SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
NEDAK ETHANOL, LLC
Effective July 18, 2007
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
NEDAK ETHANOL, LLC
TABLE OF CONTENTS
Page
ARTICLE I. THE COMPANY.........................................................1
1.1 Formation.........................................................1
1.2 Name..............................................................1
1.3 Purpose; Powers...................................................1
1.4 Principal Place of Business.......................................1
1.5 Term..............................................................1
1.6 Registered Agent..................................................1
1.7 Title to Property.................................................2
1.8 Payment of Individual Obligations.................................2
1.9 Independent Activities; Transactions With Affiliates..............2
1.10 Definitions......................................................2
ARTICLE II. CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS............................7
2.1 Initial Capital Contributions.....................................7
2.2 Additional Capital Contributions; Additional Units................7
2.3 Capital Accounts..................................................7
ARTICLE III. ALLOCATIONS.......................................................8
3.1 Profits...........................................................8
3.2 Losses............................................................8
3.3 Special Allocations...............................................8
3.4 Regulatory Allocations...........................................10
3.5 Loss Limitation..................................................10
3.6 Other Allocation Rules...........................................10
3.7 Tax Allocations: Code Section 704(c).............................11
3.8 Tax Credit Allocations...........................................11
ARTICLE IV. DISTRIBUTIONS.....................................................11
4.1 Net Cash Flow....................................................11
4.2 Amounts Withheld.................................................11
4.3 Limitations on Distributions.....................................11
ARTICLE V. MANAGEMENT.........................................................11
5.1 Directors........................................................11
5.2 Number of Directors..............................................12
5.3 Election of Directors............................................12
5.4 Authority of Directors...........................................12
5.5 Director as Agent................................................14
5.6 Restriction on Authority of Directors............................14
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5.7 Meetings.........................................................15
5.8 Notice...........................................................15
5.9 Conduct of Meeting...............................................15
5.10 Quorum..........................................................15
5.11 Manner of Acting; Informal Action...............................15
5.12 Presumption of Assent...........................................16
5.13 Removal of Directors............................................16
5.14 Vacancies.......................................................16
5.15 Compensation....................................................16
5.16 Committees; Authority...........................................16
5.17 Voting; Potential Financial Interest............................16
5.18 Duties and Obligations of Directors.............................16
5.19 Chairman and Vice Chairman......................................17
5.20 President and Chief Executive Officer...........................17
5.21 Chief Financial Officer.........................................17
5.22 Secretary; Assistant Secretary..................................17
5.23 Vice President..................................................17
5.24 Delegation......................................................17
5.25 Execution of Instruments........................................17
5.26 Limitation of Liability; Indemnification........................18
ARTICLE VI. MEMBERSHIP UNITS; MEMBERS.........................................18
6.1 Membership Units.................................................18
6.2 Certificates; Surrender for Transfer.............................19
6.3 Members..........................................................19
6.4 Additional Members...............................................19
6.5 Members' Voting Rights...........................................19
6.6 Member Meetings..................................................19
6.7 Place of Meeting.................................................19
6.8 Conduct of Meetings..............................................20
6.9 Notice...........................................................20
6.10 Contents of Notice..............................................20
6.11 Adjourned Meetings..............................................20
6.12 Waiver of Notice................................................20
6.13 Fixing of Record Date...........................................20
6.14 Quorum and Proxies..............................................21
6.15 Voting; Action by Members.......................................21
6.16 Continuation of the Company.....................................21
6.17 No Member Right of Redemption or Return of Capital..............21
6.18 Waiver of Dissenters Rights.....................................21
6.19 Loans...........................................................21
6.20 Actions Without a Meeting by Members............................21
ARTICLE VII. ACCOUNTING, BOOKS AND RECORDS....................................22
7.1 Accounting, Books and Records....................................22
7.2 Delivery to Members and Inspection...............................22
7.3 Reports..........................................................22
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7.4 Tax Matters......................................................22
7.5 Withholding......................................................23
ARTICLE VIII. AMENDMENTS......................................................23
8.1 Amendments.......................................................23
ARTICLE IX. TRANSFERS.........................................................24
9.1 General Restrictions.............................................24
9.2 Not Binding Until Entered in Company Books.......................24
9.3 Pledge of Units Allowed..........................................24
9.4 Prohibited Transfers.............................................24
9.5 Indemnification..................................................24
9.6 Transferee Subject to Transfer Restrictions......................24
9.7 Unit Transfer Policy.............................................24
9.8 No Dissolution or Termination....................................25
9.9 Rights of Unadmitted Assignees...................................25
9.10 Admission of Substitute Members.................................25
ARTICLE X. DISSOLUTION AND WINDING UP........................................25
10.1 Dissolution.....................................................25
10.2 Winding Up......................................................25
10.3 Compliance with Certain Requirements of Regulations; Deficit
Capital Accounts................................................26
10.4 Deemed Distribution and Recontribution..........................26
10.5 Rights of Unit Holders..........................................26
10.6 Allocations During Period of Liquidation........................26
10.7 Character of Liquidating Distributions..........................27
10.8 The Liquidator..................................................27
10.9 Forms of Liquidating Distributions..............................27
ARTICLE XI. MISCELLANEOUS.....................................................27
11.1 Notices.........................................................27
11.2 Binding Effect..................................................27
11.3 Construction....................................................27
11.4 Headings........................................................27
11.5 Severability....................................................27
11.6 Incorporation By Reference......................................28
11.7 Variation of Terms..............................................28
11.8 Governing Law...................................................28
11.9 Waiver of Jury Trial............................................28
11.10 Counterpart Execution..........................................28
11.11 Specific Performance...........................................28
11.12 No Third Party Rights..........................................28
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SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
NEDAK ETHANOL, LLC
THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement") is
entered into effective as of the 18th day of July, 2007, by NEDAK Ethanol, LLC,
a Nebraska limited liability company (the "Company"). Capitalized terms used but
not otherwise defined herein shall have the meaning set forth in Section 1.10.
WHEREAS, the Members adopted an Operating Agreement on December 23, 2003,
which was subsequently amended and restated on December 15, 2005 and further
amended on April 16, 2006 (the "Amended and Restated Operating Agreement"); and
WHEREAS, the Board desires to amend the Amended and Restated Operating
Agreement pursuant to Section 14.5 of the Amended and Restated Operating
Agreement.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I. THE COMPANY
1.1 Formation. The Company was formed as a Nebraska limited liability
company by filing Articles of Organization with the Nebraska Secretary of State
on December 15, 2003. This Agreement amends and replaces in its entirety the
Amended and Restated Operating Agreement.
1.2 Name. The name of the Company is "NEDAK Ethanol, LLC," and all business
of the Company shall be conducted in such name.
1.3 Purposes; Powers. The nature of the business and purposes of the
Company are to: (i) own, construct, operate, lease, finance, contract with,
and/or invest in ethanol production and by-product production facilities; (ii)
process feedstock into ethanol and related by-products, and market such ethanol
and by-products; and (iii) engage in any other business and investment activity
in which a Nebraska limited liability company may lawfully be engaged, as
determined by the Board. The Company has the power to do any and all acts
necessary, appropriate, proper, advisable, incidental or convenient to, and in
furtherance of, the purposes of the Company as set forth in this Section 1.3.
1.4 Principal Place of Business. The Company shall continuously maintain a
principal place of business in the State of Nebraska, at such location as the
Board may determine. Any documents required by the Act to be maintained by the
Company shall be maintained at the Company's principal place of business.
1.5 Term. The term of the Company commenced on the date the Articles were
filed with the Nebraska Secretary of State, and shall continue until the winding
up and liquidation of the Company and its business is completed following a
Dissolution Event as provided in Article X of this Agreement.
1.6 Registered Agent. The Company shall continuously maintain a registered
office and a registered agent for service of process in the State of Nebraska
and in any other state in which it is required by law to do so. The name and
address of the Company's initial Registered Agent in Nebraska shall be Xxxxxx
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Xxxxxxxxx at the Company's principal place of business. Such Registered Agent
may be changed and designated by the Board from time to time by resolution of
the Board.
1.7 Title to Property. All Property owned by the Company shall be owned by
the Company as an entity and not in the name of any Member, and no Member shall
have any ownership interest in such Property, except as a Member of the Company.
Each Member's interest in the Company shall be personal property for all
purposes, as specified in the Act.
1.8 Payment of Individual Obligations. The Company's credit and assets
shall be used solely for the benefit of the Company, and no asset of the Company
shall be Transferred or encumbered for, or in payment of, any individual
obligation of any Member.
1.9 Independent Activities; Transactions With Affiliates.
(a) The Directors shall be required to devote such time to the business and
affairs of the Company as may be necessary to manage and operate the Company,
and shall be free to serve any other Person or enterprise in any capacity that
they deem appropriate in their discretion.
(b) Neither this Agreement nor any activity undertaken pursuant hereto
shall: (i) prevent any Member or Director or their Affiliates from engaging in
whatever activities they choose, whether the same are competitive with the
Company or otherwise, and any such activities may be undertaken without having
or incurring any obligation to offer any interest in such activities to the
Company or any other Member; or (ii) require any Member or Director to permit
the Company or any other Director or Member or their Affiliates to participate
in any such activities. Except as expressly provided in this Section 1.9(b), as
a material part of the consideration for the execution of this Agreement by each
Member, each Member hereby waives, relinquishes and renounces any such right or
claim of participation.
(c) No contract or transaction between the Company and one or more of its
Members, or between the Company and any other Person in which one or more of the
Members is a director, manager or officer, or in which such Member has a
financial interest, shall be void or voidable (i) solely because of such
relationship, (ii) solely because a Director appointed or elected by such Member
is present at, or participates in, the meeting of the Directors at which such
contract or transaction is authorized, or (iii) solely because a Director
appointed or elected by such Member votes are counted for such authorization;
provided, however, the material facts as to the relationship are disclosed to
the Directors and a majority of the disinterested Directors authorize such
contract or transaction, regardless of whether the disinterested Directors
constitute a quorum.
1.10 Definitions. Capitalized words and phrases used in this Agreement have
the following meanings:
(a) "Act" means the Nebraska Limited Liability Company Act, as amended from
time to time, or any corresponding provisions of any succeeding law.
(b) "Adjusted Capital Account Deficit" means, with respect to any Unit
Holder, the deficit balance, if any, in such Unit Holder's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments: (i) crediting to such Capital Account any amounts which such Unit
Holder is deemed to be obligated to restore pursuant to the next to the last
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(ii) debiting to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Regulations. The foregoing definition is intended to comply with the
provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
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(c) "Affiliate" means, with respect to any Person or entity: (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person or entity; (ii) any officer, director, general partner, member or
trustee of any such Person or entity; or (iii) any Person or entity who is an
officer, director, general partner, member or trustee of any Person described in
clauses (i) or (ii) of this sentence. For purposes of this definition, the terms
"controlling," "controlled by" or "under common control with" shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person or entity, whether through the ownership
of voting securities, by contract or otherwise, or the power to elect a majority
of the directors, managers, or persons exercising similar authority with respect
to such Person or entities.
(d) "Agreement" means the Company's Second Amended and Restated Operating
Agreement dated July 18, 2007, as amended from time to time.
(e) "Articles" means the Company's Amended and Restated Articles of
Organization on file with the Nebraska Secretary of State's Office, as amended
from time to time.
(f) "Assignee" means a transferee of Units who is not admitted as a
Substitute Member pursuant to Section 9.10 of this Agreement.
(g) "Board" means collectively the Directors of the Company then serving in
office.
(g) "Capital Account" means the separate capital account maintained for
each Unit Holder in accordance with Section 2.3 of this Agreement.
(h) "Capital Contributions" means, with respect to any Member, the amount
of money (US Dollars), and the initial Gross Asset Value of any assets or
property other than money, contributed by the Member or such Member's
predecessors in interest to the Company, (net of liabilities secured by such
contributed property that the Company is considered to assume or take subject to
under Code Section 752) with respect to the Units held or purchased by such
Member, including additional Capital Contributions.
(i) "Code" means the United States Internal Revenue Code of 1986,
as amended from time to time.
(j) "Company" means NEDAK Ethanol, LLC, a Nebraska limited liability
company.
(k) "Company Minimum Gain" has the meaning given the term "partnership
minimum gain" in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
(l) "Debt" means: (i) any indebtedness for borrowed money or the deferred
purchase price of property as evidenced by notes, bonds or other instruments;
(ii) obligations as lessee under capital leases; (iii) obligations secured by
any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
existing on any asset owned or held by the Company, whether or not the Company
has assumed or become liable for the obligations secured thereby; (iv) any
obligation under any interest rate swap agreement or other derivative; (v)
accounts payable; and (vi) obligations, contingent or otherwise, under direct or
indirect guarantees of indebtedness or obligations of the kinds referred to in
clauses (i), (ii), (iii), (iv) and (v), above. Notwithstanding the foregoing,
however, Debt shall not include obligations in respect of any accounts payable
that are incurred in the ordinary course of the Company's business and are not
delinquent or are being contested in good faith by appropriate proceedings.
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(m) "Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such beginning adjusted tax basis; provided, however, that if the
adjusted basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Directors.
(n) "Director" means any Person who: (i) is elected as a Director pursuant
to Article V of this Agreement or who has otherwise become a Director pursuant
to the terms of this Agreement; and (ii) has not ceased to be a Director
pursuant to the terms of this Agreement. "Directors" mean all such Persons. For
purposes of the Act, the Directors shall be deemed to be the "managers" (as such
term is defined and used in the Act) of the Company.
(o) "Dissolution Event" shall have the meaning set forth in Section 10.1 of
this Agreement.
(p) "Effective Date" means _________________.
(q) "Facilities" means the ethanol and by-product production facilities to
be constructed and operated by the Company in or around Atkinson, Nebraska and
O'Neill, Nebraska, and any other such facilities used by the Company.
(r) "Fiscal Year" means: (i) any twelve-month period commencing on January
1 and ending on December 31; and (ii) the period commencing on the immediately
preceding January 1 and ending on the date on which all Property is distributed
to the Unit Holders pursuant to Article X of this Agreement, or, if the context
requires, any portion of a Fiscal Year for which an allocation of Profits or
Losses or a distribution is to be made.
(s) "GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
(t) "Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows: (i) The
initial Gross Asset Value of any asset contributed by a Member to the Company
shall be the gross fair market value of such asset, as determined by the
Directors; (ii) The Gross Asset Values of all Company assets may, in the
discretion of the Directors, be adjusted to equal their respective gross fair
market values (taking Code Section 7701(g) into account), as determined by the
Directors as of the following times: (A) upon the acquisition of an additional
interest in the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (B) upon the distribution by the Company to a
Member of more than a de minimis amount of Company Property as consideration for
an interest in the Company; and (C) upon the liquidation of the Company within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); (iii) The Gross Asset
Value of any item of Company assets distributed to any Member shall be adjusted
to equal the gross fair market value (taking Code Section 7701(g) into account)
of such asset on the date of distribution as determined by the Directors; and
(iv) The Gross Asset Values of Company assets shall be increased or decreased,
as applicable, to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of
the definition of "Profits" and "Losses" or Section 3.3(g) of this Agreement;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent that an adjustment
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pursuant to subparagraph (ii) is required in connection with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph (iv). If
the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (ii) or (iv) of this paragraph, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset, for purposes of computing Profits and Losses.
(u) "Issuance Items" has the meaning set forth in Section 3.3(h) of this
Agreement.
(v) "Liquidation Period" has the meaning set forth in Section 10.6 of this
Agreement.
(w) "Liquidator" has the meaning set forth in Section 10.8 of this
Agreement.
(x) "Member" means any Person: (i) whose name is set forth as such on
Exhibit "A" attached hereto or as it may be amended from time to time, or who
has become a Member pursuant to the terms of this Agreement; and (ii) who is the
owner of one or more Units and has not ceased to be a Member pursuant to the
terms of this Agreement. "Members" means all such Persons.
(y) "Membership Economic Interest" means collectively, a Member's share of
"Profits" and "Losses," the right to receive distributions of the Company's
assets, and the right to information concerning the business and affairs of the
Company as required by the Act. The Membership Economic Interest of a Member is
quantified by the unit of measurement referred to herein as "Units."
(z) "Membership Interest" means collectively, the Membership Economic
Interest and the Membership Voting Interest.
(aa) "Membership Voting Interest" means collectively, a Member's right to
vote as set forth in this Agreement or as required by the Act.
(bb) "Net Cash Flow" means the gross cash proceeds of the Company less the
portion thereof used to pay or establish reserves for Company expenses, debt
payments, capital improvements, replacements and contingencies, all as
reasonably determined by the Directors, plus any reduction in the amount of
reserves, all as may be reasonably determined by the Directors. "Net Cash Flow"
shall not be reduced by Depreciation, amortization, cost recovery deductions or
similar allowances, but shall be increased by any reductions of reserves
previously established.
(cc) "New Securities" means Units of the Company, and rights, options or
warrants to purchase Units of the Company, and securities of any type whatsoever
that are, or may become, convertible or exchangeable into Units
(dd) "Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
(ee) "Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
(ff) "Officer" has the meaning set forth in Section 5.24 of this Agreement.
(gg) "Permitted Transfer" has the meaning set forth in Section 9.1 of this
Agreement.
(hh) "Person" means any individual, general or limited partnership, joint
venture, limited liability company, corporation, trust, estate, association,
nominee or other entity.
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(ii) "Profits and Losses" mean, for each Fiscal Year, an amount equal to
the Company's taxable income or loss for such Fiscal Year, 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 (without duplication): (i) Any income of the Company that
is exempt from federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of "Profits" and
"Losses" shall be added to such taxable income or loss; (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 Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Profits or Losses pursuant to
this definition of "Profits" and "Losses" shall be subtracted from such taxable
income or loss; (iii) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross
Asset Value above, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the Gross Asset Value of the asset) or an item
of loss (if the adjustment decreases the Gross Asset Value of the asset) from
the disposition of such asset and shall be taken into account for purposes of
computing Profits or Losses; (iv) Gain or loss resulting from any disposition of
Property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the Property
disposed of, notwithstanding that the adjusted tax basis of such Property
differs from its Gross Asset Value; (v) In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account Depreciation for
such Fiscal Year, computed in accordance with the definition of Depreciation;
(vi) To the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) is required, pursuant to Regulations Section
1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Unit Holder's
interest in the Company, the amount of such adjustment 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) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses; and
(vii) Notwithstanding any other provision of this definition, any items which
are specially allocated pursuant to Sections 3.3, 3.4 and 3.5 of this Agreement
shall not be taken into account in computing Profits or Losses. The amounts of
the items of Company income, gain, loss or deduction available to be specially
allocated pursuant to Sections 3.3, 3.4 and 3.5 of this Agreement shall be
determined by applying rules analogous to those set forth in subparagraphs (i)
through (vi) above.
(jj) "Property" means all real and personal property owned or acquired by
the Company (including cash), and any improvements thereto, and shall include
both tangible and intangible property.
(kk) "Regulations" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations are amended from
time to time.
(ll) "Regulatory Allocations" has the meaning set forth in Section 3.4 of
this Agreement.
(mm) "Securities Act" means the Securities Act of 1933, as amended, or any
applicable federal or state laws.
(nn) "Tax Matters Member" has the meaning set forth in Section 7.4 of this
Agreement.
(oo) "Transfer" means, as a noun, any voluntary or involuntary transfer,
sale, pledge or hypothecation or other disposition and, as a verb, to
voluntarily or involuntarily transfer, give, sell, exchange, assign, pledge,
bequest, hypothecate or otherwise dispose of.
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(pp) "Transfer Restrictions" means the restrictions on Transfer of Units in
Article IX and the Unit Transfer Policy attached as Exhibit "C."
(qq) "Unit" means an ownership interest in the Company issued in
consideration of a Capital Contribution made as provided in Article II of this
Agreement, issued in the form of Units in such classes as provided for in this
Agreement.
(rr) "Unit Holder" means any Person who is the owner of one or more Units.
"Unit Holders" means all such Persons.
(ss) "Unit Holder Nonrecourse Debt" has the same meaning as the term
"partner nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.
(tt) "Unit Holder Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Unit Holder Nonrecourse Debt, equal to the Company Minimum Gain
that would result if such Unit Holder Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Regulations.
(uu) "Unit Holder Nonrecourse Deductions" has the same meaning as the term
"partner nonrecourse deductions" in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of
the Regulations.
(vv) "Unit Holder Register" means the register maintained by the Company at
its principal office or by the Company's duly appointed agent, setting forth the
name, address and Capital Contributions of each Unit Holder (or such Unit
Holder's predecessors in interest), and the number of Units, certificate
number(s) and date of issuance of Units issued to each Unit Holder, which
register shall be modified from time to time as additional Units are issued and
as Units are Transferred pursuant to this Agreement.
(ww) "Unit Transfer Policy" is the policy governing the Transfer of Units
and attached as Exhibit "C."
ARTICLE II. CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
2.1 Initial Capital Contributions. The name, address, Capital Contribution
and Units quantifying the Membership Interest of each of the Members are set
forth on Exhibit "A" attached hereto, and shall also be set forth on the Unit
Holder Register.
2.2 Additional Capital Contributions; Additional Units. No Unit Holder
shall be obligated to make any additional Capital Contributions to the Company
or to pay any assessment to the Company, other than any unpaid amounts on such
Unit Holder's original Capital Contributions, and no Units shall be subject to
any calls, requests or demands for capital. Subject to Section 5.6, additional
Units may be issued in consideration of Capital Contributions as agreed to
between the Directors and the Persons acquiring such Units.
2.3 Capital Accounts. A Capital Account shall be maintained for each Unit
Holder in accordance with the following provisions:
(a) To each Unit Holder's Capital Account there shall be credited: (i) such
Unit Holder's Capital Contributions; (ii) such Unit Holder's distributive share
of Profits and any items in the nature of income or gain which are specially
allocated pursuant to Sections 3.3, 3.4 and 3.5 of this Agreement; and
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(iii) the amount of any Company liabilities assumed by such Unit Holder or which
are secured by any Property distributed to such Unit Holder;
(b) To each Unit Holder's Capital Account there shall be debited: (i) the
amount of money and the Gross Asset Value of any Property distributed to such
Unit Holder pursuant to any provision of this Agreement; (ii) such Unit Holder's
distributive share of Losses and any items in the nature of expenses or losses
which are specially allocated pursuant to Sections 3.3, 3.4 and 3.5 of this
Agreement; and (iii) the amount of any liabilities of such Unit Holder assumed
by the Company or which are secured by any Property contributed by such Unit
Holder to the Company;
(c) In the event Units are Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the Transferred Units; and
(d) In determining the amount of any liability for purposes of
subparagraphs (a) and (b) above, Code Section 752(c) and any other applicable
provisions of the Code and Regulations shall be taken into account.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent therewith. In the event the Board determine that it is prudent to
modify the manner in which Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Company or any Unit Holders), are computed in order to comply with such
Regulations, the Board may make such modification, provided that it is not
likely to have a material effect on the amounts distributed to any Person
pursuant to Article X of this Agreement upon the dissolution of the Company. The
Board also shall make any appropriate modifications in the event unanticipated
events might otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b).
ARTICLE III. ALLOCATIONS
3.1 Profits. After giving effect to the special allocations in Sections 3.3, 3.4
and 3.5 of this Agreement, Profits for any Fiscal Year shall be allocated among
the Unit Holders in proportion to Units held.
3.2 Losses. After giving effect to the special allocations in Sections 3.3, 3.4
and 3.5 of this Agreement, Losses for any Fiscal Year shall be allocated among
the Unit Holders in proportion to Units held.
3.3 Special Allocations. The following special allocations shall be made in the
following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article III, if there is a net decrease in Company Minimum Gain during any
Fiscal Year, each Unit Holder shall be specially allocated items of Company
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount equal to such Unit Holder's share of the net decrease in
Company Minimum Gain, determined in accordance with Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Unit
Holder pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations.
This Section 3.3(a) 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.
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(b) Unit Holder Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of
this Article III, if there is a net decrease in Unit Holder Nonrecourse Debt
Minimum Gain attributable to a Unit Holder Nonrecourse Debt during any Fiscal
Year, each Unit Holder who has a share of the Unit Holder Nonrecourse Debt
Minimum Gain attributable to such Unit Holder 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 Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Unit Holder's
share of the net decrease in Unit Holder Nonrecourse Debt Minimum Gain,
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 Unit Holder 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 3.3(b) 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.
(c) Qualified Income Offset. In the event any Member unexpectedly receives
any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit as soon as
practicable, provided that an allocation pursuant to this Section 3.3(c) shall
be made only if and to the extent that the Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article III
have been tentatively made as if this Section 3.3(c) were not in the Agreement.
(d) Gross Income Allocation. In the event any Member has a deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of: (i) the
amount such Member is obligated to restore pursuant to any provision of this
Agreement; and (ii) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations, then in such circumstance each such Member
shall be specially allocated items of Company income and gain in the amount of
such excess as quickly as possible, provided that an allocation pursuant to this
Section 3.3(d) shall be made only if and to the extent that such Member would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Article III have been made as if Sections 3.3(c) and 3.3(d)
were not in this Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or
other period shall be specially allocated among the Members in proportion to
Units held.
(f) Unit Holder Nonrecourse Deductions. Any Unit Holder Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Unit Holder
who bears the economic risk of loss with respect to the Unit Holder Nonrecourse
Debt to which such Unit Holder Nonrecourse Deductions are attributable in
accordance with Regulations Section 1.704-2(i)(1).
(g) 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
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 Unit Holder in complete
liquidation of such Unit Holder's interest in the Company, 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
Unit Holders in accordance with their interests in the Company in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to
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the Unit Holder to whom such distribution was made in the event Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies.
(h) Allocations Relating to Taxable Issuance of Company Units. Any income,
gain, loss or deduction realized as a direct or indirect result of the issuance
of Units by the Company to a Unit Holder (the "Issuance Items") shall be
allocated among the Unit Holders so that, to the extent possible, the net amount
of such Issuance Items, together with all other allocations under this Agreement
to each Unit Holder shall be equal to the net amount that would have been
allocated to each such Unit Holder if the Issuance Items had not been realized.
3.4 Regulatory Allocations. The allocations set forth in Sections 3.3(a),
3.3(b), 3.3(c), 3.3(d), 3.3(e), 3.3(f), 3.3(g) and 3.5 (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Regulations. It is the intent of the Unit Holders that, to the extent possible,
all Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Company income, gain,
loss or deduction pursuant to this Section 3.4. Therefore, notwithstanding any
other provision of this Article III (other than the Regulatory Allocations), the
Board shall make such offsetting special allocations of Company income, gain,
loss or deduction in whatever manner they determine appropriate so that, after
such offsetting allocations are made, each Unit Holder's Capital Account balance
is, to the extent possible, equal to the Capital Account balance such Unit
Holder would have had if the Regulatory Allocations were not part of the
Agreement and all Company items were allocated pursuant to Sections 3.1, 3.2,
and 3.3(h).
3.5 Loss Limitation. Losses allocated pursuant to Section 3.2 of this Agreement
shall not exceed the maximum amount of Losses that can be allocated without
causing any Unit Holder to have an Adjusted Capital Account Deficit at the end
of any Fiscal Year. In the event some but not all of the Unit Holders would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 3.2 of this Agreement, the limitation set forth in this
Section 3.5 shall be applied on a Unit Holder by Unit Holder basis and Losses
not allocable to any Unit Holder as a result of such limitation shall be
allocated to the other Unit Holders in accordance with the positive balances in
such Unit Holder's Capital Accounts so as to allocate the maximum permissible
Losses to each Unit Holder under Section 1.704-1(b)(2)(ii)(d) of the
Regulations.
3.6 Other Allocation Rules.
(a) For purposes of determining Profits, Losses and any other items
allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Board using
any permissible method under Code Section 706 and the Regulations thereunder.
(b) The Unit Holders are aware of the income tax consequences of the
allocations made by this Article III and hereby agree to be bound by the
provisions of this Article III in reporting their shares of Company income and
loss for income tax purposes.
(c) Solely for purposes of determining a Unit Holder's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning of
Regulations Section 1.752-3(a)(3), the Unit Holders' aggregate interests in
Company Profits shall be deemed to be as provided in the Capital Accounts. To
the extent permitted by Section 1.704-2(h)(3) of the Regulations, the Board
shall endeavor to treat distributions of Net Cash Flow as having been made from
the proceeds of a Nonrecourse Liability or a Unit Holder Nonrecourse Debt only
to the extent that such distributions would cause or increase an Adjusted
Capital Account Deficit for any Unit Holder.
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(d) Profits and Losses to the Unit Holders shall be allocated among the
Unit Holders in the ratio which each Unit Holder's Units bears to the total
number of Units issued and outstanding.
3.7 Tax Allocations; Code Section 704(c). In accordance with Code Section 704(c)
and the Regulations thereunder, income, gain, loss, and deduction with respect
to any Property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Unit Holders 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 Gross Asset Value. In the event the Gross
Asset Value of any Company asset is adjusted pursuant to subparagraph (ii) of
the definition of Gross Asset Value in Section 1.10(t) of this Agreement,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder. Any
elections or other decisions relating to such allocations shall be made by the
Board in any manner that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 3.7 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be taken into
account in computing, any Unit Holder's Capital Account or share of Profits,
Losses, other items or distributions pursuant to any provision of this
Agreement.
3.8 Tax Credit Allocations. All income tax credits with respect to the Company's
property or operations shall be allocated among the Members in accordance with
their respective Membership Interests for the Fiscal Year during which the
expenditure, production, sale or other event giving rise to such credits occurs.
This Section 3.8 is intended to comply with the applicable tax credit allocation
principles of Regulations Section 1.704-1(b)(4)(ii) and shall be interpreted
consistently therewith.
ARTICLE IV. DISTRIBUTIONS
4.1 Net Cash Flow. Subject to the terms and conditions of any applicable loan
covenants and restrictions, the Board, in their sole discretion, shall make
distributions of Net Cash Flow, if any, to the Unit Holders in proportion to
Units held. In determining Net Cash Flow, the Board shall endeavor to provide
for cash distributions at such times and in such amounts as will permit the Unit
Holders to make timely payment of income taxes.
4.2 Amounts Withheld. All amounts withheld pursuant to the Code or any provision
of any state, local or foreign tax law with respect to any payment, distribution
or allocation to the Company or the Unit Holders shall be treated as amounts
paid or distributed, as the case may be, to the Unit Holders with respect to
which such amount was withheld pursuant to this Section 4.2 for all purposes
under this Agreement. The Company is authorized to withhold from payments and
distributions, or with respect to allocations, to the Unit Holders and to pay
over to any federal, state, local or foreign government, any amounts required to
be so withheld, and shall allocate any such amounts to the Unit Holders with
respect to which such amount was withheld.
4.3 Limitations on Distributions. The Company shall make no distributions to the
Unit Holders except as provided in this Article IV and in Article X of this
Agreement. Notwithstanding any other provision, no distribution shall be made if
not permitted to be made under the Act.
ARTICLE V. MANAGEMENT
5.1 Directors. Except as otherwise provided in this Agreement or required by
law, the Board shall direct the business and affairs and exercise all of the
powers of the Company, and shall adopt such policies, rules, regulations and
actions as they deem advisable. Subject to Section 5.6 of this Agreement
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and any other express provisions of this Agreement to the contrary, the business
and affairs of the Company shall be managed by and under the direction of the
Directors and not by the Members.
5.2 Number of Directors. The number of Directors shall be not less than twelve
(12) nor more than eighteen (18) Members, the number of which shall be set by
resolution of the Board, and elected by the Members in accordance with Section
5.3.
5.3 Election of Directors.
(a) Members shall have the right to elect Directors. At each election for
Directors, every Member entitled to vote at such election shall have the right
to vote in person or by proxy, the number of Units owned by him or her for as
many persons as there are Directors to be elected and for whose election he or
she has a right to vote, or to cumulate his or her votes by giving one candidate
as many votes as the number of such Directors to be elected multiplied by the
number of his or her Units, or by distributing such votes on the same principle
among any number of candidates. Five directors shall be elected for a term
expiring in 2007; four directors shall be elected for a term expiring in 2008
and five Directors shall be elected for a term expiring in 2009. Beginning in
2007, Directors shall be elected to fill the terms then expiring for a term of
three (3) years and shall serve until his or her successor is duly or elected
or, if earlier, until such Director's death, resignation or removal. In the
event the size of the Board is modified pursuant to Section 5.2, it is the
intent that the Board is authorized to address the transition to such new number
of directors and shall take reasonable efforts to maintain proportionately
staggered terms for the Directors thereafter.
(b) Nominees for a Director position up for election shall be named by the
then-current Directors or by a nominating committee established by the
Directors. Nominations may also be made by any Member entitled to vote in the
election of Directors. Any Member that intends to nominate a Person for election
as a Director may do so only if written notice of such Member's intent to make
such nomination is given one hundred twenty (120) calendar days prior to the one
year anniversary of the date on which the Company delivered the prior year's
proxy statement or notice of annual meeting to such Members. Each such notice
shall set forth: (i) the name and address of the Member who intends to make the
nomination; (ii) a representation that the Member is a holder of record of Units
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to nominate the Person specified in the notice; (iii) the name, age,
address and principal occupation/employment of each nominee; (iv) a description
of all arrangements or understandings between the Member and each nominee and
any other Person(s) pursuant to which such nominations are to be made; (v) such
other information regarding each nominee as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission; (vi) the consent of each nominee to serve as a Director if
so elected; and (vii) a nominating petition signed and dated by the holders of
at least five percent (5%) of the then outstanding Units and clearly setting
forth the proposed nominee as a candidate for the Director's seat to be filled.
The Company may require any proposed nominee to furnish such other information
as may reasonably be required by the Company to determine the eligibility of
such proposed nominee to serve as a Director. The presiding Officer of the
meeting may, if the facts warrant, determine that a nomination was not made in
accordance with the foregoing procedures, and if so determined, the defective
nomination shall be disregarded.
5.4 Authority of Directors. Subject to the limitations and restrictions set
forth in this Agreement and the Act, the Board shall direct the management of
the business and affairs of the Company and shall have all of the rights and
powers which may be possessed by a "manager" under the Act including, without
limitation, the right and power to do or perform, and the further right and
power by resolution to delegate to the Officers or such other Persons as the
Board deem appropriate, the right and power to do or perform, the following:
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(a) Conduct the business and carry on the operations of the Company, and
have and exercise the powers granted by the Act in any state, territory,
district or possession of the United States, or in any foreign country, which
may be necessary or convenient to effect any or all of the purposes for which
the Company is organized;
(b) Acquire by purchase, lease or otherwise any real or personal property
which may be necessary, convenient, or incidental to the accomplishment of the
purposes of the Company;
(c) Operate, maintain, finance, improve, construct, own, operate, sell,
convey, assign, mortgage and lease any real estate and any personal property
necessary, convenient, or incidental to the accomplishment of the purposes of
the Company;
(d) Execute any and all agreements, contracts, documents, certifications
and instruments necessary or convenient in connection with the management,
maintenance and operation of the business and affairs of the Company, including
executing amendments to this Agreement and the Articles in accordance with the
terms of this Agreement, both as Directors and where permitted, as
attorney-in-fact for the Members pursuant to any power of attorney granted by
the Members to the Directors;
(e) Borrow money and issue evidences of indebtedness necessary, convenient,
or incidental to the accomplishment of the purposes of the Company, and secure
the same by mortgage, pledge or other lien on any Company assets;
(f) Execute, in furtherance of any or all of the purposes of the Company,
any deed, lease, mortgage, deed of trust, mortgage note, promissory note, xxxx
of sale, contract or other instrument purporting to convey or encumber any or
all of the Company assets;
(g) Prepay in whole or in part, refinance, increase, modify or extend any
liabilities affecting the assets of the Company and in connection therewith,
execute any extensions or renewals of encumbrances on any or all of such assets;
(h) Care for and distribute funds to the Members by way of cash income,
return of capital or otherwise, all in accordance with the provisions of this
Agreement, and perform all matters in furtherance of the objectives of the
Company and this Agreement;
(i) Contract on behalf of the Company for the employment and services of
employees and independent contractors, and delegate to such Persons the duty to
manage or supervise any of the assets or operations of the Company;
(j) Engage in any kind of activity and perform and carry out contracts of
any kind necessary or incidental to, or in connection with, the accomplishment
of the purposes of the Company, as may be lawfully carried on or performed by a
limited liability company under the laws of each state in which the Company is
then formed or qualified;
(k) Take, or refrain from taking, all actions, not expressly proscribed or
limited by this Agreement or the Articles, as may be necessary or appropriate to
accomplish the purposes of the Company;
(l) Institute, prosecute, defend, settle, compromise and dismiss lawsuits
or other judicial or administrative proceedings brought on or in behalf of, or
against, the Company, the Members or the Directors or Officers in connection
with activities arising out of, connected with, or incidental to this Agreement,
and engage counsel or others in connection therewith;
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(m) Purchase, take, receive, subscribe for or otherwise acquire, own, hold,
vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and
otherwise use and deal in and with, shares or other interests in or obligations
of domestic or foreign corporations, associations, general or limited
partnerships, other limited liability companies, or individuals or direct or
indirect obligations of the United States or of any government, state,
territory, government district or municipality or of any instrumentality of any
of them;
(n) Agree with any Person as to the form and other terms and conditions of
such Person's Capital Contribution to the Company and cause the Company to issue
Membership Interests and Units in consideration for such Capital Contribution as
provided in Section 6.1(d); and
(o) Indemnify Members, Directors or Officers, or former Members, Directors
or Officers, and to make any other indemnification that is authorized by this
Agreement in accordance with, and to the fullest extent permitted by, the Act.
5.5 Director as Agent. Notwithstanding the power and authority of the Board to
manage the business and affairs of the Company, no Director shall have authority
to act as agent for the Company for the purposes of its business (including the
execution of any instrument on behalf of the Company) unless the Board has
authorized the Director to take such action.
5.6 Restrictions on Authority of Directors.
(a) Notwithstanding any provision in this Agreement to the contrary, the
Directors shall not have authority to, and they covenant and agree that they
shall not, do any of the following acts without the unanimous consent of the
Members:
(i) Cause or permit the Company to engage in any activity that is not
consistent with the purposes of the Company as set forth in
Section 1.3 of this Agreement;
(ii) Knowingly engage in any act in contravention of this Agreement or
which would make it impossible to carry on the ordinary business
of the Company, except as otherwise provided in this Agreement;
or
(iii) Possess Company Property, or assign rights in specific Company
Property, for other than a Company purpose.
(b) The Directors shall not have authority to, and they covenant and agree
that they shall not cause the Company to, without the consent of the Members
holding sixty-six and two-thirds percent (66 2/3%) of the Membership Voting
Interests:
(i) Merge, consolidate, exchange, sell or otherwise dispose of all or
substantially all of the Property;
(ii) Make an election for the Company to be classified for income tax
purposes as an association taxable as a corporation;
(iii) Merge or consolidate the Company with any other entity; or
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(iv) Take any action to cause a Dissolution Event as defined in
Section 10.1, to the extent permitted by the Act (other than
seeking approval of Members as provided in this Section).
The actions specified herein as requiring the consent of the Members shall be in
addition to any actions by the Board that are specified in the Act as requiring
the consent or approval of the Members. Unless otherwise required by this
Agreement or the Act, any such required consent or approval may be given by a
vote of a majority of the Membership Voting Interests.
5.7 Meetings. A regular meeting of the Board shall be held, without other notice
than this Section, immediately after, and at the same place as, the annual
meeting of the Members. Additionally, the Board may, by resolution, prescribe
the time and place for holding regular meetings and may provide that such
resolution constitutes notice thereof. If the Board does not prescribe the time
and place for the holding of regular meetings, such regular meetings shall be
held at the time and place specified in the notice of each such regular meeting.
Unless otherwise prescribed by statute, special meetings may be called by, or at
the request of, the Chairman or any two (2) or more Directors. The Board may
designate any location as the place of any regular or special meeting. If no
designation is made, the place of meeting shall be the principal office of the
Company.
5.8 Notice. Notice shall be given to each Director with respect to any special
meeting of the Board, stating the date, time and place of the meeting. Such
notice shall be given at least one (1) day prior thereto and shall be in
writing, unless oral notice is reasonable under the circumstances. If mailed,
such notice shall be deemed to be delivered on the earlier of five (5) days
after deposit in the U.S. mail addressed to the Director's address as shown on
the Company's records with postage prepaid, or upon receipt. Any Director may
waive notice of any meeting. Except as provided in the next sentence, the waiver
must be in writing, signed by the Director entitled to notice, and filed with
the minutes relating to the action taken. A Director's attendance at a meeting
shall constitute a waiver of notice of such meeting, except where such Director
attends the meeting for the express purpose of objecting to the transaction of
any business because the meeting was not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in the notice or waiver of notice of such
meeting.
5.9 Conduct of Meeting. All Directors, to the extent possible, shall personally
attend all Board meetings. However, any Director may participate in any regular
or special meeting by any means of communication by which all Directors
participating may simultaneously hear each other during the meeting. A Director
participating in a meeting by this means is deemed to be present in person.
5.10 Quorum. A majority of the duly elected and qualified Directors shall
constitute a quorum for the transaction of business at a meeting of the Board.
If less than a quorum is represented at a meeting, the Directors represented may
adjourn the meeting and reschedule it for a later date without further notice.
At such adjourned and rescheduled meeting at which a quorum is present or
represented, any business may be transacted which might have been transacted at
the original meeting. Directors present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
Directors to leave less than a quorum.
5.11 Manner of Acting; Informal Action. Except as otherwise provided in this
Agreement, the act of a majority of the Directors at a meeting at which a quorum
is present shall be the act of the Board. Unless otherwise provided by law, any
action required or permitted to be taken at a meeting of the Board may be taken
without a meeting if a consent in writing setting forth the action so taken is
signed by all Directors entitled to vote with respect the subject matter
thereof.
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5.12 Presumption of Assent. A Director present at a meeting shall be presumed to
have assented to action taken, unless the dissent of such Director is entered in
the minutes of the meeting or unless such Director files a written dissent to
such action with the other Directors before the adjournment thereof or forwards
such dissent by mail to the other Directors immediately after the adjournment
thereof. Such right to dissent shall not apply to a Director who voted in favor
of an action.
5.13 Removal of Directors. Members may remove a Director, with or without cause,
at a meeting called for that purpose, if notice has been given that a purpose of
the meeting is such removal and an affirmative vote of Members holding eighty
percent (80%) or more of the Member Voting Interests. Directors may remove a
Director, with or without cause, at a meeting called for that purpose, if notice
has been given that a purpose of the meeting is such removal and sixty-six and
two-thirds percent (66 2/3 %) or more affirmative vote of the Directors.
5.14 Vacancies. Any vacancy occurring in the Directors may be filled by the
affirmative vote of a majority of the remaining Directors. A Director elected to
fill a vacancy shall be elected for the unexpired term of such Director's
predecessor in office.
5.15 Compensation. The Board, by a two-thirds (2/3) affirmative vote of the
Directors, shall have authority to establish reasonable compensation of all
Directors for services to the Company as Directors, officers or otherwise, and
to provide for reimbursement to Directors of their reasonable expenses.
5.16 Committees; Authority. The Board may create such committees, and appoint
such Directors to serve on them, as the Board deems appropriate. Each committee
must have two (2) or more Directors, who serve at the pleasure of the Board. The
creation of a committee, and the appointment of Directors to serve on it, must
be approved by a majority of the Directors. The procedural requirements for
Board meetings under this Article V shall also apply to committee meetings.
Committees of the Board may exercise only those aspects of the Board's authority
which are expressly conferred by the Board by express resolution.
Notwithstanding the foregoing, however, a committee may not, under any
circumstances: (i) apportion or authorize distributions; (ii) approve or propose
any action for which the Act requires Member approval; (iii) elect Officers;
(iv) fill vacancies of Directors or on any of its committees; (v) adopt, amend,
or repeal the Articles or this Agreement; (vi) approve a plan of merger; (vii)
authorize or approve the reacquisition of Units, except according to a formula
or method prescribed by the Directors; or (ix) authorize or approve the issuance
or sale or contract for sale of Units or determine the designation and relative
rights, preferences, and limitations of a class or series of Units.
5.17 Voting; Potential Financial Interest. Unless otherwise provided by the
Board, no Director shall be disqualified from voting on any matter solely by
reason of such Director's (or his/her Affiliate's) potential financial interest
in the outcome of such vote, provided that the nature of such potential
financial interest was reasonably disclosed at the time of such vote.
5.18 Duties and Obligations of Directors. The Board shall take all actions which
may be necessary or appropriate: (i) for the continuation of the Company's valid
existence as a limited liability company under the laws of the State of Nebraska
and each other jurisdiction in which such existence is necessary to protect the
limited liability of Members or to enable the Company to conduct the business in
which it is engaged; and (ii) for the accomplishment of the Company's purposes,
including the acquisition, development, maintenance, preservation, and operation
of Company Property in accordance with the provisions of this Agreement and
applicable laws and regulations. Each Director shall have the duty to discharge
the foregoing duties in good faith and with the care an ordinarily prudent
person in a like position would exercise under similar circumstances. The
Directors shall be under no other fiduciary duty to the Company or the Members
to conduct the affairs of the Company in a particular manner.
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5.19 Chairman and Vice Chairman. Unless provided otherwise by a resolution
adopted by the Board, the Chairman shall be elected by the Board to serve as an
Officer of the Board and preside at meetings of the Members and the Board; shall
see that all orders and resolutions of the Board are carried into effect; may
maintain records of and certify proceedings of the Board and Members; and shall
perform such other duties as may from time to time be prescribed by the Board.
The Vice Chairman shall, in the absence or disability of the Chairman, perform
the duties and exercise the powers of the Chairman and shall perform such other
duties as the Board or the Chairman may from time to time prescribe. The Board
may designate more than one Vice Chairmen, in which case the Vice Chairmen shall
be designated by the Board so as to denote which is most senior in office. Each
Chairman or Vice Chairman shall be chosen from individuals serving as Directors.
5.20 President. Unless provided otherwise by a resolution adopted by the Board,
the President shall perform such duties as the Board may from time to time
prescribe, including without limitation, the overall management of the
day-to-day operations of the Company.
5.21 Chief Financial Officer. Unless provided otherwise by a resolution adopted
by the Board, the Board shall appoint a Chief Financial Officer of the Company
who shall be the Treasurer of the Company or such other person as appointed by
the Board from time to time and shall keep accurate financial records for the
Company; shall deposit all monies, drafts, and checks in the name of and to the
credit of the Company in such banks and depositories as the Board shall
designate from time to time; shall endorse for deposit all notes, checks, and
drafts received by the Company as ordered by the Board, making proper vouchers
therefore; shall disburse Company funds and issue checks and drafts in the name
of the Company as ordered by the Board, shall render to the President and the
Board, whenever requested, an account of all such transactions as Chief
Financial Officer and of the financial condition of the Company, and shall
perform such other duties as may be prescribed by the Board or the President
from time to time.
5.22 Secretary; Assistant Secretary. The Board shall appoint a Secretary. The
Secretary shall attend all meetings of the Board and of the Members and shall
maintain records of, and whenever necessary, certify all proceedings of the
Board and of the Members. The Secretary shall keep the required records of the
Company, when so directed by the Board or other person(s) authorized to call
such meetings, shall give or cause to be given notice of meetings of the Members
and of meetings of the Board, and shall also perform such other duties and have
such other powers as the Chairman or the Board may prescribe from time to time.
An Assistant Secretary, if any, shall perform the duties of the Secretary during
the absence or disability of the Secretary.
5.23 Vice President. The Board may appoint one or more Vice Presidents having
duties as the Board may provide. If more than one, the Directors shall designate
which is most senior. The most senior Vice President shall perform the duties of
the President in the absence of the President.
5.24 Delegation. Unless prohibited by a resolution of the Board, any Officer
appointed by the Board (individually, an "Officer" and collectively, "Officers")
may delegate in writing some or all of the duties and powers of such Officer's
management position to other Persons. An Officer who delegates the duties or
powers of an office remains subject to the standard of conduct for such Officer
as set forth in the Act with respect to the discharge of all duties and powers
so delegated.
5.25 Execution of Instruments. All deeds, mortgages, bonds, checks, contracts
and other instruments pertaining to the business and affairs of the Company
shall be signed on behalf of the Company by (i) the Chairman; or (ii) the
President; or (iii) by such other person or persons as may be designated from
time to time by the Board.
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5.26 Limitation of Liability; Indemnification. To the maximum extent permitted
under the Act and other applicable law, no Member, Director or Officer shall be
personally liable for any debt, obligation or liability of the Company merely by
reason of being a Member, Director or Officer. Furthermore, to the maximum
extent permitted under the Act, the liability of Directors and Officers shall be
eliminated, and no Director or Officer shall be personally liable to the Company
or its Members for monetary damages for, any action taken, or any failure to
take action, as a Director or Officer, except for liability for any of the
following, to the extent determined by final adjudication on the merits by a
court of competent jurisdiction:
a. The amount of a financial benefit received by the Director or
Officer to which the Director or Officer is not entitled;
b. An intentional infliction of harm on the Company or its Members;
c. An intentional violation of criminal law.
To the maximum extent permitted under the Act and other applicable law, the
Company, the Liquidator, its receiver, or its trustee (in the case of its
receiver or trustee, to the extent of Company Property) shall indemnify, save
and hold harmless, and pay all judgments and claims against each Director or
Officer relating to any liability or damage incurred by reason of any act
performed or omitted to be performed by such Director or Officer, in connection
with the business of the Company, including reasonable attorneys' fees incurred
by such Director in connection with the defense of any action based on any such
act or omission, which attorneys' fees may be paid as incurred, including all
such liabilities under federal and state securities laws as permitted by law. To
the maximum extent permitted under the Act and other applicable law, in the
event of any action by a Unit Holder against any Director or Officer, including
a derivative suit, the Company shall indemnify, save and hold harmless, and pay
all costs, liabilities, damages and expenses of such Director or Officer,
including reasonable attorneys' fees incurred in the defense of such action.
Notwithstanding the foregoing provisions, no Director or Officer shall be
indemnified by the Company to the extent prohibited or limited by the Act. The
Company may purchase and maintain insurance on behalf of any Director or Officer
in his or her official capacity against any liability described in this Section,
whether or not the Company would otherwise be required to indemnify such
Director or Officer against such liability.
ARTICLE VI. MEMBERSHIP UNITS; MEMBERS
6.1 Membership Units. The authorized capital of the Company shall consist solely
of Units, having the rights, powers and preferences herein described:
(a) The Company may issue Units in such amounts, at such times, to such
Persons and on such other terms and conditions as the Board may determine.
Ownership of one or more Units shall entitle a Member to the Membership Voting
Interest, Membership Economic Interest and other rights and obligation expressly
set forth in this Agreement.
(b) Additional and different classes of Membership Interests represented by
different Units may be created and issued to new or existing Members on such
terms and conditions as the Directors may determine. Such additional and
different classes may have different rights, powers and preferences (including,
without limitation, voting rights and distribution preferences), which may be
superior to those of existing Members. In the event of creation of additional
Membership Interests, Exhibit A shall be updated as necessary by the Board to
reflect such Membership Interests and the Board shall amend this Agreement, and
the Members hereby consent to the amendment hereof, to reflect (a) the
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sale of additional Membership Interests with such terms as the Board shall deem
appropriate, (b) the admission of additional Members. Except as expressly set
forth in this Agreement, Members shall have no preemptive rights to acquire
additional or newly created Units.
(c) No Member together with its Affiliates shall own in excess of forty
percent (40%) of the Units of the Company.
6.2 Certificates; Surrender for Transfer. Certificates representing Units shall
be in such form as shall be determined by the Board, in its discretion. If a
certificate is lost, destroyed or mutilated, a new one may be issued upon such
terms and indemnity to the Company as the Board may prescribe. No new
certificate shall be issued until the former certificate for a like number of
Units has been surrendered and canceled.
6.3 Members. Each Person who desires to become a Member must complete and
execute a signature page to this Agreement in the form of Exhibit "B" attached
hereto and such other documents as may be required by the Board. Membership
Interests and Units of the Members shall be set forth on Exhibit "A" to this
Agreement, as amended from time to time.
6.4 Additional Members. Subject to the provisions of 9.10, no Person shall
become a Member without the approval of the Board. The Board may refuse to admit
any Person as a Member in their sole discretion. Any such admission must comply
with the requirements described in this Agreement and will be effective only
after such Person has executed and delivered to the Company such documentation
as determined by the Directors to be necessary and appropriate to effect such
admission. All Members acknowledge that the admission of additional Members may
result in a dilution of a Member's Membership Interest. Prior to admission as a
Member, a prospective Member shall agree in writing to be bound by this
Agreement and shall execute and deliver to the Company an Addendum to this
Agreement in the form of Exhibit "B" attached hereto. Upon the execution of such
Addendum, such additional Member shall be deemed to be a party to this Agreement
as if such additional Member had executed this Agreement on the original date
hereof, and shall be bound by all of the provisions set forth herein.
6.5 Members' Voting Rights. Each Member holding Units shall be entitled to one
(1) vote for each Unit registered in the name of such Member (as shown in the
Unit Holder Register) as to any matter for which a Member holding Units is
entitled to vote under this Agreement or the Act. Unless a matter is expressly
reserved in this Agreement for the vote or approval of a particular class of
Units, each Member holding Units (regardless of class) shall be entitled to vote
thereon, with each Member entitled to one (1) vote for each Unit registered in
the name of such Member (as shown in the Unit Holder Register. Members shall
have cumulative voting rights for the election of Directors as described in
Section 5.3. Except as otherwise expressly provided for in this Agreement,
Members shall not have any right or power to take part in the management or
control of the Company or its business and affairs or to act for or bind the
Company in any way.
6.6 Member Meetings. Meetings of the Members shall be called by the Board, and
shall be held at the principal office of the Company or at such other place as
shall be designated by the Board. Members representing an aggregate of not less
than thirty percent (30%) of the Membership Voting Interests may also in writing
demand that the Board call a meeting of the Members. Regular meetings of the
Members shall be held not less than once per Fiscal Year.
6.7 Place of Meeting. The Board, or in the absence of action by the Board, the
Chairman, may designate any place as the place for any meeting of the Members,
unless by written consents, a majority of all Members entitled to vote at the
meeting designate a different place for the holding of such meeting.
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If no designation is made by the Board, the Chairman or by unanimous action of
the Members, the place of meetings shall be at the principal office of the
Company.
6.8 Conduct of Meetings. Subject to the discretion of the Board, the Members may
participate in any Member meeting by means of telephone conference or similar
means of communication by which all participants in the meeting can hear and be
heard by all other participants.
6.9 Notice. Written notice stating the place and time of any annual or special
Member meeting shall be delivered or mailed not less than five (5) nor more than
sixty (60) days prior to the meeting date, to each Member of record entitled to
vote at such meeting as of the close of business on the day before said notice
is delivered or mailed. Such notices shall be deemed to be effective upon the
earlier of: (i) deposit postage-prepaid in the U.S. mail, addressed to the
Member at the Member's address as it appears on the Unit Holder Register, or
such other address as may have been provided in writing to the Company by a
Member; (ii) the date shown on the return receipt if sent by registered or
certified mail, return receipt requested; or (iii) actual receipt.
6.10 Contents of Notice. The notice of each Member meeting shall include a
description of the purpose(s) for which the meeting is called. If a purpose of
any Member meeting is to consider: (i) a proposed amendment to or restatement of
the Articles or this Agreement requiring Member approval; (ii) a plan of merger
or Unit exchange; (iii) the sale, lease, exchange or other disposition of all,
or substantially all of the Company's Property; (iv) the dissolution of the
Company; or (v) removal of a Director, then the notice must so state and must be
accompanied, as applicable, by a copy or summary of the (1) amendment(s) to the
Articles or Operating Agreement, (2) plan of merger or Unit exchange, (3)
documents relating to the transaction for the disposition of all the Company's
Property, and/or (4) documents relating to any plan for dissolution.
6.11 Adjourned Meetings. If any Member meeting is adjourned to a different date,
time or place, notice need not be given of the new date, time or place, if the
new date, time and place is announced at the meeting before adjournment;
provided that, if a new record date for the adjourned meeting is or must be
fixed, then notice must be given to new Members as of the new record date.
6.12 Waiver of Notice. Whenever any notice is required to be given to any Member
under the Act, the Articles or this Agreement, a waiver in writing, signed by
such Member shall be deemed equivalent to the giving of such notice.
Furthermore, a Member's attendance at a meeting waives any objection that the
Member might otherwise raise based on lack of notice or defective notice, unless
the Member: (i) objects at the outset of the meeting; or (ii) in the case of an
objection claiming that consideration of a particular matter is not within the
purposes described in the meeting notice, objects at the time such matter is
presented, and in either case, thereafter does not participate in the meeting.
6.13 Fixing of Record Date. For purposes of determining the Members entitled to
notice of, or to vote at, any Member meeting or any adjournment thereof, or for
purposes of determining the Members entitled to receive payment of any
distribution, or in order to make a determination of the Members for any other
purpose, the Board may provide that the Unit Holder Register shall be closed for
a stated period, not to exceed sixty (60) days. If the Unit Holder Register
shall be closed for such purpose, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the Unit Holder
Register, the Board may fix in advance a date as the record date for any such
determination of Members, such date in any case to be not more than sixty (60)
days, and in case of a meeting of Members not less than ten (10) days, prior to
the date on which the particular action requiring such determination is to be
taken. If the Unit Holder Register is not closed and no record date is fixed for
the determination, the date on which notice of the meeting is mailed or the date
on which the resolution of the Board declaring a dividend is adopted, as the
case may be, shall be the record date for such determination. When a
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determination of Members entitled to vote at any meeting of the Members has been
made as provided in this Section, such determination shall apply to any
adjournment thereof, unless the Board fixes a new record date, which it must do
if the meeting is adjourned to a date more than one hundred twenty (120) days
after the date fixed for the original meeting.
6.14 Quorum and Proxies. The presence (in person or by proxy or mail ballot) of
Members holding at least twenty five percent (25%) of the Membership Voting
Interests is required for the transaction of business at a meeting of the
Members. Voting by proxy or by mail ballot shall be permitted on any matter if
authorized by the Board. A proxy shall not be effective for purposes of
determining a quorum under this Section or for purposes of voting at the annual
meeting unless and until it is received by the Secretary of the Company and is
duly executed as provided in such proxy. In each case where a Member
appropriately specifies how a proxy is to be voted, it will be voted in
accordance with such specification. As to any matter or business which may be
brought before an annual meeting which is note discussed in the Company's proxy
statement, a vote may be cast pursuant to a proxy in accordance with the
judgment of the Company's proxies name in the proxy voting the same. Any Member
may revoke his or her proxy at any time insofar as it is then not exercised by
giving notice of such revocation, either personally at the annual meeting or in
writing, to the Secretary of the Company or by the execution and delivery to the
Company of a new proxy dated subsequent to the original proxy.
6.15 Voting; Action by Members. If a quorum is present, the affirmative vote of
a majority of the Membership Voting Interests represented at the meeting and
entitled to vote on the matter (including Units represented in person, by proxy
or by mail ballot when authorized by the Board) shall constitute the act of the
Members, unless the vote of a greater or lesser proportion or numbers is
otherwise required by this Agreement or the Act.
6.16 Continuation of the Company. The Company shall not be dissolved upon the
occurrence of any event that is deemed to terminate the continued membership of
a Member, but rather the Company shall continue without dissolution, and its
affairs shall not be required to be wound up.
6.17 No Member Right of Redemption or Return of Capital. Except as otherwise
provided in this Agreement or the Act, no Member or transferee of any Member
shall have any right to demand or receive a return of his/her/its Capital
Contribution or to require the redemption of his/her/its Units.
6.18 Waiver of Dissenters Rights. To the fullest extent permitted by the Act,
each Member hereby disclaims, waives and agrees not to assert: (i) any
dissenters' or similar rights under the Act; (ii) any right to require partition
or appraisal of the Company or of any of its assets, or to cause the sale of any
Company Property; or (iii) any right to maintain any action for partition or to
compel any sale with respect to such Member's Units, or with respect to any
Company Property.
6.19 Loans. Any Member or Affiliate may, with the consent of the Board, lend or
advance money to the Company, in which case the amount of any such loan or
advance shall not be treated as a contribution to the capital of the Company but
rather shall be a debt due from the Company, repayable out of the Company's
cash, and shall have such other terms as approved by the Board. None of the
Members or their Affiliates shall be obligated to make any loan or advance to
the Company.
6.20 Actions Without a Meeting by Members Any action required or permitted to be
taken at a meeting of the Members may be taken without a meeting, without notice
and without a vote, if a consent in writing, setting forth the action so taken,
is signed by Members required to approve such action. Such consent will have the
same force and effect as a vote of such Members. The signed consent will be
placed by the Secretary of the Company in the Company's corporate records.
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ARTICLE VII. ACCOUNTING, BOOKS AND RECORDS
7.1 Accounting, Books and Records; Audit Rights. The books and records of the
Company shall be kept, and the financial position and the results of its
operations recorded, in accordance with GAAP. The books and records shall
reflect all Company transactions and shall be appropriate and adequate for the
Company's business. The Company shall maintain at its principal place of
business: (i) a current list of the full name and last known address of each
Member and Assignee set forth in alphabetical order, together with the Capital
Contributions, Capital Account and Units of each Member and Assignee; (ii) the
full name and address of each Director; (iii) a copy of the Articles and any and
all amendments thereto, together with executed copies of any powers of attorney
pursuant to which the Articles or any amendments thereto have been executed;
(iv) copies of the Company's federal, state and local income tax and information
returns and reports, if any, for the six (6) most recent taxable years; (v) a
copy of this Agreement and any and all amendments hereto, together with executed
copies of any powers of attorney pursuant to which this Agreement or any
amendments hereto have been executed; and (vi) copies of the financial
statements of the Company, if any, for the six (6) most recent Fiscal Years. The
Company shall use the accrual method of accounting in the preparation of its
financial reports and for tax purposes and shall keep its books and records
accordingly.
7.2 Delivery to Members and Inspection. Any Member or such Member's designated
representative shall have reasonable access during normal business hours to the
information and documents kept by the Company pursuant to Section 7.1 of this
Agreement. The rights granted to a Member pursuant to this Section 7.2 are
expressly subject to compliance by such Member with the safety, security and
confidentiality procedures and guidelines of the Company, as such procedures and
guidelines may be amended from time to time. Upon the request of any Member for
purposes reasonably related to such Member's interest as a Member, the Board
shall promptly deliver to the requesting Member, at the expense of the
requesting Member, a copy of the information required to be maintained under
Section 7.1 of this Agreement. Each Member has the right, upon reasonable
request for purposes reasonably related to such Member's interest as a Member
and for proper purposes, to: (i) inspect and copy during normal business hours
any of the Company records described in Section 7.1 of this Agreement; and (ii)
obtain from the Board, promptly after their becoming available, copies of the
Company's federal, state and local income tax and information returns for each
Fiscal Year. Each Assignee shall have the right to information regarding the
Company only to the extent required by the Act.
7.3 Reports. The Chief Financial Officer of the Company shall be responsible for
causing the preparation of financial reports of the Company and the coordination
of financial matters of the Company with the Company's accountants. The Company
shall cause to be delivered to each Member financial reports, prepared, in each
case (other than with respect to Member's Capital Accounts, which shall be
prepared in accordance with this Agreement) in accordance with GAAP consistently
applied. Delivery of the financial reports shall occur as soon as practicable
following the end of each Fiscal Year and the first three fiscal quarters of
each such Fiscal Year, and at such time as distributions are made to the Unit
Holders pursuant to Article X of this Agreement following the occurrence of a
Dissolution Event. The Company's financial statements for each Fiscal Year shall
be audited and certified by the Company's accountants, and in each case setting
forth in comparative form the corresponding figures for the immediately
preceding Fiscal Year end (in the case of the balance sheet) and the two (2)
immediately preceding Fiscal Years (in the case of the statements). Public
access to the financial statements through either the Company's website or the
Securities and Exchange Commission's website of the Company's filings shall
constitute delivery pursuant to this Section 7.3.
7.4 Tax Matters. The Board shall, without any further consent of the Unit
Holders being required (except as specifically required herein), make any and
all elections for federal, state, local and foreign tax purposes as the Board
shall determine appropriate and shall have the right and authority to represent
the
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Company and the Unit Holders before taxing authorities or courts of competent
jurisdiction in tax matters affecting the Company or the Unit Holders in their
capacities as Unit Holders, and to file any tax returns and execute any
agreements or other documents relating to or affecting such tax matters,
including agreements or other documents that bind the Unit Holders with respect
to such tax matters or otherwise affect the rights of the Company and the Unit
Holders. The Board shall designate a Person to be specifically authorized to act
as the "Tax Matters Member" under the Code and in any similar capacity under
state or local law; provided, however, that the Board shall have the authority
to designate, remove and replace the Tax Matters Member who shall act as the tax
matters partner within the meaning of and pursuant to Regulations Sections
301.6231(a)(7)-1 and -2 or any similar provision under state or local law. The
Tax Matters Member shall receive no compensation for its services. All
third-party costs and expenses incurred by the Tax Matters Member in performing
its duties as such (including legal and accounting fees and expenses) shall be
borne by the Company. Nothing herein shall be construed to restrict the Company
from engaging an accounting firm to assist the Tax Matters Member in discharging
its duties hereunder. Necessary tax information shall be delivered to each Unit
Holder as soon as practicable after the end of each Fiscal Year.
7.5 Withholding. Each Unit Holder hereby authorizes the Company to withhold from
or pay on behalf of or with respect to such Unit Holder any amount of federal,
state, local or foreign taxes that the Directors determine that the Company is
required to withhold or pay with respect to any amount distributable or
allocable to such Unit Holder pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Company pursuant to
Code Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446.
Any amount paid on behalf of or with respect to a Unit Holder shall constitute a
loan by the Company to such Unit Holder, which loan shall be repaid by such Unit
Holder within fifteen (15) days after notice from the Company that such payment
must be made unless (i) the Company withholds such payment from a distribution
that would otherwise be made to the Unit Holder or (ii) the Board determines, in
its sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Company that would, but for such payment, be distributed
to the Unit Holder. Each Unit Holder hereby unconditionally and irrevocable
grants to the Company a security interest in such Unit Holder's Units to secure
such Unit Holder's obligation to pay to the Company any amounts owed to the
Company pursuant to this Section 7.5. In the event that a Unit Holder fails to
pay any amounts owed to the Company when due, the Board may, in its sole and
absolute discretion, elect to make the payment to the Company on behalf of such
defaulting Unit Holder, and in such event shall be deemed to have loaned such
amount to such defaulting Unit Holder and shall succeed to all rights and
remedies of the Company as against such defaulting Unit Holder (including,
without limitation, the right to receive distributions). Any amounts payable by
a Unit Holder hereunder shall bear interest at the prime rate as reported in The
Wall Street Journal (but not higher than the maximum lawful rate) from the date
such amount is due (i.e., fifteen (15) days after demand) until such amount is
paid in full. Each Unit Holder shall take such action as the Company or the
Board shall request in order to perfect or enforce the security interest created
hereunder.
ARTICLE VIII. AMENDMENTS
8.1 Amendments. Amendments to this Agreement may be made upon an affirmative
vote of two-thirds (2/3) of the Board or upon an affirmative vote of two-thirds
(2/3) of the Units represented in person or proxy at a meeting called for such
purpose. Upon the modification or amendment of this Agreement, the Board shall
promptly execute such amendments or other documents as the Company deems
appropriate to reflect such amendments under Act or other applicable laws of the
State of Nebraska. In the event the Board materially modifies or amends this
Agreement pursuant to this section, the Board shall send notice to the Members
of the material modification or amendment within a reasonable period of time
after the effective date of such modification or amendment.
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ARTICLE IX. TRANSFERS
9.1 General Restrictions. The Directors shall not approve, and the Company shall
not recognize for any purpose, any purported Transfer of Units unless and until
the Transfer Restrictions, consisting of the provisions of this Article and the
Unit Transfer Policy, have been satisfied or the Board has by resolution
specifically waived any unsatisfied provision, condition or restriction. A
Transfer of Units approved by the Board that satisfies, in the sole discretion
of the Board, the provisions and conditions of the Transfer Restrictions (or if
any unsatisfied condition is waived), shall be referred to in this Agreement as
a "Permitted Transfer."
9.2 Not Binding Until Entered in Company Books. A Transfer of Units is not
binding on the Company without the approval of the Board and direction by the
Board to enter the Transfer in the Unit Holder Register.
9.3 Pledge of Units Allowed. Notwithstanding the Transfer Restrictions, a Unit
Holder may pledge, xxxxx x Xxxx on all or any portion of its Units as security
for the payment of debt, provided that a subsequent foreclosure or transfer to
the secured party in lieu of foreclosure or otherwise shall be considered a
Transfer and thereby subject to the terms of this Agreement.
9.4 Prohibited Transfers. Any purported Transfer of Units that is not a
Permitted Transfer shall be null and void and of no force or effect whatsoever;
provided that, if the Company is required by law to recognize a Transfer that is
not a Permitted Transfer (or if the Board, in its sole discretion, elect to
recognize a Transfer that is not a Permitted Transfer): (i) the transferee's
rights shall be strictly limited to the transferor's Membership Economic
Interests associated with such Units; and (ii) the Company may offset against
such Membership Economic Interests (without limiting any other legal or
equitable rights of the Company) any debts, obligations or liabilities for
damages that the transferor or transferee may have to the Company.
9.5 Indemnification. If a Transfer or attempted Transfer of Units is not a
Permitted Transfer, the Unit Holder and the prospective transferee engaging or
attempting to engage in the Transfer is liable to and shall indemnify and hold
harmless the Company and the other Unit Holders from all cost, liability, and
damage that the Company and any of the other Unit Holders may incur (including
incremental tax liabilities, lawyers' fees and expenses) as a result of the
Transfer or attempted Transfer and efforts to prohibit the transfer or enforce
the indemnity.
9.6 Transferee Subject to Transfer Restrictions. Units held by a transferee are
subject to the Transfer Restrictions subsequent to a transfer permitted under
this Article.
9.7 Unit Transfer Policy. The Unit Transfer Policy shall be developed by the
Board and impose conditions and restrictions on Transfers to: (1) preserve the
tax status of the Company; (2) comply with state or federal securities laws; (3)
require appropriate information from the transferor and transferee regarding the
transfer; (4) require appropriate representations from the transferor and/or
transferee regarding the Transfer; and (5) allow the Board to determine whether
or not the transferee is a competitor of the Company or the Company's
Affiliates. The Unit Transfer Policy also shall state the permitted method and
conventions that shall be used in allocating each item of Profits, and Losses
and all other items attributable between the transferor and the transferee. The
Unit Transfer Policy is attached as Exhibit "C," and incorporated as part of
this Agreement. The Unit Transfer Policy may be amended by the Board without
Member approval.
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9.8 No Dissolution or Termination. The Transfer of Units pursuant to the terms
of this Article IX shall not dissolve or terminate the Company. No Member shall
have the right to have the Company dissolved or to have such Member's Capital
Contribution returned except as provided in this Agreement.
9.9 Rights of Unadmitted Assignees. A Person who acquires Units but who is not
admitted as a Substitute Member pursuant to Section 9.10 of this Agreement shall
be entitled only to the Membership Economic Interests with respect to such Units
in accordance with this Agreement, and shall not be entitled to the Membership
Voting Interests with respect to such Units. In addition, such Person shall have
no right to any information or accounting of the affairs of the Company except
as affirmatively required by the Act, shall not be entitled to inspect the books
or records of the Company, and shall not have any of the other rights of a
Member under the Act or this Agreement.
9.10 Admission of Substitute Members. A transferee of Units, pursuant to a
Permitted Transfer, shall be admitted as a substitute Member provided that such
transferee has complied with the following provisions:
(a) The transferee shall, by written instrument in form and substance
reasonably satisfactory to the Board, agree to be bound by all of the terms
and provisions of this Agreement, and assume the obligations of the
transferor Member hereunder with respect to the Transferred Units.
(b) The transferee shall pay for or reimburse the Company for all
reasonable legal, filing and publication costs incurred in connection with
the admission of the transferee as a Member.
(c) Except in the case of a Transfer involuntarily by operation of
law, if required by the Board, the transferee shall deliver to the Company
evidence of his/her/its authority to become a Member.
(d) The transferee and transferor shall each execute and deliver such
other instruments as the Board reasonably deems necessary or appropriate in
connection with such Transfer.
ARTICLE X. DISSOLUTION AND WINDING UP
10.1 Dissolution. The Company shall dissolve and shall commence winding up and
liquidating upon the first to occur of any of the following (each a "Dissolution
Event"): (i) the affirmative vote of the Members as required by Section 5.6(b)
to dissolve, wind up and liquidate the Company; or (ii) the entry of a decree of
judicial dissolution pursuant to the Act. The Members hereby agree that,
notwithstanding any provision of the Act, the Company shall not dissolve prior
to the occurrence of a Dissolution Event.
10.2 Winding Up. Upon the occurrence of a Dissolution Event, the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors and Members;
and no Member shall take any action that is inconsistent with, or not necessary
to or appropriate for, winding up of the Company's business and affairs.
Notwithstanding any provision in this Agreement to the contrary, the Members
acknowledge and agree that all covenants and obligations set forth this
Agreement shall continue to be fully binding upon the Members until such time as
the Property has been distributed pursuant to this Section 10.2 and any articles
of dissolution or similar document have been filed pursuant to the Act. The
Liquidator shall be responsible for overseeing the prompt and orderly winding up
and dissolution of the Company. The Liquidator shall take full account of
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the Company's liabilities and Property and shall cause the Property or the
proceeds from the sale thereof (as determined pursuant to Section 10.8 of this
Agreement), to the extent sufficient therefor, to be applied and distributed, to
the maximum extent permitted by law, in the following order: (i) first, to
creditors (including Members and Directors who are creditors, to the extent
otherwise permitted by law) in satisfaction of all of the Company's Debts and
other liabilities (whether by payment or the making of reasonable provision for
payment thereof), other than liabilities for which reasonable provision for
payment has been made; and (ii) second, except as provided in this Agreement, to
Members in satisfaction of liabilities for distributions pursuant to the Act;
(iii) third, the balance, if any, to the Unit Holders in accordance with the
positive balance in their Capital Accounts calculated after making the required
adjustment set forth in clause (ii)(C) of the definition of Gross Asset Value in
Section 1.10 of this Agreement, after giving effect to all contributions,
distributions and allocations for all periods.
10.3 Compliance with Certain Requirements of Regulations; Deficit Capital
Accounts. In the event the Company is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article X to the Unit Holders who have positive Capital Accounts in
compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Unit Holder
has a deficit balance in such Member's Capital Account (after giving effect to
all contributions, distributions and allocations for all Fiscal Years, including
the Fiscal Year during which such liquidation occurs), such Unit Holder shall
have no obligation to make any contribution to the capital of the Company with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Company or to any other Person for any purpose whatsoever. In the discretion
of the Liquidator, a pro rata portion of the distributions that would otherwise
be made to the Unit Holders pursuant to this Article X may be: (i) distributed
to a trust established for the benefit of the Unit Holders for the purposes of
liquidating Company assets, collecting amounts owed to the Company, and paying
any contingent or unforeseen liabilities or obligations of the Company, in which
case the assets of any such trust shall be distributed to the Unit Holders from
time to time, in the reasonable discretion of the Liquidator, in the same
proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Unit Holders pursuant to Section 10.2 of
this Agreement; or (b) withheld to provide a reasonable reserve for Company
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Company, provided that such withheld
amounts shall be distributed to the Unit Holders as soon as practicable.
10.4 Deemed Distribution and Recontribution. Notwithstanding any other provision
of this Article X, in the event the Company is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has occurred,
the Property shall not be liquidated, the Company's Debts and other liabilities
shall not be paid or discharged, and the Company's affairs shall not be wound
up.
10.5 Rights of Unit Holders. Except as otherwise provided in this Agreement,
each Unit Holder shall look solely to the Property of the Company for the return
of such Unit Holder's Capital Contribution and shall have no right or power to
demand or receive Property other than cash from the Company. If the assets of
the Company remaining after payment or discharge of the debts or liabilities of
the Company are insufficient to return such Capital Contribution, the Unit
Holders shall have no recourse against the Company or any other Unit Holder or
Directors.
10.6 Allocations During Period of Liquidation. During the period commencing on
the first day of the Fiscal Year during which a Dissolution Event occurs and
ending on the date on which all of the assets of the Company have been
distributed to the Unit Holders pursuant to Section 10.2 of this Agreement (the
"Liquidation Period"), the Unit Holders shall continue to share Profits, Losses,
gain, loss and other items of Company income, gain, loss or deduction in the
manner provided in Article III of this Agreement.
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10.7 Character of Liquidating Distributions. All payments made in liquidation of
the interest of a Unit Holder shall be made in exchange for the interest of such
Unit Holder in Property pursuant to Section 736(b)(1) of the Code, including the
interest of such Unit Holder in Company goodwill.
10.8 The Liquidator. The "Liquidator" shall mean a Person appointed by the Board
to oversee the liquidation of the Company. Upon the consent of a majority of the
Membership Voting Interests, the Liquidator may be the Board. The Company is
authorized to pay a reasonable fee to the Liquidator for its services performed
pursuant to this Article X and to reimburse the Liquidator for its reasonable
costs and expenses incurred in performing those services. The Company shall
indemnify, save harmless, and pay all judgments and claims against such
Liquidator and any officers, directors, agents and employees of the Liquidator
relating to any liability or damage incurred by reason of any act performed or
omitted to be performed by the Liquidator, or any officers, directors, agents or
employees of the Liquidator in connection with the liquidation of the Company,
including reasonable attorneys' fees incurred in connection with the defense of
any action based on any such act or omission, which attorneys' fees may be paid
as incurred, except to the extent such liability or damage is caused by fraud,
intentional misconduct, or a knowing violation of the laws which was material to
the cause of action.
10.9 Forms of Liquidating Distributions. For purposes of making distributions
required by Section 10.2 of this Agreement, the Liquidator may determine whether
to distribute all or any portion of the Property in-kind or to sell all or any
portion of the Property and distribute the proceeds therefrom.
ARTICLE XI. MISCELLANEOUS
11.1 Notices. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be deemed to have been delivered, given, and received for all purposes (i)
if delivered personally to the Person or to an officer of the Person to whom the
same is directed, or (ii) when the same is sent, if sent by regular or certified
mail, postage prepaid, or by facsimile, if such facsimile is followed by a hard
copy of the facsimile communication sent promptly thereafter by regular or
certified mail, postage prepaid, addressed as follows, or to such other address
as such Person may from time to time specify by notice to the Company: (a) If to
the Company, to the address determined pursuant to Section 1.4 of this
Agreement; (b) If to the Board, to the address set forth on record with the
Company or as otherwise set forth in a communications policy established by the
Board; (c) If to a Unit Holder, either to the address set forth in the Unit
Holder Register or to such other address that has been provided in writing to
the Company.
11.2 Binding Effect. Except as otherwise provided in this Agreement, every
covenant, term and provision of this Agreement shall be binding upon, and shall
inure to the benefit of, the Company and the Members, and their respective
heirs, representatives, successors, transferees, and assigns.
11.3 Construction. Every covenant, term, and provision of this Agreement shall
be construed simply according to its fair meaning and not strictly for or
against the Company or any Member.
11.4 Headings. Article, Section and other headings contained in this Agreement
are for reference purposes only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
of this Agreement.
11.5 Severability. Except as otherwise provided in the succeeding sentence,
every provision of this Agreement is intended to be severable, and if any term
or provision of this Agreement is illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement. The preceding sentence of this Section 11.5 shall
be of no force or effect if
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the consequence of enforcing the remainder of this Agreement without such
illegal or invalid term or provision would be to cause any Member to lose the
material benefit of its economic bargain.
11.6 Incorporation By Reference. Every recital, exhibit, schedule and appendix
attached to this Agreement and referred to herein is hereby incorporated into
this Agreement by reference unless this Agreement expressly provides otherwise.
11.7 Variation of Terms. All terms and variations thereof used in this Agreement
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the context may require.
11.8 Governing Law. The laws of the State of Nebraska shall govern the validity
of this Agreement, the construction of its terms, and the interpretation of the
rights and duties arising hereunder.
11.9 Waiver of Jury Trial. Each of the Members irrevocably waives, to the
fullest extent permitted by law, all rights to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or the
business and affairs of the Company.
11.10 Counterpart Execution. This Agreement may be executed in any number of
counterparts with the same effect as if all of the Members had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
11.11 Specific Performance. Each Member acknowledges and agrees that the Company
and the other Members would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their specific terms, and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, it is agreed that, in addition to any other remedy to which the
Company and the non-breaching Members may be entitled hereunder, at law or in
equity, the Company and the non-breaching Members shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement and to
specifically to enforce the terms and provisions of this Agreement.
11.12 No Third Party Rights. None of the provisions contained in this Agreement
shall be deemed to be for the benefit of or enforceable by any third parties,
including without limitation, any creditors of any Member or the Company.
DULY ADOPTED by the Board pursuant to Section 14.5 of the Amended and
Restated Operating Agreement, as of this 18th day of July, 2007.
I, Xxxxxxx Xxxxx, Chairman of the Board of Directors of NEDAK Ethanol, LLC,
hereby certify that the Second Amended and Restated Operating Agreement of NEDAK
Ethanol, LLC, was adopted at a meeting of the Board of Directors duly called,
and for which there was a quorum present, on July 18, 2007.
/s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx, Chairman of the Board
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EXHIBIT "A"
Membership List
Name and Address of Members Units
---------------------------------------------------- ---------------------------
TOTAL:
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EXHIBIT "B"
MEMBER SIGNATURE PAGE
ADDENDUM TO THE
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF NEDAK ETHANOL, LLC
The undersigned does hereby warrant, represent, covenant and agree that:
(i) the undersigned, as a condition to becoming a Member in NEDAK Ethanol, LLC,
has received a copy of the Second Amended and Restated Operating Agreement dated
________, 2007, and, if applicable, all amendments and modifications thereto;
(ii) the undersigned shall be subject to and comply with all terms and
conditions of such Second Amended and Restated Operating Agreement in all
respects, as if the undersigned had executed said Second Amended and Restated
Operating Agreement on the original date thereof; and (iii) the undersigned is
and shall be bound by all of the provisions of said Second Amended and Restated
Operating Agreement from and after the date of execution of this Addendum.
Individuals: Entities:
---------------------------------------- ------------------------------------
Name of Individual Member (Please Print) Name of Entity (Please Print)
---------------------------------------- ------------------------------------
Signature of Individual Print Name and Title of Officer
---------------------------------------- ------------------------------------
Name of Joint Individual Member (Please Signature of Officer
Print)
----------------------------------------
Signature of Joint Individual Member
Agreed to and Accepted on Behalf of the
Company and its Members:
NEDAK ETHANOL, LLC
By:
-------------------------------------
Its:
------------------------------------
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EXHIBIT "C"
UNIT TRANSFER POLICY
OF
NEDAK ETHANOL, LLC
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