LIMITED LIABILITY COMPANY AGREEMENT

Exhibit 2.1
EXECUTION VERSION

LIMITED LIABILITY COMPANY AGREEMENT

OF

MISSISSIPPI HUB ACQUISITION COMPANY, LLC

     

Dated as of October 31, 2007

TABLE OF CONTENTS

ARTICLE I DEFINED TERMS			1
ARTICLE II ORGANIZATIONAL MATTERS			1
SECTION 2.1 Formation; Name			1
SECTION 2.2 Purpose and Powers			2
SECTION 2.3 Offices; Registered Agent			2
SECTION 2.4 Term			2
SECTION 2.5 Liability to Third Parties			2
SECTION 2.6 Admittance			2
SECTION 2.7 Members and Membership Interests			2
SECTION 2.8 Withdrawal			3
SECTION 2.9 Exclusivity; Company Opportunities			3
ARTICLE III UNITS			4
SECTION 3.1 Authorization and Issuance of Units			4
SECTION 3.2 Unit Certificates			5
ARTICLE IV MANAGEMENT OF THE COMPANY			5
SECTION 4.1 Board of Managers			5
SECTION 4.2 Meetings of Members			8
SECTION 4.3 Officers			9
SECTION 4.4 Duties of Officers and Managers			10
SECTION 4.5 Indemnification			10
SECTION 4.7 Access			14
SECTION 4.8 Budget Process; Construction Oversight			14
SECTION 4.9 Enforcement of Affiliate Agreements			15
ARTICLE V CAPITAL AND DISTRIBUTIONS			15
SECTION 5.1 Capital Contributions			15
SECTION 5.2 Capital Accounts			17
SECTION 5.3 No Withdrawal of Capital; Distributions			17
SECTION 5.4 Tax Distributions			18
SECTION 5.5 No Interest on Capital			18
SECTION 5.6 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit			18
SECTION 5.7 Withholding			22
ARTICLE VI TRANSFERS OF COMPANY INTERESTS			23
SECTION 6.1 Transfer of Units by Members. (a)			23
SECTION 6.2 Right of First Offer			23
SECTION 6.3 ESMI Change of Control			25
SECTION 6.4 Tag-Along Rights			25
SECTION 6.5 Prohibited Transfers			26
SECTION 6.6 Rights of Unadmitted Assignees			26
SECTION 6.7 Admission of Substituted Members			26
SECTION 6.8 Representations Regarding Transfers; Legend			27
SECTION 6.9 Distributions and Allocations in Respect of Transferred Units			28
SECTION 6.10 Buy/Sell Rights			29

ARTICLE VII BOOKS OF ACCOUNT AND FISCAL YEAR			30
SECTION 7.1 Books of Account			30
SECTION 7.2 Fiscal Year			30
SECTION 7.3 Financial Statements			31
SECTION 7.4 Tax Returns and Information			31
SECTION 7.5 Fixing Record Date			33
ARTICLE VIII DISSOLUTION, LIQUIDATION, TERMINATION AND EVENTS OF DEFAULT			33
SECTION 8.1 Dissolution			33
SECTION 8.2 Liquidation and Termination			33
SECTION 8.3 Cancellation of Filings			34
SECTION 8.4 Event of Default by Member			34
ARTICLE IX TERM			35
ARTICLE X MISCELLANEOUS			35
SECTION 10.1 Jurisdiction			35
SECTION 10.2 Governing Law			36
SECTION 10.3 Waiver of Jury Trial			36
SECTION 10.4 Amendments and Waivers			36
SECTION 10.5 Tax Matters			37
SECTION 10.6 Notices			37
SECTION 10.7 Entire Agreement			37
SECTION 10.8 Assignment; Successors and Assigns			37
SECTION 10.9 No Agency			38
SECTION 10.10 Severability			38
SECTION 10.11 Counterparts			38
SECTION 10.12 Headings; Exhibits			38
SECTION 10.13 Further Assurances			38
SECTION 10.14 No Third Party Beneficiary			38
SECTION 10.15 Specific Performance			38
SECTION 10.16 Expenses			39
SECTION 10.17 Rules of Construction			39
EXHIBIT A — Capital Accounts/Members Schedule			A-1
EXHIBIT B — Form of Unit Certificate			B-1
EXHIBIT C — List of Designees to the Board of Managers			C-1
EXHIBIT D — Form of Draw Certificate			D-1
EXHIBIT E — Construction and Operation Agreement			E-1
ANNEX I — Definitions			I-1
ANNEX II-A — Initial Construction Budget		II-A-1
ANNEX II-B — Initial Construction Plan		II-B-1
ANNEX III-A — Initial Capital Contributions		III-A-1

MISSISSIPPI HUB ACQUISITION COMPANY, LLC
LIMITED LIABILITY COMPANY AGREEMENT

     THIS LIMITED LIABILITY COMPANY AGREEMENT (this “ Agreement ”) of MISSISSIPPI HUB ACQUISITION COMPANY, LLC, a Delaware limited liability company (the “ Company ”), dated as of October 31, 2007 (the “ Effective Date ”) is made by and among the Company and DB PEV GAS, LLC, a Delaware limited liability company (“ Drawbridge ”), EnergySouth Midstream, Inc., an Alabama corporation (“ ESMI ”), and, solely in connection with Section 2.9, EnergySouth, Inc. Drawbridge and ESMI are each individually referred to as a “ Member ” of the Company.

W I T N E S S E T H :

     A. The Company was formed as a limited liability company on October 26, 2007.

     B. The Members intend for the Company to be a separate operating entity. The Company has been established for the purpose of acquiring (the “ Acquisition ”) (i) 100% of the outstanding membership interests in Mississippi Hub, LLC (“ MS Hub ”) pursuant to that certain Membership Interest Purchase Agreement, dated as of the date hereof, by and among Theo B. Bean, Jr., Theo B. Bean, Jr., as trustee for the Theo B. Bean, Jr. Family Trust and the Company (the “ MIPA ”) and (ii) certain real property owned by BRI-Marsh, LLC (“ BRI-Marsh ”) pursuant to that certain Purchase and Sale Agreement, dated as of the date hereof, by and between BRI-Marsh and the Company (the “ PSA ”).

     C. The Members and the Company wish to enter into this Agreement in order to set forth their respective rights and obligations.

     ACCORDINGLY, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members and the Company agree as follows:

ARTICLE I

DEFINED TERMS

     For purposes of this Agreement, the capitalized terms shall have the meanings set forth on Annex I to this Agreement, which is incorporated herein by reference. Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the MIPA, which defined terms shall be applicable without regard to the termination of the MIPA.

ARTICLE II

ORGANIZATIONAL MATTERS

          SECTION 2.1 Formation; Name . The Company was formed upon the execution and filing of a Certificate of Formation with the Secretary of State of the State of Delaware. This Agreement shall be effective as of the date hereof. The name of the Company shall be “Mississippi Hub Acquisition Company, LLC” or such other name as the

Board of Managers of the Company (the “ Board ”) may from time to time hereafter designate in accordance herewith. The Board shall cause to be executed and filed such further certificates, notices, statements or other instruments required by law for the operation of a limited liability company in all jurisdictions where the Company is required to qualify or be authorized to do business as a foreign limited liability company, or as otherwise necessary to carry out the purpose of this Agreement and the business of the Company.

          SECTION 2.2 Purpose and Powers . The purpose of the Company shall be to (a) pursue the Acquisition, (b) develop, construct, finance, operate and own the Facility and (c) engage, either directly or through one or more Subsidiaries, in any other lawful business that may be engaged in by a limited liability company under the Act relating to the foregoing. The Company shall possess and may exercise all of the powers and privileges granted by the Act or by any other law or by this Agreement (if not prohibited by the Act), together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.

          SECTION 2.3 Offices; Registered Agent . The principal office of the Company, and such additional offices as the Company may determine to establish, shall be located at such place or places inside or outside the State of Delaware as the Board may designate from time to time. The registered office of the Company in the State of Delaware is located at The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The registered agent of the Company for service of process at such address is The Corporation Trust Company.

          SECTION 2.4 Term . The term of the Company commenced on the date its certificate of formation described in Section 18-201 of the Act was filed in the office of the Secretary of State of the State of Delaware and shall continue until terminated in accordance with the terms of this Agreement or the Act.

          SECTION 2.5 Liability to Third Parties . The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, Manager or Officer of the Company shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or acting as a Manager or Officer of the Company. Notwithstanding any provision of this Agreement to the contrary, with the unanimous consent of the Board, any Member, at its sole and absolute discretion, may guarantee all or any portion of any debt, obligation or liability of the Company.

          SECTION 2.6 Admittance . Except as specifically provided herein, no new party shall be admitted as a member of the Company without the unanimous vote or written consent of the Members.

          SECTION 2.7 Members and Membership Interests . A Member’s membership interest in the Company (“ Membership Interest ”) is its interest in the Company’s assets, liabilities and capital, income or loss and cash flow, in each case, subject to the provisions of this Agreement and the Act. The Membership Interests of the Members shall be represented by issued and outstanding Units with each type having the rights and privileges,

including voting rights, set forth in this Agreement. The Board shall maintain a schedule of all Members from time to time, their respective mailing addresses, the type and number of Units held by each of them and their respective Percentage Interests represented by such Units (as the same may be amended, modified or supplemented from time to time, the “ Members Schedule ”), a copy of which as of the date hereof is included on Exhibit A . Upon a Transfer (other than a Security Transfer), issuance or redemption of any Units made in accordance with this Agreement, the Board shall amend the Members Schedule to reflect such Transfer, issuance or redemption of Units and the adjusted Membership Interests and Percentage Interests of the Members.

          SECTION 2.8 Withdrawal . A Member may not resign or withdraw, or borrow or withdraw any portion of its capital contribution or capital account from the Company prior to the dissolution and winding up of the Company, except with the affirmative vote or written consent of all Members or upon a sale or Transfer of all of its Units as permitted by this Agreement.

          SECTION 2.9 Exclusivity; Company Opportunities .

     (a) In anticipation that the Company, the Members and its and their respective Affiliates may engage in the same or similar activities or lines of business and have an interest in the same areas of business opportunities, the provisions of this Section 2.9 are set forth to regulate and define the conduct of certain affairs of the Company as they may involve the Members and the powers, rights, duties and liabilities of the Company and the Members. In particular, the Members intend that the Members will devote their exclusive efforts to the Company with respect to the acquisition or development of gas storage facilities within 75 miles of the Facility or any additional facilities that the Company operates with the rationale that such exclusive efforts of the Members are crucial to the development of the Company. This Section 2.9 is the agreement of the Members related to the stated intention in the prior sentence.

     (b) No Member shall, and each Member shall cause its Affiliates not to, acquire or develop, own or operate gas storage capacity or services within 75 miles of any location in which the Company operates, without first presenting such opportunity to the Company and providing the Company the opportunity to consent to the participation, exclusively or otherwise, of the Company in such opportunity. In such event the Company, as determined by the non-presenting Members, shall have twenty (20) days after the non-presenting Members receive the information that they reasonably determine to be necessary to make the determination whether or not to proceed but, in any case, no more than thirty (30) days after the initial presentation of the opportunity, provided that the presenting party furnishes a reasonably detailed set of information relating to such opportunity, provided further , that this Section 2.9 shall not prohibit a party from making a non-controlling equity investment, a debt investment or an equity investment resulting from foreclosure of any security interest, in each case in such opportunity, without first providing such opportunity to the Company. Should the Company decline to invest in any such opportunity within the time specified above, then the Member which presented the opportunity may invest in such opportunity on its own.

     (c) Subject to such Person’s compliance with applicable law, each Member agrees that it will maintain in confidence and not make use of, divulge or disclose to any other Person (other than the Company, any subsidiary or Affiliate of the Company, or any Accepted

Lenders (subject to customary confidentiality agreements for commercial loan transactions), or any of their respective representatives, agents, directors, officers, managers, or employees, and then only on a need to know basis in connection with the business of the Company) any information of any proprietary, secret or confidential nature related to the Company or the business of the Company, unless such information becomes publicly available through no fault of such Member. Subject to its compliance with applicable law (including without limitation FERC requirements governing affiliate transactions and nondiscriminatory provision of services), to the extent that EnergySouth, Inc. and its Affiliates participate in business activities that compete with the business of the Company, EnergySouth, Inc. agrees on behalf of itself and its Affiliates that it will not, and will cause its Affiliates not to, pursue any business opportunity with the intention of discriminating against the Company in favor of such competing activities, and to the extent that Drawbridge and its Affiliates participate in business activities that compete with the business of the Company, Drawbridge agrees on behalf of itself and its Affiliates that it will not, and will cause its Affiliates not to, pursue any business opportunity with the intention of discriminating against the Company in favor of such competing activities, it being understood that engaging in such competing activities with respect to such business opportunity is permitted hereunder so long as there is a bona fide business reason (for example, pipeline dependency of the business) for the opportunity to be pursued by EnergySouth, Inc. or it Affiliates or Drawbridge or its Affiliates, as the case may be, rather than the Company. EnergySouth Inc. agrees to comply with FERC requirements governing affiliate transactions and nondiscriminatory provision of services.

     (d) Except as expressly set forth in this Section 2.9, (i) the Members shall have no duty to refrain from engaging in the same or similar activities or lines of business as the Company, and a Member shall not be liable to the Company or any other Member by reason of any such activities of such Member and (ii) in the event that a Member acquires knowledge of a potential transaction or matter which may be a business opportunity for both such Member and the Company, such Member shall have no duty to communicate or offer such business opportunity to the Company and shall not be liable to the Company or any Member by reason of the fact that such Member pursues or acquires such business opportunity for itself, directs such opportunity to another Person, or does not communicate information regarding such opportunity to the Company.

ARTICLE III

UNITS

          SECTION 3.1 Authorization and Issuance of Units .

     (a) The Company hereby authorizes the issuance of (i) four (4) Units to Drawbridge (representing forty percent (40%) of the Membership Interests outstanding as of the date hereof) and (ii) six (6) Units to ESMI (representing sixty percent (60%) of the Membership Interests outstanding as of the date hereof). The Company hereby authorizes the issuance of additional Units to each of Drawbridge and ESMI on a rata basis in proportion to their respective Percentage Interest upon receipt by the Company of the Initial Capital Contributions, in such amounts as the Board may unanimously determine.

     (b) The rights, powers and duties relating to the Units authorized for issuance pursuant to this Section 3.1 are set forth in this Agreement.

     (c) The Company is hereby authorized to issue additional classes of Units upon such terms and with such rights, preferences and privileges, in each case as the Board may unanimously determine.

          SECTION 3.2 Unit Certificates.

     (a) All Units shall be represented by certificates in the form set forth on Exhibit B , and each Unit shall be deemed a “security” within the meaning of Section 8-102 of Article 8 of the Delaware Uniform Commercial Code and shall be governed by Article 8 of the Delaware Uniform Commercial Code. Each such certificate shall be signed by a Manager or by the Chief Executive Officer or the President and the Secretary of the Company, certifying the number of Units owned by the holder of such Units and stating the type of such Units. All certificates for each type and class or Series of Units shall be consecutively numbered or otherwise identified. The name of the Person to whom the Units represented thereby are issued, with the number and type of Units, the date of issue and the Capital Account balance attributable to such Units, shall be entered on the books of the Company and, until such Units are transferred on the books of the Company (including the Members Schedule), such Person shall be deemed to be the owner of such Units for all purposes. Subject to the provisions of this Agreement, Units shall only be Transferred on the books of the Company (including the Members Schedule) by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Company of the certificate(s) for such Units endorsed by the appropriate Person(s), with such evidence of the authenticity of such endorsement, transfer, authorization, and other matters as the Company may reasonably require, and accompanied by all necessary transfer stamps. In that event, provided all other conditions to Transfer have been met, it shall be the duty of the Company to issue a new certificate(s) to the Person entitled thereto, cancel the old certificate(s), and record the transaction on its books (including the Members Schedule).

     (b) A Member may direct a new certificate(s) to be issued in place of any of such Member’s certificate(s) previously issued by the Company alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by such Member. When authorizing such issuance of a new certificate(s), the other Members may, in their reasonable discretion and if approved by Members holding at least 80% of the outstanding Units (including, for purposes of determining the number of outstanding Units, Units held by the Member requesting the replacement certificate(s)), and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate(s), or his or her legal representative, to indemnify the Company against any claim that may be made against the Company on account of the loss, theft or destruction of any such certificate(s) or the issuance of such new certificate(s).

ARTICLE IV

MANAGEMENT OF THE COMPANY

          SECTION 4.1 Board of Managers .

     (a)  Generally . All management powers over the business and affairs of the Company shall be vested in the Board and, if so determined by the unanimous consent of the Board, Officers. Any appointed Officers shall be subject to the direction of and any restrictions imposed by the Board. No Member, by virtue of having the status of a Member, shall have any management power over the business and affairs of the Company or actual or apparent authority to enter into contracts on behalf of, or to otherwise bind, the Company or, except as expressly provided in this Agreement, to attend or participate in any meeting of the Board. Except as otherwise specifically provided in this Agreement, the business and affairs of the Company shall be managed under the direction of the Board, and the day-to-day activities of the Company shall be conducted on the Company’s behalf by or under the direction of the Officers or as otherwise determined by the Board.

     (b)  Size and Composition of the Board . There shall initially be two (2) members of the Board, and each of Drawbridge and ESMI shall have the right to designate one (1) Manager for so long as each Member retains ownership of any Units (the “ Initial Board ”), as set forth on Exhibit C (which Exhibit C shall be amended from time to time by the Managers to reflect the resignation or removal of any Manager or the appointment of new or additional Managers in accordance with this Agreement). The number of Managers of the Company shall remain two (2), unless such number is changed by the unanimous vote of the Board. Notwithstanding the foregoing, any Person duly admitted as a Member pursuant to Article VI of this Agreement that holds a Percentage Interest of greater than 10% of the Company, shall have also have the right to designate one (1) Manager for so long as such Person maintains a Percentage Interest of at least 10% of the Company, provided that such Person and its Affiliates shall have the right to designate only one (1) Manager regardless of their individual Percentage Interests. Each person designated as a Manager pursuant to this Section 4.1(b) shall hereafter be referred to as a “ Designee .”

     (c)  Voting Arrangements for Managers . For as long as each of ESMI and Drawbridge and their respective Affiliates are Members, each Member shall vote all Units, and any other securities of the Company (or any successor thereto) that may be exchangeable for or issued in exchange for or in respect of the Units (whether by way of a stock split, stock dividend, combination, reclassification, reorganization or any other means), now owned or hereafter acquired by such Member which such Member is entitled to vote in elections of Managers, to cause the election to the Board and continuance as Managers of the one (1) nominee designated by Drawbridge and the one (1) nominee designated by ESMI.

     (d)  Vacancies . Each Manager shall serve unless otherwise removed or replaced in accordance with the terms of this Agreement. Each Member may remove its Designee with or without cause and replace its Designee to the Board with another Designee by written notice to the other Members promptly after such replacement. If there is otherwise a vacancy in the Board caused by the death, illness or other incapacity, or resignation, of a Designee or removal of a Designee by the Member that designated such Designee, the Member that had designated such deceased, ill, incapacitated, resigned or removed Designee shall designate a replacement Designee by written notice to the other Members promptly after the date of such vacancy.

     (e)  Board Responsibilities . Except as otherwise provided in this Agreement, the responsibilities of the Board shall generally consist of managing and supervising the business

of the Company, including overseeing the general progress of operational, development and marketing activities. The Board shall be entitled to delegate one or more of its duties to the Officers of the Company pursuant to employment agreements or otherwise.

     (f)  Meetings; Notice . Regular meetings of the Board shall be held at such time and at such place as the Board may from time to time prescribe, but no less frequently than quarterly. Notice of any regular meeting shall be provided to each Manager in the manner consistent with the notice requirements set forth in Section 4.1(g) . There shall be distributed to each Manager no later than five (5) days in advance of each meeting the materials pertaining to the matters to be acted upon at the meeting.

     (g)  Special Meetings; Notice . Special meetings of the Board shall be called by the Secretary of the Company, or an Officer of the Company performing similar functions, upon receipt of a written request of any Manager to do so, specifying the matter or matters appropriate for action at such a meeting that are proposed to be presented at the meeting. Any such meeting shall be held at such time and at such place, within or without the State of Delaware, as reasonably requested by such Manager, subject to the provisions of this Section 4.1(g). Notice of such meeting stating the date, time and place thereof and the principal purpose or purposes of the meeting shall be given by mail, telephone, other electronic transmission or personally. If by mail, such notice shall be given not less than five (5) days before the meeting; and if by telephone, other electronic transmission or personally, not less than two (2) days before the meeting. Notice of any meeting of the Board need not be given to a Manager, however, if waived by the Manager in writing before or after such meeting or if the Manager shall be present at the meeting, except when the Manager attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting has not been called or convened in accordance with this Agreement.

     (h)  Quorum; Action of Board . At each meeting of the Board, the presence of both the Drawbridge Designee and the ESMI Designee shall constitute a quorum for the transaction of business, provided that if a quorum is not reached at two (2) consecutive meetings of the Board due to the absence of a Member’s Designee for reasons in such Designee’s reasonable control, then the presence of such Designee shall not be necessary to constitute a quorum for the transaction of business at the next meeting of the Board, but shall be required for meetings after such meeting, subject to this sentence. The vote of each Manager will be in proportion to the Percentage Interest of such Manager’s designating Member. Except as otherwise provided in this Agreement, the vote of a majority of the votes represented by the entire Board then in office shall be the act of the Board. Notwithstanding any other provision contained in this Agreement to the contrary, with respect to those matters set forth in Section 4.6, no act shall be taken, sum expended, obligation incurred or power exercised by the Board, the Company, or any Manager or Officer of the Company without an affirmative vote by Members holding a Percentage Interest of at least 80%.

     (i)  Informal Action By Managers . 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 (which may be in counterparts) setting forth the action so taken shall be signed by the Managers having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting (which shall include at least one Designee of each of Drawbridge and ESMI);

provided that each Manager shall have been provided with a copy of the action to be taken and the consent before the action is to be taken with a reasonable opportunity to sign it.

     (j)  Telephone Meetings . The Managers may participate in and hold meetings by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in any such meeting will constitute presence in person at such meeting, except where a person participates in such meeting for the express purpose of objecting to the transaction of any business on the ground that such meeting has not been called or convened in accordance with this Agreement.

     (k)  Subsidiaries . To the extent that a Subsidiary of the Company is a corporation or is otherwise required by applicable law to have a board of directors, board of managers or similar governing body, then such governing body shall consist of all of the Managers of the Company, with such additional members as is advisable or necessary to comply with such applicable law.

          SECTION 4.2 Meetings of Members .

     (a)  Meetings of Members; Notice . A meeting of Members may be called at any time by the Board or any Member to vote on, or obtain consent for, any action which, pursuant to this Agreement, the Certificate of Formation or any applicable law, permits or requires the vote or consent of the Members. Any such meeting shall be held at such time and at such place, within or without the State of Delaware. Notice of such meeting stating the date, time and place thereof and the principal purpose or purposes of the meeting shall be given by mail, telephone, other electronic transmission or personally. Such notice shall be given not less than five (5) days before the meeting. Notice of any meeting of the Members need not be given to a Member, however, if waived by the Member in writing before or after such meeting or if the Member shall be present at the meeting, except when the Member attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting has not been called or convened in accordance with this Agreement.

     (b)  Quorum; Action of Members . At each meeting of the Members, each of Drawbridge and ESMI present either in person or by proxy shall constitute a quorum for the transaction of business, provided that if a quorum is not reached at two (2) consecutive meetings of the Members due to the absence of a Member for reasons in such Member’s reasonable control, then the presence of such Member shall not be necessary to constitute a quorum for the transaction of business at the next meeting of the Members, but shall be required for meetings after such meeting, subject to this sentence. Except as otherwise provided in this Agreement, the vote of the holders of a majority of the issued and outstanding Units shall be the act of the Members. The vote of each Member will be in proportion to such Member’s Percentage Interest.

     (c) Informal Action By Members . Any action required or permitted to be taken at a meeting of the Members may be taken without a meeting if a consent in writing (which may be in counterparts) setting forth the action so taken shall be signed by the Members having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all interests entitled to vote thereon were present and voted; provided that each Member shall have been provided with a copy of the action to be taken and the consent before the action is to be taken with a reasonable opportunity to sign it.

     (d)  Telephone Meetings . The Members may participate in and hold meetings by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in any such meeting will constitute presence in person at such meeting, except where a person participates in such meeting for the express purpose of objecting to the transaction of any business on the ground that such meeting is not called or convened in accordance with this Agreement.

     (e)  Voting Agreements . Except for arrangements between Drawbridge and its Affiliates, no Member is presently a party to, and no Member shall enter into, any voting agreements, voting trusts or any other arrangements or agreements which relate to voting the Units held by such Member, except for this Agreement and any amendments hereto.

          SECTION 4.3 Officers .

     (a)  In General . The Board may unanimously, in accordance with Section 4.1 , appoint a Chief Executive Officer, a President, a Chief Operating Officer, one or more Vice Presidents, a Chief Financial Officer, a Treasurer, a Secretary and such other Officer or Officers of the Company as the Board may deem necessary or advisable. The Officers of the Company will exercise the powers and perform the duties incident to their offices, subject to the direction of the Board. If so authorized by the unanimous consent of the Board, an Officer will have the authority to bind the Company. In addition, the Secretary, in addition to his or her customary duties, is empowered to certify resolutions and other documents of the Company. The Officers need not be Managers of the Company, and the Officers will hold office until their successors are appointed and qualified, unless they sooner die, resign or are removed from office. The Board, acting unanimously, is empowered to fill any vacancy in any office of the Company and to remove any Officer in accordance with this Agreement and applicable law.

     (b)  Appointment . All of the Officers of the Company will be appointed by the Board; provided that the Board may delegate its authority to the Chief Executive Officer to appoint one or more Vice Presidents or any lower ranking Officer. Any one or more offices may be held by the same person. The Board shall establish compensation for Officers and any employees of the Company which shall be at a rate that is customary for the position held.

     (c)  Term of Office . Each Officer shall hold office from the time of such Officer’s appointment and qualification to the time at which such Officer’s successor is appointed and qualified, unless such Officer shall sooner die or resign or be removed pursuant to Section 4.3(e) .

     (d)  Resignation . Any Officer may resign at any time by giving written notice of such resignation to the Board or the Secretary of the Company. Any such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt thereof by the Board or one of the above-named Officers; and, unless specified therein, the acceptance of such resignation shall not be necessary to make it effective.

     (e) Removal . Subject to the applicable provisions of Section 4.1(h) , any Officer may be removed at any time from his position as an officer, but not as a Manager, with or without cause, by the Board.

     (f)  Vacancies . A vacancy, however caused, of any Officer of the Company may be filled in the manner provided by Section 4.3(a) for appointment of such Officer.

          SECTION 4.4 Duties of Officers and Managers . Except as otherwise specifically provided in this Agreement, the duties and obligations owed to the Company and to the Members by the Officers and by the Managers shall be the same as the respective duties and obligations owed to a corporation organized under the DGCL or its stockholders by its officers and directors, respectively.

          SECTION 4.5 Indemnification .

     (a) No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner believed to be within the scope of authority conferred on such Covered Person by or in accordance with this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person’s gross negligence, fraud or willful misconduct.

     (b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company.

     (c) To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage, or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person (including alleged breaches of fiduciary duty) in good faith on behalf of the Company and in a manner believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage, or claim incurred by such Covered Person by reason of gross negligence, willful misconduct or fraud with respect to such acts or omissions or any breach of this Agreement; provided , however , that any indemnity under this Section 4.5(c) shall be provided out of and to the extent of Company assets only, and no Covered Person shall have any personal liability with respect to such indemnity.

     (d) To the fullest extent permitted by applicable law, expenses (including reasonable legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of a written undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in Section 4.5(c) hereof.

     (e) The Company may purchase and maintain insurance, on behalf of Covered Persons and such other Persons as the Board shall determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company or such indemnities, regardless of whether the Company would have

the power to indemnify such Person against such liability under the provisions of this Agreement. The Company may enter into indemnity contracts with Covered Persons and such other Persons as the Board shall determine and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations hereunder and containing such other procedures regarding indemnification as are appropriate.

     SECTION 4.6 Approval of the Members . Notwithstanding any other provision in this Agreement to the contrary, the following acts will require the approval of Members representing 80% of the outstanding Percentage Interest of the Company:

     (a) Amendments . Amendment of the Company’s certificate of formation;

     (b) Equity Events . The creation, authorization, designation, issuance or sale of any class or series of equity interest, “phantom” equity or stock appreciation rights of the Company or any of its subsidiaries or rights, options, warrants, stock options or other securities convertible into or exchangeable for any security of the Company or any of its subsidiaries, including any public offering of equity;

     (c) Redemptions of a Member . Any purchase or redemption by the Company of a Member Interest, other than as provided herein;

     (d) Distributions . The making of any distribution of cash, income, assets or rights to any Member, except pursuant to Article 5 or as otherwise expressly provided in this Agreement;

     (e) Merger . The merger, consolidation or change in form of entity of the Company or any of its subsidiaries whether or not involving a change of control;

     (f) Dissolution . Dissolution or termination of the Company in accordance with the terms of this Agreement or dissolution of any of the Company’s subsidiaries;

     (g) Bankruptcy . Any Bankruptcy of the Company or any of its subsidiaries;

     (h) Affiliate Transactions . Any transactions (including purchases, sales or leases of assets) by the Company or any of its subsidiaries with or for the benefit of any Officer or Member or any Affiliate thereof, other than pursuant to the Construction and Operation Agreement; provided , however , any material amendment or waiver of, or consent in connection with, the Construction and Operation Agreement after the Effective Date shall require the approval referred to in this paragraph (h);

     (i) Execution, Amendment or Termination of Material Company Documents . Execution of any Material Contract, and (i) any material amendment, modification or extension of any Material Contract (including any adjustments to compensation of the Operator under the Construction and Operations Agreement), (ii) any termination, cancellation, assignment of any Material Contract, and (iii) material grant of consent or any waiver under or in respect of any Material Contract;

     (j) [Intentionally Omitted];

     (k) Change of Business Lines . Any decision to (i) cause a change in business purpose of the Company or any subsidiary of the Company or (ii) commence any new, or discontinue any existing, material line of business of the Company or any subsidiary of the Company;

     (l) Indebtedness . Except as is provided in an approved Construction Plan, Operating Plan or Budget, the incurrence or assumption of (i) any Indebtedness by the Company or (ii) any Indebtedness by a subsidiary of the Company, except, in each case, for Indebtedness incurred for the Company’s or its subsidiaries’ business and in an amount not exceeding $250,000 individually and, together with all other Indebtedness of the Company and its subsidiaries taken as a whole, $250,000 at any time.

     (m) Additional Liens . The granting of any lien on the assets or rights of the Company or its subsidiaries other than, “permitted liens” as such term, or similar term, shall be defined in any applicable debt documents for the Company or such subsidiary which have been approved by the Board or liens granted in connection with approved indebtedness incurred in accordance with Section 4.6(l);

     (n) Prepayment . The prepayment, in whole or substantial part, of any indebtedness which is in excess of $500,000 individually and, together with all other prepayments of indebtedness of the Company and its subsidiaries taken as a whole, $500,000 at any time, other than any prepayments (i) required pursuant to agreements previously approved by the Board in accordance with this Agreement or (ii) in accordance with the Construction Plan, the Operating Plan or the Budget;

     (o) Legal Proceedings . (x) The initiation of any legal proceedings or arbitration on behalf of the Company or any of its subsidiaries, or (y) any settlement of, and any decisions relating to, litigation or other dispute resolution proceedings relating to the Company or any of its subsidiaries for (i) amounts in excess of $100,000, (ii) any injunctive or other equitable relief or (iii) which could otherwise reasonably be expected to have a material adverse effect on the business or condition of Company, any Company subsidiary, any Member or any Affiliate of a Member;

     (p) Accounting . The approval of any change, not required for compliance with Generally Accepted Accounting Principles, in the accounting or tax policy of the Company or any of its subsidiaries;

     (q) Reserves . Establishing any operating, capital or other reserves of the Company or causing or permitting any of the Company’s subsidiaries to establish any operating, capital or other reserves except pursuant to the Budget;

     (r) Default . Take any action which the party desiring to take such action knows will be a breach of a Material Contract.

     (s) Property . Possession of property of the Company or any of its subsidiaries by any Member, or the assignment, transfer or pledge of rights of the Company or any of its subsidiaries in specific property, for other than a Company or

Company subsidiary purpose or other than for the benefit of the Company or any of its subsidiaries, or any commingling of the funds of the Company or any of its subsidiaries, as applicable, with the funds of any other Person;

     (t) Judgments . Entering into any confession of a judgment against the Company or any of its subsidiaries (i) in excess of $100,000 individually or, when combined with other judgments, $100,000 in aggregate, (ii) which could otherwise reasonably be expected to have a material adverse effect on the business or condition of the Company, any Company subsidiary, any Member or any Affiliate of any Member or (iii) which includes the admission of criminal liability by any of the Company, any Company subsidiary, any Member or any Affiliate of any Member;

     (u) Budget . Approval of (i) any Construction Plan, Operating Plan and any Budget, (ii) any amendment, modification or waiver of the Construction Plan or Construction Budget which affects in any material respect the scope, schedule or cost of Construction and (iii) any amendment, modification or waiver of an Operating Budget; provided , however , clauses (ii) and (iii) shall not apply to any increase in any line item or in the aggregate of the Construction Budget or any Operating Budget which is not in excess of the amounts requiring Owner approval under the Construction and Operation Agreement; and provided , further , that if the Members are unable to agree on an Operating Budget for any year by the commencement of such year, then the Operating Budget for the prior year plus 5% in the aggregate shall apply and remain in full force and effect until a new Operating Budget is approved by Members in accordance with this Section 4.6(u) or until the next year;

     (v) Asset Sales . Any sale, exchange, license as licensor, lease as lessor, or other disposition of any assets of the Company or any of its subsidiaries except sales or transfers in the ordinary course of business or in accordance with any Budget, Construction Plan, or Operating Plan;

     (w) Asset Acquisition; Investments . Engaging in, or acquiring of, any material assets except in accordance with any Budget, Construction Plan or Operating Plan and making any other investments except according to an investment program approved by the unanimous consent of the Board;

     (x) Creation of Subsidiaries . Creation of any subsidiaries or joint ventures between the Company or any of its subsidiaries on the one hand and a third party on the other hand;

     (y) Key Policies . The establishment or change to any compliance, communications, underwriting or other material policy for the Company or any of its subsidiaries;

     (z) Selection of Advisors . Selection of accounting, legal and financial advisors for the Company or any of its subsidiaries; and

     (aa) Regulatory Status . Take or omit to take any action that could reasonably be expected to affect the regulatory status of the Company, any of its

subsidiaries under the laws and regulations of any governmental authority, including any action that would: (i) require a waiver of FERC requirements with respect to the operations of the Company or any of its subsidiaries and (ii) require authority from FERC in addition to that already obtained for any of the Company’s Subsidiaries.

          SECTION 4.7 Access . Each Member shall be permitted access to the Facility, the Company’s offices and all of the Company’s books and records, and may grant similar access to any Accepted Lenders (subject to customary confidentiality agreements for commercial loan transactions), and each Member shall be permitted to assign an employee or representative on its behalf to have an office at the Company’s primary office space, in each case in a manner which is not materially burdensome to the business or operations of the Company.

          SECTION 4.8 Budget Process; Construction Oversight .

          (a) Plan and Budget Approvals . Each Member hereby ratifies and approves the initial construction budget and initial construction plan attached as Annex II-A (the “ Initial Construction Budget ”) and Annex II-B (the “ Initial Construction Plan ”), respectively, from the Effective Date until December 31, 2007. The Company shall cause the Operator to deliver, within the time periods required pursuant to the Construction and Operation Agreement, (i) the Construction Plans and the Construction Budget, which shall be divided into fiscal year periods, commencing initially with the partial fiscal year from January 1, 2008 through September 30, 2008 and continuing thereafter, for the full period of Construction of the Facility and shall distinguish between Phase I and Phase II, and (ii) an annual operating plan (the “ Operating Plan ”) and budget (the “ Operating Budget ”) for the operation and maintenance of the Facility after completion of Construction. Each of the Initial Construction Budget, the Construction Budget and the Operating Budget shall be referred to herein as a “ Budget ”. Each of the Construction Plans, any Operating Plan and any Budget, and any amendment, modification or waiver thereof, shall require approval of the Members in accordance with Section 4.6(u).

          (b) Items for Inclusion in the Construction Plans and Budgets . The Members acknowledge that the following items (among other items ordinarily included for development, construction, ownership operation and maintenance of a natural gas storage project similar to the Facility) need to be included in the Construction Plans and the Budgets and will work in good faith to agree on such items in a manner consistent with other gas storage facilities in the United States that have received third party limited recourse financing: (i) a milestone for completion of two natural gas storage caverns with an approximate working gas capacity of 7.5 Bcf each (the date approximately six (6) months prior to the estimated date of completion of leaching of the second cavern being referred to herein as the “Phase I Evaluation Date”), (ii) a milestone for completion of four natural gas storage caverns with an approximate working gas capacity of 7.5 Bcf each and a pipeline system connecting the storage caverns to three major interstate pipelines (completion of such matters as further defined in the Construction Plans, “ Full Facility Completion ”), and (iii) with respect to each Budget, a line item for sources of funding, including from any required Capital Contributions and any other revenues expected to be received during the period referred to in such Budget.

          (c) Phase I Ratio . Not earlier than 60 days nor later than 30 days prior to the Phase I Evaluation Date the Members will work together in good faith to calculate the Phase I Ratio.

          (d) Owner’s Engineer . Promptly after the Effective Date, Drawbridge and ESMI shall appoint a mutually acceptable independent engineer, nationally recognized as having expertise in the natural gas storage business in the United States, to serve as an owner’s engineer. The scope of such owner’s engineer, among other items which may be agreed to between Drawbridge and ESMI, shall include (i) a review and opinion on the feasibility of the Construction Plans and Construction Budget and (ii) providing a monthly report on the status of Construction in relation to the Construction Plan and Construction Budget. The fees, costs and expenses of the owner’s engineer shall be included in the Construction Budget and paid for by the Company.

          (e) The Members hereby authorize and direct a Manager to execute the Construction and Operation Agreement as an authorized signatory of the Mississippi Hub, LLC, upon the closing of the Acquisition. Between the Effective Date of this Agreement and the closing of the Acquisition, the Members will agree on the activities to be performed by any Member or their Affiliates in connection with the Facility.

          SECTION 4.9 Enforcement of Affiliate Agreements . In connection with any Material Contracts between the Company and any Member or an Affiliate of any Member, the Member who is a party to such Material Contract or whose Affiliate is a party to such Material Contract shall not vote or otherwise participate in any decision by the Company to exercise any remedies thereunder, and with respect to exercise of remedies in the event of breach by such Member or its Affiliate of such Material Contract, the majority of the non-affiliated Members shall be permitted to initiate and take such actions. Any Member may request an audit of arrangements regarding Material Contracts with Affiliates of Members, and the non-requesting Member will comply with and provide information reasonably requested by the auditing Member. So long as the Operator is an Affiliate of a Member, any extension to the term of the Construction and Operations Agreement after the initial term thereof pursuant to Section 1.2(a) of such agreement shall require the affirmative vote of 80% of the Members.

ARTICLE V

CAPITAL AND DISTRIBUTIONS

          SECTION 5.1 Capital Contributions .

          (a) The Board will notify Members, no later than three (3) business days prior of the closing of the Acquisition (the “Closing”), of the Capital Contributions to be made by each Member as Initial Capital Contributions, and each Member agrees to make its respective Initial Capital Contribution on or before the date of the Closing. The Members also agree to make Capital Contributions during the Phase I Period and Phase II Period up to the amounts set forth for each Member on Annex III, in each case subject to the terms and conditions of this Section 5.1. The Members will work in good faith during the development of the Construction Plan and Construction Budget to agree to the Capital Contributions to be listed on Annex III for the Phase I Period and the Phase II Period.

          (b) Other than the Initial Capital Contributions, each Member agrees that any Capital Contributions shall be made on a pro-rata basis in accordance with a Member’s Percentage Interest and as required in an approved Budget. Any Capital Contributions other than the Initial Capital Contributions shall be made on the last Business Day of each calendar quarter beginning on December 31, 2007 in immediately available funds to an account designated by the Board (the “ Operating Account ”). Such Capital Contributions shall be for an amount no greater than an amount required to pay those amounts referred to in clause (b) of the definition of Available Cash that are then due and owing, or reasonably expected to become due and owing in the next quarter pursuant to an approved Budget. The Company shall provide each Member with notice of its required capital contribution as determined in accordance with this Section 5.1(b) at least thirty (30) days prior to the date required. The failure of any Member to make a Capital Contribution required pursuant to this Section 5.1(b) shall constitute an Event of Default in accordance with Section 8.4(a).

          (c) Notwithstanding the foregoing, no Member shall be required to make any Capital Contributions for the Phase II Period unless the Phase I Ratio is equal to or greater than 0.05. If the Phase I Ratio is less than 0.05 then the Members may, but shall not be obligated, to make Capital Contributions for the Phase II Period in accordance with Section 5.1(b) by delivering a written notice to the other Members within ten (10) Business Days after calculation of the Phase I Ratio. Any Member delivering a notice stating that it shall make Capital Contributions during the Phase II Period shall then be obligated to make such Capital Contributions subject to the terms and conditions of this Section 5.1(c). If any Member does not deliver the notice referred to in this paragraph (c) (a “ Non-Participating Member ”), it shall then have thirty (30) days to deliver a written notice to the other Members requesting one of the following options: (i) permit the other Members to make such Capital Contributions in which case the Percentage Interests shall be adjusted to reflect actual Capital Contributions, so that each Member’s Percentage Interest is represented by a fraction, the numerator of which consists of the Member’s actual Capital Contribution and the denominator of which is the total actual Capital Contributions of all of the Members or (ii) declare a Buy/Sell Event and take such actions permitted by Section 6.10. If any Non-Participating Member fails to request an option referred to in the preceding sentence then such Non-Participating Member shall be deemed to have requested the option referred to clause (i) of such sentence.

          (d) Each Member agrees that no funds may be withdrawn from the Operating Account except to pay for amounts which are in accordance with the applicable Budget and Construction Plan or Operating Plan, as the case may be, and only after a Draw Certificate has been provided by the Operator to the Board; provided , however , such amounts may exceed any budgeted line item, or aggregate amount set forth in the applicable Budget by the amounts provided in the Construction and Operation Agreement which do not require Owner approval thereunder. The Members hereby authorize the Board to delegate authority to the Operator for withdrawals from the Operating Account and payments of any amounts so long as such withdrawals and payments are made in accordance with this Section 5.1(d).

          (e) The amount of money and the Fair Market Value of any property (net of any liabilities secured by the property or to which the property is subject) contributed to the Company by a Member, in respect of the issuance of Units or otherwise, shall constitute a “ Capital Contribution ” of such Member. Any reference in this Agreement to the Capital

Contribution of a Member shall include a Capital Contribution of such Member’s predecessors in interest.

          (f) No Member shall be required to make any Capital Contributions while it is disputing in good faith whether such Capital Contribution is then required pursuant to the terms of this Agreement.

               SECTION 5.2 Capital Accounts .

          (a) A separate capital account (each a “ Capital Account ”) shall be maintained for each Member in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv). Each Member’s initial Capital Account shall reflect the Gross Asset Value of such Member’s initial Capital Contribution net of any liabilities secured by the property or to which the property is subject. Subject to the provisions of subsections (b) and (c) of this Section 5.2 , the Capital Account of each Member shall be (i) increased by (A) the amount of cash and the Gross Asset Value of any property contributed to the Company by such Member (net of liabilities secured by the property or to which the property is subject), (B) Profits and any other items of income and gain allocated to such Member pursuant to Section 5.6 , (ii) decreased by (A) the amount of cash and the Gross Asset Value of any property distributed to such Member (net of liabilities secured by the property or to which the property is subject), (B) the Losses and any other items of deduction and loss allocated to such Member pursuant to Section 5.6 , and (iii) otherwise maintained in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv) in order for the allocation of Profits and Losses pursuant to Section 5.6 to have “substantial economic effect” in accordance with Treasury Regulations Section 1.704-1(b)(2).

          (b) The foregoing provisions of this Section 5.2 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Sections 1.704-1 and 1.704-2 and will be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto. The Board will cause appropriate modifications to be made if unanticipated events might otherwise cause this Agreement not to comply with such Treasury Regulations, so long as such modifications do not cause a material change in the relative economic benefit of the Members under this Agreement.

          (c) If all or any part of a Member’s Units are transferred in accordance with this Agreement, the Capital Account of the transferor that is attributable to the transferred Units will carry over to the transferee.

          (d) Each Member’s Capital Account after giving effect to the transactions set forth in this Agreement is set forth on Exhibit A.

               SECTION 5.3 No Withdrawal of Capital; Distributions .

          (a) Except as otherwise provided in this Agreement, no Member shall demand or receive a return of its Capital Contributions. Under circumstances requiring a return of any Capital Contributions, no Member shall have the right to receive property other than cash, except as may be specifically provided in this Agreement. The Board shall determine the cash needs of

the Company on at least a quarterly basis and direct that all Available Cash (other than from a Capital Event) shall be distributed to the Members.

          (b) Except as provided in Section 8.2 with respect to a liquidation or dissolution of the Company, the net proceeds of any Capital Event shall be distributed first , for the repayment of any Indebtedness (including any payment of accrued and unpaid interest and then unpaid principal on the respective Member Loans in proportion to the outstanding balances owed to each Member), second , to the payment of indemnity obligations of the Company under this Agreement and third , any remaining amount, to the Members in accordance with their Percentage Interests.

          (c) Except as provided in Section 8.2 , any such distributions of Available Cash shall be made to the Members in proportion to their respective Percentage Interests.

               SECTION 5.4 Tax Distributions . The Company shall make distributions of Available Cash to the Members in proportion to their respective Percentage Interests, in order to make available sufficient funds to each Member to pay federal, state and local income and franchise taxes resulting from the allocation of the Company’s taxable income to its Members. For the avoidance of doubt, no such distributions shall be made in respect of any tax liabilities of a Member resulting from “guaranteed payments” to a Member within the meaning of Section 707(c) of the Code and the Treasury Regulations promulgated thereunder. Unless otherwise unanimously agreed by the Members, the total amount required to be distributed pursuant to this Section 5.4 , regardless of the actual amount of taxes ultimately payable by any Member (or its owners), shall be an amount such that each Member receives, at a minimum, the product of thirty-eight and one-quarter percent (38.25%) and such Member’s allocable share of the taxable income of the Company for the taxable year net of losses for any prior taxable year. The Company shall make the distributions required in this Section 5.4 in a timely manner to allow the taxes (including, without limitation, estimated tax payments) attributable to the income of the Company allocated to any Member to be paid when due.

               SECTION 5.5 No Interest on Capital . No Member shall receive any interest with respect to its Capital Contributions or its Capital Account.

               SECTION 5.6 Allocation of Items of Company Income, Gain, Loss, Deduction and Credit .

          (a) After giving effect to the special allocations set forth in Section 5.6(c) , all Profits and Losses shall be allocated to the Members as follows:

          (i) Profits for each Fiscal Year shall be allocated to the Members in accordance with their Percentage Interests.

          (ii) Losses for each Fiscal Year shall be allocated to the Members in accordance with their Percentage Interests.

          (b) For purposes of this Agreement, the terms “ Profits ” and “ Losses ” shall mean, for each Fiscal Year as defined in Section 7.2 or other period, an amount equal to the Company’s taxable income or loss, as the case may be, for such Fiscal Year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income,

gain, loss and deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

          (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this subparagraph shall be added to such taxable income or loss;

          (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this subparagraph (b) 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 subparagraph (b), (c) or (d) of the definition thereof, 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 the disposition of any 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 the definition thereof;

          (vi) to the extent an adjustment to the adjusted tax basis of any Company Asset pursuant to Section 734(b) of the Code is required, pursuant to Treasury Regulations Section 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 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 subparagraph (b), any items which are specially allocated pursuant to Section 5.6(c) shall not be taken into account in computing Profits and Losses.

          (c) Special Allocations . The following special allocations shall be made in the following order:

          (i) Minimum Gain Chargeback . Subject to the exceptions set forth in Treasury Regulations Section 1.704-2(f), if there is a net decrease in Company Minimum Gain during a Fiscal Year, each Member shall be specially allocated items of income and gain for such Fiscal Year (and, if necessary, for subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain during such Fiscal

Year (which share of such net decrease shall be determined under Treasury Regulations Section 1.704-2(g)(2)). 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 Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). It is intended that this Section 5.6(c)(i) shall constitute a “minimum gain chargeback” as provided by Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

          (ii) Member Nonrecourse Debt Minimum Gain Chargeback . Subject to the exceptions contained in Treasury Regulations Section 1.704-2(i)(4), if there is a net decrease in Member Nonrecourse Debt Minimum Gain during a Fiscal Year, any Member with a share