LUCKY BROTHERS, LLC Operating Agreement
Exhibit
10.1
LUCKY
BROTHERS, LLC
This
Agreement is entered into and shall be effective as of the later of the date
of
execution hereof or the date on which Company’s Articles of Organization are
filed with the Ohio Secretary of State by and among the persons executing
this
Agreement as Members, on the following terms and conditions.
SECTION
1
DEFINITIONS
For
purposes of this Agreement, unless the context clearly indicates otherwise,
(i)
all of the capitalized words in this Agreement shall have the meanings set
forth
in the Appendix attached hereto and (ii) all non-capitalized words defined
in
the Act shall have the meanings set forth therein.
SECTION
2
FORMATION
2.1 Organization.
The
Members have authorized the formation of the Company as an Ohio Limited
Liability Company pursuant to the provisions of the Act and have filed Articles
of Organization with the Ohio Secretary of State.
2.2 Agent.
The
Agent for service of process upon the Company is ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. whose
address in the State of Ohio is ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
The Members may, from time to time, change the Agent by filing appropriate
documents with the Ohio Secretary of State. If the registered agent ceases
to
act as such for any reason the Members shall promptly designate a replacement
Agent. The members shall promptly file with the Ohio Secretary of State the
documents required by the Act with respect to any change of the registered
Agent
or his address. If the Members shall fail to designate a replacement registered
agent or if the Members or the Agent fail to file the appropriate notice
of a
change of agent or his address, any Member may designate a replacement Agent
or
file a notice of change of agent or his address.
2.3 Principal
office.
The
principal office of the Company shall be located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇.
2.4 Purposes.
The
Company shall be formed to engage in any lawful act or activity.
2.5 Title
to Property.
Title
to all property contributed to or otherwise acquired by the Company shall
be
held in the name of the Company.
2.6 Term.
The
Company shall exist from the date of filing of its Articles of Organization
until December 31, 2099, unless earlier terminated pursuant to Section
12.1
hereof.
SECTION
3
ACCOUNTING
AND RECORDS
3.1 Records
to be Maintained.
The
Company shall maintain the following records at its principal
office:
(a) A
current
list of the full names, in alphabetical order, and last known business or
residence address of each Member;
(b) Copies
of
the Articles, all amendments thereto, and executed copies of any powers of
attorney pursuant to which the Articles or the amendments have been
executed;
(c) Copies
of
this Agreement, all amendments hereto, and executed copies of any powers
of
attorney pursuant to which this Agreement and such amendments have been
executed;
(d) Copies
of
the Company's federal, state, and local income tax returns and reports, for
the
three (3) most recent years;
(e) Copies
of
any financial statements of the Company for the three (3) most recent
years;
(f) Any
other
agreements or documents required by the Act or this Agreement.
3.2 Accounts.
The
Company shall maintain at its principal office appropriate books and records,
kept in accordance with generally accepted accounting principles. Each Member
shall have the right to inspect and copy any books and records of the Company
during normal business hours.
3.3 Annual
Report.
An
annual report of the Company's operations shall be issued to the Members
within
ninety (90) days after the end of each Fiscal Year.
2
SECTION
4
MANAGEMENT
4.1 Management.
Control
of the Company and all of its affairs shall be vested exclusively in the
Managing Members.
4.2 Managing
Members.
(a) The
Members shall from time to time by Unanimous Vote designate one or more Members
to act as Managing Members of the Company. Any Member or group of Members
serving as Managing Members hereunder at any time shall continue to serve
in
such capacity until removed by a Unanimous Vote. During any period when one
or
more Managing Members shall be designated and serving hereunder, such Managing
Members acting unanimously shall have power, acting unanimously, to take
any
actions on behalf of the Company.
(b) The
Members hereby designate ▇▇▇▇ ▇. Oil & Gas Co. by either ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Alpha Acquisition, LLC by either ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as the Co-Managing Members hereunder.
SECTION
5
MEMBERS
5.1 Liability
of Members.
No
Member shall be liable as such for the liabilities of the Company. The failure
of the Company to observe any formalities or requirements relating to the
exercise of its powers or management of its business or affairs under this
Agreement or the Act shall not be grounds for imposing personal liability
on the
Members for liabilities of the Company.
5.2 Representations
and Warranties.
Each
Member hereby represents and warrants to each other Member that (a) the Member
is acquiring the Units for the Member's own account as an investment and
without
an intent to distribute the Units, and (b) the Member acknowledges that the
Units have not been registered under the Securities Act of 1933, as amended,
or
any state securities laws, and may not be resold or transferred by the Member
without appropriate registration or the availability of an exemption from
such
requirements.
5.3 Conflicts
of Interest.
(a) A
Member
shall be entitled to enter into transactions that may be considered to be
competitive with the business of the Company. Neither the Company nor any
Member
shall have any right by virtue of this Agreement to share or participate
in such
other transactions.
5.4 Meetings
of Members.
The
Members shall meet annually on the 3rd Wednesday of November or at such other
time as shall be determined by resolution of the Members, each year, for
the
purpose of transacting such business as may come before the meeting; provided,
however, the failure to hold an annual meeting shall not be grounds for
dissolution of the Company. Special meetings of the Members, for any purpose
or
purposes, may be called by any Member or Members holding at least thirty
percent
(30%) of the outstanding Units. The Members may designate any place, either
within or outside the State of Ohio, as the place of any meeting of the Members.
If no designation is made the place of meeting shall be the principal office
of
the Company. Members may participate in any annual or special meeting through
the use of any means of communication by which all of the Members may
simultaneously hear each other during the meeting. A Member participating
in a
meeting by this means is deemed to be present in person at the
meeting.
3
5.5 Notice
and Record Date of Meetings.
Except
as otherwise provided herein, written notice stating the place, day and hour
of
a meeting and the purpose or purposes for which the meeting is called shall
be
delivered at least ten (10) days before the date of the meeting, either
personally or by mail, to each Member entitled to Vote at such meeting. If
mailed, such notice shall be deemed to be delivered two calendar days after
being deposited in the United States mail, addressed to the Member at his
address as it appears on the books of the Company, with postage thereon prepaid.
Members may waive prior notice by attending the meeting or by executing a
written waiver of notice before or after the meeting. The date on which notice
of the meeting is mailed shall be the record date for such determination
of
Members entitled to notice of or to Vote at any meeting of Members.
5.6 Quorum.
The
Members owning at least Majority-in-Interest of the Units in the Company
represented in person or by proxy, shall constitute a quorum at any meeting
of
Members.
5.7 Voting.
Except
as otherwise herein provided, the Members shall have one Vote for each Unit
owned by them with respect to all matters relating to the affairs of the
Company.
5.8 Withdrawal
of Member.
The
Members covenant not to withdraw as a Member without the prior written consent
of all of the other Members.
5.9 Expulsion
of a Member.
A
Member may be expelled from the Company upon a Majority Vote of the Members
if
such Member:
(a) Fails
to
make a Capital Contribution by the due date specified herein and within thirty
(30) days of notice of such failure; and
(b) Breach
of
a material provision of this Agreement which breach is not cured within thirty
(30) days of notice thereof.
4
SECTION
6
CONTRIBUTIONS
AND COMMITMENTS
6.1 Capital
Contributions .
Each
Member has made Capital Contributions to the Company and the Company shall
keep
a record of the Capital Account of each Member. Ownership of the Company
shall
be in proportion to the Initial Capital Contributions of each Member and
is as
set forth on Exhibit
"A"
hereto.
The Members shall cause Exhibit
"A"
to be
revised and updated from time to time to reflect any change in the ownership
of
Company. Additional Capita Contributions shall be made by the Members as
determined from time to time by the Managing Members in proportion to their
respective percentages of ownership in Company. .
6.2 Failure
to Make Capital Contribution
If any
Member or Assignee (a "Delinquent Member") fails to make a Capital Contribution
required to be made hereunder, within ten (10) days after the date such Capital
Contribution was required to be made, then all other Members of the Company
shall thereupon become obligated to make such Capital Contribution in proportion
to their respective Units of ownership in the Company within thirty (30)
days
after written notice of such obligation from the Company. In such event,
the
Unit ownership of the Delinquent Member, and of all other Members of the
Company, shall be adjusted as follows: the percentage interest of the Delinquent
Member shall be equal to a fraction, the numerator of which shall be the
total
amount of all Capital Contributions and loans previously made by such Delinquent
Member to the Company which have not been repaid by the Company, and the
denominator of which shall be the total of all Capital Contributions and
loans
made by all Members to the Company which have not previously been repaid.
The
resulting number shall be the new percentage interest of the Delinquent Member
in the Company (which shall be converted to Unit ownership by multiplying
such
percentage interest by the total number of Units then outstanding), and the
Unit
ownership of the other Members shall likewise be similarly adjusted. For
purposes of this Section, the phrase "loans made by a Member to the Company"
or
words of similar effect shall include only loans advanced by Members directly
to
the Company, and shall not include any share of outside borrowings obtained
by
the Company. Notwithstanding anything to the contrary contained elsewhere
in
this Agreement, if the other Member or Members are unable or unwilling to
contribute to the capital of the Company the amount which the Delinquent
Member
was to contribute to the Company, and if the Company is unable or unwilling
to
borrow such funds from any other source, then the Company shall forthwith
be
terminated and dissolved.
6.3 Assignments
by ▇▇▇▇ ▇. Oil and Gas Company ▇▇▇▇
▇.
Oil and Gas Company shall promptly following the execution hereof assign
to
Company: (i) all permits and licenses associated with the proposed oil and
gas
well to be drilled in Highland Heights, Ohio on lands owned by Alpha Plaza
Investments, Ltd.; and (ii) its interest in and to all no surface occupancy
oil
and gas leases for lands which are to be unitized with the lands of Alpha
Plaza
Investments, Ltd.
5
SECTION
7
ALLOCATIONS
AND DISTRIBUTIONS
7.1 Allocations
of Profits.
Except
as may be required by the Code or Section 1.704-l(b)(2)(iv)(f)(4) of the
Regulations, all items of income and gain of the Company shall be allocated
among the Members in accordance with their respective ownership of
Units.
7.2 Allocation
of Losses.
Except
as may be required by the Code or Section 1.704-l(b)(2)(iv)(f)(4) of the
Regulations, all items of loss, deduction and credit of the Company shall
be
allocated among the Members in accordance with their respective ownership
of
Units.
7.3 Distributions.
Distributions may be declared from time to time by a Majority Vote of the
Members. Distributions in anticipation of a Dissolution Event or subsequent
to a
Dissolution Event shall be made as provided in Section
12.2.
All
other Distributions shall be allocated in proportion to Unit
Ownership.
7.4 Allocations
and Distributions to New Members and Assignees.
If
Units are transferred or if additional Units are issued to a new Member during
any Fiscal Year, Profits and Losses, for the Fiscal Year shall be allocated
to
the Assignee or the new or Substitute Member in accordance with Section 706(d)
of the Code, using any conventions permitted by law and selected by the other
Members. All Distributions on or before the date of a Transfer shall be made
to
the transferor, and all Distributions thereafter shall be made to the
transferee. If a Transfer does not comply with the provisions of Section
9
of this
Agreement, then any Distributions shall be allocated to the Person who attempted
to make the Transfer.
SECTION
8
TAXES
8.1 Method
of Accounting For Tax Purposes.
The
records of the Company shall be maintained on the accrual method of accounting
for federal income tax purposes.
8.2 Tax
Matters Members.
▇▇▇▇ ▇.
Oil and Gas Company shall
be
designated as the "tax matters member" of the Company pursuant to Section
6231(a)(7) of the Code. ▇▇▇▇ ▇. Oil and Gas Company shall
take such actions as are necessary to cause each other Member and Assignee
to
become a "notice partner" within the meaning of Section 6223 of the Code.
▇▇▇▇
▇. Oil and Gas Company shall
not
take any action contemplated by Sections 6223 through 6229 of the Code without
the approval of a Majority Vote of the Members.
8.3 Section
754 Election.
Following the death of a Member, the Company agrees to make an election under
Section 754 of the Code, upon request by the representative of such deceased
Member.
6
SECTION
9
TRANSFER
OF UNITS
9.1 Limitation
on Transfers
Except
as provided in this Agreement, no Member shall transfer all or any portion
of
his Units without the written consent of a majority of the non-transferring
Members. Any purported transfer of a Member's Unit or portion thereof in
violation of this Agreement shall be a nullity and shall vest no title or
right
in the purported transferee.
9.2 Permitted
Transfers.
A
Member may voluntarily transfer, at the death, dissolution, liquidation,
or
during the existence or lifetime of such Member, all or a portion of such
Member's Unit without the consent of a majority of the non-transferring Members
if such transfer is made to an Affiliate or another Member (a "Permitted
Transferee"); provided, however, that such transfer shall not impair, diminish
or extinguish any of the duties, obligations or covenants herein of such
transferor Member to the Members or the Company, and thereafter, such Permitted
Transferee shall be admitted as a Member and shall be bound by all the terms
of
this Agreement. Any transfer made pursuant to this Section
9.2
shall be
made only in such manner as to provide control of any membership interests
in
any minor or other legally incompetent person.
9.3
Transfer
of Units to Other than Permitted Transferees.
(a)
If a
Member shall desire voluntarily to transfer all or portion of his Units to
a
person other than a Permitted Transferee, and shall not at that time have
received a bona-fide offer for the purchase of his Units or portion thereof,
he
shall first offer, in writing, to sell such Units or portion thereof, for
a
period of thirty (30) days, to each of the other Members, and the other Members
shall have the right but not the obligation to purchase such Units or portion
thereof, in the same proportion as the Units held by all Members, excluding
the
Member desiring the transfer (or in such other proportion as may be agreed
upon
by all Members entitled to purchase such Units or portion thereof). Should
any
Member decline such offer, his prorata portion of the Units or portion thereof
being offered shall be available for purchase by the other Members, prorata,
on
the same basis as though such declining Member or Members was not a Member
at
the time of such offer. The price and terms for any Units purchased under
the
provisions of this Section
9.3(a)
shall be
as agreed upon and negotiated between the Member desiring the transfer and
the
purchasing Members. If all or any part of the Units or portion thereof so
offered for sale is not accepted within the periods of time above prescribed,
the Member desiring the transfer may proceed to obtain a written offer from
a
third party for the sale of his Units or portion thereof, which offer shall
be
subject to the provisions of Section
9.3(b)
below.
(b)
If a
Member shall desire voluntarily to transfer all or a portion of his Units,
and
shall at the time have received a bona-fide written offer for the purchase
of
all or a portion of his Units, then the other Members shall have a right
of
first refusal to purchase the transferring Member's Units or portion thereof
for
an equivalent price and on equivalent terms as those negotiated between and
the
transferring Member and the prospective transferee. Under such circumstances,
the transferring Member shall give the other Members written notice of his
intention to transfer his Units or portion thereof, the name of the prospective
transferee, and a copy of the bona-fide written offer for the Units from
the
prospective transferee which includes the proposed selling price and terms.
Within thirty (30) days following receipt of such notice, the other Members
shall have the right to elect in writing to purchase the Units or portion
thereof which have been offered for transfer in accordance with the terms
set
forth in said notice. Should more than one Member desire to accept the selling
Member's offer, then the acceptance shall be deemed to be in proportion to
the
accepting Member's respective Units unless otherwise agreed to by the Members.
(For example, if the accepting Member's respective Units are 15% and 5%,
then a
75% of the Units to be sold would be sold to the Member with the 15% Units
and
25% would be sold to the Member with the 5% Units.) If none of the other
Members
timely elects to purchase the Units or portion thereof which is offered for
transfer, then the selling Member shall have the right to transfer same strictly
in accordance with the information set forth in the aforementioned notice
(except that the purchase price may exceed the amount set forth in the notice)
and, thereafter, the transferee shall be bound by all the terms of this
Agreement. If the proposed transaction is not consummated within sixty (60)
days
following the giving of such notice or the terms and conditions of such proposed
transfer are varied or changed, the selling Member must re-submit the offer
to
the other Members above described.
7
9.4
Transfer
of Interests in Members.
Not
more than fifty percent (50% of the equity interests in any entity which
is a
Member may be transferred to persons or entities who or which are not Permitted
Transferees, without first offering such interests to the other Members pursuant
to the provisions of Section
9.3
above.
9.5 Effective
Date of Transfer.
A
Transfer of Units hereunder shall not be effective until the latest to occur
of
the following to the extent applicable:
(a) Any
proposed Transfer that is a sale to a third party subject to Section
9.3
shall
not be effective unless and until the requirements of Section
9.3
have
been satisfied.
(b) Any
proposed Transfer of Units which is not subject to Section
9.5,
shall
not be effective unless and until notice (including the name and address
of the
proposed transferee and the date of the proposed Transfer) has been provided
to
the Company and the other Members.
(c) No
Transfer of Units shall be effective unless and until the transferee has
complied with Section
9.6.
(d) Any
transfer of Units shall be deemed effective as of the last day of the calendar
month in which the last of the conditions specified in this Section
9.5
is
satisfied.
9.6 Requirements
for Effectiveness of Transfer.
As a
condition to recognizing the effectiveness of any proposed Transfer of Units,
the remaining Members may require the transferor and/or the proposed transferee,
to execute instruments of transfer, assignment and assumption and other
documents, and to perform all other acts which the remaining Members may
deem
necessary or desirable to:
(a) Constitute
such transferee, as an Assignee or a Substitute Member;
(b) Confirm
that the Person acquiring Units, or being admitted as a Member, has agreed
to be
subject to and bound by this Agreement, as it may be further amended, regardless
of whether the Person is to be admitted as a Substitute Member or will merely
be
an Assignee;
(c) Preserve
the Company's status under the laws of each jurisdiction in which the Company
is
qualified, organized or does business after the Transfer;
(d) Maintain
the Company's classification as a partnership for federal income tax purposes;
and
8
(e) Assure
compliance with any applicable state and federal laws including securities
laws
and regulations.
9.7 Admission
of a Transferee as a Member.
A
transferee of Units shall be admitted as a Member with respect thereto if
the
transferee (a) complies with Section
9.8
and (b)
is (i) a Member, (ii) an Affiliate with respect to the Transferring Member,
(iii) a person or entity receiving Units as permitted by Section 9.4(c),
or (iv)
unanimously approved as a substitute Member by the non-transferring
Members.
9.8 Transfer
to a Person Not Admitted as a Member.
Notwithstanding anything contained in this Agreement to the contrary, any
transferee of Units shall be an Assignee and have no right to participate
in the
management of the business and affairs of the Company. Upon the Transfer
of all
of a Member's Units to an Assignee who is not admitted as a Member, the Company
shall purchase from the transferring Member, and the transferring Member
shall
sell to the Company for a purchase price of $100.00, all remaining rights
and
interests retained by the transferring Member associated with the transferred
Units.
SECTION
10
ADDITIONAL
MEMBERS
The
Members, by vote as in the percentage specified at Section 4.2 hereof, may
make
a Person a Member by the Company issuing Units for such consideration as
the
Members by unanimous consent determine. In such event, Exhibit
"A"
to this
Agreement shall be amended to reflect the issuance of Additional Units and
the
New Members shall execute such documents as shall be required to reflect
their
acquisition of Units in the Company and their agreement to be bound by the
terms
of the Articles and this Agreement.
9
SECTION
11
DISSOCIATION
OF A MEMBER
11.1 Dissociation.
A
Person ceases to be a Member upon the happening of any of the following
events:
(a) The
withdrawal of a Member (unless all of the other Members have consented to
the
withdrawal, the withdrawing Member will be liable for damages pursuant to
Section 5.9);
(b) The
expulsion of a Member;
(c) A
Member
becoming a Bankrupt Member;
(d) In
the
case of a Member who is a natural person, the adjudication of incompetency
or
death of the Member;
(e) In
the
case of a Member who is acting as a Member by virtue of being a trustee of
a
trust, the termination of the trust (but not merely the substitution of a
new
trustee);
(f) In
the
case of a Member that is an organization other than a corporation, the
dissolution and commencement of winding up of the separate
organization;
(g) In
the
case of a Member that is a corporation, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of
its
charter if not reinstated within ninety (90) days; or
(h) In
the
case of a Member that is an estate, the distribution by the fiduciary of
the
estate's Units.
11.2 Rights
of Dissociating Member.
In the
event any Member dissociates prior to the dissolution and winding up of the
Company:
(a) If
the
Dissociation causes a dissolution and winding up of the Company under
Section
12
of this
Agreement, 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 the damages
sustained by the Company as a result of the dissolution and winding up;
and
(b) If
the
Dissociation does not cause a dissolution and winding up of the Company under
Section
12
of this
Agreement, the dissociated Person shall have no right to compel a liquidation
of
his Units and he shall thereafter hold Units as an Assignee.
SECTION
12
DISSOLUTION
AND WINDING UP
12.1 Dissolution.
The
Company shall be dissolved and its affairs wound up, upon the first to occur
of
the following events:
(a) The
expiration of the term of existence of the Company set forth in the Articles
and
this Agreement;
10
(b) The
unanimous written consent of all of the Members;
(c) The
Dissociation of any Member, unless the business of the Company is continued
with
the written consent of the remaining Members required for action pursuant
to
Section 4.2 hereof within one hundred eighty (180) days after
Dissociation;
(d) At
any
time that there cease to be two (2) or more Members;
(e) The
occurrence of circumstances requiring dissolution under Section
6.3;
or
(f) Upon
entry of a decree of judicial dissolution.
Upon
the
occurrence of any Event of Dissolution, a certificate of dissolution containing
the information required by the Act shall be delivered to the Secretary of
State
for filing.
12.2 Winding
Up.
Upon
dissolution, the Members shall wind up all of the Company's affairs and proceed
to liquidate all of the Company's assets as promptly as is consistent with
obtaining their fair value. The Company's property and cash shall be
distributed:
(a) To
creditors, including Members who are creditors, to the extent permitted by
law,
in satisfaction of liabilities of the Company;
(b) To
Members and Assignees in accordance with positive Capital Account balances
taking into account all Capital Account adjustments for the Company's taxable
year in which the liquidation occurs. Liquidation proceeds shall be paid
within
60 days of the end of the Company's taxable 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 Members
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 and assets
of the Company have been distributed to the Members.
SECTION
13
INDEMNIFICATION
13.1 General.
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 action, suit or
proceeding, whether civil, criminal, administrative or investigative (excluding
actions by or in the right of the Company) and whether formal or informal,
by
reason of the fact that the Person is or was a Member of the Company, who,
while
a Member of the Company, is or was serving at the request of the Company
as a
director, officer, partner, member, trustee, employee or agent of another
corporation, partnership, limited liability company, joint venture, trust,
business association, employee benefit plan or other enterprise, whether
for
profit or not, against expenses (including counsel fees), judgments,
settlements, penalties and fines (including excise taxes assessed with respect
to employee benefit plans) actually or reasonably incurred in accordance
with
such action, suit or proceeding, if the Person acted in good faith and in
a
manner reasonably believed by the Person to have been, in the case of conduct
taken as a Member, in the best interest of the Company and in all other cases,
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, either the Person had no reasonable cause
to
believe such conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of
nolo
contendere or its equivalent, shall not, of itself, create a presumption
that
the Person did not meet the prescribed standard of conduct. The Company may
also, with the consent of a Majority of the Members, indemnify any Assignee
or
employee or agent of the Company who is not a Member in the manner and to
the
extent that it shall indemnify Members pursuant to this
section.
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13.2 Authorization.
To the
extent that a Member has been successful in the defense of any action, suit
or
proceeding referred to in Section
13.1,
on the
merits or otherwise, or in the defense of any claim, issue or other matter
therein, the Company shall indemnify such Person against expenses (including
counsel fees) actually and reasonably incurred by the Person. Any other
indemnification under Section
13.1
shall be
made by the Company only as authorized in the specific case, upon a
determination that indemnification of the Member, employee or agent is
permissible in the circumstances because the Person has met the applicable
standard of conduct. Such determination may be made by either: (a) a Majority
of
the Members who are not at the time parties to such action, suit or proceeding;
or (b) a written opinion authored by independent legal counsel.
13.3 Reliance
on Information.
For
purposes of any determination under Section
13.1,
a
Person shall be deemed to have acted in good faith and to have otherwise
met the
applicable standard of conduct set forth in Section
13.1
if the
action is based on information, opinions, reports, or statements, including
financial statements and other financial data, if prepared or presented by
(a)
one or more Members, officers or employees of the Company or another enterprise
whom the Person reasonably believes to be reliable and competent in the matters
presented: (b) legal counsel, public accountants, appraisers or other Persons
as
to matters reasonably believed to be within the Person's professional or
expert
competence; or (c) the board of directors or other governing body of another
entity, employee benefit plan or other enterprise of which such Person is
or was
serving at the request of the Company as a director, officer, partner, member,
trustee, employee or agent. The provisions of this Section
13.3
shall
not be deemed to be exclusive or to limit in any way the circumstances in
which
a person may be deemed to have met the applicable standard of conduct set
forth
in Section
13.1.
13.4 Advancement
of Expenses.
Expenses incurred in connection with any civil or criminal action, suit or
proceeding may be paid for or reimbursed by the Company in advance of the
final
disposition of the action, suit or proceeding, as authorized in the specific
case in the same manner described in Section
13.2,
upon
receipt of a written affirmation of the Member, employee or agent's good
faith
belief that such Person has met the standard of conduct described in
Section
13.1
and upon
receipt of a written undertaking by or on behalf of the Person to repay such
amount if it shall ultimately be determined that the Person did not meet
the
standard of conduct, and a determination is made that the facts then known
to
those making the determination shall not preclude indemnification under this
Section.
13.5 Non-Exclusive
Provisions: Vesting.
The
indemnification provided by this Section is not exclusive of any other rights
to
which a Person seeking indemnification may be entitled. The right of any
Person
to indemnification under this Section shall vest at the time of occurrence
or
performance of any event, act or omission giving rise to any action, suit
or
proceeding of the nature referred to in Section
13.1
and,
once vested, shall not later be impaired as a result of any amendment, repeal,
alteration or other modification of any or all of these
provisions.
12
13.6 Definitions.
For
purposes of this Section, serving an employee benefit plan at the request
of the
Company shall include any service as a director, officer, employee or agent
of
an entity which imposes duties on, or involves services by such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries. A Person who acted in good faith and in a
manner
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a
manner "not opposed to the best interest of the Company" referred to in this
Section. For purposes of this Section, "party" includes any individual who
is or
was a plaintiff, defendant or respondent in any action, suit or proceeding,
or
who is threatened to be made a named defendant or respondent in any action,
suit
or proceeding.
SECTION
14
MISCELLANEOUS
PROVISIONS
14.1 Entire
Agreement.
This
Agreement and the Articles represent the entire agreement among all the
Members.
14.2 Amendment
or Modification of this Agreement.
This
Agreement may be amended or modified from time to time only by a written
instrument approved by the Majority Vote of the Units then
outstanding.
14.3 No
Partnership Intended for Nontax Purposes.
The
Members have formed the Company pursuant to the Act, and expressly do not
intend
to form a partnership or a limited partnership. The Members do not intend
to be
partners one to another, or partners as to any third party. To the extent
any
Member, by word or action, represents to another person that any other Member
is
a partner or that the Company is a partnership, the Member making such wrongful
representation shall be liable to any other Member who incurs personal liability
by reason of such wrongful representation.
14.4 Rights
of Creditors and Third Parties under this Agreement.
This
Agreement is entered into among the Members for the exclusive benefit of
the
Company, its Members, and their successors and assignees. This 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 applicable statute,
no
creditor or third party shall have any rights under this Agreement or any
agreement between the Company and any Member with respect to any Capital
Contribution or otherwise.
14.5 Notice.
All
notices required or permitted by this Agreement shall be in writing. Notice
to
the Company shall be given to its principal office or personally delivered
to
the custodian of the Company's records. Notice to a Member or Assignee shall
be
given or personally delivered to the Member or Assignee at the address on
Exhibit
A
as
amended from time to time unless such Member or Assignee has notified the
Company in writing of a different address.
14.6 Severability.
Every
provision of this Agreement is intended to be severable. If any term or
provision of this Agreement is illegal or invalid for any reason, the illegality
or invalidity shall not affect the legality or validity of the remainder
of this
Agreement.
14.7 Number
and Gender.
All
provisions and references to gender shall be deemed to refer to masculine,
feminine or neuter, singular or plural, as the identity of the person or
persons
may require.
14.8 Binding
Effect.
Except
as otherwise provided in this Agreement, every covenant, term and provision
of
this Agreement shall be binding upon and inure to the benefit of the Members
and
their respective heirs, legatees, legal representatives, successors and
assigns.
13
14.9 Counterparts.
This
Agreement may be executed in any number of counterparts with the same effect
as
if all such parties executed the same document. All such counterparts shall
constitute one agreement.
14.10 Ohio
Law Controlling.
The
laws of the State of Ohio, including the Act, shall govern the validity of
this
Agreement, the construction of its terms and the interpretation of the rights
and duties of the parties hereto.
14.11 Representation.
Each
party hereby represents and covenants that each has had the opportunity to
consult with their independent attorney(s) and/or tax advisors prior to the
execution of this Agreement.
IN
WITNESS WHEREOF,
this
Agreement has been executed as of the date first above written.
| ▇▇▇▇ ▇. OIL & GAS CO. | |
| BY: |
/▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇/
|
| Its: President______________ | |
| M2KLB HOLDCO, LLC | |
| BY: |
/▇▇▇▇▇
▇▇▇▇▇▇▇/
|
| Its:Managing Member________ | |
| WONDER IF, LLC | |
| BY: |
/▇▇▇▇▇
▇▇▇▇▇▇/
|
| Its:Member__________________ | |
| ALPHA ACQUISITION, LLC | |
| BY: |
/▇▇▇▇▇
▇▇▇▇▇▇▇/
|
| Its:Managing Member_________ | |
14
APPENDIX
"Act"
means the Ohio Revised Code Title 17, Chapter 1705 et seq.,
as
amended from time to time.
"Affiliate"
shall mean (i) any person directly or indirectly controlling, controlled
by or
under common control with any Member; (ii) any person directly or indirectly
owning or controlling fifteen percent (15%) or more of the voting securities
or
capital of any Member which is a corporation, or fifteen percent (15%) or
more
of the capital or profit interests of any member which is a partnership,
joint
venture, limited liability company or other unincorporated association, or
fifteen percent (15%) or more in beneficial interest of any Member which
is a
trust; or (iii) (A) the spouse, siblings (or their spouses) of any Member
of
Affiliate described in clauses (i) or (ii) immediately preceding, or the
lineal
descendants (or their spouses) of any Member, any such Affiliate, or any
of
their respective spouses or siblings (or their spouses), or (B) any trust
for
the primary preceding. Without limiting the generality of the foregoing,
"control" of a person means the possession directly or indirectly of the
power
to direct or cause the direction of the management or policies of such person;
any general partner of a partnership shall be deemed to control such partnership
if it is the sole general partner, or it owns fifteen percent (15%) or more
of
the aggregate capital or profits interests owned by all general partners
in such
partnership, but not otherwise; any trustee of a trust shall be deemed to
control such trust; any director or executive officer shall not be deemed
to
control any corporation solely by reason of such director's or executive
officer's position as such; and any employer shall not be deemed to control
any
employee solely by reason of such employer's position as such.
"Agent"
shall mean the agent designated by the Company from time to time for service
of
process pursuant to Section 1705.06 of the Act.
"Agreement"
means this Operating Agreement as amended from time to time.
"Articles"
means the Articles of Organization of the Company as properly adopted and
amended from time to time by the Members and filed with the Ohio Secretary
of
State pursuant to the Act.
"Assignee"
means an assignee of Units who is not a Member at the time of the assignment
and
is not admitted as a Substitute Member.
"Bankrupt
Member" means a Member who: (i) has become the subject of a decree or order
for
relief under any bankruptcy, insolvency or similar law affecting creditors'
rights now existing or hereafter in effect; or (ii) has initiated, either
in an
original proceeding or by way of answer in any state insolvency or receivership
proceeding, an action for liquidation, arrangement, composition, readjustment,
dissolution, or similar relief.
"Capital
Account" means the amount of cash and fair market value of services or property
(net of any liabilities secured by contributed property that the Company
is
considered to assume or take subject to under Section 752 of the Code) that
a
Member or Assignee has contributed to the Company as Capital Contributions
pursuant to Section
6
hereof,
adjusted as follows:
(i) The
Capital Account shall be increased by all Profits allocated to such Person
pursuant to Section
7
hereof.
(ii) The
Capital Account shall be decreased by (a) the amount of cash and the fair
market
value of all property distributed to such Person by the Company (net of
liabilities securing such distributed property that such Person is considered
to
assume or take subject to under Section 752 of the Code) and (b) all Losses
allocated to such Person pursuant to Section
7
hereof.
(iii) The
Capital Account shall be credited in the case of an increase or debited in
the
case of a decrease to reflect such Person's allocable share of any adjustment
to
the adjusted basis of Company assets pursuant to Section 734(b) of the Code
to
the extent provided by Section 1.704-l(b)(2)(iv)(m) of the
Regulations.
15
(iv) The
Capital Account shall be adjusted in any other manner required by Section
1.704-l(b)(2)(iv) of the Regulations or otherwise, in order to be deemed
properly maintained for federal income tax purposes.
(v) Capital
Accounts shall not bear interest.
(vi) The
transferee of Units shall succeed to the Capital Account attributable to
the
Units transferred.
"Capital
Contribution" means any contribution of cash, property or services to the
Company made by or on behalf of a Member or Assignee pursuant to Section
6
hereof.
"Code"
means the Internal Revenue Code of 1986, as amended from time to
time.
"Company"
means the limited liability company organized pursuant to the Articles and
this
Agreement, and any successor limited liability company.
"Default
Interest Rate" means, at a given time, a rate of interest equal to four percent
(4%) in excess of the rate then in effect on the Company's first mortgage
financing or, if not applicable or readily determinable, thirteen percent
(13%).
"Delinquent
Member" means a Member or Assignee who has failed to meet the Commitment
of that
Member or Assignee.
"Distribution"
means a transfer of cash or property to a Member or Assignee on account of
Units
as described in Section
7
hereof.
"Dissociation"
means any action which causes a Person to cease being a Member as described
in
Section
11
hereof.
"Dissolution
Event" means an event, the occurrence of which will result in the dissolution
of
the Company under Section
12
hereof.
"Fiscal
Year" means the taxable year of the Company.
"Majority-in-Interest"
means Members holding from time to time a majority of the Units.Majority
Vote"
means, at any given time, Members voting affirmatively on a matter holding
in
the aggregate more than fifty percent (50%) of the outstanding Units held
by
such Members voting thereon.
"Member"
means any Person who has signed this Agreement as a Member or who is hereafter
admitted as a Member of the Company pursuant to this Agreement.
"Regulations"
except where the context indicates otherwise, means the permanent, temporary,
proposed, or proposed and temporary regulations of Department of the Treasury
under the Code as such regulations may be changed from time to
time.
"Related
Person" means, with respect to any Member, such Member's spouse, ancestors,
lineal descendants, trusts for the sole benefit of any such persons, and
partnerships eighty percent (80%) or more owned by the Member.
"Substitute
Member" means an Assignee who is admitted as a Member.
"Transfer"
means any transference of Units, sale, gift, assignment, pledge, granting
of a
security interest or other disposition, including any disposition by operation
of law.
“Unanimous
Vote” means a vote concurred in by Members representing one hundred percent
(100%) of the outstanding Units.
16
"Unit"
means a fractional share of the membership interest of a Member or an Assignee
in the Company, the numerator of which is one (1) and the denominator of
which
is the total number of Units outstanding from time to time. As of the date
of
this Agreement, the Company has 100 Units outstanding. The number of Units
initially issued to each Member in exchange for their Initial Capital
Contribution is set forth on Exhibit
A
which
shall be amended in the event that the Company issues additional Units or
acquires any outstanding Units.
"Vote"
means each Member's voting rights as provided for in Section
5.7
of this
Agreement.
17