LIMITED LIABILITY COMPANY AGREEMENT
OF
NEW ALBANY-INDIANA, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is
entered into effective as of the 25th day of November, 2005, by and among those
Persons who have executed this Agreement, and whose names and addresses are set
forth in Schedule A annexed hereto, as Members.
WHEREAS, New Albany-Indiana, LLC (the "Company") was organized in
accordance with the Delaware Limited Liability Company Law (the "Law"), by the
filing with the office of the Secretary of State of the State of Delaware on
November 9, 2005 of a Certificate of Formation; and
WHEREAS, the Members (as hereinafter defined) desire to establish
their respective rights and obligations in connection with the ownership and
operation of the Company.
NOW, THEREFORE, to reflect the foregoing, the parties hereto agree
as follows:
ARTICLE 1
THE COMPANY
1.1 Formation. A Certificate of Formation under the Law (the
"Certificate") was filed in the office of the Delaware Secretary of State on
November 9, 2005. The Company shall execute such further documents (including
amendments to the Certificate) and take such further action as shall be
appropriate to comply with all requirements of law for the formation and
operation of a limited liability company in the State of Delaware and all other
counties and states where the Company may elect to do business.
1.2 Name. The name of the Company shall be New Albany-Indiana, LLC,
provided, however, that the business of the Company may be conducted under any
other name designated by the Managing Member and, in such event, the Managing
Member shall thereafter notify the Members of such name change.
1.3 Purpose. The Company is formed for the object and purpose to
acquire, own, operate, manage, lease, develop, and sell or otherwise dispose of,
directly or indirectly, interests in oil and gas properties and xxxxx (and
property related to or used in connection with the foregoing), including,
without limitation, the Properties (as hereinafter defined), and to engage in
any other kind of lawful activity for profit related to the foregoing. This
Section 1.3 may not be amended without the written consent or approval of all of
the Members.
1.4 Place of Business; Registered Office. The principal place of
business of the Company and the office of the Managing Member shall be
established at Xxxxxxx 000, Xxx 000, Xxxxxxxxxx, Xxxxxxxx, 00000 or at such
other location as may be selected from time to time by the Managing Member. The
Company may maintain such other offices or agents as the Managing Member deems
advisable. The registered office of the Company in the State of Delaware shall
be c/o The Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000.
1.5 Fiscal Year. The fiscal year of the Company shall be the
calendar year.
1.6 Agent for Process. The Corporation Trust company, having an
address at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, is hereby designated
as the agent of the Company upon whom process in any action or proceeding
against it may be served, and the address to which such agent shall mail a copy
of any process served on it against the Company shall be Xxxxxxx 000, Xxx 000,
Xxxxxxxxxx, Xxxxxxxx, 00000, Attn: Xxxxxxxx X. Xxxxxxx. CT Corporation Systems,
having an address at 000 Xxxx Xxxx Xxxxxx Xxxxx 0000 Xxxxxxxxxxxx, XX 00000, is
hereby designated as the agent of the Company upon whom process in any action or
proceeding against it may be served in Indiana, and the address to which such
agent shall mail a copy of any process served on it against the Company shall be
Xxxxxxx 000, Xxx 000, Xxxxxxxxxx, Xxxxxxxx, 00000, Attn: Xxxxxxxx X. Xxxxxxx.
1.7 Foreign Qualification. Prior to the Company's conducting
business in any jurisdiction other than Delaware, the Company shall comply, to
the extent procedures are available and those matters are reasonably within the
control of the Company, with all requirements necessary to qualify the Company
as a foreign limited liability company in that jurisdiction. The officers of the
Company shall execute, acknowledge, swear to, and deliver all certificates and
other instruments conforming with this Agreement that are necessary or
appropriate to qualify, continue, or terminate the Company as a foreign limited
liability company in all such jurisdictions in which the Company may conduct
business.
1.8 No State Law Partnership. The Members intend that the Company
not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member be a partner or joint venturer of any other
Member, for any purposes other than federal and state tax purposes, and this
Agreement may not be construed to suggest otherwise.
1.9 Certificates. The Company shall have the authority, but no
obligation, to issue certificates, in form and substance satisfactory to the
Managing Member and in compliance with the Law, evidencing each Member's
Membership Interest in the Company. Any such certificate shall bear such legends
as the Managing Member may reasonably determine to be appropriate or as
otherwise may be required by the Law.
ARTICLE 2
DEFINITIONS
The following defined terms used in this Agreement shall have the
respective meanings specified below.
2.1 Affiliate. "Affiliate" shall mean (i) any person or entity
directly or indirectly controlling, controlled by, or under common control with,
another person or entity, (ii) a person or entity owning or controlling fifty
percent (50%) or more of the outstanding voting securities of another entity,
(iii) any officer, director, partner, member or employee of any person or
entity, and (iv) with respect to any officer, director, partner, member or
employee of a person or entity, any other person or entity for which such person
acts in any such capacity.
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2.2 Aurora. "Aurora" shall mean Aurora Energy, Ltd., a Nevada
corporation.
2.3 Bankruptcy. The "Bankruptcy" of a Member shall mean (i) the
filing by a Member of a voluntary petition seeking liquidation, reorganization,
arrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code or any other federal or state insolvency law, (ii) the making
by a Member of any assignment for the benefit of its creditors, or (iii) the
expiration of sixty days after the filing of an involuntary petition under Title
11 of the United States Code, an application for the appointment of a receiver
for the assets of a Member, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other federal
or state insolvency law, provided that the same shall not have been vacated, set
aside or stayed within such sixty-day period or immediately upon a Member's
filing an answer consenting to or acquiescing in any such petition.
2.4 Capital Account. "Capital Account" shall mean the account to be
maintained by the Company for each Member in accordance with the following
provisions:
(a) a Member's Capital Account shall be increased by the Member's
Capital Contributions, the amount of any Company liabilities assumed by the
Member (or which are secured by Company property distributed to the Member), the
Member's share of Profit and any item in the nature of income or gain specially
allocated to the Member pursuant to the provisions of Article 5; and
(b) a Member's Capital Account shall be decreased by the amount of
money and the fair market value of any Company property distributed to the
Member, the amount of any liabilities of the Member assumed by the Company (or
which are secured by property contributed by the Member to the Company), the
Member's share of Loss and any item in the nature of expenses or losses
specially allocated to the Member pursuant to the provisions of Article 5.
If the book value of Company property is adjusted pursuant to
Section 5.1(b)(i), the Capital Account of each Member shall be adjusted to
reflect the aggregate adjustment in the same manner as if the Company had
recognized gain or loss equal to the amount of such aggregate adjustment.
2.5 Capital Contribution. "Capital Contribution" shall mean the fair
market value of any contribution by a Member to the capital of the Company in
cash or property. Such property shall not include the value of any promissory
note for which the contributing Member is also the maker. In the event such
promissory note is contributed, such Member's capital account shall be increased
in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(d)(2).
2.6 Certificate. "Certificate" shall have the meaning given to such
term in Section 1.1.
2.7 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended, or the corresponding provisions of any successor statute.
2.8 Company. "Company" shall mean New Albany-Indiana, LLC.
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2.9 Economic Interest. "Economic Interest" shall mean a Person's
right to share in the Profits and Losses of, and the right to receive
distributions and allocations from, the Company.
2.10 Economic Interest Percentage. "Economic Interest Percentage"
shall mean, as to a Member, the percentage interest of such Member in residual
Profits and Losses set forth after the Member's name on Schedule A, as amended
from time to time, including, without limitation, to reflect changes in Economic
Interest Percentage upon additional Capital Contributions in accordance with the
provisions of Section 3.2 and, as to an assignee who is not a Member, the
Economic Interest Percentage of the Member whose Economic Interest has been
acquired by such assignee, to the extent the assignee has succeeded to that
Member's Economic Interest.
2.11 Fiscal Year. "Fiscal Year" shall mean the calendar year.
2.12 Majority-In-Interest. "Majority-In-Interest" shall mean one or
more Members having among them more than 50% of the Voting Interest of the
Company.
2.13 Managing Member. "Managing Member" shall mean Xxx Energy
Wabash, LLC.
2.14 Members. "Member" shall mean each Person who or which executes
a counterpart of this Agreement as a Member (including the Managing Member) and
each person who or which may hereinafter become a Member or Managing Member of
the Company.
2.15 Membership Interest. "Membership Interest" shall mean a
Member's aggregate rights in the Company, including, without limitation, the
Company's (i) Economic Interest and (ii) Voting Interest.
2.16 Net Cash Flow. "Net Cash Flow" shall have the meaning given to
such term in Section 5.2.
2.17 Person. "Person" shall mean any person, corporation,
governmental authority, limited liability company, partnership, trust,
unincorporated association or other entity.
2.18 Pilot Program. "Pilot Program" shall have the meaning given to
such term in Section 3.2(b).
2.19 Profits and Losses. "Profits" and "Losses" shall mean, for any
fiscal period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits and Losses
will be added to taxable income or loss; and
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(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits and Losses will be subtracted from taxable income
or loss.
2.20 Properties. "Properties" shall mean any and all oil, gas and
other mineral interests (and any tangible personal property, equipment or other
property associated therewith) purchased by the Company pursuant to the Purchase
Agreement.
2.21 Purchase Agreement. "Purchase Agreement" shall mean the
Purchase and Sale Agreement dated as of November 15, 2005 by and between the
Company and Aurora Energy, Ltd.
2.22 Transfer. "Transfer" shall mean when used as a noun, any gift,
sale, hypothecation, mortgage, pledge, assignment, attachment, or other
transfer, and, when used as a verb, means to gift, sell, hypothecate, pledge,
assign, or otherwise transfer.
2.23 Transferee. "Transferee" shall mean any Person to whom is
Transferred a Membership Interest.
2.24 Transferor. "Transferor" shall mean a Member who Transfers a
Membership Interest.
2.25 Treasury Regulations. "Treasury Regulations" shall mean all
proposed, temporary and final regulations promulgated under the Code as from
time to time in effect.
2.26 Voting Interest. "Voting Interest" shall mean a Person's right
to vote in matters coming before the Company and participate in the management
of the Company.
2.27 Voting Interest Percentage. "Voting Interest Percentage" shall
mean, with respect to a particular Member, such Member's percentage of the
aggregate Voting Interests, as set forth after the Member's name on Schedule A,
as amended from time to time.
ARTICLE 3
CAPITAL CONTRIBUTIONS
3.1 The Members. The Members have contributed the amounts identified
on Schedule A as Capital Contributions to the Company, and such contributions
are reflected in such Members' Capital Accounts.
3.2 Additional Contributions. The Members acknowledge and agree that
the Managing Member, may, upon execution of this Agreement, issue demands for
additional Capital Contributions to the Company for the purposes of:
(a) The costs and expenses of the Company relating to the
acquisition of the Properties by the Company pursuant to the terms and
conditions of the Purchase Agreement, provided, however, that the aggregate
amount of the Capital Contributions demanded for this purpose, together with the
Capital Contributions contributed by the Members as shown on Exhibit A, shall
not exceed $11,000,000.00, and;
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(b) The costs and expenses of the Company relating to the drilling
of a ten well (10) pilot program on the Properties, not to exceed $4,500,000 in
the aggregate (the "Pilot Program"), and;
(c) Such other subsequent capital requests as provided for in
paragraph 3.4 of this Agreement.
If the Managing Member determines that a Capital Call is required,
the Managing Member shall notify each Member of (i) the aggregate amount of
additional Capital Contributions requested by the Managing Member (the "Capital
Call Amount") and the reason(s) for which the capital is being called, (ii) the
amount of such Member is required to contribute pursuant to the Capital Call
(the "Capital Call Obligation") and (iii) the date (which date may be no earlier
than the thirtieth (30th) day following the date of such notice) (the "Call
Obligation Deadline") before which the Capital Call Obligation must be
contributed to the Company. Each Member shall contribute to the Company, on or
before the Call Obligation Deadline, his, her or its Capital Call Obligation.
Immediately following the Call Obligation Deadline, the Economic Percentage
Interests of each of the Members shall be adjusted so that each Member receives
a Economic Percentage Interest determined by multiplying the total Economic
Percentage Interest of all Members by a fraction, the numerator of which is each
Member's aggregate Capital Contributions and the denominator of which is the sum
of all Members' aggregate Capital Contributions.
3.3 Default. If a Member does not contribute, on or before the Call
Obligation Deadline, his, her or its Capital Call Obligation required to made
pursuant to Section 3.2(a) or 3.2(b), the Managing Member may exercise, on
notice to that Member (the "Delinquent Member"), one or more of the following
remedies:
(a) permit the other Members, in proportion to their Economic
Percentage Interests or in such other percentages as they may agree (the
"Contributing Partner(s)"), to advance the portion of the Delinquent Member's
Capital Call Obligation that is in default with the following results:
(i) The sum so advanced shall constitute a Capital
Contribution from the Contributing Member(s) to the Company.
(ii) The Economic Percentage Interests of all Members shall be
adjusted effective as of the date such Capital Call Obligation was due to be
made by the Delinquent Member with each Member's Economic Percentage Interest
being determined by multiplying the total Economic Percentage Interest of all
Members by a fraction, the numerator of which is each Member's aggregate Capital
Contributions and the denominator of which is the sum of all Members' aggregate
Capital Contributions; or
(b) involuntarily withdraw the Delinquent Member from the Company (a
"Delinquent Member Withdrawal") within thirty (30) days of notice to the
Delinquent Member. The Delinquent Partner's Capital Contributions shall be
thereafter be forfeited to the Company and shall constitute liquidated damages.
Such liquidated damages shall be in lieu of any other remedies the Company may
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have at law, in equity or otherwise. Upon the occurrence of a Delinquent Member
Withdraw, the Economic Percentage Interests of all Members shall be adjusted
effective as of the date the Capital Call Obligation was due to be made by the
Delinquent Member with each Member's Economic Percentage Interest being
determined by multiplying the total Economic Percentage Interest of all Members
by a fraction, the numerator of which is each Member's aggregate Capital
Contributions and the denominator of which is the sum of all Members' aggregate
Capital Contributions.
3.4 Proposals for Subsequent Drilling Operations. During the term of
this Agreement, but after completion of the Pilot Program, any Member of the
Company shall have the right to propose exploration or development of xxxxx in
any formation within the Area of Mutual Interest of which the Properties are or
will be a part (the "AMI") to the Managing Member. In all cases, all such
proposals shall be made for the development of 640 acres around a well, plus an
additional one-half mile radius around such acreage. In the event any such
proposal is made, the following conditions shall apply:
(a) In the event that a Member proposes an area to develop well(s)
within the AMI and the other Member(s) or the Managing Member decline to
participate, the Managing Member shall, at the request of the proposing Member,
cause the Company to sell its interest in the proposed development acreage to
the proposing Member and the other electing Member(s) for their proportionate
share at a gross cost of $80 per acre. The Managing Member shall cause the
Company to propose such proposed development or exploration xxxxx to Aurora
Energy Ltd on behalf of the proposing and electing Members.
(b) In the event that Aurora declines to participate in a proposed
development, the Managing Member shall, at the request of the electing Members,
cause the Company to purchase Aurora's proportionate share of the proposed
development acreage at a gross cost of $80 per acre, and (i) in the event all
Members of the Company have elected to participate in such proposed development,
to make a Capital Call from all Members in proportion to the their Economic
Percentage Interest in the Company and to cause the Company to acquire the
acreage and subsequently implement the proposed development project, or (ii) in
the event that any Member has elected not to participate, to sell such proposed
development acreage to the electing Members directly in proportion to their
Economic Percentage Interest in the Company at a gross cost of $80 per acre.
(c) In the event Aurora proposes an area to develop within the AMI,
the Managing Member shall distribute such proposal to all Members of the Company
within five (5) days of its receipt from Aurora. Members of the Company shall
have fifteen (15) days to notify the Managing Member that they elect to
participate in the development proposal. In the event 100% of the Members of the
Company elect to participate in the proposal, the Managing Member shall issue a
Capital Call to the Members of the Company for their proportionate share of such
proposed development, and shall notify Aurora of the Company's election to
participate in the proposed development. In the event that less than 100% of the
Members of the Company elect to participate in the proposed development, the
Managing Member shall sell the proportionate share of such proposed development
to the electing Members of the Company in proportion to their Economic
Percentage Interests at a gross cost of $80 per acre.
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3.5 Withdrawal. Except as otherwise set forth herein, no Member
shall have the right to withdraw from the Company or to demand a return of all
or any part of its Capital Contribution during the existence of the Company. No
interest shall be paid on Capital Contributions.
3.6 Negative Capital Accounts. At no time during the existence of
the Company or upon dissolution and liquidation of the Company shall a Member
with a negative balance in his, her or its Capital Account have any obligation
to the Company or the other Members to restore such negative balance, except (i)
as may be required by law, or (ii) in respect of any negative balance resulting
from a withdrawal of capital or dissolution in contravention of this Agreement.
3.7 Advances by Members. If the Company does not have sufficient
cash to pay its obligations, any Member that may agree to do so, with the
consent of a Majority-In- Interest of the other Members, may advance all or part
of the needed funds to or on behalf of the Company. An advance described in this
Section 3.7 constitutes a loan from the Member to the Company, shall bear
interest per annum at the prime rate as stated in the Wall Street Journal from
the date of the advance until the date of payment, and is not a Capital
Contribution.
ARTICLE 4
COSTS AND EXPENSES
4.1 Operating Costs. The Company shall pay or cause to be paid all
costs and expenses of the Company incurred by the Company in pursuing and
conducting, or otherwise related to, the business of the Company.
4.2 Reimbursement of Managing Member and Officers. The Company shall
reimburse the Managing Member and the officers of the Company for any
out-of-pocket costs and expenses incurred by them in pursuing and conducting, or
otherwise related to, the business of the Company.
ARTICLE 5
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations.
(a) Allocation of Profits and Losses. Except as provided in
subparagraphs (b) and (c) of this Section, all Profits and Losses for each
Fiscal Year shall be allocated to Members in accordance with their respective
Economic Interest Percentages.
(b) Special Allocations. All capitalized terms used in this Section
not otherwise defined in this Agreement shall have the meaning set forth in the
Regulations promulgated pursuant to Section 704 of the Code. The following
special allocations shall be made in the following order:
(i) Property Contributions. In accordance with Code Section
704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of the Company or
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revalued in accordance with Reg. 1.704-1(b)(2)(iv)(f) shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial fair market value. Any elections or decisions
relating to such allocations shall be made by the Managing Member in any manner
that reasonably reflects the purpose and intention of this Agreement.
(ii) Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f) of the Regulations, notwithstanding any other provision of
this Section 5.1, if there is a net decrease in Partnership Minimum Gain during
any Adjustment Period, each Member shall be specially allocated items of Company
income and gain for such period (and, if necessary, subsequent periods) in an
amount equal to such Member's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Section 1.704-2(g) of the Regulations.
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto. The
items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 5.1(b)(ii) is
intended to comply with the minimum gain chargeback requirement in Section
1.704-2(f) of the Regulations and shall be interpreted consistently therewith.
(iii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Section 5.1, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any period,
each Person who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Company income and gain for such Adjustment Period (and, if necessary,
subsequent Adjustment Periods) in an amount equal to such Member's share of the
net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section
5.1(b)(iii) is intended to comply with the minimum gain chargeback requirement
in Section 1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
(iv) Qualified Income Offset. If any Member unexpectedly
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company income and gain
shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Capital
Account deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 5.1(d)(iv) shall be made only if and to the
extent that such Member would have a Capital Account deficit after all other
allocations provided for in this Section 5.1 have been tentatively made as if
this Section 5.1(b)(iv) were not in the Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
period shall be specially allocated among the Members in proportion to their
Economic Interests.
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(vi) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any period shall be specially allocated to the Member who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(1).
(vii) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of his or her interests, the
amount of such adjustment to Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in accordance with their Economic Interests in the
event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member
to whom such distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Extraordinary Transactions. Gain or loss arising from
any disposition of the assets of the Company outside the ordinary course of the
Company's business shall be allocated to as to reduce as much as possible the
difference between the Members' respective percentages of the Company's total
Capital Accounts and the Economic Interest Percentages of such Members. Such
gain or loss shall be allocated to each Member to which this subparagraph (viii)
applies in the same proportion as the difference with respect to such Members
bears to the total differences with respect to all such Members. (ix)
Compensation Income. If any Member is determined to recognize compensation
income upon receipt of an Economic Interest, that Member will be allocated all
corresponding items of Company deduction.
(c) Compliance with Treasury Regulations. The provisions of this
Agreement, as amended, relating to the maintenance of Capital Accounts are
intended to comply with Treasury Regulation Section 1.704-1(b), and must be
interpreted and applied in a manner consistent with such regulations. In the
event the Managing Member shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto, are
computed in order to comply with such regulations, the Managing Member may make
such modification, provided that it is not likely to have a material effect on
the amounts distributable to any Member upon the dissolution of the Company.
(d) Allocation to Transferred Interests. Items of Profit, Loss, and
credits allocated to an Economic Interest assigned during a Fiscal Year of the
Company and distributions with respect thereto shall be allocated or
distributed, as the case may be, to the person who was the holder of such
Economic Interest during such fiscal year on the basis of an interim closing or
closings of the Company's books or in any other proportion determined by the
Managing Member to be required by the Code or advisable in light of positions
(published or unpublished) taken or likely to be taken by the Internal Revenue
Service.
(e) No Section 754 Election. Notwithstanding any other provision of
this Agreement, the Company shall not make an election under Section 754 of the
Code.
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5.2 Distributions. The Managing Member shall cause the Company to
distribute its Net Cash Flows, if any, within thirty (30) days of receipt by the
Company to the Members in accordance with each Member's Economic Percentage
Interests. For purposes of this Agreement, the term "Net Cash Flow" shall mean
the excess, if any, of (a) cash received by the Company during the applicable
period from operations, plus releases from reserves over (b) the sum of (i) all
cash expenditures by the Company with respect to the Company's assets or
business, and (ii) such reasonable additions to reserves for anticipated
expenses, contingent or otherwise, in such amounts as the Managing Member, in
its discretion, deems necessary.
5.3 Special Distribution of the Assets In Kind. The Managing Member
shall cause the Company to distribute its assets in kind to the Members in
proportion to their Economic Percentage Interest in the Company and to wind up
the affairs of the Company upon the earlier to occur of (i) the date which is
two (2) years following the closing of the acquisition of the Properties
pursuant to the Purchase Agreement or (ii) the completion the Pilot Program;
provided, however, that the applicable of this Section 5.3 may be delayed to
such later date or time as may be agreed upon by the unanimous vote or written
consent of the Members.
5.4 Allocation of Distributions. Distributions to Members shall be
allocated among such Members as of the date of such distribution without regard
to the length of time such Member has held such Economic Interest. All
distributions by the Company upon its final liquidation and dissolution shall be
made to the Members, pro rata in accordance with the balance in the Members'
Capital Accounts, after adjustment to reflect all Profits and Losses for the
Fiscal Year in which such liquidation occurs.
5.5 Credit. For all income tax purposes, credits of the Company
claimed for a Fiscal Year shall be allocated among the Members in the same
manner as Losses are allocated among the Members pursuant to Section 5.1(a).
5.6 Offset. The Company may offset all amounts owing to the Company
by a Member against any distribution to be made to such Member.
5.7 Limitation Upon Distributions. No distribution shall be declared
and paid unless, after such distribution is made, the assets of the Company are
in excess of all liabilities of the Company.
ARTICLE 6
MANAGEMENT
6.1 Rights and Duties of Members. The Company is a "manager-managed"
limited liability company under the Law which shall be managed by the Managing
Member. Except as may hereafter be required or permitted by the Law or as
specifically provided herein, the Members (other than the Managing Member) shall
in such capacity take no part whatever in the control, management, direction or
operation of the affairs of the Company and shall have no power to act for or
bind the Company.
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6.2 Powers of the Managing Member.
(a) The Managing Member shall have full and complete charge of all
affairs of the Company, and the management and control of the Company's business
shall rest exclusively with the Managing Member, subject to the terms and
conditions of this Agreement. The Managing Member shall devote to the conduct of
the business of the Company such time and attention as is reasonably necessary
to accomplish the purposes, and to conduct the business, of the Company.
(b) Subject to the limitations set forth in this Agreement,
including but not limited to those limitations set forth in Section 6.3, the
Managing Member shall perform or cause to be performed all management and
operational functions relating to the business of the Company. Without limiting
the generality of the foregoing, the Managing Member is authorized on behalf of
the Company, without the consent of any other Member, to:
(i) invest and expend the capital and revenues of the Company
in furtherance of the Company's business and pay, in accordance with the
provisions of this Agreement, all expenses, debts and obligations of the Company
to the extent that funds of the Company are available therefor;
(ii) to purchase, lease, rent, or otherwise acquire or obtain
the use of office equipment, materials, supplies, and all other kinds and types
of real or personal property, and to incur expenses for travel, telephone,
telegraph and for such other things, services and facilities, as may be deemed
necessary, convenient or advisable for carrying on the business of the Company;
(iii) make investments in United States government securities,
securities of governmental agencies, commercial paper, insured money market
funds, bankers' acceptances, certificates of deposit and other securities,
pending disbursement of the Company funds or to provide a source from which to
meet contingencies;
(iv) enter into agreements and contracts with any Person, and
modify, supplement or terminate any such agreements, subject, however, to the
provisions of Section 6.3 (xiii) of this Agreement;
(v) maintain, at the expense of the Company, adequate records
and accounts of all operations and expenditures and furnish the Members with the
reports of such records and accounts;
(vi) purchase, at the expense of the Company, liability,
casualty, fire and other insurance and bonds to protect the Company's
properties, business, Members and employees;
(vii) sell, lease, trade, exchange or otherwise dispose of all
or any portion of the property or assets of the Company, subject, however, to
the provisions of Section 6.3(xiv);
-12-
(viii) employ or retain, at the expense of the Company,
consultants, accountants, attorneys, brokers, engineers, escrow agents and
others and terminate such employment;
(ix) to appoint one or more officers of the Company as the
Managing Member deems necessary, convenient or advisable in carrying out the
businesses and purposes of the Company;
(x) execute and deliver purchase agreements, notes, leases,
subleases, applications, transfer documents and other documents, agreements and
instruments necessary or incidental to the conduct of the businesses and
purposes of the Company;
(xi) permit an assignment of the Members' Interest in the
Company and admit an assignee of the Members' Interest as a substituted Member
in the Company, pursuant to and subject to the limitations of Article X hereof;
(xii) determine the accounting methods and conventions to be
used in the preparation of the Returns (as defined in Section 7.1), and make any
and all elections under the tax laws of the United States, the several states
and other relevant jurisdictions as to the treatment of items of income, gain,
loss, deduction and credit of the Company, or any other method or procedure
related to the preparation of the Returns;
(xiii) defend claims or litigation in the name of the Company,
subject, however, to Section 6.3(xii) of this Agreement; and
(xiv) to take such other action and perform such other tasks
as the Managing Member deems reasonably necessary, convenient or advisable in
carrying out the purposes and businesses of the Company.
The enumeration of powers in this Agreement shall not limit the
general or implied powers of the Managing Member or any additional powers
provided by law. By executing this Agreement, the Members shall be deemed to
have consented to any exercise by the Managing Member of any of the foregoing
powers. Any third party may rely on the signature of an officer of the Company
as a valid exercise or execution of any of the foregoing powers of the Managing
Member on behalf of the Company.
6.3 Restrictions on the Managing Member's Authority.
(a) Unless otherwise provided for in this Agreement, the Managing
Member may not, without the approval, written consent or ratification of the
specific act by Members holding at least a Majority-In-Interest (which
calculation shall include the Voting Interest of the Managing Member), given in
this Agreement or given by other written instrument executed and delivered by
the Members subsequent to the date of this Agreement, do any of the following:
(i) any act in contravention of this Agreement or the
Certificate of Formation;
(ii) any act which would make it impossible to carry on the
ordinary business of the Company, except as otherwise provided in this
Agreement;
-13-
(iii) the engagement of the Company in any business other than
the ones specified in this Agreement;
(iv) the sale, lease or exchange, other than in the ordinary
course of business, of substantially all of the assets of the Company;
(v) the filing of a voluntary petition or otherwise initiating
proceedings to have the Company adjudicated bankrupt or insolvent, or consenting
to the institution of bankruptcy or insolvency proceedings against the Company,
or the filing of a petition seeking or consenting to reorganization or relief of
the Company as debtor under any applicable federal or state law relating to
bankruptcy, insolvency, or other relief for debtors with respect to the Company;
or the seeking or consenting to the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, liquidator (or other similar
official) of the Company or of all or any substantial part of the properties and
assets of the of the Company, or the admitting in writing the inability of the
Company to pay its debts generally as they become due or declare or effect a
moratorium on the Company debt or the taking of any action in furtherance of any
such action;
(vi) the merging or consolidating of the Company with any
Member or other Person or entity,
(vii) the conversion of the Company to a partnership, limited
partnership, corporation or other entity;
(viii) the borrowing of funds on behalf of the Company, and,
in connection therewith, the issuance of notes, debentures and other debt
securities, and mortgaging, pledging, or encumbering of the assets of the
Company in an amount in excess of $100,000;
(ix) the guaranteeing in the name or on behalf of the Company
of the payment of money or the performance of any contract or other obligation
of any other Person, except for responsibilities customarily assumed under
operating agreements or hedging contracts considered standard in the industry;
(x) the making of any one expenditure of the Company funds in
excess of $100,000, except for any expenditure required under the terms or
conditions of the Purchase Agreement and any document or instrument contemplated
thereby;
(xi) the loaning of any Company funds to a Member or any of
its Affiliates;
(xii) the initiation of litigation or claims in the name of
the Company or the dismissal or settlement of any litigation or claims in the
name of the Company;
(xiii) the entering into of any agreement or contract with any
Person obligating the payment by the Company, or providing for the receipt by
the Company, of more than $100,000, or the modification or termination of any
such agreements; or
-14-
(xiv) the sale, lease, trade, exchange or other disposition of
all or any portion of the property or assets of the Company in a transaction or
series of related transactions of an aggregate value in excess of $100,000.
6.4 Officers.
(a) The Managing Member may, from time to time, designate one or
more persons to be an officer of the Company. Any officer so designated shall
have such authority and perform such duties on behalf of the Company as the
Managing Member may, from time to time, delegate to them subject to the
limitations set forth in the Law or this Agreement. The Managing Member may
assign titles to particular officers.
(b) No officer need be a resident of the State of Delaware or a
Member. Each officer shall hold his office until his successor shall be duly
designated and qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided. Any number of offices may
be held by the same person. Except as provided in Section 4.2, no officer shall
receive a salary or other compensation from the Company without the prior
written consent of the Majority-In-Interest of the Members.
(c) Any officer may resign as such at any time. Such resignation may
be made in writing and shall take effect at the time specified therein, or if no
time is specified, upon receipt by the Managing Member. Acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managing Member at any time when, in the Managing Member's
judgment, the best interest of the Company will be served by the officer's
removal. Any vacancy occurring in any office of the Company may be filled by the
Managing Member.
6.5 Initial Officers. The following person shall serve as the
initial officers of the Company in the positions indicated below until his
successor is duly designated and qualified, or until his death, resignation or
removal:
Xxxxx X. Xxxxxx Chairman
Xxxxxx X. Xxxxxxx Chief Executive Officer
Xxxxxxxx X. Xxxxxxx President
Xxxxxx X. Xxxxxxx Vice President, Treasurer and Chief
Financial Officer
Xxxxxxxxxxx X. Xxxxxxx Vice President and Secretary
Xxxxxxx X. Xxxxxxx Vice President
Xxxx Xxxxxxx Vice President
6.6 Exculpation. The Managing Member and the officers of the Company
shall not be liable, in damages or otherwise, to the Company or to any of the
Members for any act or omission performed or omitted by a the Managing Member or
officer pursuant to the authority granted by this Agreement, except if such act
or omission results from willful misconduct, bad faith, malfeasance or fraud.
The Company shall indemnify, defend and hold harmless the Managing Member and
the officers of the Company from and against any and all claims or liabilities
of any nature whatsoever, including reasonable attorneys' fees, arising out of
or in connection with any action taken or omitted by them pursuant to the
authority granted by this Agreement, except where attributable to the willful
-15-
misconduct, bad faith, malfeasance or fraud of a Managing Member or such
officer. The Managing Member and the officers of the Company shall be entitled
to rely on the advice of counsel, accountants or other independent experts
experienced in the matter at issue, and any act or omission of the Managing
Member or an officer of the Company pursuant to such advice shall in no event
subject them to liability to the Company or any Member. The Company shall
advance funds to the Managing Member or any officer of the Company for the costs
of defending any claim upon receipt of an undertaking from the Managing Member
or officer to repay such amounts to the Company upon any judicial determination
that the Managing Member or officer is not entitled to indemnification under
this Section 6.6.
6.7 Other Activities. Any Member (including the Managing Member) or
its Affiliates may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, whether presently
existing or hereafter created and neither the Company nor any Member or its
Affiliates shall have any rights in or to such independent ventures or the
income or profits deprived therefrom.
6.8 Transactions with Affiliates. This Agreement shall not preclude
transactions between the Company and its Members, the Managing Member and/or an
Affiliate of a Member or the Managing Member, acting in and for its own account,
provided that any services performed by such Member, the Managing Member or any
of their Affiliates are services that the Managing Member reasonably believes,
at the time of requesting such services, to be in the best interests of the
Company, and provided that the rate of compensation to be paid for any such
services shall be commercially reasonable and shall not exceed amounts which
would have been paid in an arms-length transaction to an independent third party
similar in size, stature and commercial experience.
6.9 Power of Attorney. Each Member hereby appoints the Managing
Member (and any liquidator pursuant to Section 11.3) as that Member's
attorneys-in-fact for the purpose of executing, acknowledging, and delivering
all certificates, documents, and other instruments as may be necessary,
appropriate, or advisable in the judgment of the Managing Member (or the
liquidator) in furtherance of the business of the Company or complying with
applicable law. On request by the Managing Member (or the liquidator), a Member
shall confirm its grant of this power of attorney or any use thereof by the
Managing Member (or the liquidator) and shall execute, acknowledge, and deliver
any such certificate, document, or other instrument.
ARTICLE 7
TAXES
7.1 Tax Returns. The Managing Member of the Company shall cause to
be prepared and filed all necessary federal, state and local income tax returns
for the Company (the "Returns"). The Managing Member is designated as the Tax
Matters Partner as defined in Section 6231(a)(7) of the Code with respect to
operations conducted by the Company.
-16-
7.2 Tax Status of the Company. The Managing Member and the Members
covenant and agree to use their reasonable best efforts to establish and
maintain the classification of the Company as a partnership for federal income
tax purposes.
ARTICLE 8
COMPENSATION
8.1 Fees. Except as expressly authorized by a Majority-In-Interest
of the Members, the Managing Member will not receive any fees or other
compensation (except as contemplated by Article 4) from the Company solely for
its service as the Managing Member.
ARTICLE 9
ACCOUNTS
9.1 Books. The officers of the Company, as selected by the Managing
Member, shall maintain complete and accurate books of account of the Company's
affairs at the Company's principal offices, including a list of the names and
addresses of all Members and the interest held by each Member. Each Member and
its accountants, lawyers and agents shall have the right to inspect the
Company's books and records (including the list of the names and addresses of
Members) during reasonable business hours at the offices of the Company.
9.2 Members' Accounts. Separate Capital Accounts shall be maintained
for each Member.
9.3 Reports and Returns. Within 120 days of the end of each Fiscal
Year, each Member shall be provided with an information letter containing all
information concerning the Company necessary for the preparation of the Member's
income tax return(s).
9.4 Bank Account. The officers of the Company, as selected by the
Managing Member, shall establish and maintain a separate bank account in the
name of the Company. All funds of the Company shall be deposited and maintained
in said account.
ARTICLE 10
TRANSFERS
10.1 Transfer of Membership Interest. No Member may Transfer his,
her, or its Membership Interest or Economic Interest to another Person except as
set forth in this Agreement. A Transfer of Membership Interest or Economic
Interest may not be effected unless:
(a) the Transfer is approved by a Majority-In-Interest of the
Members, provided, however, that Xxx Energy Operating Corp. may transfer all or
any portion of its Membership Interest or Economic Interest to any of its
Affiliates without the approval of the Members;
(b) the Transfer of such Interest complies with (as may be
determined in good faith by the Managing Member) any and all terms and
conditions of this Agreement;
-17-
(c) a duly executed and acknowledged written instrument of
assignment in form satisfactory to the Managing Member is filed with the
Company;
(d) the Transferee consents in writing, in form satisfactory to the
Managing Member, to be bound by the terms of this Agreement as if he, she, or it
were the Transferor;
(e) the Transferor and the Transferee execute and acknowledge other
instruments, in form and substance satisfactory to the Managing Member, as the
Managing Member may deem necessary or desirable to effect the substitution;
(f) the Transfer will not jeopardize the status of the Company as an
entity taxed as a partnership for federal income tax purposes, cause a
termination of the Company for the purposes of the then applicable provisions of
the Code, or violate or cause the Company to violate any applicable law or
governmental rule or Treasury Regulation, including without limitation, any
applicable federal or state securities law;
(g) if requested by the Managing Member, an opinion from counsel to
the assignee (which counsel and opinion must be satisfactory to counsel for the
Company) is furnished to the Company stating that, in the opinion of the
counsel, the Transfer would not jeopardize the status of the Company as a
partnership for federal income tax purposes, or cause a termination of the
Company for the purposes of the then applicable provisions of the Code, or
violate, or cause the Company to violate any applicable law or governmental rule
or Treasury Regulation, including without limitation, any applicable federal or
state securities law or cause the Company to be subject to any reporting
requirements of any applicable federal or state securities law; and
(h) each Transferor agrees to pay, prior to the time the Managing
Member consents to a Transfer of such Interest in the Company, all reasonable
expenses, including attorneys fees, incurred by the Company in connection with
the Transfer.
10.2 Transferee's Rights.
(a) Any purported Transfer of a Membership Interest or an Economic
Interest in the Company that is not in compliance with this Agreement is hereby
declared to be null and void and of no force and effect whatsoever. Any Person
acquiring a Membership Interest in a manner that is not in compliance with this
Agreement shall not become a Member.
(b) The "effective date" of a Transfer of a Membership Interest or
an Economic Interest in the Company is the day next following receipt by the
Managing Member of written notice of Transfer and fulfillment of all conditions
precedent to the Transfer provided for in this Agreement.
10.3 Satisfactory Written Assignment Required. Anything herein to
the contrary notwithstanding, both the Company and the Managing Member will be
entitled to treat the Transferor of a Membership Interest or an Economic
Interest in the Company as the absolute owner thereof in all respects, and will
incur no liability for distributions made in good faith to him or her, until a
written assignment that conforms to the requirements of this Agreement has been
received by, accepted and recorded on the books of the Company.
-18-
10.4 Substituted Member. Upon compliance with the requirements of
Section 10.1, the Transferee of any Membership Interest (but not an Economic
Interest) in the Company will become a substituted Member in place of his or her
Transferor. The Transferee then will acquire the entire Membership Interest
assigned, including, without limitation, the Voting Interest held by the
Transferor. By executing this Agreement, each Member is deemed to have consented
to any substitution of a Transferee in the place of a Transferor upon compliance
with Article 10 of this Agreement.
10.5 Death, Bankruptcy or Incapacity of a Member. Subject to the
terms of this Agreement, the death, Bankruptcy or adjudicated incompetency of a
Member will not cause a dissolution of the Company, but the rights of the Member
to share in the Profits and Losses of the Company, to receive distributions and
to Transfer his or her Membership Interest in the Company pursuant to Section
10.1 or cause the substitution of a substitute Member pursuant to Section 10.4,
on the happening of one of these events, devolve on his or her successor,
executor, administrator, guardian or other legal representative for the purpose
of settling his or her estate or administering his or her property, or in the
event of the death of one whose Membership Interest is held in joint tenancy,
pass to the surviving joint tenant, subject to the terms and conditions of this
Agreement, and the Company will continue as a limited liability company. The
estate of the Member is liable for all the obligations of the deceased, Bankrupt
or incapacitated Member.
ARTICLE 11
DISSOLUTION
11.1 Events of Dissolution. The Company shall dissolve and its
affairs shall be wound up upon the first to occur of the following:
(a) the sale, exchange or other disposition by the Company of all or
substantially all of the Company's assets;
(b) upon the earlier of (i) two (2) years following the closing of
the acquisition of the Properties by the Company pursuant to the Purchase
Agreement or (ii) the completion of the Pilot Program; provided, however that
the application of this Section 11.1(b) may be delayed to such time as one
hundred percent (100%) of the vote or consent of the Members may elect; or
(c) at any time, with the approval or written consent of Members
holding an aggregate of sixty-seven percent (67%) of the Voting Interest
Percentage of the Members.
11.2 Final Accounting. Upon the dissolution of the Company, a proper
accounting shall be made from the date of the last previous accounting to the
date of dissolution.
11.3 Liquidation. Upon the dissolution of the Company, an officer of
the Company, as selected by the Managing Member, shall act as liquidator to wind
up the affairs of the Company. The liquidator shall have full power and
authority to sell, assign and encumber any or all of the Company's assets and to
wind up and liquidate the affairs of the Company in an orderly and business-like
manner. All proceeds from liquidation shall be distributed in the following
order of priority: (i) to the payment of the debts and liabilities of the
Company and expenses of liquidation, (ii) to the setting up of such reserves as
the liquidator may reasonably deem necessary for any contingent liability of the
Company, and (iii) the balance to the Members in accordance with Section 5.2(c).
-19-
11.4 Distribution in Kind. If the liquidator shall determine that a
portion of the Company's assets should be distributed in kind to the Members,
such distribution shall be made pursuant to Section 5.3 of this Agreement.
11.5 Cancellation of Certificate. Upon the completion of the
distribution of Company assets as provided in Section 11.3 and 11.4, the Company
shall be terminated and the person acting as liquidator shall cause the
cancellation of the Certificate and shall take such other actions as may be
necessary or appropriate to terminate the Company.
ARTICLE 12
MEETINGS OF THE MEMBERS
12.1 Meetings. Meetings of Members, for any purpose, may be called
by the Managing Member, and shall be called by the Managing Member upon receipt
of a request in writing signed by any Member. Such request shall state the
purpose or purposes of the proposed meeting and the business to be transacted.
Such meetings shall be held at the principal office of the Company, or at such
other place as may be designated by the Managing Member. Notice of any such
meeting shall be delivered to all Members in the manner prescribed in Article 13
within 10 days after receipt of such request and not fewer than 15 days nor more
than 60 days before the date of such meeting. The notice shall state the place,
date, hour and purpose or purposes of the meeting. At each meeting of the
Members, the Members present or represented by proxy shall adopt such rules for
the conduct of such meeting as they shall deem appropriate. The expenses of any
such meeting, including the cost of providing notice thereof, shall be borne by
the Company.
12.2 Proxy. Each Member may authorize any person or persons to act
for him by proxy in all matters in which a Member is entitled to participate.
Every proxy must be signed by the Member or his or her attorney-in-fact. No
proxy shall be valid after the expiration of six months from the date thereof.
Every proxy shall be revocable by the Member executing it.
12.3 Written Consents. Whenever Members are required or permitted to
take any action by vote or at a meeting, such action may be taken without a
meeting, without prior notice and without a vote, if a written consent setting
forth the action so taken is signed by the Members whose Voting Interest
Percentages aggregate at least the minimum level that would be necessary to
authorize or take such action by vote or at a meeting. Notice of any action so
taken by written consent shall be given by the Managing Member to all Members
who have not so consented, in the manner prescribed in Article 13, promptly
after the taking of such action.
12.4 Manner of Acting. The vote or written consent of Members whose
Voting Percentages aggregates to a Majority-In-Interest will be the act of the
Members, unless the vote of a greater or lesser proportion or number is
otherwise required by law, the Certificate or this Agreement.
-20-
ARTICLE 13
NOTICES
13.1 Method for Notices. Except as expressly set forth to the
contrary in this Agreement, all notices, requests, or consents provided for or
permitted to be given under this Agreement must be in writing and must be given
either (i) by depositing that writing in the United States mail, addressed to
the recipient, postage paid, and registered or certified with return receipt
requested, (ii) by delivering that writing to the recipient in person, (iii) by
reputable overnight courier service or (iv) by facsimile; and a notice, request,
or consent given under this Agreement is effective on receipt by the Person to
receive it. All notices, requests, and consents to be sent to a Member must be
sent to or made at the addresses given for that Member on Schedule A, or such
other address as that Member may specify by notice to the Managing Member and
the other Members. Whenever any notice is required to be given by law, the
Certificate of Formation or this Agreement, a written waiver thereof, signed by
the Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
13.2 Routine Communications. Notwithstanding the provisions of
Section 13.1, routine communications such as distribution checks or financial
statements of the Company may be sent by first-class mail, postage prepaid, via
facsimile, or by other electronic communications, as circumstances reasonably
permit.
13.3 Computation of Time. In computing any period of time under this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or legal holiday, in
which event the period shall run until the end of the next day which is not a
Saturday, Sunday or legal holiday.
13.4 Communications Pursuant to the Purchase Agreement. The Managing
Member shall promptly provide the Members with copies of any notices or other
communications sent or received by the Managing Member which are permitted or
required by the terms of the Purchase Agreement.
ARTICLE 14
AMENDMENTS TO AGREEMENT
Amendments to this Agreement which are of an inconsequential nature
and do not affect the rights of the Members in any material respect, or which
are contemplated by this Agreement, may be made by the Managing Member without
the approval or written consent of the Members. Any other amendments only shall
be made upon the approval or written consent of sixty-seven percent (67%) of the
Voting Interest Percentage of the Members. Notwithstanding anything to the
contrary contained in the foregoing and except where approval of the Members is
specifically provided for elsewhere in this Agreement, without the approval or
written consent of each Member, no amendment shall cause the Company to become a
general partnership, alter the liability of the Members, alter the Members'
Economic Percentage Interest in Profits and Losses or distributions or alter the
provisions of this Article 14. The Managing Member shall give written notice, in
accordance with Section 13.1 hereof, to the Members promptly after any amendment
has become effective, other than amendments solely for the purposes of the
admission of substitute Members.
-21-
ARTICLE 15
GENERAL PROVISIONS
15.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter, and supersedes
any prior agreement or understanding among the parties with respect to the
subject matter hereof. Nothing in this Agreement, express or implied, is
intended to confer upon any Person any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15.2 Waiver. Except as provided otherwise herein, no rights under
this Agreement may be waived except by an instrument in writing signed by the
party sought to be charged with such waiver.
15.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflicts of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, or otherwise relating to, this Agreement shall be brought
in the courts of the State of Delaware, and each of the parties, for itself, its
shareholders and its members, hereby submits to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in this Section 15.3 may be served anywhere in the
world, whether within or without the State of Delaware, by personal service or
by overnight delivery service to the address herein provided for notices.
15.4 Binding Effect. Except as provided otherwise herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, heirs, successors and
assigns.
15.5 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts of the signature pages, each of which
shall be considered an original. Any party may execute this Agreement by
facsimile signature and the other parties shall be entitled to rely on such
facsimile signature as evidence that this Agreement has been duly executed by
such party. Any party executing this Agreement by facsimile signature shall
immediately forward to the other parties an original signature page by overnight
mail.
15.6 Separability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
15.7 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
-22-
15.8 Gender and Number. Whenever required by the context hereof, the
singular shall include the plural and the plural shall include the singular. The
masculine gender shall include the feminine and neuter genders.
15.9 Taxable Year. The Company shall elect the calendar year as its
taxable year for federal income tax purposes. Each Member acquiring an interest
of 5% or more in Company capital or Profits must have elected properly to use
the calendar year as its taxable year for federal income tax purposes unless
this requirement is waived by the Managing Member, in its sole discretion. The
Managing Member will not waive this requirement without first obtaining an
opinion of counsel that the admission of such a Member would not jeopardize the
Company's ability to use the calendar year as its taxable year for federal
income tax purposes.
15.10 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
15.11 Purchase Agreement Paramount. If and to the extent that any of
the provisions of this Agreement conflict with or are otherwise inconsistent
with the Purchase Agreement, the provisions of the Purchase Agreement shall
prevail. Nothing herein shall be deemed to amend or modify the terms of the
Purchase Agreement.
[Remainder of Page Intentionally Left Blank. Signatures Follow.]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement,
to be effective as of the day and year first above written.
Managing Member:
XXX ENERGY WABASH, LLC
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
Members:
COLLEGE OAK INVESTMENTS, INC.
By: /s/ Xxxxx X. Birmingham
--------------------------
Name: Xxxxx X. Birmingham
Title: President
XXX ENERGY OPERATING CORP.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
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NEW ALBANY-INDIANA, LLC
SCHEDULE A
====================================================================================================================
VOTING ECONOMIC
NAME AND CAPITAL INTEREST INTEREST
ADDRESS CONTRIBUTION PERCENTAGE PERCENTAGE
--------------------------------------------------------------------------------------------------------------------
Managing Member:
--------------------------------------------------------------------------------------------------------------------
XXX ENERGY WABASH, LLC $35,000.00 1% 1%
0000 Xxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Fax: 000-000-0000
--------------------------------------------------------------------------------------------------------------------
Members:
--------------------------------------------------------------------------------------------------------------------
XXX ENERGY OPERATING CORP. $1,715,000.00 49% 49%
0000 Xxxxxx Xxxx
Xxxxx Xxxxxxx, XX, 00000
Fax: 000-000-0000
--------------------------------------------------------------------------------------------------------------------
COLLEGE OAK INVESTMENTS, INC. $1,750,000.00 50% 50%
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
With copies of notices to:
Xxxxx & Xxx Xxxxxx
Attn: Xxxxxx X. Xxxxx
0 xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
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