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EXHIBIT 10.10.2
AMENDMENT NO. 1 TO THE
OPERATING AGREEMENT
OF
OAK MOUNTAIN ENERGY, L.L.C.
This Amendment No. 1 to the Operating Agreement of Oak Mountain
Energy, L.L.C., is made as of the 9th day of April, 1997, by and among the
undersigned who constitute all of the Members of Oak Mountain Energy, L.L.C., an
Alabama limited liability company (the "Company").
W I T N E S S E T H:
WHEREAS, the Members of the Company are parties to that certain
Operating Agreement of the Company effective as of the 18th day of February,
1997 (the AOperating Agreement");
WHEREAS, the Members of the Company believe it to be desirable and
in the best interests of the Company to amend the Operating Agreement of the
Company in order (i) to permit the Company to certificate the Membership Units
of the Company, (ii) to replace Exhibit B of the Operating Agreement, (iii) to
change the provisions regarding the rights of Substitute Members and (iv) to
permit the Members to vote by proxy;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Operating Agreement as follows:
1. Definitions. Terms used herein but not otherwise defined shall
have the same meaning as ascribed to them in the Operating Agreement.
2. Exhibit B. The undersigned, constituting all of the Members of
the Company, hereby agree that Exhibit B to the Operating Agreement, which sets
forth the names and the addresses of the Members, Initial Delayed Capital
Contributions to be made by the Members and the number of Membership Units to be
issued to the Members in connection with the Initial Delayed Capital
Contribution, shall be amended by and replaced with Exhibit B attached hereto.
3. Certificates. The undersigned, constituting all of the Members of
the Company, hereby agree that a new Section 4.21 shall be added to the
Operating Agreement of the Company, which Section 4.21 shall read in its
entirety as follows:
"Section 4.21-- Certificates for Membership Units. The Company
shall issue to each Member a certificate in the form of the specimen
certificate attached hereto as Exhibit D which shall evidence
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the Membership Units of the Company. The following provisions shall apply
with respect to the certificates representing the Membership Units:
(A) All certificates shall be consecutively numbered. The name
of the Person owning the Membership Units, and the date of issue, shall be
entered upon the Company=s books. Each certificate shall be signed by at
least one Manager of the Company. A record of such certificates shall be
kept with the Company=s books and records.
(B) All certificates surrendered to the Company shall be
canceled, and no new certificates shall be issued until the former
certificates for an equal number of Membership Units shall have been
surrendered and canceled except in cases of a lost or destroyed
certificate. Any Person claiming a certificate to be lost or destroyed
shall make an affidavit of that fact, and advertise the same as the
Managers may require, whereupon the new certificate may be issued of the
same tenor and for the same number of Membership Units as the one alleged
to be lost or destroyed, but always subject to the approval of the
Managers.
(C) Subject to the restrictions on transfer contained in this
Operating Agreement, Membership Units of the Company shall be transferable
by the holder thereof or by its duly authorized agent or attorney, upon
surrender of the certificate properly endorsed or together with a properly
signed power of transfer.
(D) Subject to the restrictions on transfer contained in this
Operating Agreement, the Managers shall have the power and authority to
make all such rules and regulations as they may deem expedient concerning
the issue, transfer and regulation of the certificates for the Membership
Units of the Company.
(E) The certificates representing the Membership Units of the
Company shall bear the following legend:
THE MEMBERSHIP UNITS REPRESENTED BY THIS CERTIFICATE, AND THE SALE,
ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR ANY OTHER DISPOSITION
OR ENCUMBRANCE THEREOF ARE SUBJECT TO THE TERMS, CONDITIONS,
RESTRICTIONS AND LIMITATIONS CONTAINED IN THE OPERATING AGREEMENT OF
THE COMPANY AMONG THE MEMBERS OF THE COMPANY EFFECTIVE AS OF
FEBRUARY 18, 1997, AS THE SAME SHALL BE AMENDED FROM TIME TO TIME."
4. Rights of Substitute Members. The undersigned, constituting all
of the Members of the Company, hereby agree that Section 13.2 be, and it hereby
is, amended and restated in its entirety as follows:
"Section 13.2 Admission of Substitute Members. Except as provided in
this Section 13.2, an Assignee of a Membership Unit shall be admitted as a
Substitute Member and entitled to all the rights of the Member who
assigned the Membership Units only with the written approval of Members
holding at least Eighty Percent (80%) of the Membership Units. The Members
may grant or withhold the approval of such admission in their sole and
absolute discretion. If so admitted, the Substitute Member has all the
rights and powers and is subject to all the restrictions and liabilities
of the Member assigning the Membership Units. The admission of a
Substitute Member, without more, shall not release the Member assigning
the
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Membership Units from any liability to the Company that may have existed
prior to the approval. Notwithstanding anything to the contrary in this
Operating Agreement, any Assignee of a Membership Unit by or under any
pledge thereof in favor of Mellon Bank, N.A., or its successors or
assigns, (i) shall be admitted as a Substitute Member and entitled to all
the rights of the Member who assigned the Membership Unit without any
further action, approval or consent by any Member, Manager or other
Person, and (ii) shall not, to the extent permitted under the Act, be
subject to any of the known or unknown liabilities of the assigning Member
(including any obligations to make a contribution to the Company)."
5. Proxies. The undersigned, constituting all of the Members of the
Company, hereby agree that Section 6.1 be, and it hereby is, amended and
restated in its entirety as follows:
"Section 6.1 Member Management Rights. Unless otherwise provided in
this Operating Agreement or by nonwaivable provisions of the Act, all
Members (other than Assignees) who have not Dissociated shall be entitled
to vote on any matter submitted to a vote of the Members. Each Member
shall be entitled to the number of votes equal to the number of Membership
Units held by such Member, and may vote such Membership Units either in
person or by written proxy. No proxy shall be valid after six (6) months
from the date of its execution, unless otherwise provided in the proxy."
6. No other Amendments. Except as otherwise amended, revised or
changed in this Amendment to the Operating Agreement, the Operating Agreement
shall remain in full force and effect and shall be binding on the parties in
accordance with its terms.
7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, all of the Members of the Company have caused
this Amendment to the Operating Agreement to be executed as of the day and year
first above written.
THE MEMBERS:
SHELBY ENERGY GROUP, L.L.C.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
As Its Manager
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
As Its Manager
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
As Its Manager
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
As Its Manager
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇
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EXHIBIT B
Name, Address and Initial Delayed Contribution
Additional
Member Initial Delayed Membership
Members Contribution and Value Units
------- ---------------------- -----
Shelby Energy Group, L.L.C. $30,000,000, consisting of (i) 3,000,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ the assignment of the Fifth
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Amended and Restated Negotiable
Promissory Note dated April 1,
1997, of Oak Mountain Energy
Corporation to Zither Mining
Company, Inc. in the principal
amount of $9,500,000, as the same
may be hereafter increased from
time to time (the "Note"), and
(ii) an amount of cash equal to
$30,000,000 less (A) the
principal amount of the Note
assigned to the Company under (i)
above, (B) accrued but unpaid
interest under the Note, and (C)
all expenses incurred by Oak
Mountain Group, Inc., Shelby
Energy Group, Inc.,
Anker-Alabama, L.L.C., their
respective parent corporations
and Affiliates in connection with
the Asset Purchase Agreement
executed contemporaneously
herewith, up to a maximum of
$439,000.
▇▇▇▇▇▇ ▇▇▇▇ Promissory Note in the form of 106,383
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Exhibit C to the Operating
▇.▇. ▇▇▇ ▇▇▇▇ Agreement in the principal
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ amount of $1,063,830.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Promissory Note in the form of 21,276
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Exhibit C to the Operating
▇.▇. ▇▇▇ ▇▇▇▇ Agreement in the principal
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ amount of $212,760.
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EXHIBIT 10.11.1
OPERATING AGREEMENT
OF
SHELBY ENERGY GROUP, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
FORMATION OF COMPANY
Section 2.1 Organization........................................... 7
Section 2.2 Registered Agent and Office............................ 7
Section 2.3 Principal Place of Business............................ 7
Section 2.4 Permitted Businesses................................... 7
ARTICLE III
NAMES AND ADDRESSES OF MEMBERS
ARTICLE IV
RIGHTS AND DUTIES OF MANAGERS
Section 4.1 Management............................................. 7
Section 4.2 Number, Tenure and Qualifications...................... 8
Section 4.3 Manager Voting......................................... 8
Section 4.4 Certain Powers of Managers............................. 8
Section 4.5 Limitation on Powers of Managers....................... 9
Section 4.6 Liability for Certain Acts............................. 10
Section 4.7 Committees of the Managers............................. 10
Section 4.8 Intentionally omitted.................................. 10
Section 4.9 Managers Have No Exclusive Duty to Company............. 10
Section 4.10 Property............................................... 10
Section 4.11 Bank Accounts.......................................... 10
Section 4.12 Records, Audits and Reports to be Maintained........... 10
Section 4.13 Access to Records...................................... 11
Section 4.14 Reports to Members..................................... 11
Section 4.15 Accounts............................................... 11
Section 4.16 Records of Membership Units............................ 11
Section 4.17 Resignation............................................ 11
Section 4.18 Removal................................................ 11
Section 4.19 Vacancies.............................................. 12
ARTICLE V
MEETINGS OF MANAGERS
Section 5.1 Meetings............................................... 12
Section 5.2 Regularly Scheduled Meeting............................ 12
Section 5.3 Meeting of All Managers................................ 12
Section 5.4 Record Date............................................ 12
Section 5.5 Action by Managers Without a Meeting................... 12
Section 5.6 Waiver of Notice....................................... 12
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 6.1 Member Management Rights............................... 12
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Section 6.2 Liability of Members to Third Parties.................. 13
Section 6.3 Approval of Sale of All of the Company's Property...... 13
Section 6.4 Approval of Merger or Consolidation.................... 13
Section 6.5 Right of Withdrawal.................................... 13
Section 6.6 Conflicts of Interest.................................. 13
ARTICLE VII
MEETINGS OF MEMBERS
Section 7.1 Meetings............................................... 13
Section 7.2 Manner of Acting....................................... 13
Section 7.3 Action by Members Without a Meeting.................... 14
Section 7.4 Waiver of Notice....................................... 14
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification of Members, Managers, Etc.............. 14
Section 8.2 Determination of Meeting Applicable Standard........... 14
Section 8.3 Payment of Expenses in Advance of Disposition of Action 14
Section 8.4 Non-Exclusivity of Article............................. 15
Section 8.5 Insurance.............................................. 15
ARTICLE IX
CONTRIBUTIONS AND CAPITAL ACCOUNTS
Section 9.1 Initial Capital Contributions.......................... 15
Section 9.2 Additional Capital Contributions....................... 15
Section 9.3 Maintenance of Capital Accounts........................ 16
Section 9.4 Sale or Exchange of Interest........................... 16
Section 9.5 Compliance withss.704(b) of the Code................... 16
ARTICLE X
ALLOCATIONS AND DISTRIBUTIONS
Section 10.3 Company Minimum Gain Chargeback........................ 17
Section 10.5 Member Nonrecourse Deductions.......................... 18
Section 10.6 Member Minimum Gain Chargeback......................... 18
Section 10.7 Qualified Income Offset................................ 18
Section 10.9 Tax Allocations: ss. 704(c) of the Code.................. 18
Section 10.10 Interim Distributions.................................. 19
Section 10.11 Limitations on Distributions........................... 19
ARTICLE XI
CERTAIN TAX MATTERS
Section 11.1 Elections.............................................. 19
Section 11.2 Taxes of Taxing Jurisdictions.......................... 19
Section 11.3 Tax Matters Partner.................................... 19
Section 11.4 Method of Accounting................................... 20
ARTICLE XII
DISPOSITION OF MEMBERSHIP UNITS
Section 12.1 Limitations............................................ 20
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Section 12.2 Consent, Etc........................................... 20
Section 12.3 Permitted Sales by the Member.......................... 20
Section 12.4 Transfer Upon Dissociation of a Member................. 21
Section 12.5 Purchase Price......................................... 21
Section 12.6 Certain Additional Permitted Transfers of
Membership Units by Members ........................... 22
Section 12.7 Certain Limitations on Transfers of Capital Stock...... 23
ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS
Section 13.1 Rights of Assignees.................................... 23
Section 13.2 Admission of Substitute Members........................ 23
Section 13.3 Admission of Additional Members........................ 23
ARTICLE XIV
DISSOCIATION, DISSOLUTION AND WINDING UP
Section 14.1 Dissociation........................................... 24
Section 14.2 Rights of Dissociating Member.......................... 24
Section 14.3 Dissolution............................................ 24
Section 14.4 Distribution of Assets on Dissolution.................. 25
Section 14.5 Winding Up and Certificate of Cancellation............. 25
Section 14.6 Effect of Dissolution.................................. 25
ARTICLE XV
AMENDMENT
Section 15.1 Operating Agreement May Be Modified.................... 25
Section 15.2 Amendment or Modification of Operating Agreement....... 25
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Entire Agreement....................................... 26
Section 16.2 Rights of Creditors and Third Parties.................. 26
Section 16.3 Changes in Applicable Law.............................. 26
Section 16.4 Interpretation......................................... 26
Section 16.5 Governing Law.......................................... 26
Section 16.6 Execution of Additional Instruments.................... 26
Section 16.7 Construction of Terms.................................. 26
Section 16.8 Captions............................................... 26
Section 16.9 Waivers................................................ 27
Section 16.10 Rights and Remedies Cumulative......................... 27
Section 16.11 Heirs, Successors and Assigns.......................... 27
Section 16.12 Counterparts........................................... 27
Section 16.13 Certain Disputes Between Kiewit Alabama and
Simba Group ........................................... 27
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Operating Agreement
Of
Shelby Energy Group, L.L.C.,
A Delaware Limited Liability Company
This Operating Agreement of Shelby Energy Group, L.L.C., a limited
liability company organized pursuant to the Delaware Limited Liability Company
Act, shall be effective as of the Effective Date (as defined herein), by and
among the Persons executing this Operating Agreement as Members.
ARTICLE I
DEFINITIONS
The following terms used in this Operating Agreement shall have the
following meanings unless otherwise expressly provided herein:
Section 1.1 "Act" shall mean the Delaware Limited Liability Company Act,
as amended from time to time, and any successor thereto.
Section 1.2 "Additional Capital Contribution" shall mean any Capital
Contribution other than an Initial Capital Contribution and the Initial Delayed
Capital Contribution that a Member is obligated to make in accordance with
Section 9.2.
Section 1.3 "Additional Member" shall mean a Member, other than an Initial
Member or a Substitute Member, who has acquired a Membership Unit of the Company
and has become a Member in accordance with Section 13.3.
Section 1.4 "Adjusted Deficit" shall mean with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulation ▇▇.▇▇. 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in ▇▇.▇▇.
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Deficit is intended to comply with the
provisions of ss. 1.704-1(b)(2)(ii)(d) of the Regulations and shall be so
construed.
Section 1.5 "Affiliate" shall mean, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by, or under common
control with such Person, (ii) any Person owning or controlling ten percent
(10%) or more of the outstanding voting interests of such Person, (iii) any
member, manager, officer, director or general partner of such Person, or (iv)
any Person who is a member, manager, officer, director, general partner,
trustee, or a holder of ten percent (10%) or more of the voting interests of any
Person described in clauses (i) through (iii) of this sentence. For purposes of
this definition, the term "controls," "is controlled by" or "is under common
control with" shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management policies of a person or entity,
whether through the ownership of voting securities, by contract or otherwise.
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Section 1.6 "Appraiser" means an unaffiliated and unrelated business
consultant or independent Investment Banker who is familiar with the type of
business in which the Company is involved and would qualify as an "expert" for
business appraisals in a court of law.
Section 1.7 "Assignee" shall mean a transferee of an Economic Interest who
has not been admitted as a Substitute Member. Such transferee of a Membership
Unit shall be entitled to merely an Economic Interest in the Company until and
unless such Assignee is admitted as a Substitute Member in accordance with this
Operating Agreement.
Section 1.8 "Capital Account" shall mean the account maintained with
respect to a Member or Assignee determined in accordance with Article IX.
Section 1.9 "Capital Contribution" shall mean the amount of money and the
Gross Asset Value of Property (other than money) contributed to the Company by
or on behalf of a Member or Assignee.
Section 1.10 "Certificate" shall mean the Certificate of Formation of the
Company, as amended from time to time.
Section 1.11 "Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor thereto.
Section 1.12 "Company" shall mean Shelby Energy Group, L.L.C., a Delaware
limited liability company, and any successor limited liability company.
Section 1.13 "Company Minimum Gain" shall mean an amount determined by
first computing for each Company Nonrecourse Liability any gain the Company
would realize if it disposed of the Company Property subject to that liability
for no consideration other than full satisfaction of the liability, and then
aggregating the separately computed gains. The amount of Company Minimum Gain
includes such minimum gain arising from a conversion, refinancing, or other
change to a debt instrument, only to the extent a Member is allocated a share of
that minimum gain. For any Fiscal Year, the net increase or decrease in Company
Minimum Gain is determined by comparing the Company Minimum Gain on the last day
of the immediately preceding Fiscal Year with the Minimum Gain on the last day
of the current Fiscal Year. Notwithstanding any provision to the contrary
contained herein, Company Minimum Gain, and increases and decreases in Company
Minimum Gain, are intended to be computed in accordance with ss. 704 of the Code
and the Regulations issued thereunder, as the same may be issued and interpreted
from time to time.
Section 1.14 "Company Nonrecourse Liability" shall mean any debt or
obligation of the Company to the extent that no Member or Related Person bears
the economic risk of loss (as defined in ss. 1.752-2 of the Regulations) with
respect to the liability.
Section 1.15 "Company Property" shall mean any Property owned by the
Company.
Section 1.16 "Depreciation" means, for each Fiscal Year, an amount equal
to the depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such Fiscal Year, except that if the Gross Asset
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such Fiscal Year, Depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization, or other cost recovery deduction for such
Fiscal Year bears to such beginning adjusted tax basis; provided, however, that
if the adjusted basis for federal income tax purposes of an asset at the
beginning of such Fiscal Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by the Managers.
Section 1.17 "Disposition" ("Dispose") shall mean any sale, assignment,
transfer, exchange, mortgage, pledge, grant, hypothecation, or other transfer,
absolute or as security or encumbrance (including dispositions by operation of
law) of an Economic Interest or Membership Unit in the Company.
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Section 1.18 "Dissociation (Dissociate)" shall mean any action or event
which causes a Person to cease to be Member of the Company as described in
Article XIV hereof.
Section 1.19 "Dissociation Event" shall mean an event, the occurrence of
which will result in the dissolution of the Company under Article XIV unless the
Members agree to the contrary.
Section 1.20 "Distribution" shall mean a transfer of Property made by the
Company to a Member or an Assignee on account of such Member's or Assignee's
Economic Interest or Membership Unit as
described in Article X.
Section 1.21 "Economic Interest" shall mean a Member's or Assignee's share
of the Company's Net Profits, Net Losses, and Distributions of the Company's
Property pursuant to this Operating Agreement and the Act, but shall not include
any right to participate in the operation, management or affairs of the Company,
including the right to vote on, consent to, or otherwise participate in any
decision of the Members.
Section 1.22 "Effective Date" shall mean February 18, 1997.
Section 1.23 "Fiscal Year" shall mean (i) the period commencing on the
Effective Date of this Agreement and ending on December 31, 1997, (ii) any
subsequent twelve (12) month period commencing on January 1 and ending on
December 31, and (iii) any portion of the period described in clause (ii) for
which the Company is required to allocate Profits, Losses and other items of
Company income, gain, loss or deduction pursuant to Article X hereof.
Section 1.24 "Gross Asset Value" shall mean, with respect to any asset,
the asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset, as
determined by the Managers, provided that the initial Gross Asset Values of the
assets contributed to the Company pursuant to Sections 9.1 and 9.2 hereof shall
be as set forth and determined in such sections;
(b) The Gross Asset Values of all Company assets shall be adjusted
to equal their respective gross fair market values, as determined by the
Managers, as of the following times: (i) the acquisition of an additional
Membership Interest or Membership Unit by any new or existing Member in exchange
for more than a de minimis Capital Contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Property as
consideration for a Membership Interest or Membership Unit; and (iii) the
liquidation of the Company within the meaning of Regulations ss.
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses
(i) and (ii) above shall be made only if the Managers reasonably determine that
such adjustments are necessary or appropriate to reflect the relative economic
interests of the Members in the Company;
(c) The Gross Asset Value of any Company asset distributed to any
Member shall be adjusted to equal the gross fair market value of such asset on
the date of distribution as determined by the Managers; and
(d) The Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code ss. 734(b) or Code ss. 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulation ss. 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values
shall not be adjusted pursuant to this Section 1.24(d) to the extent the
Managers determine that an adjustment pursuant to Section 1.24(b) hereof is
necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this Section 1.24(d). If the Gross Asset
Value of an asset has been determined or adjusted pursuant to Section 1.24(a),
Section 1.24(b), or Section 1.24(d) hereof, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Net Profits and Net Losses.
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Section 1.25 "Initial Capital Contribution" shall mean the Capital
Contribution agreed to be made by the Members as described in Section 9.1 and
set forth on Exhibit A attached hereto.
Section 1.26 "Initial Delayed Contribution" shall mean the Initial Delayed
Contribution agreed to be made by the Initial Members as described in Section
9.1 and set forth on Exhibit B attached hereto.
Section 1.27 "Initial Members" shall mean those persons identified on
Exhibit A attached hereto who have executed this Operating Agreement as of the
Effective Date.
Section 1.28 "Kiewit Alabama" shall mean Kiewit Alabama Mining Company, a
Delaware corporation.
Section 1.29 "Majority" with respect to Members, shall mean those Members
owning more than Fifty Percent (50%) of the Membership Units in the Company;
similarly, any reference in this Agreement to any other specified percentage of
the Members shall refer to those Members holding, in the aggregate, the
specified percentage of Membership Units in the Company and, for this purpose,
Assignees, transferees and other holders of Economic Interests who have not been
admitted as Members pursuant to Section 13.2 hereof shall be deemed to hold zero
Membership Units.
Section 1.30 "Managers" shall mean the Persons designated by the Members
to manage the affairs of the Company under Article IV hereof.
Section 1.31 "Member" shall mean an Initial Member, Substitute Member or
Additional Member of the Company who has not ceased to be a Member.
Section 1.32 "Member Minimum Gain" shall mean an amount determined in
accordance with Regulations ss. 1.704-2(i) by first computing for each Member
Nonrecourse Liability any gain the Company would realize if it disposed of the
Company Property subject to that liability for no consideration other than full
satisfaction of the liability, and then aggregating the separately computed
gains. The amount of Member Minimum Gain includes such minimum gain arising from
a conversion, refinancing, or other change to a debt instrument, only to the
extent a Member is allocated a share of that minimum gain. For any Fiscal Year,
the net increase or decrease in Member Minimum Gain is determined by comparing
the Member Minimum Gain on the last day of the immediately preceding Fiscal Year
with the Member Minimum Gain on the last day of the current Fiscal Year.
Notwithstanding any provision to the contrary contained herein, Member Minimum
Gain and increases and decreases in Member Minimum Gain are intended to be
computed in accordance with ss. 704 of the Code and the Regulations issued
thereunder, as the same may be issued and interpreted from time to time.
Section 1.33 "Member Nonrecourse Deductions" shall mean the net increase
during the Fiscal Year, if any, in Member Minimum Gain, reduced (but not below
zero) by any distribution of proceeds that are attributable to a Member
Nonrecourse Liability and allocable to an increase in such Member Minimum Gain
under ss. 1.704-2(i) of the Regulations.
Section 1.34 "Member Nonrecourse Liability" shall mean any debt or
obligation of the Company to the extent the liability is nonrecourse under state
law, and on which a Member or Related Person bears the economic risk of loss
under ss. 1.752-2 of the Regulations because, for example, the Member or Related
Person is the creditor or a guarantor.
Section 1.35 "Membership Interest" shall mean a Member's entire interest
in the Company including such Member's Economic Interest and the right of the
Member to participate in the management and operation of the business and
affairs of the Company, including, but not limited to, the right to vote on,
consent to, or otherwise participate in any decision, vote or action of or by
the Members granted pursuant to this Operating Agreement and the Act. In the
case of an Assignee, the term "Membership Interest" shall mean only the
Assignee's Economic Interest in the Company. A Member's Membership Interest
shall be equal to the
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number of Membership Units held by such Member, divided by the total number of
Membership Units outstanding.
Section 1.36 "Membership Unit" shall mean the numerical measure of the
size of a Membership Interest in the Company. In the case of an Assignee, the
term "Membership Unit" shall encompass only the Assignee's Economic Interest in
the Company with respect to such Membership Unit.
Section 1.37 "Net Profits" and "Net Losses" means, for each Fiscal Year,
an amount equal to the Company's taxable income or loss for such Fiscal Year,
determined in accordance with Code ss. 703(a) (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Code ss. 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Net Profits or Net Losses
pursuant to this Section 1.37 shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code ss.
705(a)(2)(B) or treated as Code ss. 705(a)(2)(B) expenditures pursuant to
Regulations ss. 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Net Profits or Net Losses pursuant to this Section 1.37, shall be
subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to Section 1.24(b) or Section 1.24(c) hereof, the amount of
such adjustment shall be taken into account as gain or loss from the disposition
of such asset for purposes of computing Net Profits or Net Losses;
(d) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with Section 1.16 hereof;
(f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code ss. 734(b) or Code ss. 743(b) is required
pursuant to Regulations ▇▇.▇▇. 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Member's Membership
Interest, the amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset and shall be
taken into account for purposes of computing Net Profits or Net Losses; and
(g) Notwithstanding any other provision of this Section 1.37, any
items which are specially allocated pursuant to Sections 10.3 through 10.9
hereof shall not be taken into account in computing Net Profits or Net Losses.
The amounts of the items of Company income, gain, loss, or deduction available
to be specially allocated pursuant to Sections 10.3 through 10.9 hereof shall be
determined by applying rules analogous to those set forth in Sections 1.37(a)
through 1.37(f) above.
Section 1.38 "Notice" shall be in writing. Notice shall be considered
given (a) on the date when delivered personally, (b) when transmitted by
telecopy (receipt confirmed), provided that a copy is mailed at the end of the
following business day by first class mail, postage prepaid, (c) on the third
day after mailing by first class mail postage prepaid addressed to the Managers
in care of the Company at the address of the Company's
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Principal Place of Business, or (d) on the next business day following deposit
within a nationally recognized overnight delivery service for next day delivery,
at that Member's address as reflected in the Operating Agreement unless the
Member has given the Company a Notice of a different address.
Section 1.39 "Offsettable Decrease" shall mean any allocation that
unexpectedly causes or increases an Adjusted Deficit in a Member's or Assignee's
Capital Account as of the end of the Fiscal Year to which the allocation relates
attributable to depletion allowances under ss. 1.704(b)(2)(iv)(k) of the
Regulations, allocations of loss and deductions under ▇▇.▇▇. 704(e)(2) or 706 of
the Code or ss. 1.751-1 of the Regulations, or distributions that, as of the end
of the Fiscal Year, are reasonably expected to be made to the extent they exceed
the offsetting increases to such Member's or Assignee's Capital Account that
reasonably are expected to occur during or (prior to) the Fiscal Years in which
such distributions are expected to be made (other than increases pursuant to a
minimum gain chargeback pursuant to sections 10.3 and 10.6 hereof).
Section 1.40 "Operating Agreement" shall mean this Operating Agreement
including all amendments hereto adopted in accordance with Section 15.2 and the
Act.
Section 1.41 "Organization" shall mean any entity permitted to be a Member
of a limited liability company under the Act. The term "Organization" includes,
without limitation, corporations (both non-profit and other corporations),
partnerships (both limited and general), joint ventures, limited liability
companies, and unincorporated associations, but does not include joint tenancies
and tenancies by the entirety.
Section 1.42 "Person" shall include an individual, trust, estate, or any
Organization.
Section 1.43 "Principal Place of Business" shall mean the principal office
of the Company designated in Section 2.3, or any other place or places as the
Managers may from time to time deem advisable.
Section 1.44 "Property" shall mean any property real, personal or mixed,
tangible or intangible, including money and any legal or equitable interest in
such property, but excluding services and promises to perform services in the
future.
Section 1.45 "Regulations" shall mean the permanent, temporary, proposed,
or proposed and temporary regulations issued by the of Department of the
Treasury that are promulgated under the Code as amended.
Section 1.46 "Related Person" shall mean a Person having a relationship to
a Member that is described in ss. 1.752-4(b) of the Regulations.
Section 1.47 "Secretary of State" shall mean the Delaware Secretary of
State.
Section 1.48 "Simba Group" shall mean Simba Group, Inc., a Delaware
corporation.
Section 1.49 "Substitute Member" shall mean an Assignee who has been
admitted as a Member of the Company in accordance with Section 13.2. Upon
becoming a Member of the Company, such Assignee shall have all the rights of a
Member as are described more fully in Section 13.2 hereof.
Section 1.50 "Taxing Jurisdiction" shall mean the taxing jurisdiction of
the Federal Government and of any state, local, or foreign government that
collects tax, interest or penalties, however designated, on any Member's share
of the income or gain attributable to the Company.
ARTICLE II
FORMATION OF COMPANY
Section 2.1 Organization. On February 18, 1997, the initial Members
organized the Company pursuant to the provisions of the Act by executing and
filing the Certificate with the Secretary of State.
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Section 2.2 Registered Agent and Office. The registered agent for the
service of process and the registered office shall be that person and location
reflected in the Certificate. The Managers may, from time to time, change the
registered agent or office through appropriate filings with the Secretary of
State. In the event the registered agent ceases to act as such for any reason or
the location of the registered office shall change, the Managers shall promptly
designate a replacement registered agent or file a notice of change of address
as the case may be.
Section 2.3 Principal Place of Business. The Principal Place of Business
of the Company is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇. The Company may locate its principal places of business at any other
place or places as the Managers may from time to time deem advisable.
Section 2.4 Permitted Businesses. The business of the Company shall be:
(a) To perform any and all business for which a limited liability
company may be organized under the Act, including, without limitation, the
formation of Oak Mountain Energy L.L.C., a separate limited liability company,
whose purpose shall include, without limitation, the mining, processing,
marketing and selling of coal and related products in and throughout the State
of Alabama.
(b) To accomplish any lawful business whatsoever or which shall at
any time appear conducive to or expedient for the protection or benefit of the
Company and its Property.
(c) To exercise all other powers necessary to or reasonably
connected with the Company's business which may be legally exercised by limited
liability companies under the Act or under the laws of any jurisdiction in which
the Company may conduct its business.
(d) To engage in all activities necessary, customary, convenient, or
incident to any of the foregoing.
ARTICLE III
NAMES AND ADDRESSES OF MEMBERS
The name and address of each Member and Assignee, and the Membership Units
of each such Member shall be listed on Exhibit A attached hereto. The Managers
shall update Exhibit A from time to time as necessary to accurately reflect the
information therein. Any amendment or revision to Exhibit A made in accordance
with this Agreement shall not be deemed an amendment to this Agreement for
purposes of requiring Member approval. Any reference in this Agreement to
Exhibit A shall be deemed to be a reference to Exhibit A as may be in effect
from time to time.
ARTICLE IV
RIGHTS AND DUTIES OF MANAGERS
Section 4.1 Management. The management of the business and affairs of the
Company shall be vested in its Managers. Except for situations in which the
approval of the Members is expressly required by this Operating Agreement, or by
nonwaivable provisions of applicable law, the Managers shall have full and
complete authority, power and discretion to manage and control the business,
affairs and Properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incident to the management of the Company's business.
Section 4.2 Number, Tenure and Qualifications. The Company shall have four
(4) Managers. Simba Group shall be entitled to designate two (2) Managers and
Kiewit Alabama shall be entitled to designate two (2) Managers. No other Member
shall be entitled to elect, designate, appoint or otherwise participate in an
election, designation or approval of any Managers. Each Manager shall hold
office until such Manager's successor shall have been elected or designated and
qualified, or until the Member responsible for designating such Manager shall
have Dissociated from the Company, whichever occurs first. A Manager need not be
a
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resident of the State of Delaware or a Member of the Company. The names and
addresses of the Managers of the Company appointed or designated by each Member,
as of the date of execution of this Agreement, are as follows:
NAME ADDRESS
Managers appointed by Simba Group (the "Simba Group Managers")
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Managers appointed by Kiewit Alabama (the "Kiewit Alabama Managers")
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 4.3 Manager Voting. With respect to all matters requiring the vote
of, action by, approval of or consent by "the Managers," the approval, consent,
vote or action by all of the Managers shall be required to take such action,
unless such other number of Managers is expressly required pursuant to this
Operating Agreement or nonwaivable provisions of the Act.
Section 4.4 Certain Powers of Managers. Except as otherwise required
pursuant to this Operating Agreement or by nonwaivable provisions of the Act,
including, without limitation, the provisions of Section 4.5 hereof, the
Managers shall have the power and authority, on behalf of the Company:
(a) To acquire Property from any Person and to hold and own Property
in the name of the Company;
(b) To invest any Company funds temporarily (by way of example but
not limitation) in time deposits, short-term governmental obligations,
commercial paper or other investments;
(c) To dispose of the Company's Property in the ordinary course of
the Company's business;
(d) To borrow money for the Company from banks, other lending
institutions, Managers, Members, or any Affiliate of the Managers or Members on
such terms as the Managers deem appropriate, and in connection therewith, to
hypothecate, encumber and grant security interests in the Property of the
Company to secure repayment of the borrowed sums. No debt shall be contracted or
liability incurred by or on behalf of the Company except as authorized by the
Managers, or to the extent permitted under the Act, by agents or employees of
the Company expressly authorized to contract such debt or incur such liability
by the Managers;
(e) To execute on behalf of the Company all instruments and
documents, including, without limitation, checks, drafts, notes and other
negotiable instruments, mortgages or deeds of trust, security agreements,
financing statements, documents providing for the acquisition, mortgage or
disposition of the
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Company's Property, assignments, bills of sale, leases, partnership agreements,
operating agreements of other limited liability companies, and any other
instruments or documents necessary to the business of the Company;
(f) To purchase liability and other insurance to protect the
Company's Property and business;
(g) To employ accountants, legal counsel, managing agents or other
experts to perform services for the Company and to compensate them from Company
funds;
(h) To enter into any and all other agreements on behalf of the
Company with any other Person for any purpose;
(i) To exercise the Company's rights in connection with any
investment in any Organization, including, without limitation, to exercise any
voting rights arising from such an investment; and
(j) To do and perform any and all other acts as may be necessary or
appropriate to the conduct of the Company's business.
Unless authorized to do so by this Operating Agreement or by the
Managers of the Company, no attorney-in-fact, employee or other agent of the
Company shall have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable pecuniarily for any purpose. No Member
or Manager shall have any power or authority to bind the Company unless the
Member or Manager has been authorized by the Managers to act as an agent of the
Company in accordance with the previous sentence.
Section 4.5 Limitation on Powers of Managers. Notwithstanding anything to
the contrary in this Article IV or elsewhere in the Operating Agreement or the
Certificate, the Managers shall not have the power or authority to do any of the
following without the consent of the requisite number of Members or those
Members holding the requisite Membership Units in the Company:
(a) amend the Operating Agreement except in accordance with Article
III or Section 15.2 of this Operating Agreement;
(b) admit Assignees as Substitute Members except in accordance with
Section 13.2 of this Operating Agreement;
(c) admit Additional Members except in accordance with Section 13.3
of this Operating Agreement;
(d) continue the Company after a Dissociation Event except in
accordance with Section 14.3 of this Operating Agreement;
(e) Dispose of all or substantially all of the Company Property
except in accordance with Section 6.3 of this Operating Agreement;
(f) merge or consolidate the Company with or into one or more
limited liability companies or other entities except in accordance with Section
6.4 of this Operating Agreement;
(g) waive the requirement of the Members to make an Additional
Capital Contribution or Initial Delayed Capital Contribution except in
accordance with Sections 9.1 and 9.2 of this
Operating Agreement;
(h) require the Members to make Additional Capital Contributions,
except in accordance with Section 9.2 of this Operating Agreement; or
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(i) take any other action which requires the vote, approval or
consent of the Members under this Operating Agreement.
Section 4.6 Liability for Certain Acts. Each Manager shall perform his
duties as Manager in good faith, in a manner he reasonably believes to be in the
best interests of the Company, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances. A Manager who
so performs the duties of Manager shall not have any liability by reason of
being or having been a Member of the Company. The Managers do not, in any way,
guarantee the return of the Members' Capital Contributions or a profit for the
Members from the operations of the Company. The Managers shall not be liable to
the Company or to any Member for any loss or damage sustained by the Company or
any Member, unless the loss or damage shall have been the result of fraud,
deceit, gross negligence, willful misconduct or a wrongful taking by the
Manager.
Section 4.7 Committees of the Managers. The Managers may create one or
more committees. Any such committee shall consist of at least one (1) Simba
Group Manager and one (1) Kiewit Alabama Manager. Any such committee, to the
extent specified by the Managers, may exercise the authority of the Managers in
supervising the management of the business affairs of the Company, except that a
committee may not (i) authorize distributions, except in accordance with a
formula or method described by the Managers; (ii) approve or propose to Members
actions required by law to be approved by the Members; (iii) fill vacancies of
the Managers or any of its committees; (iv) amend the Certificate or the
Operating Agreement or propose amendments to the Certificate or the Operating
Agreement; (v) authorize any Additional Capital Contributions; (vi) take any
other actions which require the approval of the Members under the Certificate,
the Operating Agreement or the Act; or (vii) authorize the expenditure, or
undertaking of an obligation, in excess of $50,000.00.
Section 4.8 Intentionally omitted.
Section 4.9 Managers Have No Exclusive Duty to Company. No Manager shall
be required to manage the Company as such Manager's sole and exclusive function,
and any Manager may have other business interests and may engage in other
activities in addition to those relating to the Company. Neither the Company nor
any Member shall have any right, by virtue of this Operating Agreement, to share
or participate in such other investments or activities of a Manager or to the
income or proceeds derived therefrom. A Manager shall incur no liability to the
Company or to any of the Members as a result of engaging in any other business
or venture.
Section 4.10 Property. Any and all Company Property shall be held in the
name of the Company.
Section 4.11 Bank Accounts. The Managers may from time to time open bank
accounts in the name of the Company.
Section 4.12 Records, Audits and Reports to be Maintained. At the expense
of the Company, the Managers or the appropriate officer of the Company shall
maintain the records and accounts of all operations and expenditures of the
Company. The Company shall maintain the following records at the Principal Place
of Business:
(a) A current list of the full name and last known business or
residence address of each Member;
(b) A copy of the Certificate and all amendments thereto, together
with executed copies of any powers of attorney pursuant to which any documents
have been executed;
(c) Copies of the Company's Federal, foreign, state and local income
tax returns and reports, if any;
(d) A copy of the Operating Agreement including all amendments
thereto;
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(e) Copies of any financial statements of the Company for the three
(3) most recent years; and
(f) Any other records and accounts as the Members shall require the
Company to maintain.
Section 4.13 Access to Records. The records required to be maintained by
the Company in this Article IV, and any other books and records of the Company,
wherever situated, are subject to inspection and copying at the reasonable
request of, and at the expense of, any Member or the Member's agent or attorney
during regular business hours of the Company.
Section 4.14 Reports to Members. The Managers shall provide reports at
least annually to the Members, other than Assignees, at such time and in such
manner as the Managers may determine reasonable. The Managers shall also provide
all Members with those information returns required by the Code and the laws of
all applicable local and foreign governments.
Section 4.15 Accounts. The Managers shall maintain a record of Capital
Account for each Member and Assignee in accordance with Article IX.
Section 4.16 Records of Membership Units. The Managers shall maintain a
record of the Membership Units held by each Member, as such Membership Units
shall be increased or decreased from time to time in accordance with this
Operating Agreement.
Section 4.17 Resignation. Any Manager of the Company may resign at any
time by giving prior written notice to the Members of the Company. The
resignation of any Manager shall take effect upon the receipt of the notice or
at such later time as shall be specified in the notice, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. The resignation of a Manager who is also a Member shall not
affect the Manager's rights as a Member and shall not constitute the
Dissociation of such Manager as a Member.
Section 4.18 Removal. Any Manager may be removed, with or without cause,
by the Member who designated or appointed such person as Manager (i.e., either
Simba Group or Kiewit Alabama) in accordance with Section 4.2, and such Member
shall promptly provide Notice to the Company of such removal. The removal of a
Manager who is also a Member shall not affect the Manager's rights as a Member
and shall not constitute a Dissociation of such Manager as a Member. In the
event of the Dissociation of a Member, all of the Managers appointed by such
Dissociated Member shall be immediately and automatically removed as a Manager
of the Company, without any further action on the part of the Members or
Managers of the Company.
Section 4.19 Vacancies. Any vacancy occurring for any reason among the
Managers of the Company may be filled by the Member (i.e., either Simba Group or
Kiewit Alabama) entitled to designate the Manager in accordance with Section
4.2.
ARTICLE V
MEETINGS OF MANAGERS
Section 5.1 Meetings. Meetings of the Managers, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by any Manager
or any Member. Except as provided in Section 5.2, 5.3, 5.5 or 5.6 of this
Article V, Notice of the place, day and hour of a meeting of the Managers and
the purpose or purposes for which the meeting is called shall be given not less
than seven (7) nor more than thirty (30) days before the date of the meeting by
or at the direction of the Manager or Member calling the meeting to each Manager
entitled to vote or act at such meeting. The Managers may designate any place,
either within or outside the State of Delaware, as the place of meeting for any
meeting of the Managers. If no designation is made, or if a special meeting is
called, the place of meeting shall be the Principal Office of Business of the
Company.
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Section 5.2 Regularly Scheduled Meeting. The Managers shall meet on at
least a quarterly basis.
Section 5.3 Meeting of All Managers. If all of the Managers shall meet at
any time and place, either within or outside of the State of Delaware, and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or Notice and at such meeting any lawful action may be
taken.
Section 5.4 Record Date. For purposes of (i) determining those Managers
entitled to Notice of or to vote at any meeting of Managers, or any adjournment
thereof, or (ii) in order to make a determination of Managers for any other
purpose, the date on which Notice of the meeting is mailed shall be the record
date for such determinations with respect to the Managers. When a determination
of those Managers entitled to vote at any meeting of the Managers has been made
as provided in this Section 5.4, such determination shall apply to any
adjournment thereof.
Section 5.5 Action by Managers Without a Meeting. Action required or
permitted to be taken at a meeting of Managers may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, signed by the requisite number of Managers required to approve such
action and delivered to the Company for inclusion in the minutes or for filing
with the Company records. Action taken under this section is effective when the
requisite number of Managers have signed the consent, unless the consent
specifies a different effective date. The record date for determining Managers
entitled to take action without a meeting shall be the date the first Manager
signs a written consent. If an action by Managers is taken without a meeting
under this Section 5.5, Notice to the Managers shall be considered waived,
provided however, that if action is taken hereunder by less than all of the
Managers, Notice of such action shall be provided to the nonparticipating
Managers. Failure to provide the Notice described in the preceding sentence
shall not invalidate or otherwise affect the validity of any action properly
taken by the requisite number of Managers.
Section 5.6 Waiver of Notice. When any Notice is required to be given to
any Manager, a waiver thereof in writing signed by the person entitled to such
Notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such Notice.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 6.1 Member Management Rights. Unless otherwise provided in this
Operating Agreement or by nonwaivable provisions of the Act, all Members (other
than Assignees) who have not Dissociated shall be entitled to vote on any matter
submitted to a vote of the Members, other than with regard to the appointment,
designation, election or removal of the Managers in accordance with Article V.
Each Member shall be entitled to the number of votes equal to the number of
Membership Units held by such Member.
Section 6.2 Liability of Members to Third Parties. Unless otherwise
provided by the Act, no Member shall be liable under any judgment, decree, or
order of a court, or in any other manner, for any debt, obligation or liability
of the Company, whether arising in contract, tort or otherwise, or for the acts
or omissions of any Member, Manager, officer, agent or employee of the Company.
Section 6.3 Approval of Sale of All of the Company's Property. The
affirmative vote or action of a Member or Members holding at least a Majority of
the Membership Units of the Company shall be required to approve the sale,
exchange or other disposition of all, or substantially all, of the Company's
Property.
Section 6.4 Approval of Merger or Consolidation. The affirmative vote or
action of a Member or Members holding at least a Majority of the Membership
Units of the Company shall be required to approve the merger or consolidation of
the Company with or into one or more limited liability companies or other
entities formed or organized under the laws of the State of Delaware, any other
state, the United States or any foreign jurisdiction, with the Company or the
other business entity being the surviving entity.
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Section 6.5 Right of Withdrawal. Except as otherwise provided herein, no
Member shall have the right to withdraw as a Member of the Company or otherwise
seek the partition of the Company's Property, without the prior written consent
of the other Members.
Section 6.6 Conflicts of Interest:
(a) Except as provided in a separate written agreement between a
Member and the Company or any other Member, any Member shall be entitled to
enter into transactions that may be considered to be competitive with, or a
business opportunity that would be beneficial to, the Company, it being
expressly understood that the Members may enter into transactions that are
similar to the transactions into which the Company may enter.
(b) No Member shall be deemed to have violated a duty or obligation
to the Company merely because the Member's conduct furthers such Member's own
interest. Any Member may lend money to and transact other business with the
Company. The rights and obligations of a Member who lends money to or transacts
business with the Company are the same as those of a person who is not a Member,
subject to the Act or other applicable law. No transaction with the Company
shall be voidable solely because a Member or an Affiliate of the Member has a
direct or indirect interest in the transaction if (i) either the transaction is
fair to the Company or (ii) the disinterested Members, in either case knowing
the material facts of the transaction and the Member's interest, authorize,
approve, or ratify the transaction.
ARTICLE VII
MEETINGS OF MEMBERS
Section 7.1 Meetings. Meetings of the Members may be called by the
Managers or by any Member of the Company upon not less that seven (7) days nor
more than thirty (30) days prior written Notice to each Member of the Company.
Such notice shall set forth the time and place of the meeting and the purpose
for which it is called. If no place for the meeting is designated, the place of
meeting shall be the Principal Place of Business of the Company in the State of
Delaware.
Section 7.2 Manner of Acting. The affirmative vote or action of a Member
or Members holding at least a Majority of the Membership Units of the Company
shall be the vote or action of the Members, unless the vote or action of a
greater or lesser proportion or number of the Members is otherwise required by
the Act, by the Certificate or by this Operating Agreement. Unless otherwise
expressly provided herein or required under applicable law, Members who have an
interest (economic or otherwise) in the outcome of any particular matter upon
which the Members vote may vote upon any such matter and their vote shall be
counted in the determination of whether the requisite matter was approved by the
Members. Any Member may participate in any meeting of the Members by means of a
conference telephone or similar communications equipment by means of which all
persons participating in such meeting can hear each other, and participation in
a meeting pursuant to this Section 7.2 shall constitute presence in person at
such meeting.
Section 7.3 Action by Members Without a Meeting. Action required or
permitted to be taken at a meeting of Members may be taken without a meeting and
without Notice if the action is evidenced by one or more written consents
describing the action taken, signed by those Members or that Member having the
requisite number of Membership Units required to take such action at a meeting
of the Members and delivered to the Managers of the Company for inclusion in the
minutes or for filing with the Company records. Action taken under this section
is effective when the requisite number of Members entitled to vote have signed
the consent, unless the consent specifies a different effective date. If an
action by Members is taken without a meeting under this Section 7.3, Notice to
the Members shall be considered waived, provided however, that if action is
taken hereunder by less than all of the Members, Notice of such action shall be
provided to the nonparticipating Members. Failure to provide the Notice
described in the preceding sentence shall not invalidate or otherwise affect the
validity of any action properly taken by the requisite number of Members.
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Section 7.4 Waiver of Notice. When any Notice is required to be given to
any Member, a waiver thereof in writing signed by the person entitled to such
Notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such Notice.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification of Members, Managers, Etc. The Company shall
indemnify any Person who was or is a party or is threatened to be made a party
to any threatened, pending or completed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative, including appeals
(including an action by or in the right of the Company), by reason of the fact
that such Person is or was a Member, Manager, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a member,
manager, director, officer, partner, employee or agent of another limited
liability company, corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such Person in
connection with such claim, action, suit or proceeding if such Person acted in
good faith and in a manner such Person reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding had no reasonable cause to believe such Person's conduct
was unlawful. The termination of any claim, action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Person did
not act in good faith and in a manner which such Person reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
Person's conduct was unlawful.
Section 8.2 Determination of Meeting Applicable Standard. Any Person
entitled to indemnification under Section 8.1 of this Article VIII shall be
deemed to have acted in good faith and in a manner such Person reasonably
believed to be in or not opposed to the best interests of the Company until such
Person shall have been finally adjudged to have acted in bad faith and in a
manner such Person reasonably believed to be against and not in the best
interests of the Company.
Section 8.3 Payment of Expenses in Advance of Disposition of Action.
Expenses (including attorneys' fees) incurred in defending a civil or criminal
claim, action, suit or proceeding shall be paid by the Company in advance of the
final disposition of such claim, action, suit or proceeding upon receipt of an
undertaking by or on behalf of the Member, Manager, officer, employee or agent
to repay such amount if and to the extent that it shall be ultimately determined
that such Person is not entitled to be indemnified by the Company as authorized
in this Article VIII.
Section 8.4 Non-Exclusivity of Article. The indemnification authorized in
and provided by this Article VIII shall not be deemed exclusive of and shall be
in addition to any other right to which those indemnified may be entitled under
any statute, rule of law, provision of the certificate of formation, operating
agreement, other agreement, vote or action of Members or by a Majority of the
Managers, or otherwise, both as to actions in such Person's official capacity
and as to actions in another capacity while holding such office, and shall
continue as to a Person who has ceased to be a Member, Manager, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
Section 8.5 Insurance. The Company may purchase and maintain insurance on
behalf of any Person who is or was a Member, Manager, officer, employee or agent
of the Company, or is or was serving at the request of the Company as a member,
manager, director, officer, partner, employee or agent of another limited
liability company, corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such Person incurred by such
Person in any such capacity arising out of such Person's status as such, whether
or not the Company is required or permitted to indemnify such Person against
such liability under the provisions of this Article VIII or any statute.
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ARTICLE IX
CONTRIBUTIONS AND CAPITAL ACCOUNTS
Section 9.1 Initial Capital Contributions. The Initial Capital
Contribution of (and Membership Units allocated to) each Member, as of the date
of this Agreement, is set forth on Exhibit A hereto. The Initial Capital
Contribution (to the extent not previously paid) shall be paid by each Member
upon execution of this Agreement in cash or its equivalent. The Initial Delayed
Contribution of each Member (if any) is set forth on Exhibit B hereto and shall
be paid by such Members contemporaneously with the closing of the transactions
contemplated by that certain Asset Purchase Agreement to be executed by and
among Oak Mountain Energy, L.L.C., Oak Mountain Energy Corporation and certain
other parties. If no Closing occurs under the foregoing Asset Purchase
Agreement, no Member shall have any obligation to make any Initial Delayed
Contribution.
Section 9.2 Additional Capital Contributions. In addition to the Initial
Capital Contributions and the Initial Delayed Contributions of the Members, in
the event a Member or Members holding at least a Majority of the Membership
Units of the Company or the Managers determine that Additional Capital
Contributions are reasonably necessary to facilitate the business needs of the
Company, including, without limitation, to meet the Company's operating
expenses, to fund the expansion of the Company's business, to acquire other
businesses or business entities and to purchase any Property reasonably
necessary for the operation of the Company, each Member shall be entitled, but
not required, to make such Additional Capital Contribution on a basis pro rata
to such Member's Membership Interest in the Company. Upon making such a
determination, the Company shall give Notice to each Member in writing at least
fifteen (15) days prior to the date on which the Additional Capital
Contributions are due (the "Company Contribution Notice"). Such Company
Contribution Notice shall set forth the amount of Additional Capital
Contribution needed, the purpose for which the contribution is needed, and the
date by which the Member must contribute such Additional Capital Contribution.
Each Member who desires to make such Additional Contribution shall provide
Notice (the "Member Contribution Notice") to the Company within fifteen (15)
days of its receipt of the Company Contribution Notice. In the event that one or
more of the Members fails to provide the Member Contribution Notice, the
contributing Member or Members shall be entitled to make such Additional Capital
Contribution on a basis pro rata to such Members' Membership Interest in the
Company (calculated without taking into account the Membership Units of the
non-contributing Members). Contributing Members shall be issued one additional
Membership Unit for each $10.00 of Additional Capital contributed by such
Member.
Section 9.3 Maintenance of Capital Accounts. The Company shall establish
and maintain Capital Accounts for each Member and Assignee.
(a) To each Member's Capital Account there shall be credited: (i)
such Member's Capital Contributions; (ii) such Member's distributive share of
Net Profits and any items in the nature of income or gain which are specially
allocated pursuant to Sections 10.3 through 10.7 hereof, and (iii) the amount of
any Company liabilities assumed by such Member or which are secured by any
Property distributed to such Member.
(b) To each Member's Capital Account there shall be debited: (i) the
amount of cash and the Gross Asset Value of any Property distributed to such
Member pursuant to any provision of this Agreement; (ii) such Member's
distributive share of Net Losses and any items in the nature of expenses or
losses which are specially allocated pursuant to Sections 10.3 through 10.7
hereof, and (iii) the amount of any liabilities of such Member assumed by the
Company or which are secured by any property contributed by such Member to the
Company.
(c) In the event all or a portion of a Membership Interest is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred Membership Interest. This Section 9.3(c) shall not be interpreted as
permitting the transfer of any Economic Interest, Membership Interest or
Membership Unit that is otherwise prohibited under Article ▇▇▇ ▇▇▇▇▇▇.
▇▇
▇▇
(▇) In determining the amount of any liability for purposes of this
Section 9.3, there shall be taken into account Code ss. 752(c) and any other
applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations ss.
1.704-1(b), and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Managers shall determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits or credits
thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Company or any Member), are computed in order to comply with
such Regulations, the Managers may make such modification, provided that it is
not likely to have a material effect on the amounts distributable to any Member
pursuant to Section 14.4 hereof upon the dissolution of the Company. The
Managers also shall (i) make any adjustments that are necessary or appropriate
to maintain equality between the Capital Accounts of the Members and the amount
of Company capital reflected on the Company's balance sheet, as computed for
book purposes, in accordance with Regulations ss. 1.704-1(b)(2)(iv)(q), and (ii)
make any appropriate modifications in the event unanticipated events (for
example, the acquisition by the Company of oil or gas properties) might
otherwise cause this Agreement not to comply with Regulations ss. 1.704-1(b).
Section 9.4 Sale or Exchange of Interest. In the event of a sale or
exchange of some or all of a Member's or Assignee's Economic Interest in the
Company, the Capital Account of the transferring Member or Assignee shall become
the Capital Account of the Assignee acquiring such Interest, to the extent it
relates to the portion of the Economic Interest transferred.
Section 9.5 Compliance with ss. 704(b) of the Code. The provisions of this
Article IX as they relate to the maintenance of Capital Amounts are intended,
and shall be construed, and, if necessary, modified to cause the allocations of
profits, losses, income, gain and credit pursuant to Article X to have
substantial economic effect under the Regulations promulgated under ss. 704(b)
of the Code, in light of the Distributions made pursuant to Articles X and XIV
the Capital Contributions made pursuant to this Article IX. Notwithstanding
anything herein to the contrary, this Operating Agreement shall not be construed
as creating a deficit restoration obligation or otherwise personally obligate
any Member to make a Capital Contribution in excess of the Initial Capital
Contribution made by that Member.
ARTICLE X
ALLOCATIONS AND DISTRIBUTIONS
Section 10.1 Net Profits. Except as may be required by Sections 10.3
through 10.7 of this Article X, Net Profits shall be apportioned among the
Members in the following order and amounts:
(a) First, to and among the Members in amounts equal to the excess,
if any, of (i) the cumulative Net Losses allocated to the Members pursuant
to Section 10.2(c) hereof for all prior Fiscal Years, over (ii) the
cumulative Net Profits allocated to the Members pursuant to this Section
10.1(a) for all prior Fiscal Years; and
(b) The balance, if any, to and among the Members in proportion to
the Membership Units each Member holds as of the first day of the Fiscal
Year.
Section 10.2 Net Losses.
(a) Except as may be required by Sections 10.3 through 10.7 of this
Article X, Net Losses shall be apportioned to and among the Members in
proportion to the Membership Units each Member holds as of the first day
of the Fiscal Year;
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(b) provided, however, that Net Losses shall not be allocated to any
Member pursuant to Section 10.2(a) to the extent that such allocation
would cause any Member to have an Adjusted Deficit at the end of such
Fiscal Year, and
(c) In the event some but not all of the Members would have Adjusted
Deficits as a consequence of an allocation of Net Losses pursuant to
Section 10.2(a), the limitation set forth in Section 10.2(b) shall be
applied on a Member-by-Member basis so as to allocate the maximum
permissible amount of Net Losses to each Member; and
(d) provided further that the limitation set forth in Section
10.2(b) shall cease to apply at the point at which all Members' Capital
Accounts (adjusted in accordance with Section 1.4 hereof) have been
reduced to zero, and thenceforth Net Losses shall be allocated in
accordance with Section 10.2(a) hereof.
(e) Notwithstanding any other provisions of this Section 10.2, if
the number of Membership Units held by any Member changes during the
Fiscal Year, or if any Members are admitted during the Fiscal Year, the
Net Profits and Net Losses otherwise to be allocated shall be consistent
with Section 13.3.
Section 10.3 Company Minimum Gain Chargeback. If there is a net decrease
in Company Minimum Gain for a Fiscal Year, each Member must be allocated items
of income and gain for that Fiscal Year (and, if necessary, subsequent Fiscal
Years) equal to that Member's share of the net decrease in Company Minimum Gain.
A Member's share of the net decrease in Company Minimum Gain is the amount of
the total net decrease multiplied by the Member's percentage share of the
Company Minimum Gain at the end of the immediately preceding Fiscal Year. A
Member's share of any decrease in Company Minimum Gain resulting from a
revaluation of Company Property equals the increase in the Member's Capital
Account attributable to the revaluation to the extent the reduction in Company
Minimum Gain is caused by the revaluation. A Member is not subject to this
Company Minimum Gain chargeback requirement to the extent the Member's share of
the net decrease in Company Minimum Gain is caused by a guarantee, refinancing,
or other change in the debt instrument causing it to become partially or wholly
a recourse liability or a Member Nonrecourse Liability, and the Member bears the
economic risk of loss (within the meaning of ss. 1.752-2 of the Regulations) for
the newly guaranteed, refinanced, or otherwise changed liability.
Section 10.4 Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year shall be specially allocated to the Members in proportion to the number of
Membership Units held by each Member.
Section 10.5 Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any Fiscal Year shall be allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Liability to which
such Member Nonrecourse Deductions are attributable in accordance with ss.
1.704-2(i) of the Regulations.
Section 10.6 Member Minimum Gain Chargeback. If during a Fiscal Year there
is a net decrease in Member Minimum Gain, any Member with a share of that Member
Minimum Gain (as determined under ss. 1.704-2(i)(5) of the Regulations) as of
the beginning of that Fiscal Year must be allocated items of income and gain for
that Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to that
Member's share of the net decrease in the Member Minimum Gain. A Member's share
of the net decrease in Member Minimum Gain is determined in a manner consistent
with the provisions of ss. 1.704-2(g)(2) of the Regulations. A Member is not
subject to this Member Minimum Gain chargeback, however, to the extent the net
decrease in Member Minimum Gain arises because the liability ceases to be Member
Nonrecourse Liability due to a conversion, refinancing, or other change in the
debt instrument that causes it to become partially or wholly a Company
Nonrecourse Liability. The amount that would otherwise be subject to the Member
Minimum Gain chargeback is added to the Member's share of Company Minimum Gain.
In addition, rules consistent with those applicable to Company Minimum Gain and
Company Minimum Gain chargeback shall be applied to determine the shares of
Member Minimum Gain and
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Member Minimum Gain chargeback to the extent provided under the Regulations
issued pursuant to ss. 704(b) of the Code.
Section 10.7 Qualified Income Offset. In the event any Member, in such
capacity, unexpectedly receives an Offsettable Decrease, such Member will be
allocated items of income and gain (consisting of a pro rata portion of each
item of income and gain of the Company for the Fiscal Year) in an amount and
manner sufficient to offset such Offsettable Decrease as quickly as possible.
This Section 10.7 is intended to be in accordance with ss.
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
Section 10.8 Curative Allocations. The allocations set forth in Sections
10.3 through 10.7 hereof (the "Regulatory Allocations") are intended to comply
with certain requirements of the Regulations. To the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Company income, gain, loss or
deduction pursuant to this Section 10.8. Therefore, notwithstanding any other
allocation provision (other than the Regulatory Allocations), the Managers shall
make such offsetting special allocations of Company income, gain, loss or
deduction in whatever manner they may deem appropriate so that each Member's
Capital Account balance shall be, to the maximum extent possible, equal to the
Capital Account balance that each such Member would have had if the Regulatory
Allocations had not been part of this Agreement, and all Company items were
allocated pursuant to Sections 10.1 and 10.2 hereof. In exercising their
discretion under this Section 10.8, the Managers shall consider future
Regulatory Allocations under Section 10.3 that, although not yet made, are
likely to offset other Regulatory Allocations previously made under Sections
10.4 and 10.5.
Section 10.9 Tax Allocations: ss. 704(c) of the Code. In accordance with
Code ss. 704(c) and the Regulations thereunder, income, gain, loss, and
deduction with respect to any property contributed to the capital of the Company
shall, solely for tax purposes, be allocated among the Members so as to take
account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its initial Gross Asset Value
(computed in accordance with Section 1.24(a) hereof). In the event the Gross
Asset Value of any Company asset is adjusted pursuant to Section 1.24(b) hereof,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code ss. 704(c) and the Regulations thereunder. Any elections or
other decisions relating to such allocations shall be made by the Managers in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 10.9 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Net Profits, Net Losses,
other items, or distributions pursuant to any provision of this Agreement.
Section 10.10 Interim Distributions. From time to time, and subject to
Section 10.11 hereof, the Managers shall determine in their reasonable judgment
to what extent, if any, the Company's cash on hand exceeds the current and
anticipated needs for such moneys, including, without limitation, needs for
operating expenses, debt service, acquisitions, reserves, and mandatory
distributions, if any. To the extent such excess exists, a Majority of the
Managers may make Distributions to the Members in proportion to each Member's
Membership Units in the Company as of the date of such Distribution. An Interim
Distribution shall be in cash or Property (which need not be distributed
proportionately) or partly in both, as determined by the Managers. The Company
shall distribute cash to the Members, to the extent not previously distributed
during or with respect to a fiscal year, on or before ninety (90) days after the
end of each fiscal year, in an amount equal to the federal and state taxes
payable by the Members with respect to the income of the Company for the
preceding fiscal year; for the foregoing purpose, the Members shall all be
assumed to be subject to federal and state income tax at a combined effective
rate of Thirty Four Percent (34%).
Section 10.11 Limitations on Distributions.
(a) No Distribution shall be declared and paid unless, after the
Distribution is made, the Property of the Company is in excess of all
liabilities of the Company and the Company has sufficient working capital as
determined by the Managers, except liabilities to Members on account of their
Capital Accounts.
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(b) No Distribution shall be made to a Member to the extent that
such Distribution would cause such Member to have an Adjusted Deficit at the end
of such Fiscal Year, provided that in the event some but not all of the Members
would have Adjusted Deficits as a consequence of a Distribution, the limitation
set forth in this Section 10.11(b) shall be applied on a Member-by-Member basis
so as to permit the maximum permissible amount of Distributions to be made to
each Member; and provided further that the limitation set forth in this Section
10.11(b) shall cease to apply at the point at which all Members' Capital
Accounts (adjusted in accordance with Section 1.4 hereof) have been reduced to
zero, and thenceforth Distributions may be made in accordance with Section
10.10.
ARTICLE XI
CERTAIN TAX MATTERS
Section 11.1 Elections. The Managers may make any tax elections for the
Company allowed under the Code or the tax laws of any Taxing Jurisdiction.
Section 11.2 Taxes of Taxing Jurisdictions. To the extent that the laws of
any Taxing Jurisdiction so require, each Member requested to do so by the
Managers will submit an agreement indicating that the Member will make timely
income tax payments to the Taxing Jurisdiction and that the Member accepts
personal jurisdiction of the Taxing Jurisdiction with regard to the collection
of income taxes attributable to the Member's income, and interest and penalties
assessed on such income. If the Member fails to provide such agreement, the
Company may withhold and pay over to such Taxing Jurisdiction the amount of tax
penalties and interest determined under the laws of the Taxing Jurisdiction with
respect to such income. Any such payments with respect to the income of a Member
shall be treated as a distribution for purposes of Article X. The Managers may,
where permitted by the rules of any Taxing Jurisdiction, file a composite,
combined or aggregate tax return reflecting the income of the Company and pay
the tax, interest and penalties of some or all of the Members on such income to
the Taxing Jurisdiction, in which case the Company shall inform the Members of
the amount of such tax interest and penalties so paid.
Section 11.3 Tax Matters Partner. Simba Group is hereby designated as the
"Tax Matters Partner" of the Company, as such term is defined by ss. 6231(a)(7)
of the Code. The Tax Matters Partner shall: (i) notify each Member of all
administrative and judicial proceedings for the adjustment of Company items and
shall periodically report to the Members on the status of such proceedings; (ii)
cause to be prepared and filed Company tax returns and tax elections and
determinations as are necessary, appropriate or desirable; (iii) use its best
efforts to deliver to each Person who was a Member of the Company at any time
during a Fiscal Year a copy of the Company's proposed federal income tax return
for such Fiscal Year at least 30 days prior to the due date (with extensions)
for filing such return; (iv) provide each Member with a copy of such return and
Schedule K-1 as filed. Each Member shall notify the Tax Matters Partner of its
intention to file a federal income tax return that is inconsistent with the
information or amounts included on the Member's Form K-1 or other forms or
attachments to the Company's U.S. Partnership Return of Income (Form 1065). The
Members shall provide the Tax Matters Partner with a copy of any Form 8082 filed
by the Member with respect to the Company's items. The Tax Matters Partner shall
take such action as may be necessary to cause each Member (other than a Member
who acts as the Tax Matters Partner) to become a notice partner within the
meaning of ss. 6223 of the Code. No Member who is designated Tax Matters Partner
may take any action contemplated by ▇▇.▇▇. 6222 through 6232 of the Code without
the consent of a Member or Members holding at least a Majority of the Membership
Units of the Company.
Section 11.4 Method of Accounting. The records of the Company shall be
maintained on the method of accounting chosen by a Majority of the Managers.
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ARTICLE XII
DISPOSITION OF MEMBERSHIP UNITS
Section 12.1 Limitations. An Assignee of a Membership Unit under this
Article XII shall have only those rights of an Assignee as described more fully
in Section 13.1 hereof and shall have no right to become a Member of the Company
or to participate in the management of the business and affairs of the Company
unless such Assignee is admitted as a Substitute Member in accordance with
Section 12.3(c) or Section 13.2 of this Operating Agreement.
Section 12.2 Consent, Etc. No Member or Assignee may Dispose of all or a
portion of such Member's or Assignee's Membership Units, unless:
(a) Prior to the Disposition, the Company receives, unless waived by
the Members in writing, an opinion of counsel satisfactory to Members holding at
least a Majority of the Membership Units of the Company (which determination of
a majority shall include the Membership Units held by, and the consent or vote
of, the transferring Member) that: (i) such Disposition is not subject to an
effective registration under, or exempt from the registration requirements of,
the applicable state and federal securities laws, and (ii) such Disposition,
alone or when combined with other transactions, would not result in a
termination of the Company within the meaning of ss. 708 of the Code (unless the
Member disposing of its Membership Units agrees to indemnify the Company and the
other Members for any adverse consequences of such termination);
(b) Prior to the Disposition, the Company receives from the
transferee the information and agreements that the Members may reasonably
require, including, but not limited to, any taxpayer identification number and
any agreement that may be required by the Taxing Jurisdiction; and
(c) The transferring Member or Assignee shall either:
(i) First obtain the written consent to such Disposition of
a Member or Members holding at least a Majority of the Membership Units of the
Company (which determination of a majority shall include the Membership Units
held by, and the consent or vote of, the transferring Member); or
(ii) Comply with the provisions of Section 12.3 below.
Section 12.3 Permitted Sales by the Member. (a) In the event a Member
shall have received and wishes to accept a bona fide offer to sell or assign all
or any portion of its Membership Units, but has not received the prior written
consent referred to in Section 12.2 above (other than a transfer to an Affiliate
of such Member under Section 12.6, or, subject to subsection (b) below, as
collateral under a financing arrangement), such Member may sell the same only
after offering it to the other Member in the following manner:
(i) The Member desiring to sell shall serve Notice to the
other, stating that it has received a bona fide offer for the sale of its
Membership Units, and setting forth the following information:
(A) the portion of its Membership Units to be sold,
(B) the name and address and business or occupation of
the Person offering to purchase such Membership Units, and
(C) the sales price and terms and conditions of such
sale.
Such Notice shall also contain an offer by the transferring Member to sell such
Membership Units to the other Member at the price and under the terms offered by
such bona fide offeror.
(ii) For a period of thirty (30) days after the receipt of
such Notice, the non-transferring Member shall have the option to purchase all
of the Membership Units so offered.
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(iii) In the event the non-transferring Member shall
exercise its option to purchase all of the Membership Units offered in the
Company under this Section 12.3(a), the Member exercising such option to
purchase shall designate the time, date and place of closing; provided, however,
that the date of closing shall be within ninety (90) days of the date that the
Member provides Notice to the transferring Member of is election to purchase
such transferring Member's Membership Units.
(b) Any assignment of a Membership Unit as Collateral as
contemplated in Section 12.3(a) above shall first require the party to whom such
Membership Unit is pledged to agree that the foreclosure or other seizure of
such Membership Unit shall constitute a transfer giving rise to the right of
first refusal described in Section 12.3(a), and the foreclosing party shall give
the Member entitled to such right the opportunity to exercise the right of first
refusal immediately following the foreclosure or other seizure in accordance
with the time frames set forth in Section 12.3(a), with the time frames
beginning on the date such Member received written notice of the foreclosure
from the foreclosing party.
(c) In the event that the Member does not exercise its option made
under Section 12.3(a) to purchase, as provided herein, the transferring Member
shall be free to transfer such Member's Membership Units to the Person named in
the aforesaid Notice at the price and upon the terms and conditions set forth in
such Notice, and such Person shall be deemed to have been admitted as a
Substitute Member in accordance with Article XIII; provided, however, that such
Disposition shall be made within ninety (90) days following the termination of
the Member's option to purchase such Membership Units. If such Disposition is
not consummated within said ninety (90) day period, the provisions of this
Section 12.3 shall again be applicable to the Member's Membership Units with
respect to which the Member had received a bona fide offer.
Section 12.4 Transfer Upon Dissociation of a Member. In the event a Member
shall Dissociate as a Member of the Company for any reason, then the Company
shall have the option to purchase (exercisable within twelve months after such
event of Dissociation), and the Dissociated Member shall be obligated to sell to
the Company, all of such Member's Membership Units in the Company. The purchase
price to be paid by the Company for such Membership Units shall be determined
and paid in accordance with the provisions of Section 12.5 below.
Section 12.5 Purchase Price. The purchase price of a Membership Unit to be
purchased in accordance with the provisions of Sections 12.4 above shall be
determined as follows:
(a) The purchase price of each Membership Unit purchased pursuant to
Section 12.4 shall be determined as of the last day of the month preceding the
month during which the event giving rise to the purchase obligation, and shall
be the amount that would have been distributed to such Member with respect to
the Membership Interest to be purchased hereunder, in liquidation of the Company
pursuant to Section 14.4 hereof as if (i) all of the Property of the Company had
been sold for its fair market value (as determined in accordance with Section
12.5(b) below), (ii) the Company paid its accrued but unpaid liabilities and
established reserves pursuant to Article XIV hereof for the payment of
reasonably anticipated contingent or unknown liabilities, (iii) all allocations
and distributions called for by this Agreement through the date of such
determination were taken into account, and (iv) the Company distributed the
remaining proceeds to the Members in liquidation, all as of such day.
(b) The determination of the purchase price under this Section 12.5
shall be determined as follows: (1) for the first thirty (30) days following the
exercise of an option to purchase or following the date of that the obligation
to purchase arises, the Company (acting without any input from any Managers
appointed by a transferring Member) and the transferring Member shall negotiate
in good faith regarding the purchase price for the Membership Units being
transferred; (2) in the event that the Company and the transferring Member are
unable to agree on a purchase price within such thirty (30) day period, the
transferring Member and the Company shall, within fifteen (15) days after
expiration of such thirty (30) day period, select and agree upon an Appraiser to
determine such purchase price, and the appraisal of such Appraiser shall be
binding on the parties; and (3) in the event that the Company and the
transferring Member are unable to agree upon an Appraiser, (i) the Company and
the transferring Member shall each appoint within ten (10) days after the
expiration of the aforementioned
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thirty (30) and fifteen (15) day periods an Appraiser, and such Appraisers shall
promptly appoint a third Appraiser, (ii) each of such three Appraisers shall
perform a separate appraisal of the Company, and (iii) the average of the two
closest appraisals from such three Appraisers shall be the purchase price and
shall be binding upon the parties.
(c) The purchase price due under this Section 12.5 shall be paid in
the following manner:
(i) There shall first be credited against such purchase
price the amount of any indebtedness due and payable to the Company by such
Member.
(ii) There shall next be credited the amount of any expenses
or damages incurred by the Company as a result of Dissociation.
(iii) The balance of the purchase price shall be payable at
closing which shall occur within thirty (30) days following the latter of the
final determination of the purchase price or the exercise of the Company's
option to purchase; provided, however, upon the election of the Company, the
balance of the purchase price shall be payable in three (3) equal annual
installments, with interest at the then current prime rate quoted in the Wall
Street Journal plus two (2) percentage points, the first installment of which
shall be due within thirty (30) days following the latter of the final
determination of the purchase price or the exercise of the Company's option to
purchase and the second and third installments shall be due within one year and
two years, respectively, following the due date of the first installment. Such
installment obligation shall be evidenced by a negotiable promissory note of the
Company, and shall be secured by a pledge of such Membership Units transferred
to the Company.
Section 12.6 Certain Additional Permitted Transfers of Membership Units by
Members. Notwithstanding the provisions of Article XII and Article XIII, each
Member shall be entitled to Dispose all of its Membership Units to an Affiliate
of such Member, without giving rise to any rights of first refusals, options or
consent-requirements, and, upon effectiveness of such transfer, such Affiliated
transferee of a Member shall succeed to all of the rights and obligations
(including voting and other governance rights) of the transferring Member and
shall be admitted as a Substitute Member of the Company, without any further
action on the part of the Members or the Company and all references to such
transferring Member contained in this Operating Agreement shall automatically
apply to the Member's Affiliated transferee; provided, however, that if any such
transfer or assignment shall result in a termination of the Company within the
meaning of ss. 708 of the Code, the Member shall indemnify the Company and the
other Members for any adverse consequences of such termination.
Section 12.7 Certain Limitations on Transfers of Capital Stock. Each
member hereby agrees that it shall not permit any transfer or issuance of its
capital stock or the transfer or issuance of the capital stock of any direct or
indirect parent corporation of such Member (other than to an Affiliate of either
Member, and with respect to Simba Group and its Affiliates, the entities listed
on Exhibit "C" attached hereto), without the prior written consent of the other
Member; provided, however, such consent shall not be required if the fair market
value of the Membership Units in the Company owned by such Member does not
directly or indirectly make up greater than Ninety Percent (90%) of the fair
market value of the total assets of such Member or direct or indirect parent
corporation. The fair market value of such Membership Units and total assets
shall be determined by an Appraiser or Appraisers selected by the Members using
a procedure similar to that procedure for selecting Appraisers set forth in
Section 12.5(b)(2) and (3).
ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS
Section 13.1 Rights of Assignees. Notwithstanding anything to the contrary
contained in this Operating Agreement (other than pursuant to Section 12.6
hereof), the only rights, if any, which an Assignee of a Member shall have are
those rights associated with the Economic Interest received and such Assignee
shall not receive any right to participate in the management of the business and
affairs of the Company or to become a Member; provided, however, that in the
event an Assignee is an existing Member of the Company, such Assignee
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shall receive all rights to participate in the management of the business and
affairs of the Company incident to the transferred Membership or Economic
Interest. An Assignee is only entitled to receive the Distributions and return
of capital, and to be allocated the Net Profits and Net Losses attributable to a
transferred Membership Economic Interest.
Section 13.2 Admission of Substitute Members. Except as set forth in
Section 12.3(c), an Assignee of a Membership Unit shall be admitted as a
Substitute Member and entitled to all the rights of the Member who initially
assigned the Membership Units only with the written approval of the other
Members (i.e., the non-transferring Members) holding at least a Majority of the
remaining Membership Units. The Members may grant or withhold the approval of
such admission in their sole and absolute discretion. If so admitted, the
Substitute Member has all the rights and powers and is subject to all the
restrictions and liabilities of the Member originally assigning the Membership
Units. The admission of a Substitute Member, without more, shall not release the
Member originally assigning the Membership Units from any liability to the
Company that may have existed prior to the approval.
Section 13.3 Admission of Additional Members. From the date of formation
of the Company, any Person acceptable to a Member or Members holding at least a
Majority of the Membership Units of the Company, as reflected by the written
approval of such Member or Members, may become Additional Members of the Company
for such consideration as such Members shall determine, subject to the terms and
conditions of this Operating Agreement. No Additional Member shall be entitled
to any retroactive allocation of income, gain, loss, deduction or credit by the
Company. The Members may, at their option, at the time the Additional Member is
admitted, close the Company's books (as though the Company's Fiscal Year had
ended) or make pro rata allocations of income, gain, loss, deduction or credit
to the Additional Member for that portion of the Company's Fiscal Year in which
the Member was admitted in accordance with the provisions of ss. 706(d) of the
Code and the Regulations promulgated thereunder. Upon admission of an Additional
Member, this Operating Agreement shall be amended in order to reflect such
additional Member's Membership Units in the Company.
ARTICLE XIV
DISSOCIATION, DISSOLUTION AND WINDING UP
Section 14.1 Dissociation. A Person shall cease to be a Member upon the
happening of any of the following Dissociation Events:
(a) the withdrawal of a Member with the consent of the other Members
holding at least a Majority of the remaining Membership Units;
(b) upon the Managers' receipt of notice with respect to a Member
who:
(i) makes an assignment for the benefit of creditors;
(ii) files a voluntary petition in bankruptcy;
(iii) files a petition or answer seeking for the Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation:
(iv) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against the Member in
any proceeding in the nature of the proceedings listed in (iii); or
(v) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Member of all or any substantial part of
the Member's properties:
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(c) in the case of a Member who is a natural person, the death of
the Member or the entry of an order by a court of competent jurisdiction
adjudicating the Member incompetent to manage the Member's person or property.
Section 14.2 Rights of Dissociating Member. In the event a Member
Dissociates from the Company and such Dissociation causes a dissolution and
winding up of the Company under this Article, the Member shall be entitled to
participate in the winding up of the Company to the same extent as any other
Member except that any Distributions to which the Member would have been
entitled shall be reduced by damages sustained by the Company as a result of the
Dissolution and winding up.
Section 14.3 Dissolution. The Company shall be dissolved and its affairs
wound up prior to such date, upon the first to occur of the following events
(which, unless the Members agree to continue the business, shall constitute
Dissolution Events):
(a) the written consent of a Member or Members holding at least a
Majority of the Super-Membership Units of the Company;
(b) the Dissociation of any Member as provided in Section 14.1 of
this Article, unless (i) there are at least two remaining Members or at least
one remaining Member and an Additional Member or Substitute Member is admitted
in accordance with Article XIII hereof and (ii) the legal existence and business
of the Company is continued with the consent of a Member or Members holding at a
Majority of the Membership Units within 90 days after such Dissociation.
(c) the merger of the Company and the Company is not the successor
limited liability company in such merger or the consolidation of the Company
with one or more limited liability companies or other entities.
(d) The entry of a final decree of dissolution of the Company by a
court of competent jurisdiction.
(e) On February 18, 2027, unless the business of the Company is
continued with the vote, consent or action of a Member or Members holding at
least a Majority of the Membership Units within ninety (90) days after such
date.
Section 14.4 Distribution of Assets on Dissolution. Upon the winding up of
the Company, Company Property shall be distributed in the following order:
(a) to creditors, including Members who are creditors, to the extent
permitted by law, in satisfaction of Company liabilities;
(b) to Members in accordance with positive Capital Account balances
taking into account all allocations, contributions, distributions, and Capital
Account adjustments for the Company's Fiscal Year in which the liquidation
occurs. Liquidation proceeds shall be paid within 60 days of the end of the
Company's Fiscal Year or, if later, within 90 days after the date of
liquidation. Such distributions shall be in cash or property (which need not be
distributed proportionately) or partly in both, as determined by a Majority of
the Managers.
Section 14.5 Winding Up and Certificate of Cancellation. The winding up of
the Company shall be completed when all debts, liabilities, and obligations of
the Company have been paid and discharged or reasonably adequate provision
therefor has been made, and all of the remaining Property of the Company has
been distributed to the Members. Upon the completion of winding up of the
Company, certificate of cancellation shall be delivered to the Secretary of
State. The certificate of cancellation shall set forth such information as is
required by the Act.
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Section 14.6 Effect of Dissolution. Upon dissolution, the Company shall
cease carrying on, as distinguished from the winding up of, the Company
business, but the Company is not terminated, but continues until the winding up
of the affairs of the Company is completed and a certificate of dissolution with
respect to the Company, or the equivalent, has been issued by the Secretary of
State.
ARTICLE XV
AMENDMENT
Section 15.1 Operating Agreement May Be Modified. This Operating Agreement
may be modified as provided in this Article XV (as the same may from time to
time be amended). No Member or Manager shall have any vested rights in this
Operating Agreement.
Section 15.2 Amendment or Modification of Operating Agreement. This
Operating Agreement may be amended or modified from time to time only by a
written instrument adopted by a Member or Members holding at least a Majority of
the Membership Units of the Company; provided, however that the unanimous
consent or approval of the Members shall be required in order to make an
amendment affecting how distributions and allocations under Article X or Article
XIV will be made to the Members, an amendment affecting the rights or
obligations of the Members with respect to Additional Capital Contributions or
an amendment affecting the right of a member to transfer its Membership Units or
the purchase price payable for Membership Units under Article XII.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Entire Agreement. This Operating Agreement constitutes the
entire agreement among the parties. No party shall be bound by any terms,
conditions, statements or representations, oral or written, not herein
contained. Each party hereby acknowledges that in executing this Operating
Agreement, such party has not been induced, persuaded or motivated by any
promise or representation made by any other party, unless expressly set forth
herein. All previous negotiations, statements and preliminary instruments by the
parties or their representatives are merged in this Operating Agreement.
Section 16.2 Rights of Creditors and Third Parties. This Operating
Agreement is entered into by and among the Members for the exclusive benefit of
the Company, its Members, and their successors and assignees. This Operating
Agreement is expressly not intended for the benefit of any creditor of the
Company or any other Person. Except and only to the extent provided by the Act
or other applicable statute, no such creditor or third party shall have any
rights under this Operating Agreement or any agreement between the Company and
any Member with respect to any Capital Contribution or otherwise.
Section 16.3 Changes in Applicable Law. In the event that any covenant,
condition, or other provision contained in this Agreement, or any part of the
business of the Company (whether or not conducted by the Company) is determined
to be invalid, void or illegal, the Members shall amend this Agreement, any
other affected agreements, and/or the manner in which the business of the
Company is conducted to comply with such laws. For purposes of this Section
16.3, a good faith determination of illegality by a Member based on an opinion
of counsel shall be sufficient to trigger the application of this Section. Any
decisions regarding the manner in which such illegality will be addressed shall
require the agreement of all of the Members.
Section 16.4 Interpretation. For and in consideration of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Members executing
this Operating Agreement hereby agree to the terms and conditions contained
herein, as it may from time to time be amended according to its terms. It is the
express intention of the Members that this Operating Agreement and the
Certificate shall be the sole source of agreement of the parties, and, except to
the extent a provision of the Operating Agreement expressly incorporates Federal
income tax rules by reference to
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sections (▇▇.▇▇.) of the Code or Regulations or is expressly prohibited or
ineffective under the Act, the Operating Agreement shall govern, even when
inconsistent with, or different than, the provisions of the Act or any other law
or rule. To the extent any provision of this Operating Agreement is prohibited
or ineffective under the Act, the Operating Agreement shall be considered
amended to the smallest degree possible in order to make the agreement effective
under the Act. In the event the Act is subsequently amended or interpreted in
such a way to make any provision of this Operating Agreement that was formerly
invalid valid, such provision shall be considered to be valid from the effective
date of such interpretation or amendment.
Section 16.5 Governing Law. This Operating Agreement, and the application
or interpretation hereof, shall be governed exclusively by its terms and by the
laws of the State of Delaware, and specifically the Act, applied without respect
to any conflicts-of-law principles.
Section 16.6 Execution of Additional Instruments. Each Member hereby
agrees to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
Section 16.7 Construction of Terms. Whenever used in this Agreement and
when required by the context, the singular number shall include the plural and
the plural the singular. Pronouns of one gender shall include all genders.
Section 16.8 Captions. The captions as to contents of particular articles,
sections or paragraphs contained in this Operating Agreement and the table of
contents hereto are inserted for convenience and are in no way to be construed
as part of this Operating Agreement or as a limitation on the scope of the
particular articles, sections or paragraphs to which they refer.
Section 16.9 Waivers. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any agreement or
condition of this Operating Agreement shall not prevent a subsequent act, which
would have originally constituted a violation, from having the effect of an
original violation.
Section 16.10 Rights and Remedies Cumulative. The rights and remedies
provided by this Operating Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
Section 16.11 Heirs, Successors and Assigns. Each and all of the
covenants, terms, provisions and agreements herein contained shall be binding
upon and inure to the benefit of the parties hereto and, to the extent permitted
by this Operating Agreement, their respective heirs, legal representatives,
successors and assigns.
Section 16.12 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
Section 16.13 Certain Disputes Between Kiewit Alabama and Simba Group.
(a) In any matter requiring the agreement or action of the Managers, or a
vote of Kiewit Alabama and Simba Group as Members of the Company, Kiewit Alabama
and Simba Group shall, and shall cause their respectively appointed Managers to
use their best efforts, in good faith, to resolve any dispute or disagreement
with respect thereto.
(b) In the event the Managers in good faith are unable to reach such
agreement on any matter requiring their approval under this Agreement, or (ii)
Kiewit Alabama and Simba Group are unable to reach agreement on any matter
requiring their vote as Members of the Company, in either instance, upon notice
by either party to the other, the matter shall be referred to resolution by the
President of Kiewit Construction Group, Inc. and the President of Anker Coal
Group, Inc.
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(c) In the event that the President of Kiewit Construction Group, Inc. and
the President of Anker Coal Group, Inc. are unable to resolve such dispute in
good faith within thirty (30) days after the same has been referred to them for
resolution, either Kiewit Alabama or Simba Group (the "Offeror") may deliver an
offer (the "Purchase/Sell Offer") to the other party (the "Offeree"), which
irrevocably offers to either (i) sell to the Offeree all of the Offeror's
Membership Units, or (ii) purchase from the Offeree all of the Offeree"s
Membership Units, in each case for a per Membership Unit price selected by the
Offeror and set forth in the Purchase/Sale Offer.
(d) An Offeree must accept one of the offers set forth in the
Purchase/Sale Offer by delivering a written acceptance ("Acceptance") to the
Offeror within thirty (30) days after receipt of the Purchase/Sale Offer. An
Acceptance must irrevocably elect to either (i) purchase from the Offeror all of
the Membership Units held by the Offeror, or (ii) sell to the Offeror all of the
Membership Units held by the Offeree, in each case, at the per Membership Unit
purchase price set forth in the Purchase/Sale Offer. Failure to deliver an
Acceptance within such thirty (30) day period shall be deemed an election by the
Offeree to sell its Membership Units to the Offeror at the per Membership Unit
purchase price set forth in the Purchase/Sale Offer. Upon delivery of the
Acceptance, or expiration of the thirty (30) day period without delivery of the
Acceptance, as the case may be, Kiewit Alabama and Simba Group will become
obligated to purchase and sell, as the case may be, the Membership Units at the
per Membership Unit purchase price specified in the Purchase/Sale Offer. The
closing date for the purchase and sale of Membership Units shall be as specified
in the Acceptance; provided, however, that such closing date shall not be less
than sixty (60) nor more than one hundred twenty (120) days after the delivery
to the Offeror of the Acceptance. If no such closing date is specified in the
Acceptance or if no Acceptance is delivered within the thirty (30) day period,
the closing date shall be ninety (90) days after the date of delivery of the
Purchase/Sale Notice.
(e) The purchase price payable pursuant to paragraph (d) above shall be
paid by the purchasing party in cash on the specified closing date.
[The Remainder Of This Page Was Left Blank Intentionally]
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IN WITNESS WHEREOF, the parties hereto have executed this Operating
Agreement as of the 20th day of February, 1997.
MEMBERS:
SIMBA GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
As Its: President
----------------------------
KIEWIT ALABAMA MINING COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
As Its: President
----------------------------
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EXHIBIT A
Name, Address and Capital Contributions
Members Member Capital Contribution Initial Membership Units
------- and Value as of Effective Time ------------------------
------------------------------
Simba Group, Inc. $500.00 50
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Kiewit Alabama Mining Company $500.00 50
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
39
EXHIBIT B
Name, Address and Initial Delayed Contribution
Additional
Member Initial Delayed Membership
Members Contribution and Value Units
------- ---------------------- -----
Simba Group, Inc. $10,000,000.00, consisting of 1,000,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (i) the assignment of Simba
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Group's interests in the Third
Amended and Restated Negotiable
Promissory Note, dated January
21, 1997, of Oak Mountain
Energy Corporation to Zither
Mining Company, Inc. in the
principal amount of $8,000,000,
as the same may be hereafter
increased from time to time
(the "Note") and (ii) an amount
of cash equal to $10,000,000
less (A) the principal amount
of Simba Group's interest in
the Note assigned to the
Company under (i) above, (B)
accrued but unpaid interest
attributable to Simba Group's
interest in the Note and (C)
all expenses incurred by Oak
Mountain Group, Inc., Simba
Group, Inc., their respective
parent corporations and their
respective Affiliates in
connection with the
transactions contemplated by
the Asset Purchase Agreement
being executed
contemporaneously herewith, up
to a maximum of $439,000.
Kiewit Alabama Mining Company $10,000,000.00, consisting of 1,000,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (i) the assignment of Kiewit
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Alabama's interests in the Note
and (ii) an amount of cash
equal to $10,000,000 less (A)
the principal amount of Kiewit
Alabama's interest in the Note
assigned to the Company under
(i) above and (B) accrued but
unpaid interest attributable to
Kiewit Alabama's interest in
the Note.
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EXHIBIT C
JJF Group Limited Liability Company
PPK Group Limited Liability Company
Anker Holding B.V.
First Reserve Corporation
American Oil & Gas Investors, Limited Partnership
AMGO II, Limited Partnership
First Reserve Fund V, Limited Partnership
First Reserve Fund V-2, Limited Partnership
First Reserve Fund VI, Limited Partnership
First Reserve Fund VII, Limited Partnership
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