Sample Operating Agreement LLC

Exhibit 3.2

 

OPERATING AGREEMENT

OF

SHOW ME ETHANOL, LLC

DATED AS OF JANUARY 24, 2006

 

TABLE OF CONTENTS

		Page
ARTICLE 1. FORMATION AND OFFICES		1
1.1	FORMATION	1
1.2	PRINCIPAL OFFICE	1
1.3	REGISTERED OFFICE AND REGISTERED AGENT	1
1.4	PURPOSE OF COMPANY	1
1.5	DURATION	2
1.6	DELIVERY OF COPIES TO MEMBERS	2
ARTICLE 2. DEFINITIONS		2
2.1	TERMS DEFINED HEREIN	2
ARTICLE 3. CAPITALIZATION OF THE COMPANY		5
3.1	INITIAL CAPITAL CONTRIBUTIONS	5
3.2	ADDITIONAL CAPITAL CONTRIBUTIONS	5
3.3	CAPITAL CONTRIBUTIONS	6
ARTICLE 4. CASH DISTRIBUTIONS; PROFITS AND LOSSES FOR TAX PURPOSES		6
4.1	CASH DISTRIBUTIONS PRIOR TO DISSOLUTION	6
4.2	PERSONS ENTITLED TO DISTRIBUTIONS	6
4.3	RESERVES	7
4.4	ALLOCATION OF PROFITS AND LOSSES FOR TAX PURPOSES AND SPECIAL ALLOCATIONS	7
4.5	WITHHOLDING TAXES	7
ARTICLE 5. MEMBERS		7
5.1	MEETINGS OF MEMBERS; PLACE OF MEETINGS	7
5.2	QUORUM; VOTING REQUIREMENT	7
5.3	PROXIES	8
5.4	ACTION WITHOUT MEETING	8
5.5	NOTICE	8
5.6	POWERS OF THE MEMBERS	8
5.7	OTHER BUSINESS VENTURES	8
ARTICLE 6. MANAGERS AND OFFICERS		9
6.1	POWERS OF THE MANAGERS	9
6.2	LIMITATION ON POWERS OF MANAGERS	9
6.3	DUTIES OF MANAGERS	10
6.4	NUMBER, APPOINTMENT, TENURE AND ELECTION OF MANAGERS	11
6.5	COMPENSATION	12
6.6	MEETINGS OF AND VOTING BY MANAGERS	12
6.7	OFFICERS	13
6.8	AUTHORITY TO EXECUTE DOCUMENTS TO BE FILED UNDER THE ACT	14
ARTICLE 7. LIABILITY AND INDEMNIFICATION		14
7.1	LIABILITY OF MEMBERS AND MANAGERS	14

 

 

7.2	INDEMNIFICATION	14
7.3	EXPENSES	15
7.4	NON-EXCLUSIVITY	15
7.5	INSURANCE	15
7.6	DUTIES	15
ARTICLE 8. TRANSFERS OF INTERESTS AND ASSIGNMENTS; WITHDRAWAL; EXPULSION; PURCHASE OF A MEMBER’S INTEREST; BUY-SELL AGREEMENT; RIGHT OF FIRST REFUSAL		16
8.1	GENERAL RESTRICTIONS	16
8.2	PERMITTED TRANSFERS	17
8.3	SUBSTITUTE MEMBERS	17
8.4	EFFECT OF ADMISSION AS A SUBSTITUTE MEMBER	18
8.5	ADDITIONAL MEMBERS	18
8.6	PURCHASE OF A MEMBER’S INTEREST	18
8.7	DRAG ALONG RIGHTS	20
8.8	PURCHASE TERMS VARIED BY AGREEMENT	20
8.9	EXPULSION	20
ARTICLE 9. DISSOLUTION AND TERMINATION		20
9.1	EVENTS CAUSING DISSOLUTION	20
9.2	NOTICES TO SECRETARY OF STATE	21
9.3	CASH DISTRIBUTIONS UPON DISSOLUTION	21
9.4	IN-KIND	22
ARTICLE 10. ACCOUNTING AND BANK ACCOUNTS		22
10.1	FISCAL YEAR AND ACCOUNTING METHOD	22
10.2	BOOKS AND RECORDS	22
10.3	BOOKS AND FINANCIAL REPORTS	23
10.4	TAX RETURNS AND ELECTIONS	23
10.5	BANK ACCOUNTS	23
ARTICLE 11. MISCELLANEOUS		24
11.1	TITLE TO PROPERTY; NO PARTITION	24
11.2	WAIVER OF DEFAULT	24
11.3	NOTICE	24
11.4	AMENDMENT	25
11.5	NO THIRD PARTY RIGHTS	25
11.6	SEVERABILITY	25
11.7	NATURE OF INTEREST IN THE COMPANY	25
11.8	BINDING AGREEMENT	25
11.9	HEADINGS	25
11.10	WORD MEANINGS	26
11.11	COUNTERPARTS	26
11.12	ENTIRE AGREEMENT	26
11.13	REPRESENTATIONS AND ACKNOWLEDGMENTS	26
11.14	MEMBER’S REPRESENTATIVE	26
11.15	DISPUTE RESOLUTION AND ARBITRATION	27
11.16	NON DISCLOSURE	27
11.17	GOVERNING LAW	27

 

 

SCHEDULE A - RESERVED	1
SCHEDULE B – TAXES	1

 

 

OPERATING AGREEMENT

OF

SHOW ME ETHANOL, LLC

THIS OPERATING AGREEMENT is made and entered into as of the 24 ^th day of January, 2006 (the “Effective Date”) by and among the Persons executing this Agreement as Members and/or Managers on the signature page hereof.

WHEREAS , the Members have caused SHOW ME ETHANOL, LLC (the “Company”)to be formed on January 24, 2006 as a limited liability company under the Missouri Limited Liability Company Act (the “Act”) and, as required thereunder, do hereby adopt this Operating Agreement as the operating agreement of the Company;

WHEREAS , by executing this Agreement, each of the Members hereby (a) ratifies the formation of the Company and the filing of the Articles, (b) confirms and agrees to the Members’ status as members of the Company, and (c) continues the existence of the Company for the purposes hereinafter set forth, subject to the terms and conditions hereof;

NOW, THEREFORE , in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows:

ARTICLE 1.

FORMATION AND OFFICES

1.1

Formation.

Pursuant to the Act, the Members have formed a Missouri limited liability company effective upon the filing of the Articles of the Company with the Secretary of State of Missouri.

1.2

Principal Office.

The principal office of the Company shall be located at Highway 10 West, Richmond, Missouri, or at such other place(s) as the Managers may determine from time to time.

1.3

Registered Office and Registered Agent.

The location of the registered office and the name of the registered agent of the Company in the State of Missouri shall be as stated in the Articles, as determined from time to time by the Managers.

1.4

Purpose of Company.

The purposes for which the Company is organized are to engage in the business of purchasing and processing agricultural bio mass, including corn and other grains, for the production and sale of ethanol and its by-products and the transaction of any or all lawful business for which a limited liability company may be organized under the Act. Subject to the provisions of this Agreement, the Company shall have the power to do any and all acts and things necessary, appropriate, advisable or convenient for the furtherance and accomplishment of the purposes of the Company, including, without limitation, to engage in any kind of activity and to enter into and perform obligations of any kind necessary to or in connection with, or incidental to, the accomplishment of the purposes of the Company, so long as said activities and obligations may be lawfully engaged in or performed by a limited liability company under the Act.

 

1.5

Duration.

 

The duration of the Company shall be perpetual.

1.6

Delivery of Copies to Members.

Upon the return by the Secretary of State of Missouri to the Company of any document “Filed” with the Secretary of State of Missouri relating to the Company, neither the Company nor the Person executing such document shall be required to deliver or mail a copy thereof to any Member.

ARTICLE 2.

DEFINITIONS

2.1

Terms Defined Herein.

As used herein, the following terms shall have the following meanings, unless the context otherwise requires:

“Act” means the Missouri Limited Liability Company Act, Chapter 347, Missouri Revised Statutes, as amended from time to time.

“Affiliate” of a specified Person (the “Specified Person”) means any Person (a) who directly or indirectly controls, is controlled by, or is under common control with the Specified Person; (b) who owns or controls ten percent (10%) or more of the Specified Person’s outstanding voting securities or equity interests; (c) in whom such Specified Person owns or controls ten percent (10%) or more of the outstanding voting securities or equity interests; (d) who is a director, partner, manager, executive officer or trustee of the Specified Person; (e) in whom the Specified Person is a director, partner, manager, executive officer or trustee; or (f) who has any relationship with the Specified Person by blood, marriage or adoption, not more remote than first cousin.

“Agreement” means this Operating Agreement, as amended or restated from time to time.

“Approved Sale” means the sale of the Company, in a single transaction or a series of related transactions, to a third party (i) pursuant to which such third party proposes to acquire all of the outstanding Interests (whether by merger, consolidation, recapitalization, reorganization, purchase of the outstanding Interests or otherwise) or all or substantially all of the assets of the Company, (ii) which has been approved by the Managers and Super Majority in Interest, and (iii) pursuant to which all Members will receive (whether in such transaction or, with respect to an asset sale, upon a subsequent liquidation) the same form and amount of consideration per Percentage Interest or, if any Members are given an option as to the form and amount of consideration to be received, all Members are given the same option.

“Articles” means the Articles of Organization of the Company filed with the Secretary of State of Missouri, as amended or restated from time to time.

“Assignee” means any Person who is the holder of an Interest but is not then a Member. An Assignee shall not be entitled to participate in the management of the business and affairs of the Company or to become or to exercise the rights of a Member, including the right to vote, the right to require any information or accounting of the Company’s business or the right to inspect the Company’s books and records. An Assignee shall only be entitled to receive, to the extent of the Interest held by such Assignee, the share of distributions and profits, including distributions representing the return of Capital Contributions, to which the transferor would otherwise be entitled with respect to the Transferred Interest. An Assignee shall not have the right to vote his, her or its Transferred Interest until the transferee is admitted to the Company as a substitute Member with respect to the Transferred Interest.

 

“Capital Contribution” means the total amount of cash, other property, the use of property, services rendered, promissory note or other binding written obligation to contribute cash or property or perform services or other valuable consideration contributed to the Company by each Member pursuant to the terms of this Agreement. Any reference in this Agreement to the Capital Contribution of a Member shall include the Capital Contribution made by any predecessor holder of the Interest of that Member.

“Class” means a class of units representing ownership interests in the Company as determined from time to time by the Board of Managers.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, including the rules and regulations promulgated thereunder.

“Company” means SHOW ME ETHANOL, LLC.

“Equity Account” means a separate account established by the Company and maintained for each Member in accordance with Section 2(b) of Schedule B . The initial balance of each Member’s Equity Account shall equal such Member’s Capital Contribution.

“Event of Withdrawal” means an event that causes a Person to cease to be a Member as provided in the Act which events include, but are not limited to, (a) voluntary withdrawal to the extent permitted by Section 8.1(b) (but subject to damage payments to the Company for breach of this Agreement), (b) assignment (in accordance with the provisions of this Agreement) of all of a Member’s Interest, (c) expulsion, (d) the making of an assignment for the benefit of creditors, (e) being subject to a Bankruptcy (as defined in Section 347.015.3 of the Act), (f) appointment of a trustee or receiver for the Member or for all or any substantial part of his, her or its property, (g) in the case of a Member who is a natural person (1) his or her death, (2) the entry by a court of competent jurisdiction adjudicating him or her incompetent to manage his or her person or estate, (h) in the case of a Member that is a trust (1) the termination of the trust or (2) a distribution of such trust’s entire Interest but not merely the substitution of a new trustee, (i) in the case of a Member that is a general or limited partnership (1) the dissolution and commencement of winding up of the partnership or (2) a distribution of such partnership’s entire Interest, (j) in the case of a Member that is a corporation (1) the filing of articles of dissolution or their equivalent for the corporation, (2) a revocation of its charter or (3) a distribution of corporation’s entire Interest, (k) in the case of a Member that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Company, or (l) in the case of a Member that is a limited liability company (1) the filing of articles of dissolution or termination or their equivalent for a limited liability company or (2) a distribution of such limited liability company’s entire Interest, or (m) in the case of a Member that is a limited partnership (1) the filing of articles of dissolution or termination or their equivalent for a limited partnership or (2) a distribution of its entire Interest.

“Interest” refers to all of a Member’s (or an Assignee’s) rights and interests in the Company in such Member’s (or Assignee’s) capacity as a Member (or an Assignee), all as provided in the Articles, this Agreement and the Act, together with the obligations of such Member (or Assignee) to comply with all the terms and provisions of the Agreement and the Act.

“Liquidation Proceeds” means all Property at the time of liquidation of the Company and all proceeds thereof.

“Majority in Interest” means any individual Member or group of Members holding an aggregate of more than 50% of the Percentage Interests held by all Members or in the case of the Managers, Managers holding at least 6 votes.

“Managers” means the Persons designated or elected from time to time pursuant to this Agreement as managers of the Company, acting in their capacity as Managers.

 

“Members” means those Persons executing this Agreement as members of the Company, including any substitute Members or additional Members, in each such Person’s capacity as a Member of the Company.

“Net Cash Flow” means, with respect to any fiscal period, all operating and investment revenues during such period and any amounts theretofore held in any reserve which the Managers determine need not be held any longer in reserve, all determined in accordance with the Company’s method of accounting, less Operating Expenses.

“Notice” means a writing, containing the information required by this Agreement to be communicated to a Person in accordance with Section 11.3 .

“Operating Expenses” means, with respect to any fiscal period, (a) to the extent paid other than with cash withdrawn from reserves therefor, the amount of cash disbursed in such period in order to operate the Company and to pay all expenses (including, without limitation, management fees, wages, taxes, insurance, repairs and/or other costs and expenses) incident to the ownership or operation of the Property or the Company and (b) the amount of any reserves created during such period or the amount of any increase in any existing reserve, as provided in Section 4.3 .

“Percentage Interest” of a Member means, at any particular time, a ratio, expressed as a percentage, which is the ratio that the Capital Contribution of such Member bears to the total Capital Contributions of all Members.

“Permitted Assignee” means (i) any Member, a Member’s spouse or any of a Member’s descendants, (ii) the settlor of a trust that is a Member; or (iii) any trust for the primary benefit of a Member, a Member’s spouse or any of a Member’s descendants, so long as, in each case, each trustee entitled to vote thereunder is also either a Member or a settlor of a trust that is a Member.

“Person” means any individual, partnership, domestic or foreign limited partnership, domestic or foreign limited liability company, domestic or foreign corporation, trust, business trust, employee stock ownership trust, real estate investment trust, estate, association and other business or not for profit entity.

“Prime Rate” means the daily prime rate of interest as published from time to time in The Wall Street Journal as being the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.

“Property” means all properties and assets that the Company may own or otherwise have an interest in from time to time.

“Super Majority in Interest” means any individual Member or a group of Members holding an aggregate of more than 70% of the Percentage Interests held by all Members who are entitled to vote hereunder, or in the case of Managers, Managers holding at least 8 votes.

“Transfer” means (a) when used as a verb, to give, sell, exchange, assign, transfer, pledge, hypothecate, bequeath, devise or otherwise dispose of or encumber, and (b) when used as a noun, the nouns corresponding to such verbs, in either case voluntarily or involuntarily, by operation of law or otherwise.

“Units” means an ownership interest in the Company which may be of different classes or different series within a class, as determined by the Board from time to time, including, but not limited to, Class A Units, Class B Units and Class C Units.

 

“Unreturned Capital Contribution” means with respect to each Member, the amount of such Member’s Capital Contribution less any amounts paid to such Member as a return of its Capital Contribution as required by Sections 4.1 and 9.3.

ARTICLE 3.

CAPITALIZATION OF THE COMPANY

3.1

Initial Capital Contributions.

The names, address and Capital Contributions of the Members shall be reflected in the books and records of the Company. Each Member shall make an initial Capital Contribution to the capital of the Company in an amount set forth opposite such Member’s name and address in the books and records of the Company. The agreed upon fair market value of any contributed property shall also be set forth opposite such Member’s name and address in the books and records of the Company.

3.2

Additional Capital Contributions.

(a)        No Member (or Assignee) shall be required or permitted to make any additional Capital Contribution except as otherwise provided in this Agreement. If agreed to by a Super Majority in Interest of the Members, each Member (and Assignee) shall, upon the written request of the Managers, make additional Capital Contributions to the Company equal to the total amount of additional Capital Contributions required times such Member’s (or Assignee’s) then Percentage Interest. The obligation to make additional Capital Contributions shall be the direct obligation of the Member (or Assignee) and shall be enforceable by the Company and each of its Members. The failure of a Member (or Assignee) to make an additional Capital Contribution shall constitute a material breach of this Agreement. If a Member (or Assignee) fails to make an additional Capital Contribution within ten (10) days of its due date, (i) the Percentage Interests of the Members (and the Assignees) shall be recalculated under Section 3.2(b) (and again recalculated upon payment of such delinquent additional Capital Contribution), and (ii) all amounts distributable by the Company to the Member (or Assignee) in any capacity shall be suspended and used by the Company to pay to the Company any amounts due the Company pursuant to this Section 3.2(a) , and the Member’s (or Assignee’s) right to receive distributions from the Company shall not be restored until the Member (or Assignee) shall have paid in full to the Company the delinquent additional Capital Contribution, plus interest at the lesser of (i) the Prime Rate plus five percent (5%) annually or (ii) the maximum rate permitted by law, calculated from the date such additional Capital Contribution should have been paid to the date it is paid by the Member (or Assignee), plus any damages to the Company attributable to the failure to timely pay the additional Capital Contribution.

(b)        If any additional Capital Contributions are made by Members (or Assignees) pursuant to Section 3.2(a) but not in proportion to their respective Percentage Interests, then the Percentage Interest of each Member (or Assignee) shall be amended to equal the percentage resulting from dividing such Member’s (or Assignee’s) aggregate Capital Contributions (including initial and any additional Capital Contributions) by the aggregate Capital Contributions (including initial and any additional Capital Contributions) of all Members (and Assignees).

3.3

Capital Contributions.

No Member shall have the right to reduce such Member’s Capital Contribution or to receive any distributions from the Company except as provided in Sections 4.1 and 9.3 . No Member shall be entitled to receive or be credited with any interest on the balance of such Member’s Capital Contribution at any time.

 

ARTICLE 4.

CASH DISTRIBUTIONS; PROFITS AND LOSSES FOR TAX PURPOSES

 

4.1

Cash Distributions Prior to Dissolution.

(a)        The Managers shall have the right to determine how much Net Cash Flow, if any, of the Company shall be distributed among the Members each year; provided, however, if such Net Cash Flow is otherwise available, the Managers shall distribute to the Members an amount of Net Cash Flow sufficient for the Members to satisfy their respective income tax liabilities arising by virtue of the allocations in Schedule B hereof, assuming each Member is subject to tax at the highest marginal federal tax bracket for married individuals filing jointly and at the highest such marginal rate applicable to Missouri residents. Any Net Cash Flow of the Company to be distributed shall be distributed among the Members, pro rata in proportion to their respective Percentage Interests.

(b)        Notwithstanding anything to the contrary herein provided, no distribution hereunder shall be permitted to the extent prohibited by the Act. Currently, among other prohibitions, the Act prohibits the Company from making, and a Member from receiving, a distribution to the extent that, after giving effect to the distribution, (i) the Company would not be able to pay its debts as they become due in the usual course of business or (ii) the Company’s total assets would be less than the sum of its total liabilities, with Capital Contributions not being deemed a liability.

(c)        No distribution of Net Cash Flow or other cash made to any Member shall be determined a return or withdrawal of a Capital Contribution unless so designated by the Managers in their sole and exclusive discretion.

4.2

Persons Entitled to Distributions.

All distributions of Net Cash Flow to the Members under Section 4.1 hereof shall be made to the Persons shown on the records of the Company to be entitled thereto as of the last day of the fiscal period prior to the time for which such distribution is to be made, unless the transferor and transferee of any Interest otherwise agree in writing to a different distribution and such distribution is consented to in writing by the Managers.

4.3

Reserves.

The Managers shall have the right to establish, maintain and expend reserves to provide for working capital, future investments, capital expenditures, debt service and such other purposes as they may deem necessary or advisable.

4.4

Allocation of Profits and Losses for Tax Purposes and Special Allocations.

All Profits and Losses for Tax Purposes of the Company and all special allocations of the Company shall be made in accordance with attached Schedule B .

4.5

Withholding Taxes.

If the Company is required to withhold any portion of any amounts distributed, allocated or otherwise attributable to a Member of the Company by applicable U.S. federal, state, local or foreign tax laws, the Company may withhold such amounts and make such payments to taxing authorities as are necessary to ensure compliance with such tax laws. Any funds withheld by reason of this Section 4.5 shall nonetheless be deemed distributed to such Member in question for purposes of Article 4 and Article 9 . If the Company does

 

not withhold from actual distributions any amounts it was required to withhold by applicable tax laws, the Company may, at its option, (i) require the Member to which the withholding was credited to reimburse the Company for withholding required by such laws, including any interest, penalties or additions thereto; or (ii) reduce any subsequent distributions to such Member by such withholding, interest, penalties or additions thereto. The obligation of a Member to reimburse the Company for such amounts shall continue after such Member transfers or liquidates its interest in the Company. Each Member agrees to furnish the Company with any representations and forms as shall reasonably be requested by the Company to assist in determining the extent of, and in fulfilling, any withholding obligations it may have.

ARTICLE 5.

MEMBERS

 

5.1

Meetings of Members; Place of Meetings.

Regular meetings of the Members shall be held on an annual basis or more frequently as determined by the Managers. Special meetings of the Members may be held for any purpose or purposes, unless otherwise prohibited by law or by the Articles, and may be called by the Managers, or by Members owning not less than 40% of the Percentage Interests. All meetings of the Members shall be held at the principal offices of the Company as set forth in Section 1.2 hereof, or at such other place as shall be designated from time to time by the Managers and stated in the Notice of the meeting or in a duly executed waiver of the Notice thereof.

5.2

Quorum; Voting Requirement.

The presence, in person or by proxy, of a Majority in Interest of the Members shall constitute a quorum for the transaction of business by the Members. The affirmative vote of a Majority in Interest of the Members shall constitute a valid decision of the Members, except where a larger vote is required by the Act, the Articles or this Agreement.

5.3

Proxies.

At any meeting of the Members, every Member having the right to vote thereat shall be entitled to vote in person or by proxy appointed by an instrument in writing (by means of electronic transmission or as otherwise permitted by applicable law) signed by such Member and bearing a date not more than one year prior to such meeting.

5.4

Action Without Meeting.

Any action required or permitted to be taken at any meeting of the Members may be taken without a meeting, without prior Notice and without a vote if a consent in writing setting forth the action so taken is signed by Members having not less than the minimum Percentage Interests that would be necessary to authorize or take such action at a meeting of the Members. Prompt Notice of the taking of any action taken pursuant to this Section 5.4 by less than the unanimous written consent of the Members shall be given to those Members who have not consented in writing. Such consent may be executed by facsimile and may be executed in counterparts.

5.5

Notice.

Notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose for which the meeting is called shall be delivered not less than five (5) days nor more than sixty (60) days before the date of the meeting by or at the direction of the Managers or other Persons calling the meeting, to each Member entitled to vote at such meeting. When any Notice is required to be given to any Member

 

hereunder, a waiver thereof in writing signed by the Member, whether before, at, or after the time stated therein, shall be equivalent to the giving of such Notice. A Member may also waive Notice by attending a meeting without objection to a lack of Notice.

5.6

Powers of the Members.

No Member, acting solely in his, her or its capacity as a Member, shall act as an agent of the Company or have any authority to act for or to bind the Company.

5.7

Other Business Ventures.

Any Member or Manager may engage in or possess an interest in other business ventures of every nature and description, independently or with others, whether or not similar to or in competition with the business of the Company, and neither the Company nor the Members shall have any right by virtue of this Agreement in or to such other business ventures or to the income or profits derived therefrom. Unless otherwise agreed to, no Manager shall be required to devote all such Manager’s time or business efforts to the affairs of the Company but shall devote so much of such Manager’s time and attention to the Company as is reasonably necessary and advisable to manage the affairs of the Company to the best advantage of the Company.

ARTICLE 6.

MANAGERS AND OFFICERS

6.1

Powers of the Managers.

Except as otherwise provided hereunder, the business and affairs of the Company shall be managed by the Managers. Any decision or act of the Managers within the scope of the Managers’ power and authority granted hereunder shall control and shall bind the Company.

6.2

Limitation on Powers of Managers.

(a)        Without the approval of a Majority in Interest of the Members, the Managers shall not have the authority to:

(i)         cause the Company to make any loan to any Member, other than for a purpose which the Managers determine directly benefits the Company, and then only on an arms-length basis at the then-prevailing market rates;

(ii)        enter into or amend any transaction between the Company and a Member or an Affiliate of a Member or an employee of either except in connection with transactions made on an arms-length basis at the then-prevailing market rates;

(iii)       grant any guarantee of third party indebtedness for borrowed money, grant any guarantee of third party obligations outside of the ordinary course of business;

(iv)       undertake or commit to undertake any capital expenditure in excess of $25,000,000 during any two consecutive fiscal years.

(b)        In addition to any other restrictions on the authority of the Managers described in this Agreement, without the approval of Super Majority in Interest of the Members, the Managers shall not have the authority to:

 

(i)         amend the Articles;

(ii)        sell, exchange, lease, or otherwise dispose of all or substantially all of the Property in a single transaction or series of related transactions;

(iii)       terminate, dissolve or wind-up the Company;

(iv)       (1) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of the Company or of all or a substantial part of the assets of the Company, (2) admit in writing the Company’s inability to pay its debts as they become due, (3) make a general assignment for the benefit of creditors, (4) have an order for relief entered against the Company under applicable federal bankruptcy law, or (5) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against the Company in any bankruptcy, reorganization or insolvency proceeding;

(v)         commingle the Company’s funds with those of any other Person;

(vi)       permit voluntary additional Capital Contributions by existing Members.

(vii)      approve a merger or consolidation of the Company with or into another Person or the acquisition by the Company of another business (either by asset, stock or interest purchase) or any equity of another entity;

(viii)     change the status of the Company from one in which management is vested in the Managers to one in which management is vested in the Members;

(ix)       authorize any transaction, agreement or action on behalf of the Company that is unrelated to its purpose as set forth in the Articles, that otherwise contravenes this Agreement or that is not within the usual course of the business of the Company;

(x)        recapitalize the Company; or

(xi)       subject to Section 8.5 as to additional Members, determine, modify, compromise or release the amount and character of the contributions which a Member shall make, or shall promise to make, as the consideration for the issuance of an Interest.

6.3

Duties of Managers.

In addition to the rights and duties of the Managers set forth elsewhere in this Agreement and subject to the other provisions of this Agreement, the Managers shall be responsible for and are hereby authorized to:

(a)        control the day to day operations of the Company;

(b)        hire or appoint employees, agents, independent contractors or officers of the Company;

(c)        carry out and effect all directions of the Members;

(d)        select and engage the Company’s accountants, attorneys, engineers and other professional advisors;

 

(e)        apply for and obtain appropriate insurance coverage for the Company;

(f)        temporarily invest funds of the Company in short term investments where there is appropriate safety of principal;

(g)        acquire in the name of the Company 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;

(h)        engage in any kind of activity and perform and carry out contracts of any kind necessary to, in connection with, or incidental to the accomplishment of the purposes of the Company, so long as said activities and contracts may be lawfully carried on or performed by a limited liability company under the Act and are in the ordinary course of the Company’s business;

(i)         negotiate, execute and perform all agreements, contracts, leases, loan documents and other instruments and exercise all rights and remedies of the Company in connection with the foregoing;

(j)          nominate candidates for consideration by the Class A Units for election to the Board of Managers;

(k)        adjust the compensation, in the Board’s discretion, payable under Section 6.5(b); and

(l)         establish and issue one or more classes of units or series within classes, to set forth the designation of class or series within classes of such units, and to fix the relative rights, preferences, privileges and limitations of each class or series within classes of units.

6.4

Number, Appointment, Tenure and Election of Managers.

 

(a)        There shall be no more than eleven (11) members of the Board (each, a “ Manager ” and collectively, the “ Managers ”) ten of whom shall be elected by the Members. The eleventh Manager shall be elected by the Managers and shall not be a Member or an employee of a Member. Each Manager shall hold office until his or her death, resignation, retirement, disability, removal from office or until his or her successor is elected/appointed and assumes office. A Manager need not be a Member of the Company.

(b)        The Majority in Interest of the Class A Unit holders shall have the right to elect seven (7) Managers. Ben Beetsma, David Durham, Roger Ehrich, George Famuliner III, Rob Korff, John Letzig and Robert Quinn shall be the initial Managers elected by the Class A Unit holders; each such Manager shall be entitled to hold his or her Board seat until his or her death, resignation, retirement, removal or until his or her successor is elected and assumes office.

(c)        The Majority in Interest of the Class B Unit holders shall have the right to designate two (2) Managers. Mike Nordwald and Jim Edwards shall be the initial Managers elected by the Class B Unit holders; each such Manager shall be entitled to hold his or her Board seat until his or her death, resignation, retirement, removal or until his or her successor is appointed and assumes office.

(d)        The Majority in Interest of the Class C Unit holders shall have the right to designate one (1) Manager. Tom Kolb shall be the initial Manager elected by the Class C Unit holders; each such Manager shall be entitled to hold his or her Board seat until his or her death, resignation, retirement, removal or until his or her successor is appointed and assumes office.

(e)        Upon the death, resignation, retirement, or removal of a Manager, the membership class which originally elected such Manager shall be entitled to elect a replacement Manager.

 

(f)        Each Manager shall be subject to removal from office upon the vote of a Majority in Interest of the Units entitled to elect such Manager.

(g)        The initial Managers representing the Class A Unit holders shall determine by lot the initial term of each such Manager. Two such Managers shall serve an initial term of five years, two such Managers shall serve an initial term of four years and one such Manager shall serve an initial term of three years. Upon the expiration of the initial terms of the Managers representing Class A Unit holders, Managers representing Class A Unit holders shall thereafter serve a term of three years and shall stand for election by the Class A Unit holders every three years as their terms expire.

(h)        Any change in the Percentage Interests held in the Company by a Class shall result in a recalculation of the number of Managers elected/appointed by the Classes. The Percentage Interests held by a Class shall be rounded to the nearest 10% for purposes of determining Manager representation of a Class. A determination of any change in Board representation shall require an election be held prior to the Board taking any further action other than to call for the election of Managers in accordance with the new distribution of Manager representation.

6.5

Compensation.

(a)        Except as provided in Sections 6.5(b) and 6.5(c) or elsewhere in this Agreement, no Manager or Member shall be entitled to compensation for any services such Manager or such Member may render to or for the Company or be entitled to reimbursement of any general overhead expenses incurred by such Manager or Member in his, her or its capacity as a Manager or Member. Each Manager and, where applicable, Member, shall be entitled to reimbursement from the Company for all reasonable direct out-of-pocket expenses incurred on behalf of the Company upon presentation to the Company of receipts or other appropriate documentation evidencing such expenses.

(b)        For their services to the Company in their capacity as Managers, the Managers shall receive $100 per diem for meetings and the Chairman and Vice Chairman shall each receive $150 per diem for meetings.

(c)        Subject to the provisions of Section 6.2(a)(ii) hereof, any Manager or Member or Affiliate thereof who performs professional, legal, accounting, management or engineering services for the Company or serves as the sales agent for the Company shall be entitled to receive compensation for such services.

6.6

Meetings of and Voting by Managers.

(a)        Meetings of the Managers shall be held at such time and at such places as they shall determine. In addition, any one Manager may, upon giving seven (7) days’ Notice to the others, call a meeting of the Managers. No meeting of the Managers shall be held without a quorum being present, which shall consist of a majority of the Managers. Managers may participate in a meeting of the Managers by means of conference telephone or other similar communication equipment whereby all Managers participating in the meeting can hear each other. Participation in a meeting in this manner shall constitute presence in person at the meeting. Action of the Managers shall require the favorable vote of a majority of all Managers.

(b)        Unless a greater number is required herein or by statute, an action approved by the Majority in Interest of the Managers shall be the act of the Managers. Except as specifically permitted in this Agreement, each Manager shall have only one vote. Whenever a Manager appointed by a Class of Units held by only one Member is absent from a meeting of the Managers, any Manager attending such meeting and appointed by the same Member shall vote for himself and the absent Manager, as if such absent Manager were there, on any matter coming to vote before the Board.

 

(c)        The Manage