AMENDED AND RESTATED MEMBER CONTROL AGREEMENT FOR RED TRAIL ENERGY, LLC
Exhibit
4.2
AMENDED
AND RESTATED MEMBER CONTROL AGREEMENT
FOR
This is
an Amended and Restated Member Control Agreement for Red Trail Energy, LLC,
dated effective as of May 28, 2009 by and among Red Trail Energy, LLC, a North
Dakota limited liability company, and the Persons named on the attached Schedule
A.
ARTICLE
1.
DEFINITIONS
1.1 Defined
Terms. The terms defined
in this Article shall have the meanings given to them in this Article for
purposes of this Agreement. Certain other capitalized terms in this
Agreement may be defined elsewhere in this Agreement. All defined
terms in this Agreement include the singular and the plural as the context
indicates.
1.2 Agreement. “Agreement” means
this Member Control Agreement as amended or restated.
1.3 Articles
of Organization. “Articles of
Organization” or “Articles” means the Articles of Organization for the Company
filed with the North Dakota Secretary of State as amended or
restated.
1.4 Board of
Governors. “Board of
Governors” or “Board” means the Board of Governors of the Company.
1.5 Capital
Accounts. “Capital
Accounts” mean the capital accounts required to be maintained by the Company for
each Member as provided in this Agreement.
1.6 Code. “Code” means the
Internal Revenue Code of 1986, as amended, and any comparable successor to such
Code. All references to a section of the Code shall mean and include
any subsequent amendment or replacement of such section.
1.7 Company. “Company” means
Red Trail Energy, LLC.
1.8 Event of
Termination. An “Event of
Termination” means an event described in Section 13.1.
1.9 Financial
Rights. “Financial
Rights” mean a Person’s rights to share in income, gain, receipt, loss,
deduction, credit and distribution as provided in this Agreement and any right
to assign such rights.
1.10
Governance
Rights. “Governance
Rights” mean all of a Member’s rights as a Member in the Company except for
Financial Rights or any right to assign Financial Rights.
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1.11 Governor. “Governor” or
“Board member” means each natural person serving on the
Board. Governors or Board members are collectively referred to as
“Governors” or “Board members.” A Governor must be a Member of the
Company, or an authorized representative of an entity member.
1.12 LLC
Act. “LLC Act” means
the North Dakota limited liability company act, as amended, and any comparable
successor to such LLC Act. All references to a section of the LLC Act
shall mean and include any subsequent amendment or replacement of such
section.
1.13 Members. “Members” mean
all Persons reflected in the required records of the Company as the owners of
all or some Governance Rights of a Membership Interest. Members are
individually referred to as a “Member.” A Person may be a Member
without having voting rights, but a Person is not a Member if the Person’s
Membership Interest consists only of Financial Rights.
1.14 Membership
Interest. “Membership
Interest” means the interest in the Company consisting of each Person’s
Financial Rights and/or Governance Rights and any right such Person has to
assign such Person’s Financial Rights and/or Governance Rights. The
Membership Interests for all such Persons are collectively referred to as the
“Membership Interests.”
1.15 Officer. “Officer” means
the natural person elected, appointed, or otherwise designated as an Officer
pursuant to this Agreement and the LLC Act, including the President and
Treasurer. An Officer need not be a Member of the
Company. An Officer is a “Manager” for purposes of the LLC
Act.
1.16 Person. “Person” includes
a natural person or a domestic or foreign limited liability company,
corporation, partnership, limited partnership, joint venture, association,
business trust, estate, trust, enterprise, and any other legal or commercial
entity.
1.17 Treasury
Regulations. The “Treasury
Regulations” mean the treasury regulations promulgated under the
Code.
1.18 Units. “Units” are used
to designate Membership Interests as provided in Article 4 of this
Agreement.
ARTICLE
2.
SCOPE
AND EFFECT OF AGREEMENT
2.1 Member
Control Agreement. The Persons who
are parties to this Agreement intend to make specific arrangements relating to
the (i) formation, operations, ownership, governance, management, and
dissolution of the Company; (ii) allocation of income, receipt, gain, loss,
deduction, credit, and distribution; (iii) receipt of additional capital,
admission of new Members and all valuation issues associated with the receipt of
such additional capital and admission of Members; (iv) transfer or encumbrance,
whether voluntary or involuntary, of Membership Interests; and (v) other matters
related to the Company. This Agreement shall constitute a Member
Control Agreement under Section 10-32-50 of the LLC Act. It is
expressly intended that, during the entire term of this Agreement, the
provisions of this Agreement shall supersede any provisions of the LLC Act, as
they now exist or as may be subsequently amended or restated, that are
inconsistent or conflict with the provisions of this Agreement to the maximum
extent permitted by law.
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2.2 Prior
Agreements. This Agreement
supersedes all prior agreements to which any or all of the parties to this
Agreement are parties to the extent that such prior agreements are inconsistent
with this Agreement.
2.3 Parties
Subject to Agreement. This Agreement
shall be binding on and inure to the benefit of the Company; each Person owning
a Membership Interest; and their respective heirs, legal representatives,
successors, and assigns. This Agreement is enforceable by and against
Persons who are parties to this Agreement, and this Agreement is binding upon
and enforceable against Persons who acquire an interest in a Membership Interest
or in a contribution agreement having knowledge of the existence of this
Agreement. A Person’s express agreement to be bound by this Agreement
or any amendment or restatement of this Agreement may be evidenced by such
Person or such Person’s legal representative either (i) signing this Agreement
or such amendment or restatement, or any predecessor Member Control Agreement of
the Company; (ii) signing a signature page to this Agreement or such amendment
or restatement that references this Agreement and/or such amendment or
restatement, or signing a signature page to any predecessor Member Control
Agreement of the Company; or (iii) signing any other document, statement or
instrument that evidences agreement to be a party to this Agreement and/or such
amendment or restatement, or signing any other document, statement or instrument
that evidences agreement to be a party to any predecessor Member Control
Agreement of the Company.
2.4 Membership
Interests Subject to Agreement. This Agreement
shall apply to all Membership Interests of the Company which are now owned or
hereafter acquired by or on behalf of any Person, whether by purchase, dividend,
split, or other recapitalization, gift, devise, or any other means
whatsoever.
2.5 Amendment
of Agreement. The terms and
provisions of this Agreement may be amended, restated or terminated only by the
agreement of the Members holding at least 66.67% of the Units having Governance
Rights entitled to vote, except as may be otherwise specifically provided in
this Agreement, provided, however, in no event may this Agreement be amended to
provide for less than unanimous consent to avoid dissolution under
Section 13.2. Amending or restating this Agreement will
not give rise to dissenters’ rights as provided in Section 10-32-54 of the LLC
Act.
2.6 Enforcement
of Agreement. If a Person
violates the terms of this Agreement, the Company and/or any Member may take
legal action against such Person or pursue an order compelling such Person to do
something or restraining such Person from doing something. If a
Person violates the terms of this Agreement, the Company and/or any Member will
be entitled to recover from such Person reasonable attorney’s fees and costs
incurred in connection with enforcing the terms of this Agreement. If
a court deems any term of this Agreement to be overly broad, superseded by the
LLC Act, or otherwise unenforceable or void, the court may modify and thereafter
enforce the term and the balance of this Agreement to the fullest extent
permitted by law, or sever such term if it cannot be so modified and enforce all
of the other terms of this Agreement to the fullest extent permitted by
law.
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2.7 Arbitration. Any dispute
arising out of or relating to this Agreement or the breach thereof (including
fraud in the inducement) shall be discussed between the parties in a good-faith
effort to arrive at a settlement. If such dispute cannot be resolved
through discussion, such dispute shall be settled by arbitration
administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules. The AAA Optional Rules for Emergency
Measures of Protection shall also apply to the proceedings. The
arbitration shall be conducted in Burleigh County, North Dakota by a single
arbitrator. The costs of the arbitration, including the arbitrator’s
compensation, shall be borne equally by the parties, except that the arbitrator
shall have discretion to reallocate such costs. Each party shall bear its
own attorneys’ fees. Judgment on the award may be entered in any court
having jurisdiction thereof.
ARTICLE
3.
ORGANIZATION
OF COMPANY
3.1 Formation
of the Company. The Company is a
limited liability company formed pursuant to the terms of the LLC Act except as
otherwise provided in this Agreement, and the rights and liabilities of the
Persons owning or holding Membership Interests, Governors and Officers are as
provided under the LLC Act, except as otherwise provided in this
Agreement.
3.2 Term of
the Company. The Company shall
exist perpetually until it is terminated in accordance with this Agreement and
the LLC Act.
3.3 Indemnification. The Company shall
indemnify each Member, Governor, Officer and agent of the Company in such
manner, under such circumstances, and to such extent as permitted by Section
10-32-99 of the LLC Act.
3.4 Tax
Matters.
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(1)
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Tax
Status. The Company
shall be classified and taxed as a partnership for federal and state
income tax purposes except to the extent that the Company is to be
disregarded as an entity for federal and state income tax purposes
pursuant to applicable provisions of the Code. If the Company
is disregarded for income tax purposes, the Company shall not be
disregarded as a separate legal entity for any other purpose, including
but not limited to, diminishing in any respect the LLC Act providing that
a Person owning or holding Membership Interests, Governor, Officer or
other agent of the Company is not, merely on account of such status,
personally liable for the acts, debts, liabilities, or obligations of the
Company.
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(2)
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Tax
Matters Partner. Any “tax
matters partner” of the Company required to be appointed by the Code shall
be the Person selected by the Board that meets the qualifications of the
Code and applicable Treasury
Regulations.
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(3)
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Tax
Elections. All
elections permitted or required to be made for federal or state income tax
purposes on behalf of the Company, including but not limited to, the
election under Section 754 of the Code, and all revocations of such
elections, shall be made by the
Board.
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ARTICLE
4.
MEMBERSHIP
INTERESTS, UNITS AND REGISTRATION
4.1 Class of
Membership Interests. The Company shall
initially have one class of Membership Interests, having the Governance Rights
and Financial Rights described in this Agreement. The Board may
establish one or more additional classes or series of Units, designate each such
additional class or series, and fix the relative rights and preferences of each
such additional class or series.
4.2 Additional
Classes of Membership Interests. Membership
Interests of the Company of a different class or series than the existing
Membership Interests may only be issued by the Board.
4.3 Units. The Company shall
use Units to designate Membership Interests for purposes of allocating income,
gain, receipt, loss, deduction, credit, and distribution; voting; and such other
purposes as provided in this Agreement.
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(1)
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General. Each Unit
shall represent Governance Rights consisting of one vote per Unit when a
vote is permitted or required by this Agreement and the LLC Act and
Financial Rights consisting of the right to the allocations of income,
gain, receipt, loss, deduction and credit and the right to distributions
as provided in the Agreement.
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(2)
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Assignment. If any
Governance Rights or Financial Rights are separately assigned as provided
in this Agreement, the Company shall reflect in the required records of
the Company the number of Units designating Governance Rights and the
number of Units designating Financial
Rights.
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(3)
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Required
Records. Ownership
of Membership Interests and the Units designating Membership Interests,
including the Governance Rights and Financial Rights, shall be as is
reflected in the required records of the Company and shall be binding on
the Company only to the extent so reflected. No transfer or
assignment of Membership Interests, Governance Rights or Financial Rights
and no designation of Units shall be effective until reflected in the
required records of the Company and then only to the extent so
reflected. The Company may request written evidence of any
transfer or assignment in a form and content acceptable to the Company
before reflecting any such transfer, assignment, or designation in the
required records of the Company. Any allocations of income,
gain, receipt, loss, deduction, credit, and distribution by the Company
and votes made, in each case, in reliance on the Company’s required
records shall acquit the Company of all liability to any Person who may
have an interest in such allocations, distributions, or
vote.
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ARTICLE
5.
CAPITAL
AND OTHER ACCOUNTS
5.1 Required
Capital Accounts.
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(1)
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Establishment
and Operation of Accounts. The Company
shall maintain a separate Capital Account for each Person owning a
Membership Interest having Financial Rights in accordance with Section
704(b) of the Code and applicable Treasury Regulations. Each
such Capital Account shall be (i) increased by the initial contribution
made to the Company by such Person; (ii) increased by additional
contributions, if any, made to the Company by such Person; (iii) decreased
by distributions made from the Company to such Person; and (iv) otherwise
adjusted as provided in this
Agreement.
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(2)
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Maintenance
of Accounts. The Capital
Accounts shall be maintained in accordance with Section 704(b) of the Code
and applicable Treasury Regulations. The Board may,
notwithstanding any other provisions in this Agreement, alter the method
by which Capital Accounts are maintained in order to comply with Section
704(b) of the Code and applicable Treasury
Regulations.
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(3)
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Events
Triggering Revaluation. The Board
shall restate the value of the Capital Accounts (and by so doing the value
of the old contributions) upon (i) any contribution made to the Company;
(ii) any distribution from the Company that was not made in proportion to
all Units; and (iii) the determination by the Board that a re-valuation is
appropriate to maintain Capital Accounts in accordance with Section 704(b)
of the Code and applicable Treasury Regulations. The Board may
use any method it determines appropriate to revalue the Capital
Accounts. If a contribution is made to the Company, absent any
valuation method specifically adopted by the Board, the Capital Accounts
shall be deemed to have been revalued by the Board such that, immediately
after the receipt of such contribution, the value of each Capital Account
for each Person owning a Membership Interest having Financial Rights will
bear the same proportion to the value of all Capital Accounts for all
Persons owning Membership Interests having Financial Rights as the number
of such Person’s Units designating Financial Rights bears to all of the
Units designating Financial Rights. It is intended that the
methods of revaluation of Capital Accounts provided in this Section of the
Agreement override Section 10-32-57 of the LLC Act including the
revaluation of the old
contributions.
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5.2 Additional
Accounts. The Company may
maintain additional accounts for each Person owning a Membership Interest having
Financial Rights to reflect the equity shown on the Company’s financial
statements, to record such Person’s basis for income tax purposes, or for any
other purpose.
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5.3 No
Interest; Effect of Balances. A positive
balance in a Capital Account or any other account for a Person shall not bear
interest; affect the allocation of income, gain, receipt, loss, deduction or
credit to a Person; or entitle a Person to any distributions or other economic
benefits. A negative balance in a Capital Account or any other
account for a Person shall not constitute an obligation of such Person to the
Company except as specifically provided in this Agreement or as such Person may
otherwise specifically agree in writing.
ARTICLE
6.
ALLOCATIONS
6.1 General
Allocations. All items of
income, gain, receipt, loss, deduction, and credit of the Company for each
fiscal year shall be allocated among all of the Persons owning Membership
Interests having Financial Rights, and to such Person’s Capital Accounts, in the
proportion that the total number of each Person’s Units having Financial Rights
bears to all of the Units having Financial Rights.
6.2 Allocations
for Income Taxes. The allocations
in Section 6.1 apply with respect to allocations solely for income tax purposes
except as provided in this Section 6.2. Allocations pursuant to this
Section 6.2 shall not affect, or in any way be taken into account in computing,
any Person’s Capital Account, right to vote, or allocable shares of income,
gain, receipt, loss, deduction, credit or distribution as provided in any other
Section of this Agreement.
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(1)
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Section 704(c). Income,
gain, receipt, loss, deduction, and credit with respect to any property
contributed to the Company shall, solely for income tax purposes, be
allocated so as to take account of any variation between the adjusted
basis of such property to the Company for income tax purposes and the
value ascribed to such property in the Company’s books and records in
accordance with Section 704(c) of the Code and applicable Treasury
Regulations. In addition, if the Capital Accounts or any asset
of the Company is revalued pursuant to the provisions of this Agreement or
Section 704(b) of the Code and applicable Treasury Regulations, subsequent
allocations of income, gain, receipt, loss, deduction, and credit for
income tax purposes with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its adjusted value in the same manner as under Section 704(c)
and applicable Treasury Regulations. Any elections or other
decisions relating to such allocations shall be made by the
Board.
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(2)
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Section
754. Any
election by the Company under Section 754 of the Code to adjust the basis
of the Company assets pursuant to Section 734 of the Code or Section 743
of the Code shall be made in the sole discretion of the
Board. If such an election is made, allocations of Company
items of income, gain, receipt, loss, deduction, and credit shall be made
in a manner consistent with such allocation of items in accordance with
Section 734 and/or Section 743 of the Code, as the case may
be.
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(3)
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Section
706(d). In the
event of any changes in Membership Interests during a fiscal year, then
for purposes of this Article 6, the Board shall take into account the
requirements of Section 706(d) of the Code and shall have the right to
select any method of determining the varying interests of the Persons
owning Membership Interests of the Persons owning Membership Interests
having Financial Rights during the year which satisfies Section 706(d) of
the Code.
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ARTICLE
7.
DISTRIBUTIONS
7.1 Distributions.
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(1)
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Interim
Distributions. Subject to
Section 10-32-64 of the LLC Act, distributions may be made from the
Company at such times and in such amounts as determined from time to time
by the Board to the Persons owning Membership Interests having Financial
Rights in the proportion that the total number of each Person’s Units
having Financial Rights bears to all of the Units having Financial
Rights. It is intended that the method of allocating
distributions provided in this Section overrides Section 10-32-60 of the
LLC Act.
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(2)
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Terminating
Distributions. Upon
termination of the Company, assets of the Company, including proceeds from
liquidation of the Company’s assets, shall be applied in the following
order of priority:
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(a)
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To
creditors of the Company, including Persons owning Membership Interests
who are creditors, to the extent otherwise permitted by law, in
satisfaction of liabilities of the Company other than liabilities for
interim distributions or terminating distributions to Persons owning
Membership Interests having Financial
Rights.
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(b)
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To
reasonable reserves, if any, deemed necessary by the Board to provide for
the contingent liabilities of the
Company.
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(c)
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To
Persons owning Membership Interests having Financial Rights in the
proportion of each Person’s positive Capital Account
balance. It is intended that the method of allocating
distributions provided in this Section overrides Section ▇▇-▇▇-▇▇▇, subd.
1(c) of the LLC Act.
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7.2 Liquidations. Notwithstanding
anything herein to the contrary, the Board may provide for non-pro rata
distributions in the event of a distribution that reduces the outstanding
Membership Interests of a Person.
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7.3 In
Kind. Distributions
from the Company may be in cash or in kind, but no Person shall have any right
to demand and receive any distribution from the Company in any form other than
cash.
ARTICLE
8.
ISSUANCE
OF MEMBERSHIP INTERESTS AND UNITS; CONTRIBUTIONS
8.1 Issuance
of Membership Interests and Units. The Board is
authorized to accept contributions, issue, sell and deliver Membership Interests
having Governance Rights and Financial Rights, Governance Rights only, or
Financial Rights only, and, in each case, consisting of the class of Membership
Interest that is then authorized to such Persons, at such times, and upon such
terms and conditions as the Board shall determine. The Board shall
establish a price in money or other consideration, or a minimum price, or a
general formula or method by which the price of such Membership Interests shall
be determined. The Board shall also fix the number of Units to
designate such Membership Interests. There is no limitation on the
number of Units used to designate such Membership Interests that may be so
issued by the Board. If the Board does not specifically designate
when issuing Membership Interests pursuant to this Agreement that such
Membership Interest has Governance Rights and Financial Rights, Governance
Rights only, or Financial Rights only, such Membership Interest shall be deemed
to have both Governance Rights and Financial Rights for all purposes of this
Agreement.
8.2 Issuance
of Rights to Purchase. The Board is
further authorized to enter into contribution agreements and contribution
allowance agreements and to otherwise grant and issue rights to subscribe for,
purchase, exchange securities for, or to convert securities into, Membership
Interests having Governance Rights and Financial Rights, Governance Rights only,
or Financial Rights only, and, in each case, consisting of the class of
Membership Interest that is then authorized with such Persons, at such times,
and upon such terms and conditions as the Board shall determine. The
Board shall fix the terms, provisions and conditions of such agreements,
including the price in money or other consideration, or a minimum price, or a
general formula or method by which the price of the Membership Interests shall
be determined or the exchange or conversion basis or the price at which such
Membership Interests may be purchased or subscribed for. The Board
shall also fix the number of Units to designate such Membership
Interests. There is no limitation on the number of Units used to
designate such Membership Interests that may be so issued by the
Board.
8.3 Unit
Dividends and Splits. The Board shall
have the authority to declare and effect any dividend or split of any Units used
to designate the class of Membership Interest of the Company that is then
authorized in which the number of Units of such Membership Interests are
increased or decreased ratably.
8.4 Valuation
of Contributions. The Board shall
value all non-monetary contributions made to the Company in exchange for
Membership Interests. Whenever the Company accepts contributions, the
Board shall also revalue the Capital Accounts as provided in Article 5 of this
Agreement.
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8.5 Preemptive
Rights. No Member, merely
because of such Member’s status as a Member or an owner of Units, shall have any
preemptive rights to purchase any Units proposed to be sold or issued by the
Company. Nothing in this Agreement shall limit the right of the
Company to grant, by contract or otherwise, preemptive or first refusal rights
to one or more Members.
ARTICLE
9.
ADMISSION
OF MEMBERS
9.1 Admission
Following Issuance of Membership Interest. If the Board
issues Membership Interests having Governance Rights to a Person who is not then
a Member, such Person shall be admitted as a Member as of the effective date
that (i) such Person pays or is required to pay to the Company the amount the
Board determines to be contributed to the Company in exchange for the Membership
Interests to be issued to such Person, and (ii) such Person executes and
delivers to the Company such Person’s agreement to be bound by this Agreement in
such form and content as is acceptable to the Board. If the Board
issues Membership Interests to a Person who is then a Member, such Person shall
continue as a Member and shall be bound by this Agreement and such Membership
Interests shall be automatically subject to this Agreement. Upon
completion of any of such actions, the Company shall reflect the name and
address of the Member; the nature and type of contribution; the type of
Membership Interest, including the Governance Rights and Financial Rights; and
the number of Units designating such Membership Interest in the required records
of the Company as of such effective date.
9.2 Admission
Following Transfer or Assignment. The following
provisions apply to transferees or assignees of Membership
Interests.
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(1)
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Assignment
Which Includes Governance Rights. Any
transferee or assignee of a Membership Interest having Governance Rights
who is not already a Member may be admitted, subject to the affirmative
approval of such transferee or assignee as a Member by the Board, as a
Member with respect to such Membership Interest as of the effective date
that such Person executes and delivers to the Company such Person’s
agreement to be bound by this Agreement in such form and content as is
acceptable to the Board. Any transferee or assignee of a
Membership Interest in the Company who is already a Member shall continue
as a Member and shall be bound by this Agreement and such Membership
Interests shall be automatically subject to this
Agreement.
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(2)
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Assignee
of Only Financial Rights. Any Person
who is not a Member but who is a transferee or assignee of a Membership
Interest having only Financial Rights shall entitle such Person to
receive, to the extent assigned, the share of the profits and losses and
the distributions to which the assignor would otherwise be entitled but
shall not entitle or empower such Person to become a Member, to exercise
any Governance Rights, to receive any notices from the Company or to cause
dissolution of the Company.
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(3)
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Reflection
in Required Records. Upon
completion of any such actions, the Company shall reflect in the required
records of the Company the name and address of the transferee or assignee;
the nature and extent of the transfer or assignment; the type of
Membership Interest so transferred or assigned; whether the Governance
Rights or Financial Rights or both were transferred or assigned; and the
number of Units used to designate such Membership
Interest.
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ARTICLE
10.
MEMBERS
10.1 Voting. Each Member shall
have one vote for each Unit having Governance Rights entitled to vote that is
reflected in the name of such Member in the required records of the Company,
subject to cumulative voting rights as set forth in the Articles of
Organization. It is intended that the method of voting by Members
provided in this Section and throughout this Agreement is intended to override
Section 10-32-40.1, subd. 5. At each meeting of the Members, every
Member owning Units having Governance Rights entitled to vote shall be entitled
to vote in person or by proxy duly appointed by an instrument in writing
subscribed by such Member. Procedures for notice, voting, and conduct
of any meeting of Members shall be as provided in the Operating Agreement of the
Company.
ARTICLE
11.
BOARD
OF GOVERNORS
11.1 General
Authority. The business and
affairs of the Company shall be directed by a Board of Governors, which shall be
composed of governors elected in the manner and shall operate in the manner
provided in the Operating Agreement of the Company.
ARTICLE
12.
OFFICERS
12.1 General
Authority. The business and
affairs of the Company shall be managed by the Officers subject to the direction
of the Board of Governors, which Officers shall operate in the manner provided
in the Operating Agreement of the Company.
ARTICLE
13.
EVENTS
TERMINATING MEMBERSHIP
13.1 Events of
Termination. The continued
membership of a Member in the Company is terminated upon the first to occur of
any of the following events occurring with respect to a Member (each an “Event
of Termination”):
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(1)
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The
Member’s death;
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(2)
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The
Member’s retirement or resignation as a Member of the Company as defined
in Section 10-32-30 of the LLC
Act;
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(3)
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The
redemption of such Member’s complete Membership Interest in the
Company;
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(4)
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An
assignment or a buyout of such Member’s Membership Interest that leaves
such Member with no Governance Rights as provided in Sections 10-32-32 or
▇▇-▇▇-▇▇▇ of the LLC Act;
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(5)
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The
Member’s bankruptcy;
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(6)
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The
dissolution of such Member that is a domestic or foreign limited liability
company, corporation, partnership, limited partnership, joint venture,
operation, business trust, estate, trust, enterprise, or any other legal
or commercial entity;
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(7)
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A
merger in which the Company is not the surviving organization;
or
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(8)
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The
occurrence of any other event that terminates the continued membership of
the Member in the Company.
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13.2 Effect of
Event of Termination. If an Event of
Termination occurs with respect to any Member, the following provisions shall
apply:
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(1)
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Dissolution
Avoidance Consent. An event that
terminates the continued membership of a Member shall not cause the
company to be dissolved unless it is the last or sole member of the
Company. After the occurrence of an event, as provided in Section 13.1,
that terminates the continued membership of another Member in the Company,
each remaining Member may be asked to consent to the continuation of the
Company as a legal entity without dissolution and to the continuation of
its business, pursuant to the power set forth in Article V of the
Articles of Organization of the
Company.
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(2)
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Effect
on Member. An Event of
Termination does not give a Member a right to have such Member’s
Membership Interest purchased except as specifically provided in this
Agreement. The Membership Interest of such Member shall
continue to have the same Governance Rights and Financial Rights as
existed immediately prior to such Event of Termination except to the
extent that such Event of Termination resulted in the redemption of such
Membership Interest or the cancellation of such Membership Interest as in
the event of a merger in which the Company is not the surviving
organization.
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(3)
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Effect
on Transferee or Assignee. Any
transferee or assignee of such Member’s Membership Interest having
Governance Rights and Financial Rights or only Governance Rights may be
admitted as a Member as provided in Article 9 of this Agreement; provided,
if such Event of Termination occurs with respect to the last or sole
Member of the Company, the legal representative of such Member shall be
deemed to be admitted as a Member as of the effective date of such Event
of Termination and shall be deemed to own the Membership Interest owned by
such Member immediately prior to such Event of Termination, including all
Governance Rights and Financial Rights, and, in such event, the Company
shall not be dissolved as provided in Section ▇▇-▇▇-▇▇▇ of the LLC
Act.
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12
ARTICLE
14.
TRANSFERS
AND RESTRICTIONS REGARDING MEMBERSHIP INTERESTS
14.1 Permitted
Transfer or Assignment. A Person may
freely transfer or assign all or any portion of such Person’s Membership
Interest, including Governance Rights and/or Financial Rights, under the
following conditions:
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(1)
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by
sale, gift, or devise to a spouse or child of such
Person;
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(2)
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following
the death, withdrawal, bankruptcy, divorce, separation, dissolution or
termination of such Person;
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(3)
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by
a Person and any related persons (as defined in
Section 267(b) of the Code) in one or more transactions during
any thirty (30) calendar day period of Membership Interests
representing in the aggregate less than two percent (2%) of the total
outstanding Membership Interests in the
Company;
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(4)
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by
a Person and any other Persons, acting together, of Membership Interests
representing in the aggregate more than fifty percent (50%) of the total
outstanding Membership Interests in the
Company;
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(5)
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by
transfer effected through a qualified matching service
program;
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(6)
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or
otherwise, subject to the restrictions set forth in this
Agreement.
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The transferor or assignor of all or
any such portion of such Membership Interest shall continue to be a Member of
the Company to the extent such transferor or assignor retains a Membership
Interest having Governance Rights, but shall cease to be the owner of the
Governance Rights and/or Financial Rights transferred or
assigned. The transferee or assignee of the Governance Rights and
Financial Rights or only Governance Rights may be admitted as a Member as
provided in Article 9 of this Agreement.
14.2 Conditions
Precedent to Transfers. The Board of
Governors, in its sole discretion, may elect not to recognize any transfer of
Units unless and until the Company has received:
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(1)
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an
opinion of counsel (whose fees and expenses shall be borne by the
transferor) satisfactory in form and substance to the Board that such
transfer may be lawfully made without registration or qualification under
applicable state and federal securities laws, or such transfer is properly
registered or qualified under applicable state and federal securities laws
and if, requested by the Company that such transfer will not cause the
company to be treated as a publicly traded
partnership;
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13
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(2)
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such
documents and instruments of conveyance executed by the transferor and
transferee as may be necessary or appropriate in the opinion of counsel to
the Company to effect such transfer, except that in the case of a transfer
of units involuntarily by operation of law, the transfer shall be
confirmed by presentation of legal evidence of such transfer, in form and
substance satisfactory to the
Company;
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(3)
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the
transferor’s Unit certificate;
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(4)
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the
transferee’s taxpayer identification number and sufficient information to
determine the transferee’s initial tax basis in the interest transferred,
and any other information reasonably necessary to permit the company to
file all required federal and state tax returns and other legally required
information statements or returns;
and
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(5)
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other
conditions on the transfer of units adopted by the Board from time to time
as it deems appropriate, in its sole
discretion.
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IN
WITNESS WHEREOF, the Company and Members have executed this Agreement with all
of the schedules referenced herein effective as of the date first above
written.
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By:
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/s/ ▇▇▇▇ ▇▇▇▇▇▇
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Its:
Chairman
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14
COUNTERPART
SIGNATURE PAGE
TO
FOR
IN WITNESS WHEREOF,
______________________ has executed this Member Control Agreement of Red Trail
Energy, LLC dated effective as of _______________________, 20__, as of
_______________________, 20__.
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SCHEDULE
A
TO
MEMBER
CONTROL AGREEMENT
OF
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Name
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Addresses
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Number of Units With Full
Governance and Financial Rights
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