|
(a)
|
Words
of the masculine gender shall be deemed to include the feminine and
neuter
genders, and vice versa, where applicable. Words of the singular
number
shall be deemed to include the plural number, and vice versa, where
applicable.
|
|
(b)
|
Unless
otherwise indicated, any reference herein to a “Section”, “Exhibit”,
“Appendix”, “Subsection”, “Paragraph”, or to a subpart of any of them,
shall be to the applicable section, exhibit, appendix, subsection
or
paragraph of or to this Agreement or subpart
thereof.
|
|
(c)
|
The
words “this Agreement”, “herein”, “hereof”, “hereby”, “hereunder”, and
words of similar import refer to this Agreement as a whole and not
to any
particular subdivision unless expressly so
limited.
|
|
(d)
|
The
word “includes” and its derivatives means “includes, but is not limited
to” and corresponding derivative
expressions.
|
|
(e)
|
Unless
the context otherwise requires or unless otherwise provided herein,
the
terms defined in this Agreement which refer to a particular agreement,
instrument, or document also refer to and include all renewals, extension,
modifications, amendments, or restatements of such agreement, instrument,
or document.
|
|
(a)
|
The
Unpaid Required Contribution shall constitute an obligation of such
Defaulting Member to the Company and shall bear interest from the
from the
[sic?]
expiration of the thirty (30) day period described in Section 3.3
at a
floating annual rate of interest equal to the lesser of (i) eight
percent
(8%), or (ii) the maximum rate permitted by law. Interest shall be
compounded monthly. The Company may upon the decision of a Majority
in
Interest (determined by excluding all of the Units of the Defaulting
Member), institute suit in any court of competent jurisdiction to
enforce
such obligation of the Defaulting Member. In addition, the Company
shall
be entitled to recover in such suit all costs and expenses, including,
but
not limited to, court costs and reasonable attorneys’ fees, thereby
incurred by the Company and any damages (except incidental or
consequential damages) sustained by the Company as a result of the
default
by the Defaulting Member.
|
|
(b)
|
By
executing this Agreement, each Member shall be deemed to have granted
to
the Company a first and prior lien and security interest upon such
Member’s Units as security for the payment of all Required Contributions
of such Member. This Agreement shall be deemed to be a security agreement
with respect to such security interest and collateral and each Member
shall promptly execute and deliver to the Company any financing statements
or other instruments that the Company, or any other Member, may request
for purposes of perfecting or continuing such security interest.
Upon the
failure of a Member to execute and deliver such financing statements
or
other instruments, the other Members, and each of them, as
attorney-in-fact for such Member, may execute and deliver such financing
statements or other instruments for, in the name and on behalf of
such
Member.
|
|
(a)
|
To
each Member’s Capital Account there shall be credited such Member’s
Capital Contributions, such Member’s distributive share of Profits and any
items in the nature of income or gain which are specially allocated
pursuant to Section 4.4 or Section 4.5, and the amount of any Company
liabilities assumed by such Member or which are secured by any asset
distributed by the Company to such
Member;
|
|
(b)
|
To
each Member’s Capital Account there shall be debited the amount of cash
and the Gross Asset Value of any asset distributed to such Member
pursuant
to any provision of this Agreement, such Member’s distributive share of
Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 4.4 or Section 4.5, and the
amount
of any liabilities of such Member assumed by the Company or which
are
secured by any property contributed by such Member to the
Company;
|
|
(c)
|
In
the event all or a portion of an interest in the Company is Transferred
in
accordance with the provisions of this Agreement, the Transferee
shall
succeed to the Capital Account of the Transferor to the extent it
relates
to the Transferred interest; and
|
|
(d)
|
In
determining the amount of any liability for purposes of clauses (a)
and
(b) above, there shall be taken into account Code § 752(c) and any
other applicable provisions of the Code and
Regulations,
|
|
(a)
|
First,
to all Members in an amount equal to the estimated federal and state
income tax liability attributable to such Member’s proportionate share of
the Company’s net taxable income. This estimated tax liability, which
shall be computed by the accountant who regularly prepares the Company’s
tax returns, shall be computed on the basis of the highest marginal
rate
applicable to individuals on capital gains and other taxable income
for
the Fiscal Year in question. Unless the Company does not have sufficient
Available Cash or is otherwise prevented from making any distributions
under applicable state law, or determined not to be in the best interest
of the Company as determined in good faith by the Manager, the minimum
mandatory distribution shall be paid on or before the date on which
such
tax liability is due. The Manager’s determination of the amount of minimum
mandatory distribution shall be binding and conclusive on all
Members.
|
|
(b)
|
Second,
to Members holding all Units in proportion to the percentage of
outstanding Units held by each Member but reduced by any amount
distributed to that Member pursuant to Section 4.1(a). Thus, all
Class A
Units and Class B Units shall be treated equally with regard to any
and
all distributions under this Section 4.1(b) and if distributions
made
under Section 41(a) were treated as if they were made under Section
4.1(b).
|
|
(a)
|
Minimum
Gain Chargeback.
Except as otherwise provided in Regulations § 1.704-2(f),
notwithstanding any other provision of this Section 4, if there is
a net
decrease in Company Minimum Gain during any Fiscal Year, each Member
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 Member’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations § 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 Member pursuant
thereto. The items to be so allocated shall be determined in accordance
with Regulations §§ 1.704-2(f)(6) and 1704-2(j)(2). This Subsection
is intended to comply with the minimum gain chargeback requirement
in
Regulation § 1.704-2(f) and shall be interpreted consistently
therewith.
|
|
(b)
|
Member
Minimum Gain Chargeback.
Except as otherwise provided in Regulations § 1.704-2(i)(4),
notwithstanding any other provision of this Section 4, if there is a
net decrease in Member Nonrecourse Debt Minimum Gain attributable
to a
Member Nonrecourse Debt during any Fiscal Year, each Member who has
a
share of the Member Nonrecourse Debt Minimum Gain attributable to
such
Member Nonrecourse Debt, determined in accordance with Regulation
§ 1.704-2(i)(5), 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 Member’s share of the net decrease in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Regulations § 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Member
pursuant
thereto. The items to be so allocated shall be determined in accordance
with Regulations § 1.704-2(i)(4) and 1.704-2(j)(2). This Subsection
is intended to comply with the minimum gain chargeback requirement
in
Regulations § 1.704-2(i)(4) and shall be interpreted consistently
therewith.
|
|
(c)
|
Qualified
Income Offset.
In the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Regulations
§ 1.704-1(b)(2)(ii)(d)(4), Regulations § 1.704-1
(b)(2)(ii)(d)(5) or Regulations § 1.704-1(b)(2)(ii)(d)(6), items of
Company income and gain shall be specially allocated to each such
Member
in an amount and manner sufficient to eliminate, to the extent required
by
the Regulations, the Adjusted Capital Account Deficit of such Member
as
quickly as possible, provided that an allocation pursuant to this
Section
4.4(c) shall be made only if and to the extent that such Member would
have
an Adjusted Capital Account Deficit after all other allocations provided
for in this Section 4 have been tentatively made as if this Section
4.4(c)
were not in the Agreement. This Subsection is intended to comply
with the
qualified income offset requirement in Regulations
§ 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
|
|
(d)
|
Nonrecourse
Deductions.
Nonrecourse Deductions for any Fiscal Year shall be specialty allocated
among the Members in proportion to their
Units.
|
|
(e)
|
Member
Nonrecourse Deductions.
Any Member Nonrecourse Deductions for any Fiscal Year shall be specially
allocated to the Member who bears the economic risk of loss with
respect
to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions
are attributable in accordance with Regulations § 1704-
2(i)(l).
|
|
(f)
|
Code
§ 754 Adjustment.
To the extent an adjustment to the adjusted tax basis of any Company
asset
pursuant to Code § 734(b) or Code § 743(b) is required, pursuant
to Regulations § 1.704-1(b)(2)(iv)(m)(2) or Regulations
§ 1.704-1 (b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Member in complete
liquidation of such Member’s interest in the Company, the amount of such
adjustment to the Capital Accounts shall be treated as an item of
gain (if
the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in accordance with their interests in the
Company
in the event Regulations § 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Member to whom such distribution was made in the event Regulations
§ 1.704-1 (b)(2)(iv)(m)(4)
applies.
|
|
(a)
|
For
purposes of determining the Profits, Losses, or 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
Managers using any permissible method under Code § 706 and the
Regulations thereunder.
|
|
(b)
|
Solely
for purposes of determining a Member’s proportionate share of the “excess
nonrecourse liabilities” of the Company, within the meaning of Regulations
§ 1.752-3(a)(3), the Members’ interests in Company profits are in
proportion to their Units.
|
|
(c)
|
To
the extent permitted by Regulations § 1.704-2(h)(3), the Members
shall endeavor to treat distributions of Available Cash as having
been
made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse
Debt only to the extent that such distributions would cause or increase
an
Adjusted Capital Account Deficit for any
Member.
|
|
(a)
|
Acquire
property not to exceed a cumulative total in any Fiscal Year of $300,000
from any Person as the Managers may determine (the fact that a Manager
or
an Equity Owner is directly or indirectly affiliated or connected
with any
such Person shall not prohibit the Managers from dealing with that
Person);
|
|
(b)
|
Borrow
money not to exceed a cumulative total in any Fiscal Year of $300,000
for
the Company from banks, other lending institutions, the Managers,
Equity
Owners, or Affiliates of the Managers or Equity Owners on such terms
as
the Managers deem appropriate and, in connection therewith, to Hypothecate
Company Property to secure repayment of the borrowed
sums;
|
|
(c)
|
Purchase
liability and other insurance to protect the Company’s property and
business;
|
|
(d)
|
Hold
and own any Company real or personal properties in the name of the
Company;
|
|
(e)
|
Invest
any Company funds not to exceed a cumulative total in any Fiscal
Year of
$300,000 (by way of example but not limitation) in time deposits,
short-term governmental obligations, commercial paper, or other
investments;
|
|
(f)
|
Execute
on behalf of the Company all instruments and documents, including
checks,
drafts, notes and other negotiable instruments; mortgages or deeds
of
trust; security agreements; financing statements; documents providing
for
the acquisition, mortgage, or disposition of Company Property;
assignments; bills of sale; leases; partnership agreements; operating
(or
limited liability company) agreements of other limited liability
companies; and any other instruments or documents necessary, in the
opinion of the Managers, to the conduct of the business of the
Company;
|
|
(g)
|
Enter
into any and all other agreements on behalf of the Company, with
any other
Person for any purpose and in such forms as the Managers may
approve;
|
|
(h)
|
Execute
and file such other instruments, documents, and certificates which
may
from time to time be required by the laws of Colorado or any other
jurisdiction in which the Company shall determine to do business,
or any
political subdivision or agency thereof; to effectuate, implement,
continue, and defend the valid existence of the
Company;
|
|
(i)
|
Open
bank accounts in the name of the Company and to be the sole signatory
thereon unless the Managers determine
otherwise;
|
|
(j)
|
Do
and perform all other acts as may be necessary or appropriate to
the
conduct of the Company’s business.
|
|
(k)
|
Employ
accountants, legal counsel, managing agents, or other experts to
perform
services for the Company and to compensate them from Company
funds;
|
|
(l)
|
Purchase
liability and other insurance to protect the Company’s property and
business;
|
|
(m)
|
Hold
and own any Company real or personal properties in the name of the
Company;
|
|
(n)
|
Invest
any Company funds in excess of a cumulative total in any Fiscal Year
of
$300,000 (by way of example but not limitation) in line deposits,
short-term governmental obligations, commercial paper, or other
investments;
|
|
(o)
|
Compromise
or settle any claim against or inuring to the benefit of the Company
involving an amount in controversy not to exceed a cumulative total
in any
Fiscal Year of $300,000.
|
|
(a)
|
Sell
or otherwise dispose all or substantially all of the Company Property
or
any Company Property other than in the ordinary course of
business;
|
|
(b)
|
Acquire
property from any Person or Persons in excess of a cumulative total
in any
Fiscal Year of $300,000;
|
|
(c)
|
Enter
into a joint venture or partnership with any other business
organization[;]
|
|
(d)
|
Enter
into a merger, conversion or participate in any other form of
reorganization;
|
|
(e)
|
Borrow
money in excess of a cumulative total in any Fiscal Year of $300,000
from
any Person and to hypothecate property of the Company to secure repayment
of the borrowed sums;
|
|
(f)
|
Lend
money in excess of a cumulative total in any Fiscal Year of $300,000
to,
or guaranty or become surety for the obligations of any Person or
Persons
in excess of a cumulative total in any Fiscal Year of $300,000;
or
|
|
(g)
|
Sell
or otherwise dispose all or substantially all of the Company Property
or
any Company Property other than in the ordinary course of business;
or
|
|
(h)
|
Cause
the Company to commence a voluntary case as debtor under the United
States
Bankruptcy Code.
|
|
(a)
|
The
Company, to the fullest extent permitted by law, shall indemnify
and hold
harmless each Manager, Member, and all officers, directors, trustees,
partners, members, principals, employees, and agents of a Manager
and
Member (individually, an “Indemnitee”)
from and against any and all losses, claims, demands, costs, damages,
liabilities, expenses of any nature (including attorneys’ fees and
disbursements), judgments, fines, settlements, and other amounts
arising
from any and all claims, demands, or proceedings in which an Indemnitee
may be involved, or threatened to be involved, as a party or otherwise,
arising out of or incidental to the business of the Company, including
liabilities under the federal and state securities laws, regardless
of
whether an Indemnitee continues to be a Manager, Member, or an officer,
director, trustee, partner, member, principal, employee, or agent
of a
Manager or Member at the time any such liability or expense is paid
or
incurred, if (i) the Indemnitee acted in good faith and in a manner
he,
she or it reasonably believed to be in, or not opposed to, the interests
of the Company, and, with respect to any criminal proceeding, had
no
reason to believe its, his, or her conduct was unlawful, and (ii)
the
Indemnitee’s conduct did not constitute fraud, gross negligence, or
willful or wanton misconduct.
|
|
(b)
|
The
indemnification provided by this Section shall be in addition to
any other
rights to which each Indemnitee may be entitled under the Act or
under any
agreement as a matter of law or otherwise, both as to action in the
Indemnitee’s capacity as a Manager, Member, or as an officer, director,
trustee, partner, member, principal, employee, or agent of a Manager
or
Member, and to action in another capacity, and shall continue as
to an
Indemnitee who has ceased to serve in such capacity and shall inure
to the
benefit of the heirs, successors, assigns, administrators, and personal
representatives of such Indemnitee.
|
|
(c)
|
The
Company may purchase and maintain insurance on behalf of any one
or more
Indemnitees, and other such Persons as the Managers shall determine,
against any liability which may be asserted against or expense which
may
be incurred by such Person in connection with the Company’s activities,
whether or not the Company would have the power to indemnify such
Person
against such liability under the provisions of this
Agreement.
|
|
(d)
|
Any
indemnification hereunder shall be satisfied solely out of the property
of
the Company, and the Managers and Members shall not be subject to
personal
liability by reason of these indemnification
provisions.
|
|
(e)
|
An
Indemnitee shall not be denied indemnification in whole or in part
under
this Section because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction
was
otherwise permitted by the terms of this
Agreement.
|
|
(f)
|
The
provisions of this Section are for the benefit of the Indemnitees
and the
heirs, successors, assigns, administrators, and personal representatives
of the Indemnitees and shall not be deemed to create any rights for
the
benefit of any other Persons.
|
|
(g)
|
The
right to indemnification conferred in this Section shall include
the right
to be paid or reimbursed by the Company the reasonable expenses (including
attorney fees, disbursements and expenses) incurred by a Person entitled
to be indemnified who was, is or is threatened to be made a named
defendant or respondent in a proceeding in advance of the final
disposition of the proceeding and without any determination as to
the
Person’s ultimate entitlement to indemnification; provided,
however,
that the payment of such expenses incurred by any such Person in
advance
of the final disposition of a proceeding shall be made only upon
delivery
to the Company of a written affirmation by such Person of his, her
or its
good faith belief that such Person has met the standard of conduct
necessary for indemnification and a written undertaking, by or on
behalf
of such Person, to repay all amounts so advanced if it shall ultimately
be
determined that such indemnified Person is not entitled to be indemnified
under this Section or otherwise.
|
|
(a)
|
The
Managers and officers shall have no fiduciary duty (including, but
not
limited to, any duty of loyalty or duty of care) to the Company or
to any
Member, except (i) a duty to act in good faith, (ii) a general obligation
of fair dealing with respect to the Company and its property, (iii)
any
duty expressly set forth in this Agreement, and (iv) any duty expressly
set forth in other written
agreements.
|
|
(b)
|
The
Managers and officers may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report notice, request, consent, order, bond,
debenture, or other paper or document believed in good faith by the
Manager or officer to be genuine and to have been signed or presented
by
the proper party or parties.
|
|
(c)
|
The
Managers and officers may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, and other
consultants and advisers selected by the Managers or officers, and
any
opinion of such Person as to matters which the Managers or officers
believe in good faith to be within such Person’s professional or expert
competence shall be full and complete authorization in respect of
any
action taken or suffered or omitted by the Managers or officers hereunder
in good faith and in accordance with such
opinion.
|
|
(a)
|
executing
an instrument reasonably satisfactory to the Managers accepting and
adopting the terms and provisions of this Agreement;
and
|
|
(b)
|
paying
all reasonable expenses of the Company in connection with the admission
of
the Transferee as a Substitute
Member.
|
|
(a)
|
such
Member shall desire to voluntarily Transfer any of such Member’s Units,
other than in a Transfer permitted by Section 8.2, in which event
such
Member shall obtain a bona fide written offer from a third party
(the
“Bona
Fide Offer”)
stating an aggregate purchase price payable in the form of cash and/or
a
promissory note (with the terms and conditions of such promissory
note
being stated) and conditioned only upon assignment of good title
to the
Subject Units, free and clear of liens and
encumbrances;
|
|
(b)
|
any
of such Member’s Units shall become subject to involuntary Transfer,
whether by judicial decree, divorce, sale upon execution or in foreclosure
of any lien or charge or by acquisition of an interest therein by
a
trustee in bankruptcy or similar officer or otherwise, to a Person
other
than permitted under Section 8.2;
|
|
(c)
|
any
of such Member’s Units are subject to a Transfer to a Person other than
permitted under Section 8.2 due to the death, termination, liquidation
or
dissolution of such Member; or
|
|
(d)
|
any
time after two (2) years and before the expiration of four (4) years
from
the Effective Date, the Daniel A. Sanders, as a Member holding Class
A
Units may elect to purchase the Units owned at any time by ICM, Inc.
by
giving notice to the person or persons holding those Units at the
time of
exercise.
|
|
(a)
|
If
the event causing an option wanted herein to become exercisable shall
be a
proposed sale pursuant to a Bona Fide Offer, as described in Section
8.6,
the aggregate purchase price for the Subject Units shall be the purchase
price set forth in the Bona Fide
Offer.
|
|
(b)
|
If
the event causing an option granted herein to become exercisable
shall be
other than a proposed sale pursuant to a Bona Fide Offer, as described
in
Section 8.6 (b), (c), or (d), the aggregate purchase price for the
Subject
Unit shall be the purchase price determined under Section 8.11(c)
below.
|
|
(c)
|
The
value of the Subject Units shall be their fair market value as determined
by the Disposing Member and a Majority in Interest (determined by
excluding all of the Units of the Disposing Member). If they are
unable to
agree upon the fair market value, the fair market value of the Subject
Units shall be determined by an appraiser selected by them. If they
are
unable to agree upon a single appraiser, the fair market value of
the
Subject Units shall be determined by a panel of three (3) appraisers
consisting of one appraiser selected by the Disposing Member, one
selected
by a Majority in Interest (determined by excluding all of the Units
of the
Disposing Member), and the third selected by the two appraisers.
They
shall each select their respective appraiser and notify the other
in
writing of such selection within fifteen (15) days following delivery
of
the notice under Section 8.7. If the two appraisers are unable to
agree
upon a third appraiser, such third appraiser shall be appointed by
the
Administrative Judge of the Nineteenth Judicial District, District
Court,
Weld County, Colorado. In the event the three appraisers are unable
to
agree upon the fair market value of the Subject Units, an average
of the
appraisals made individually by them shall be computed. The individual
appraisal that deviates the most from such average shall be disregarded
and an average of the remaining two individual appraisals shall constitute
the fair market value of the Subject Units. The appraisers shall
take into
account minority interest and lack of marketability discounts to
the
extent they are deemed appropriate. All fees and expense reimbursement
payable to the appraisers shall be borne equally between the Disposing
Member and the purchaser or purchasers. The appraisers shall give
written
notice of the fair market value of the Subject Units to the Company
and
all Members (and, if applicable, the Disposing Member’s legal
representative) promptly following determination
thereof.
|
|
(d)
|
The
aggregate purchase price shall be allocated proportionately among
the
purchasers, if more than one. If the event causing an option granted
herein to become exercisable shall be a proposed sale pursuant to
a Bona
Fide Offer, the price and terms specified in such Bona Fide Offer
shall be
controlling. Otherwise, each purchaser’s purchase price shall be
paid[.]
At
the closing the purchaser or purchasers shall deliver to the seller
or
sellers (i) the releases from liability for debts of the Company,
as
contemplated by subparagraphs (a) and (b) above, and (ii) payment
shall be
made in the form a promissory note payable in six (6) equal annual
installments of principal and interests a floating annual rate of
interest
equal to the lesser of (i) eight percent (8%), or (ii) the maximum
rate
permitted by law compounded monthly with the first such payment due
at
closing. Notwithstanding the foregoing, if the Company is a purchaser,
and
if the Disposing Member is then indebted to the Company, the Company
may
set-off all or any portion of such indebtedness against the purchase
price
payable by the Company, even if such indebtedness is not then due
and
payable.
|
|
(a)
|
Postpone
payment of the purchase price of such part of the Subject Units until
such
time as the lien, encumbrance, security interest, charge or claim
has been
discharged;
|
|
(b)
|
Deduct
from the purchase price of such part of the Subject Units and disburse
directly to such lienholder, encumbrance or claimant, if the amount
of
such claim has been determined, such part of the purchase price as
may be
adequate to discharge such lien, encumbrance, security interest,
charge or
claim;
|
|
(c)
|
In
the event any such lien, encumbrance, security interest, charge or
claim
is not liquidated, postpone the payment of the purchase price of
such part
of the Subject Units until final determination of such claim and
make
payment at that time to the lienholder, encumbrancer or claimant
and to
the Disposing Member, as their respective interests may appear;
or
|
|
(d)
|
In
the event that any such lien, encumbrance, security interest, charge
or
claim is in excess of the amount of the purchase price of such part
of the
Subject Units, then such purchaser may, but shall not be obligated
to,
disburse (if liquidated, or if not liquidated, when finally determined)
the purchase price for such part of the Subject Units to such lienholder,
encumbrancer or claimant and thereupon the lien, encumbrance, security
interest, charge or claim against such part of the Subject Units
shall be
fully released and discharged and such part of the Subject Units
shall be
Transferred to such purchaser free and clear of all liens, encumbrances,
security interests, charges and
claims.
|
|
(a)
|
The
owners of the Class A Units or the owners of the Class B Units acting
collectively as a group (the “Offeror”)
may at any time make a buy-sell offer (the “Offer”)
to the other group, excluding owners or affiliates owning only Non-Units
(the “Offeree”)
by notifying the Offeree in writing of the exercise of this right
and
stating in such notice the price at which the Offeror is willing
either to
buy all of the Units of the Company owned by the Offeree, or to sell
the
Offeree all of the Units of the Company owned by the Offeror, with
the
price per Unit and Non-Unit being the same for both the purchase
and the
sale. The Offer shall be deemed to include as an additional term
and
condition a promise by the Offeror to cause the release of the Offeree
from all liabilities of the Company for which the Offeree or any
asset of
the Offeree is liable or subject to attachment as a result of being
a
guarantor or co-maker of such liabilities or a pledgor or mortgagor
of
assets securing such liabilities; provided, however, that any Person
who
will continue to be a Member of the Company after the closing shall
not be
entitled to such a release. The Offer shall not be revocable once
the
aforesaid notice has been delivered to the
Offeree,
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(b)
|
Within
thirty (30) days after receipt by the Offeree of the Offeror’s written
notice of the Offer, the Offeree shall send to the Offeror a written
notice stating whether the Offeree elects (i) to purchase from the
Offeror
all of the Units of the Company owned by the Offeror at the price
stated
in the Offer and in accordance with the other terms and conditions
thereof
(including a release of the Offeror from personal liability for debts
of
the Company), or (ii) to sell to the Offeror all of the Units of
the
Company owned by the Offeree at the price stated in the Offer and
in
accordance with the other terms and conditions thereof (including
a
release of the Offeree from personal liability for debts of the
Company).
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|
(c)
|
Any
Offer, notice or election which may be given by a group hereunder
shall
not be effective unless it is signed by all Persons included in such
group. If the Offeree shall fail to notify the Offeror whether the
Offeree
elects to buy or sell within the time period specified in subparagraph
(b)
above, or if the notice delivered by the Offeree pursuant to such
subparagraph is not signed by all of the Persons included in the
Offeree
group, the Offeree and each Person included in the Offeree group
shall be
deemed to have elected to sell all of their Units of the Company
to the
Offeror.
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(d)
|
The
closing of the sale shall be held at the Company’s principal office (or at
such other place as the Offeror and the Offeree may in writing agree)
no
later than fifteen (15) days after the expiration of the notice period
specified in clause (b) above. At the closing the purchaser or purchasers
shall deliver to the seller or sellers (i) the releases from liability
for
debts of the Company, as contemplated by subparagraphs (a) and (b)
above,
and (ii) payment shall be made in the form a promissory note payable
in
six (6) equal annual installments of principal and interests a floating
annual rate of interest equal to the lesser of (i) eight percent
(8%), or
(ii) the maximum rate permitted by law compounded monthly with the
first
such payment due at closing, except if the seller is then indebted
to the
purchaser, such purchaser may set-off the purchase price against
and to
the extent of such indebtedness, even if such indebtedness is not
then due
and payable. Further, at the closing each seller shall deliver to
the
purchaser or purchasers an assignment and bill of sale duly Transferring
all of such seller’s Units of the Company. Each Member hereby covenants
and warrants that any Unit of the Company which is sold by such Member
pursuant to this Section will be free and clear of all liens,
encumbrances, security interests, charges and claims of others of
every
kind or character as of the
closing.
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(e)
|
Notwithstanding
the foregoing, no Offer may be made pursuant to this Section (i)
within
four (4) years from the date of this Agreement, or (ii) after an
occurrence of an event causing an option under Section 8.6 to become
exercisable with respect to all or part of the Units of the Offeror
or
Offeree until such time as such option has expired or, if exercised,
such
Units have been purchased pursuant
thereto.
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(a)
|
Offer
to Sell.
If the Company authorizes the issuance or sale of any Units, then
the
Company shall first offer to sell to each Member a portion of such
Units
(or such Rights thereto) equal to (i) the number of Units held by
such
Member divided by (ii) the sum of the number of Units
outstanding.
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|
(b)
|
Right
to Purchase.
In order to accept an offer under Section 8.22(a), each Member of
the
class of Units so authorized to be issued or sold must, within fifteen
(15) days after receipt of written notice from the Company describing
in
reasonable detail the Units (or Rights) being offered, the purchase
price
thereof, the payment terms and such Member’s percentage allotment, deliver
a written notice to the Company accepting such
offer.
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|
(c)
|
Sale
of Unsubscribed Units.
During the Ninety (90) days following the expiration of such fifteen
(15)
day offering period, the Company shall be entitled to sell any such
Units
(or any such Rights) so authorized to be issued or sold, which the
holders
of such Units have not elected to purchase, on terms and conditions
no
more favorable to the purchasers thereof than those offered to such
holders. Any Units or securities offered or sold by the Company after
such
ninety (90) day period must be re-offered to the holders of the Units
(or
any such Rights) so authorized to be issued or sold pursuant to the
terms
of this Section 8.22.
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|
(d)
|
Exclusion
from Preemptive Rights.
The provisions of this Section 8.22 shall not apply to any issuance
of
Units (or Rights to acquire any Units) (i) in connection with the
acquisition of another business (whether by purchase of stock, purchase
of
assets, merger or otherwise), (ii) pursuant to any obligation of
the
Members to purchase additional securities as a result of a capital
call by
the Company, (iii) in connection with a debt financing, (iv) as a
distribution with respect to the outstanding Units, (v) issued in
exchange
for consideration other than cash such as property or services, (vi)
as
part of an Additional Capital Contribution pursuant to Sections 3.3
and
3.4, or (vii) pursuant to any agreement in effect on the date of
this
Agreement.
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|
(a)
|
Upon
the Approval of a Two Thirds Vote of the Units;
or
|
|
(b)
|
The
entry of a decree of judicial dissolution under the
Act.
|
|
(a)
|
First,
to the payment of debts and liabilities of the Company, in the order
of
priority as provided by law, except those liabilities to Members
on
account of their Capital Contributions;
and
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|
(b)
|
The
balance, if any, to the Members in accordance with their respective
Capital Account balances after giving effect to all contributions,
distributions and allocations for all Fiscal
Years.
|
|
(a)
|
To
the maximum extent permitted by law, the parties mutually consent
to the
resolution by arbitration, and not litigation, of all claims, causes
of
action and disputes which may arise out of or in connection with
this
Agreement. In the event of any such dispute, the parties agree they
shall
attempt to resolve such dispute by good faith negotiations prior
to the
institution of mediation or arbitration proceedings. If the dispute
cannot
be resolved by such negotiations, then any party, by written notice
to the
other party, may call for private mediation of the issue before a
mediator
to be agreed upon by the parties. The parties agree to conclude such
private mediation within thirty (30) days of the filing by a party
of a
request for such mediation. In the event the dispute cannot be resolved
by
such mediation, either party may, by written notice to the other
party,
may [sic?]
commence arbitration proceedings as provided
below.
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|
(b)
|
Disputes
to be resolved by arbitration shall be submitted to binding arbitration
to
be held in a neutral location to be mutually agreed upon by and between
the parties, by either one or three independent arbitrators in accordance
with the Federal Arbitration Act, Title 9 of the U.S. Code, and the
Commercial Arbitration Rules of the American Arbitration Association
pursuant to the procedure set forth
below.
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|
(c)
|
Any
aggrieved party may demand such arbitration in writing by notice,
which
demand shall include the name of the arbitrator appointed by the
party
demanding arbitration and a statement of the matter in
controversy.
|
|
(d)
|
If
there are two parties to the dispute, then unless the parties have
agreed
on a single arbitrator within ten (10) days after such demand, the
other
party shall name its arbitrator, and the two arbitrators so selected
shall
select a third arbitrator within ten (10) days or, in lieu of an
agreement
on the third arbitrator by the two arbitrators so appointed, a third
arbitrator shall be appointed by the American Arbitration Association.
If
a second arbitrator is not selected within the time provided, the
first
arbitrator shall serve as sole arbitrator. If there are more than
two
parties to the dispute, then an independent single arbitrator shall
be
appointed by the American Arbitration Association to resolve the
dispute.
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|
(e)
|
The
arbitrators shall have the power to determine the procedure to be
followed, whether discovery is to be allowed and to what extent,
and to
establish a schedule for resolving the controversy and allocating
costs of
arbitration among the parties as they shall solely determine in their
discretion, including the power to award costs and attorney fees
of the
prevailing party against the losing party. The arbitrators shall
have the
power to award punitive or exemplary damages, but only when, in their
sole
discretion, they determine that a dispute brought or claim pursued
by a
party was not brought in good faith. The decision of a majority of
the
arbitrators shall be the decision of the arbitrators. All decisions
shall
be in writing. The decision of the arbitrators shall be final and
binding
upon the parties and shall not be appealable. The parties understand
and
agree that they are waiving all right to have all claims, causes
of action
or disputes adjudicated by a court or
jury.
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|
(f)
|
The
parties agree that the provisions of this Section 10.2 shall be a
complete
defense to any suit, action, or other proceeding instituted in any
federal, state, or local court or before any administrative tribunal
with
respect to any controversy or dispute arising out of this Agreement,
that
judgment may be rendered in any court of competent jurisdiction on
any
award made by the arbitrators pursuant to this Agreement, and that
the
arbitration provisions hereof shall survive the termination of this
Agreement for any reason.
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|
(a)
|
All
documents (including amendments to the Articles) which the
attorney-in-fact deems appropriate to reflect any written amendment,
change or modification of this Agreement approved in accordance with
this
Agreement;
|
|
(b)
|
Upon
the requisite approval, if any, required elsewhere in this Agreement,
any
and all other certificates or other instruments required to be filed
by
the Company under the laws of any state or jurisdiction, including,
without limitation, any certificate or other instruments necessary
in
order for the Company to continue to qualify as a limited liability
company under the applicable laws;
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|
(c)
|
One
or more applications to use an assumed name;
and
|
|
(d)
|
All
documents which may be required to dissolve and terminate the Company
and
to cancel its Articles upon the requisite approval required elsewhere
in
this Agreement.
|
|
i.
|
Credit
to such Capital Account any amounts which such Member is obligated
to
restore pursuant to any provision of this Agreement or is deemed
to be
obligated to restore pursuant to the penultimate sentences of Regulations
§§ 1.704-2(g)(1) and 1.704-2(0(5);
and
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|
ii.
|
Debit
to such Capital Account the items described in Regulations
§§ 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).
|
|
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 Managers;
|
|
ii.
|
The
Gross Asset Values of all Company assets shall be adjusted to equal
their
respective gross fair market values as of the following times:
(a) 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) the distribution by the Company to a Member of
more than
a de minimis amount of Company assets as consideration for an interest
in
the Company; and (c) the liquidation of the Company within the
meaning of
Regulations § 1.704-1 (b)(2)(ii)(g); provided, however, that
adjustments pursuant to clauses (a) and (b) above shall be made
only if
the Managers reasonably determine that such adjustments are necessary
or
appropriate to reflect the relative economic interests of the Members
in
the Company;
|
|
iii.
|
The
Gross Asset Value of any Company asset distributed to any Member
shall be
adjusted to equal the gross fair market value of such asset on
the date of
distribution as determined by the Managers; and
|
|
iv.
|
The
Gross Asset Values of Company assets shall be increased (or decreased)
to
reflect any adjustments to the adjusted basis of such assets pursuant
to
Code § 734(b) or Code § 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts
pursuant to Regulations § 1.704-1(b)(2)(iv)(m) and Paragraph (bb)(vi)
of this Appendix and 4.4(f); provided, however, that Gross Asset
Values
shall not be adjusted pursuant to this clause (iv) to the extent
the
Managers determine that an adjustment pursuant to clause (ii) above
is
necessary or appropriate in connection with a transaction that
would
otherwise result in an adjustment pursuant to this clause
(iv).
|
|
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 Subsection shall be added to such taxable income or
loss;
|
|
ii.
|
Any
expenditures of the Company described in Code § 705(a)(2)(B) or
treated as Code § 705(a)(2)(B) expenditures pursuant to Regulations
§ 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this Subsection 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 Paragraph (o)(ii) or (o)(iii) of this Appendix, the amount of
such
adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or
Losses;
|
|
iv.
|
Gain
or loss resulting from any disposition of a Company asset 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 asset disposed
of,
notwithstanding that the adjusted tax basis of such asset 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 or other
period,
computed in accordance with Paragraph (m) of this
Appendix;
|
|
vi.
|
To
the extent an adjustment to the adjusted tax basis of any Company
asset
pursuant to Code § 734(b) or Code § 743(b) is required pursuant
to Regulations § 1.704-1(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 Member’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
the
basis of the asset) from the disposition of the asset and shall be
taken
into account for purposes of computing Profits or Losses;
and
|
|
vii.
|
Notwithstanding
any other provision of this Subsection, any items which are specifically
allocated pursuant to Section 4.4 or Section 4.5 shall not be taken
into
account in computing Profits or
Losses.
|
|
Member
|
Units
|
Cash
Capital
Contribution
|
%
|
|
Daniel
A. Sanders
6867
Hogan Road
Gresham,
OR 97080
|
50.000
Class A Units
|
$-0-
|
.1%
|
|
Daniel
A. Sanders
6867
Hogan Road
Gresham,
OR 97080
|
12,880.405
Class B Units
|
$12,880,405
|
53.72%
|
|
Eagle
Energy LLC
2113
Pebble Beach Land
Brandon,
SD 57005
|
10,094.595
Class D Units
|
$10,094,595
|
42.10%
|
|
ICM
Inc.
310
N. First
Colwich,
KS 67030k [67030]
|
1,000.000
Class B Units
|
$1,000,000
|
4.17%
|
|
TOTAL
|
24,025.000
Units
|
$23,975,000
|
100.00%
|