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0006451209 1
�r•TPS STATE OF IDAHO For Office use Only Cn
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y C ANNUAL REPORT -FILED-
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STE o� Boise, ID 83720-0080 Date Filed: 9/19/2025 11:02:21 AM \
(208)334-2301
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Entity Name and Mailing Address: 0_1
Entity Name: Brighton Ustick LLC
The file number of this entity on the records of the Idaho 0004402725
Secretary of State is:
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Address 2929 W NAVIGATOR DR N
STE 400
MERIDIAN, ID 83642-8298
Entity Details:
Entity Status Active-Existing (p
This entity is organized under the laws of: IDAHO n
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the Idaho Secretary of State was:
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The registered agent on record is:
Registered Agent Robert Phillips
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Physical Address O
2929 WEST NAVIGATOR DRIVE I--h
SUITE 400 I-h
MERIDIAN, ID 83642 IJ_
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2929 W NAVIGATOR DR
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MERIDIAN, ID 83642-8298 1-'
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Limited Liability Company Managers and Members �3'
Name Tltle Business Address
Robert Phillips Manager 2929 WEST NAVIGATOR DRIVE H
SUITE 400
MERIDIAN, ID 83642 �
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Job Title: Authorized Signer
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Shari Vaughan 0911912025
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0004303624 1
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�¢ �E�` Office of the secretary of state, Lawerence Denney For Office Use Only __j
y 4 C CERTIFICATE OF ORGANIZATION LIMITED LIABILITY -FILED- `T1
*� COMPANY CD
rr tiq Idaho Secretary of State File#:0004303624
�rE o4 PO Box 83720 \
Boise, ID 83720-0080 Date Filed:6/3/2021 1:43:00 PM CD
(208)334-2301 (�
Filing Fee:$100.00 \
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Certificate of Organization Limited Liability Company
Select one: Standard, Expedited or Same Day Service(see Expedited(+$40;filing fee$140)
descriptions below)
1.Limited Liability Company Name
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Type of Limited Liability Company Limited Liability Company
Entity name Alturas Ustick, LLC
2.The complete street address of the principal office is:
Principal Office Address 500 E. SHORE DRIVE
SUITE 120 (D
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EAGLE, ID 83616
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3.The mailing address of the principal office is:
Mailing Address 500 E SHORE DR (D
STE 120
EAGLE, ID 83616-6947
4.Registered Agent Name and Address
Registered Agent Registered Agent
Blake Hansen H
Physical Address: d
500 E. SHORE DRIVE W
SUITE 120 (D
EAGLE, ID 83616 n
Mailing Address: l1
500 E SHORE DR (D
STE 120 ct
EAGLE, ID 83616-6947
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® I affirm that the registered agent appointed has consented to serve as registered agent for this entity.
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5.Governors 1—h
Name Address Cn
Alturas Capital Partners, LLC 500 E. SHORE DRIVE ct
SUITE 120 W
EAGLE, ID 83616 rt
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Signature of Organizer: r
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TOM MORRIS 0610312021 n
Sign Here Date (D
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Page 1 of 1
AMENDED AND RESTATED OPERATING AGREEMENT
OF
ALTURAS MANAGEMENT GROUP LLC
EFFECTIVE DATE: JANUARY 1, 2017
TRANSFER RESTRICTIONS
THE INTEREST(S) EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR
THE REGULATORY AGENCY OF ANY STATE. THEY HAVE BEEN ISSUED
PURSUANT TO EXEMPTIONS UNDER THE FEDERAL SECURITIES ACT OF 1933,
AS AMENDED, AND SIMILAR EXEMPTIONS UNDER STATE LAW. BY SIGNING
THIS AGREEMENT, THE MEMBERS ARE CONFIRMING THAT THEY ARE
ACQUIRING THE INTERESTS FOR AN INVESTMENT AND NOT FOR RESALE OR
DISTRIBUTION. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION, OR OTHER DISPOSITION OF ANY OF THE INTEREST(S) IS
RESTRICTED AND MAY NOT BE ACCOMPLISHED EXCEPT IN ACCORDANCE
WITH THIS AGREEMENT AND (1) AN APPLICABLE REGISTRATION STATEMENT
OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE MEMBERSHIP THAT
A REGISTRATION STATEMENT IS UNNECESSARY.
TABLE OF CONTENTS
Page
ARTICLE1 GENERAL................................................................................................................1
1.1 Formation ............................................................................................................1
1.2 Name .................................................................................................................1
1.3 Organization ........................................................................................................1
1.4 Purposes and Powers..........................................................................................1
1.5 Duration...............................................................................................................1
1.6 Registered Agent.................................................................................................1
1.7 Principal Office.....................................................................................................1
1.8 Miscellaneous Definitions ....................................................................................2
ARTICLE 2 MEMBERSHIP................................................ ................................................2
2.1 Members..............................................................................................................2
2.2 Membership Interest....................... .................................................................2
2.2.1 Units.............................. .....................................................................2
2.2.2 Percentage Interest..................................................................................3
2.2.3 Representations and Warranties of the Members.....................................3
2.3 Schedule of Members; Updates...........................................................................3
2.4 Approval of Actions by Members .........................................................................3
2.4.1 Member Meetings ....................................................................................4
2.4.2 Member Consents....................................................................................5
2.5 Contributions .......................................................................................................5
2.5.1 Contributions............................................................................................5
2.5.2 Additional Contributions ...........................................................................5
2.5.3 Form of Contribution.................................................................................5
2.5.4 Liability Regarding Contributions..............................................................5
2.6 Distributions.........................................................................................................6
2.6.1 Interim Distributions..................................................................................6
2.6.2 Liquidating Distributions...........................................................................6
2.6.3 Form of Distributions................................................................................6
2.6.4 Withholding and Treating Amounts Withheld as Distributions...................6
2.6.5 Distributions to Pay Taxes........................................................................7
2.6.6 Limitation on Distributions ........................................................................7
2.7 New Members .....................................................................................................7
ARTICLE 3 MANAGEMENT.......................................................................................................8
3.1 Managers.............................................................................................................8
3.2 Management Authority.........................................................................................8
3.3 Manner of Acting...................................................................................................8
3.3.1 Manager Meetings ...................................................................................8
3.3.2 Manager Consents...................................................................................9
3.4 Number................................................................................................................9
3.5 Appointment; Term; Removal ..............................................................................9
3.6 Effect of Cessation of Status as either a Manager or Member...........................10
3.7 Expense Reimbursement...................................................................................10
3.8 Compensation ...................................................................................................10
i
ARTICLE 4 AUTHORITY AND LIMITED LIABILITY..................................................................10
4.1 Authority of Members......................................................................................... 10
4.2 Authority of Managers........................................................................................ 10
4.3 Statement of Authority .......................................................................................10
4.4 Status of Limited Liability Company as Separate Entity .....................................10
4.5 Limited Liability.................................................................................................. 11
ARTICLE 5 STANDARDS OF CONDUCT................................................................................ 12
5.1 Fiduciary Duties................................................................................................. 12
5.2 Duty of Care ......................................................................................................12
5.3 Duty of Loyalty...................................................................................................12
5.3.1 Company Opportunity ............................................................................12
5.3.2 Account..................................................................................................12
5.3.3 Loans.....................................................................................................12
5.3.4 Conflicting Interest Transactions ............................................................13
5.4 Confidentiality.................................................................................................... 13
5.5 Good Faith and Fair Dealing.............................................................................. 13
ARTICLE 6 INFORMATION RIGHTS........................................................................................13
6.1 Information Rights..............................................................................................13
6.2 Books of Account...............................................................................................14
6.3 Records to be Maintained.................................................................................. 14
6.3.1 Members and Addresses .......................................................................14
6.3.2 Certificate of Organization...................................................................... 14
6.3.3 Operating Agreement............................................................................. 14
6.3.4 Statement of Authority............................................................................14
6.3.5 Tax Returns ........................................................................................... 14
6.3.6 Contributions..........................................................................................14
6.4 Managers........................................................................................................... 14
6.5 Members............................................................................................................ 14
6.6 Former Members...............................................................................................15
6.7 Protection of Company ...................................................................................... 15
6.8 Reasonable Charges.........................................................................................15
6.9 Transferees .......................................................................................................15
6.10 Audit ...............................................................................................................15
ARTICLE 7 ACCOUNTING AND TAXES..................................................................................15
7.1 Capital Accounts................................................................................................15
7.1.1 Increases and Decreases in Capital Accounts........................................16
7.1.2 Allocations upon Permitted Transfers.....................................................16
7.2 Single Member LLC Taxation.............................................................................16
7.3 Multiple Member LLC Taxation ..........................................................................16
7.3.1 Income, Gain, Loss, Deduction and Credit.............................................17
7.3.2 Special Allocations................................................................................. 17
7.3.3 Integration with Code Section 754 Election ............................................17
7.4 Compliance with Code and Treasury Regulations..............................................17
7.5 Tax Matters Partner........................................................................................... 18
ARTICLE 8 TRANSFERS OF UNITS........................................................................................18
8.1 Prohibition on Transfers..................................................................................... 18
8.1.1 General Limitations under Applicable Law..............................................18
ii
8.1.2 Reasonableness of Restrictions; Enforcement.......................................18
8.2 Effect of Prohibited Transfers.............................................................................18
8.3 Permitted Transfers........................................................................................... 19
8.3.1 Voluntary Redemption............................................................................19
8.3.2 Mandatory Redemption..........................................................................19
8.3.3 Transfer to Another Member..................................................................20
8.3.4 Transfer to a Third Party ........................................................................20
8.4 Effect of Permitted Transfers .............................................................................21
ARTICLE9 DISSOCIATION ......................................................................................................21
9.1 No Right to Dissociate .......................................................................................21
9.2 Events of Dissociation........................................................................................21
9.3 Effect of Dissociation .........................................................................................23
ARTICLE 10 DISSOLUTION.....................................................................................................23
10.1 Dissolution.........................................................................................................23
10.2 Effect of Dissolution...........................................................................................24
10.3 Winding Up........................................................................................................24
10.4 Distribution of Assets after Dissolution...............................................................24
10.4.1 Creditors ................................................................................................24
10.4.2 Remaining Proceeds and Property.........................................................24
10.4.3 Deficit Capital Account Restoration Obligation .......................................24
10.5 Distribution in Kind.............................................................................................24
10.6 Completion of Winding Up and Termination.......................................................25
ARTICLE 11 DISPUTE RESOLUTION .....................................................................................25
11.1 Indemnification by Company..............................................................................25
11.1.1 Payment of Expenses ............................................................................25
11.1.2 Right to Counsel and Control of Action...................................................26
11.1.3 Insurance...............................................................................................26
11.2 Indemnification by Member for Failure to Pay Taxes .........................................26
11.3 Claim ...............................................................................................................26
11.4 Claim Notice and Cure Period............................................................................26
11.5 Claim Resolution Procedure ..............................................................................26
11.6 Rights and Remedies.........................................................................................27
11.7 Injunction Remedies ..........................................................................................27
11.8 Attorney Fees and Costs ...................................................................................27
11.9 Waiver...............................................................................................................27
11.10 Governing Law, Jurisdiction, and Venue............................................................27
ARTICLE 12 MISCELLANEOUS...............................................................................................27
12.1 Notices ..............................................................................................................27
12.2 Waiver Of Notice................................................................................................28
12.3 Successors and Assigns....................................................................................28
12.4 Coordination of Operating Agreement and Act...................................................28
12.5 No Partnership Intended for Non-Tax Purposes.................................................28
12.6 Rights of Creditors and Third Parties.................................................................28
12.7 Severability........................................................................................................28
12.8 Time of the Essence..........................................................................................29
12.9 Entire Agreement...............................................................................................29
12.10 Amendment.......................................................................................................29
iii
12.11 Counterparts......................................................................................................29
12.12 Adoption and Ratification...................................................................................29
Exhibit A - Officers
Schedules
Schedule 2.3 —Schedule of Members
Schedule 2.4—Actions Requiring Member Approval
Spousal Consent
iv
AMENDED AND RESTATED OPERATING AGREEMENT
OF
ALTURAS MANAGEMENT GROUP LLC
Effective January 1, 2017 ("Effective Date"), this Amended and Restated Operating
Agreement ("Operating Agreement") is adopted by those Persons signing this Operating
Agreement, as the Member(s) and Manager(s) of Alturas Management Group LLC
("Company"). The Company is deemed to be a party to this Operating Agreement.
ARTICLE 1
GENERAL
1.1 Formation. The Company was formed pursuant to and in accordance with the
Delaware Limited Liability Company Act, Title 6, Delaware Code, Section 18-101 et seq. (as
amended from time to time, the "Act"). The term of the Company commenced upon the
filing of the Certificate of Formation with the Delaware Secretary of State on April 6, 2015,
and shall continue until terminated as herein provided.
1.2 Name. All business of the Company shall be conducted under the name Alturas
Management Group LLC, or one or more assumed business names as may be adopted by the
Company under applicable law.
1.3 Organization. The Company is subject to the provisions of the Act and this
Operating Agreement.
1.4 Purposes and Powers. The purposes of the Company shall be to transact any
and all lawful business that a limited liability company may conduct under the Act. The
Company will be operated for cash income, tax benefits, and long-term appreciation. The
Company shall have and may exercise all powers necessary or convenient to effectuate these
purposes.
1.5 Duration. The Company shall continue in perpetuity, unless earlier dissolved
pursuant to Article 10.
1.6 Registered Agent. The Company's registered agent for service of process in
the State of Delaware is the Corporation Service Company, 2711 Centerville Road, Suite 400, in
the City of Wilmington, County of New Castle, and thereafter the Person reflected on any
statement of change filed with the Delaware Secretary of State. The Company may change its
registered agent from time to time through appropriate filings with the Delaware Secretary of
State.
1.7 Principal Office. The Company's principal office shall be initially the location
reflected on the Company's Certificate of Organization, and thereafter the Company's mailing
address reflected on the Company's then-current annual report filed with the Delaware
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 1
Secretary of State. The Company may change its principal office from time to time through
appropriate filings with the Delaware Secretary of State.
1.8 Miscellaneous Definitions. For the purposes of this Operating Agreement, the
following terms shall have the following meanings:
(i) The term "Affiliate" means, with respect to the Company,
any Person that directly or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with the Company (for the 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 and policies of a
Person, whether through the ownership of voting securities, by contract, or otherwise), and, with
respect to a Manager or Member, any director, officer, partner, manager, member, employee or
other agent of the Manager or Member;
(ii) The term "Code" means the Internal Revenue Code of
1986, as amended;
(iii) The term "Company Property" means all property owned
by the Company, whether real or personal, tangible or intangible, including (without limitation)
money, real estate, fixtures, furniture, equipment, inventory, advertising materials, goodwill,
intellectual property and any other property entrusted to any Person as a result of the Person's
status as a Manager or Member, and any legal or equitable interest in such property;
(iv) The term "Majority" means, with respect to the Members,
a Percentage Interest above fifty percent (50%), and, with respect to the Managers, a majority
of the number of Managers or, if there are only two Managers, both Managers.
(v) The term "Person" means an individual, corporation,
estate, trust, partnership, limited liability company, business trust, association, joint venture,
public corporation, government or governmental subdivision, agency, or instrumentality, or any
other legal or commercial entity; and
(vi) The term "Treasury Regulations" means the regulations
promulgated by the United States Department of Treasury from time to time under the Code.
ARTICLE 2
MEMBERSHIP
2.1 Members. The "Members" of the Company consist of each Person that (i)
executes this Operating Agreement or a counterpart to this Operating Agreement, (ii) is
subsequently admitted as a new Member, and (iii) has not ceased to be a Member. If the
Company has only one Member, references in this Operating Agreement to "Members" shall be
deemed to refer to the single Member.
2.2 Membership Interest. Each Member holds a "Membership Interest" in the
Company, which refers to both (i) the financial obligations and rights of a Member to the extent
so provided in this Operating Agreement, including (without limitation) the obligation to make
contributions and the right to receive distributions ("Financial Rights"), and (ii) the governance
obligations and rights of a Member as granted or limited by this Operating Agreement, including
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -2
(without limitation) the obligation to comply with limits on participation in the management of the
Company and voting rights and other rights to participate in management and direction of the
business of the Company ("Governance Rights").
2.2.1 Units. The Company is authorized to issue a single class of Membership
Interests in the form of units ("Units").
2.2.2 Percentage Interest. Each Member's Membership Interest may be
expressed as a percentage that is determined by dividing the total number of Units held by the
Member by the total number of Units held by all of the Members (referred to as a Member's
"Percentage Interest").
2.2.3 Representations and Warranties of the Members. Each Member, and
in the case of an organization, each Person executing this Operating Agreement on behalf of
the organization, represents and warrants to the Company and each other Member that:
(i) The Member has the investment power and authority to
control the voting and disposition of the Member's Units and to exercise all rights of a Member
under this Operating Agreement relating to the Member's Membership Interest without the
consent of the Member's spouse or any other Person;
(i i) The Member is acquiring the Units for the Member's own
account, for personal use or investment purposes, and without any intent to sell or distribute the
Units; and
(iii) The Member acknowledges that the Units have not been
registered under the Securities Act of 1933, as amended, or any applicable state securities
laws, and may not be resold or transferred by the holders thereof without appropriate
registration or the availability of an exemption from the registration requirements.
2.3 Schedule of Members; Updates. The names, addresses, contributions, Units,
and Percentage Interests of the Members are set forth in Schedule 2.3_("Schedule of
Members"). The Company shall use its reasonable efforts to maintain in its records at all times
a current Schedule of Members, which shall reflect the changes from time to time in the
information regarding the Members, including without limitation additional contributions,
issuances of additional Units, transfers of Units, dissociations of Members, and admissions of
new Members.
2.4 Approval of Actions by Members. The actions of the Company that are
subject to approval by the Members and the corresponding percentages of the Units entitled to
vote on or consent to the actions that are required for the approval of the actions by the
Members are set forth in Schedule 2.4. The actions set forth in Schedule 2.4 may not be taken
by the Company or the Managers absent approval by the Members in accordance with this
Section 2.4. Unless otherwise provided in this Operating Agreement, any actions that are not
set forth in Schedule 2.4 may be taken by the Managers on behalf of the Company pursuant to
Article 3, without approval by the Members. The Members may take action by either (i) a vote
of the Members at any meeting pursuant to Section 2.4.1, or (ii) by written consent of the
Members pursuant to Section 2.4.2.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -3
2.4.1 Member Meetings. If a quorum is present at a duly noticed and properly
conducted Member meeting, the Members may take action by the affirmative vote of Members
holding such percentage of the Units entitled to vote on the action that is required for the
approval of the action under Section 2.4. Each Member shall have the number of votes equal to
the number of Units entitled to vote on the action held by such Member. If a Member is an
organization, a representative of such organization acting within the authority granted to such
representative by the organization may vote on behalf of the organization. The following
additional provisions shall apply to Member meetings:
(a) Annual Meetings. An annual meeting is not required but if
desired, an annual meeting of the Members shall be held at a date, time, and place to be
determined by the Managers. At the annual meeting, the Members shall transact such business
as may come before the meeting.
(b) Special Meetings. A special meeting of the Members may be
called by Members holding at least twenty percent (20%) of the Units entitled to vote on the
actions to be taken at the special meeting.
(c) Notice. Written notice stating the place, day, and hour of any
Member meeting and, in the case of any special meeting of the Members, the purpose or
purpose(s) for which the meeting is called shall be delivered to the Members not less than three
(3) and no more than thirty (30) days before the date of the meeting. When any notice is
required to be given to Members, a waiver of the notice in writing signed by the Person entitled
to the notice, whether signed before, at, or after the time of the Meeting, shall be equivalent to
the giving of the notice.
(d) Place. The Managers may designate any place, either within or
without the State of Idaho, as the place of meeting for any Member meeting. If no designation is
made, the place of meeting shall be Company's principal office unless the Members
unanimously agree on another location.
(e) Electronic Participation. Any Member may participate in any
meeting by telephone or other electronic means. If no other Member raises objection as to the
electronically participating Member's identity, a Member so participating shall be considered as
participating in person at the meeting and may vote.
(f) Record Date. For the purpose of determining Members (i) entitled
to notice of, or to vote at, any meeting or any adjournment thereof, or (ii) for any other purpose,
the Managers may by resolution fix a future date as the record date, provided that the record
date is not more than thirty (30) days prior to the meeting. If the Managers do not fix the record
date for a meeting, the date on which notice of the meeting is mailed, faxed or e-mailed to the
Members shall be the record date. When a determination of Members entitled to notice of and
to vote at any meeting has been made as provided in this Section 2.4.1, such determination
shall apply to any adjournment thereof.
(g) Quorum. The presence of Members holding more than fifty
percent (50%) of the Units entitled to vote on the actions to be taken at a meeting shall
constitute a quorum for such meeting. In the absence of a quorum, Members holding twenty
five percent (25%) of the Units so represented at the meeting may adjourn the meeting from
time to time for a period not to exceed sixty (60) days without further notice. However, if the
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -4
adjournment is for more than sixty (60) days, or if after the adjournment a new date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each Member
entitled to notice of and to vote at the meeting. At such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been transacted at the
meeting as originally noticed. The Members present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during such meeting of
Members holding that number of Units whose absence would cause less than a quorum to be
present.
2.4.2 Member Consents. The Members may take action by written consent
describing the action to be taken and signed by Members holding such percentage of the Units
entitled to consent to the action that is required for the approval of the action under Section 2.4.
If a Member is an organization, a representative of such organization acting within the authority
granted to such representative by the organization may execute the consent on behalf of the
organization. The following additional provisions shall apply to Member consents:
(a) Filing, Records. The Company shall use its reasonable efforts to
ensure that Member consents are included in the Company minutes and filed in the Company
records.
(b) Effective Date. Action taken by Member consent is effective upon
receipt of the signatures required to approve such action, unless the Member consent specifies
a different effective date.
(c) Record Date. The record date for determining Members entitled
to take action pursuant to a Member consent shall be the date the first Member signs the
Member consent.
2.5 Contributions. Members may be required to make contributions to the
Company as provided in this Section 2.5.
2.5.1 Contributions. Each Member has made contributions in exchange for
the Units as set forth in Schedule 2.3. Each new Member may be required to make an initial
contribution as a condition to the new Member's admission pursuant to Section 2.7.
2.5.2 Additional Contributions. Except as provided in this Section 2.5.2, no
Member shall be obligated to make any additional contributions beyond the initial contribution
made by the Member. The Members may agree in accordance with Section 2.4 that one or
more of the Members shall make an additional contribution, which agreement shall also provide
for the type and value of such additional contributions and the extent to which additional Units
shall be issued to the Members in consideration of such additional contributions.
2.5.3 Form of Contribution. A contribution may consist of tangible or
intangible property or other benefit to the Company, including (without limitation) money,
services performed, promissory notes, and agreements to contribute money or property, but
excluding contracts for services to be performed.
2.5.4 Liability Regarding Contributions. The liability of any Member to
contribute to the Company is limited to the amount of the total contribution to be made by such
Member pursuant to this Section 2.5. The Members have no further liability to contribute money
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -5
or other property to the Company for, or relating to, the debts, obligations, or other liabilities of
the Company. The Members are not personally liable for any debts, obligations, or other
liabilities of the Company, including (without limitation) the return or repayment of any
contribution. Contributions are to be expended in furtherance of the business of the Company.
All costs and expenses of the Company are to be paid from the Company's funds. The
Company shall not pay interest on contributions. No Member has any right to receive a return
of contributions, except as otherwise expressly provided in this Operating Agreement.
2.6 Distributions. Members may receive distributions from the Company as
provided in this Section 2.6.
2.6.1 Interim Distributions. From time to time, the Managers shall
determine in their reasonable judgment to what extent, if any, there is Cash Available for
Distribution. To the extent that Cash Available for Distribution exists, the Company may, but
shall not be required to, make distributions to the Members from the Company's net income
after expenses. All distributions to be made to the Members under this Section 2.6.1 shall be
made according to the Members' respective Percentage Interests. For the purposes of this
Section 2.6.1, whether "Cash Available for Distribution" exists shall be calculated as follows:
(i) The sum of (a) all cash and cash equivalents existing at
the first of the year, plus (b) all cash received by the Company from the operations of the
Company during the year, including (without limitation) net proceeds of sale or refinancing;
minus
(ii) The sum of (a) all cash expenditures of the Company
during the year, including (without limitation) capital expenditures and payments of principal and
interest on indebtedness, whether or not the payments are made to a Manager, Member, or
Affiliate thereof, (b) expenditures for repairs, maintenance, capital improvements, and
replacements of existing assets, (c) all other cash expenditures related to the operations of the
Company, including (without limitation) all fees, if any, payable to any Manager, Member, or
Affiliate thereof under the terms of this Operating Agreement, and (d) such reserves and
retentions as the Managers determine to be necessary or desirable in connection with Company
operations, including (without limitation) adequate capital to pay taxes, insurance payments,
debt payments, and anticipated operating or capital expenditures, such as the acquisition of
new equipment.
2.6.2 Liquidating Distributions. Liquidating distributions following dissolution
of the Company shall be made to the Members pursuant to Article 10.
2.6.3 Form of Distributions. Distributions may be paid in the form of cash, or
real or personal property or any combination thereof, as determined by the Managers.
Non-cash assets, if any, shall be distributed in a manner that reflects how cash proceeds from
the sale of the non-cash assets for fair market value would have been distributed (after any
unrealized gain or loss attributable to the non-cash assets has been allocated among the
Members in accordance with Article 7), and the Capital Accounts of the Members shall be
adjusted to account for the Members' allocable shares as determined under Article 7.
2.6.4 Withholding and Treating Amounts Withheld as Distributions. The
Company is authorized to withhold from distributions to Members and to pay over to the
appropriate federal, state, or local governmental authority any amounts required to be withheld
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -6
pursuant to the Code or provisions of applicable federal, state, or local law. All amounts
withheld pursuant to this Section 2.6.4 in connection with any distribution to any Member shall
be treated as amounts distributed to the Member for the purposes of this Section 2.6.
2.6.5 Distributions to Pay Taxes. To the extent the Company has Cash
Available for Distribution (as defined in Section 2.6.1), the Company shall make a distribution to
the Members in an amount that is reasonably estimated to be sufficient to enable the Members
to pay the estimated federal and state income taxes attributable to their allocated shares of the
Company's net long-term and Code Section 1231 capital gains and non-separately computed
income under applicable provisions of the Code. This estimated tax liability shall be computed
by the accountant who regularly prepares the Company's tax returns and shall be computed
using the highest incremental tax rate applicable to individuals, even though some Members
may have different, or even zero, tax rates. With respect to the preceding tax year, these
distributions shall be declared and paid annually no later than April 15th of each year. Any
distributions made to Members during the taxable year in question may be taken into account by
the Managers in determining the extent of the minimum distributions to be made under this
Section 2.6.6 for that particular taxable year.
2.6.6 Limitation on Distributions. The Company may not make a distribution
to the Members if, after the distribution, the Company would not be able to pay its debts as they
become due in the ordinary course of the Company's activities.
2.7 New Members. Any Person eligible to be a Member of the Company under this
Operating Agreement, the Act, and other applicable law may be issued Units by the Company
and admitted as a new Member upon the approval of the Members in accordance with Section
2.4. If admitted, the new Member has all the rights and obligations and is subject to all the
restrictions and liabilities of all other Members. The following additional conditions shall apply to
the admission of a new Member:
(a) Documents. The new Member shall execute and deliver all
documents necessary for the admission of the new Member, including without limitation a
counterpart to this Operating Agreement, in the form and substance satisfactory to the
Managers.
(b) Payment of Expenses. The new Member shall pay all reasonable
expenses incurred in connection with the admission of the new Member as may be required by
the Managers, including (without limitation), the cost of preparing and completing any
amendment to this Operating Agreement, the Company's Certificate of Organization, or the
Company's Statement of Authority, as necessary or desirable in connection with the admission
of the new Member.
(c) Contribution. The new Member shall be required to make an
initial contribution to the Company in exchange for the Company's issuance of Units, to the
extent required and as determined by the Members in accordance with Section 2.4.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -7
ARTICLE 3
MANAGEMENT
3.1 Managers. The Company will be managed by one or more "Managers" as
provided in this Article 3. If the Company has only a single Manager, references in this
Operating Agreement to "Managers" shall be deemed to refer to the single Manager.
3.2 Management Authority. Except as otherwise provided in this Operating
Agreement, the management of the Company shall be vested in its Managers and the
Managers shall have the right and power to manage and direct the business and affairs of the
Company, to take actions on behalf of the Company, to bind the Company, and to do all other
things necessary or convenient to carry out the business and affairs of the Company. All
policies, procedures and protocols affecting the Company, its business, or Company Property
shall be determined, made, approved, or authorized by the Managers. Notwithstanding the
foregoing, the Managers do not have authority to take any of the actions set forth in Section 2.4
absent the requisite approval of the Members in accordance with 2.4.
The Manager may delegate its authority to act on behalf of the Company and to manage
the business affairs of the Company to one or more officers of the Company appointed by the
Manager. The Manager may from time to time create offices of the Company, designate the
powers that may be exercised by such offices, and authorize and empower any person as an
officer of the Company ("Officer") to direct such offices. The Manager may create, empower
and appoint such Officers of the Company as the Manager may deem necessary or advisable to
manage the day to day business affairs of the Company. To the extent delegated by the
Manager, the Officers shall have the authority to act on behalf of, bind and execute and deliver
documents in the name of and on behalf of the Company. No such delegation shall cause the
Manager to cease to have all of the rights under the Act to act on behalf of the Company.
Except as otherwise expressly provided in this Agreement or required by any non-waivable
provision of the Act or other applicable law, no person other than the Manager and such Officers
designated by the Manager shall have any right, power, or authority to transact any business in
the name of the Company or to act for or on behalf of or to bind the Company. The Officers of
the Company are listed on Exhibit A, as the same may be amended from time to time to reflect
the appointment, resignation or removal of Officers.
3.3 Manner of Acting. As long as the Company has only one (1) Manager, that
Manager shall have the authority to act as an agent of the Company and bind the Company as
provided in this Article 3. If the Company has at any time more than one (1) Manager, the
Managers shall act as a collegial body and no individual Manager shall have the authority to
speak for the Company or to make decisions on behalf of the Company, except as authorized
by the Managers acting as a group. Each Manager has an equal vote in the management and
conduct of the activities of the Company. The Managers may take action by either (i) a vote of
the Managers at any meeting pursuant to Section 3.3.1, or (ii) by written consent of the
Managers pursuant to Section 3.3.2.
3.3.1 Manager Meetings. If a quorum is present at a duly noticed and properly
conducted Manager meeting, the Managers may take action by the affirmative vote of a Majority
of the number of Managers entitled to vote on the action. If a Manager is an organization, a
representative of such organization acting within the authority granted to such representative by
the organization may vote on behalf of the organization. The following additional provisions
shall apply to Manager meetings:
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -8
(a) Annual Meetings. An annual meeting is not required but if
desired, an annual meeting of the Managers shall be held at a date, time, and place to be
determined by the Managers. At the annual meeting, the Managers shall transact such
business as may come before the meeting.
(b) Special Meetings. A special meeting of the Managers may be
called at any time by any Manager.
(c) Notice. Written notice stating the place, day, and hour of any
Manager meeting and, with respect to a special meeting, the purpose or purposes for which the
meeting is called shall be delivered to the Managers not less than three (3) and no more than
thirty (30) days before the date of the meeting. When any notice is required to be given to
Managers, a waiver of the notice in writing signed by the Person entitled to the notice, whether
signed before, at, or after the time of the meeting, shall be equivalent to the giving of the notice.
(d) Place. The Managers may designate any place, either within or
without the state of Idaho, as the place of meeting for any Manager meeting. If no designation
is made, the place of meeting shall be Company's principal office unless the Managers
unanimously agree on another location.
(e) Electronic Participation. Any Manager may participate in any
meeting by telephone or other electronic means. A Manager so participating may vote if no
other Manager raises objection as to the electronically participating Manager's identity.
(f) Quorum. The presence of a Majority of the Managers entitled to
vote on the actions to be taken at a Manager meeting shall constitute a quorum for such
meeting. In the absence of a quorum, a Majority of the Managers so represented at the meeting
may adjourn the meeting from time to time for a period not to exceed sixty (60) days without
further notice. However, if the adjournment is for more than sixty (60) days, or if after the
adjournment a new date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each Manager entitled to notice of and to vote at the meeting. At such
adjourned meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally noticed. The Managers present at a
duly organized meeting may continue to transact business until adjournment, notwithstanding
the withdrawal during such meeting of a number of Managers whose absence would cause less
than a quorum to be present.
3.3.2 Manager Consents. The Managers may take action by written consent
describing the action to be taken and signed by a majority of the number of Managers entitled to
consent to the action. If a Manager is an organization, a representative of such organization
acting within the authority granted to such representative by the organization may execute the
consent on behalf of the organization as a Manager. The following additional provisions shall
apply to Manager consents:
(a) Filing; Records. The Company shall use its reasonable efforts to
ensure that each Manager consent is included in the Company minutes and filed in the
Company records.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 9
(b) Effective Date. Action taken by Manager consent is effective upon
receipt of the signatures required to approve such action, unless the Manager consent specifies
a different effective date.
(c) Record Date. The record date for determining Managers entitled
to take action pursuant to a Manager consent shall be the date the first Manager signs the
Manager consent.
3.4 Number. The Managers shall consist of one Person appointed or elected to
serve as the Manager. The current Manager is Alturas Capital, LLC.
3.5 Appointment; Term; Removal. A Manager may be appointed or elected by the
Members in accordance with Section 2.4. A Manager shall serve until a successor has been
chosen, unless the Manager sooner resigns, becomes disabled, is removed, or dies. A
Manager may be removed at any time by the Members in accordance with Section 2.4. The
Members may not cumulate their votes for the election or removal of any Manager. Any Person
shall be eligible to serve as a Manager, regardless if the Person is not also a Member.
3.6 Effect of Cessation of Status as either a Manager or Member. If a Manager
is also a Member: (i) the cessation of that Person's status as a Manager shall not affect the
Person's rights as a Member and shall not result in the cessation of that Person's status as a
Member; and (ii) the cessation of that Person's status as a Member shall result in the cessation
of that Person's status as a Manager. The Company shall not be dissolved as a result of the
cessation of a Manager's status as a Member or a Member's status as a Manager.
3.7 Expense Reimbursement. A Manager shall be reimbursed for all reasonable
expenses incurred in managing the Company.
3.8 Compensation. A Manager shall be entitled to receive compensation for
services provided to the Company in such amount and subject to such other terms and
conditions as approved by the Members. Compensation for services rendered to the Company
may include charging a prevailing market rate or fee, in addition to any management fee, for
those services that the Manager provides to the Company that are not covered by the
management fee and that it would normally seek to have third-party vendors provide, such as
fees for property management, construction management, and similar fees. Compensation to a
Manager is cumulative and, to the extent not paid in any taxable year, is a debt of the Company
to the Manager. Amounts paid pursuant to this Section 3.8 to any Manager who is also a
Member are intended to constitute guaranteed payments within the meaning of Code
Section 707(c), and are not to be treated as distributions for purposes of Section 2.6 or
computing the recipient Member's Capital Account under Article 7.
ARTICLE 4
AUTHORITY AND LIMITED LIABILITY
4.1 Authority of Members. A Member is not an agent of the Company solely by
reason of being a Member. No Member or Affiliate thereof shall have, or hold himself out to any
other Person as having, any actual authority to bind the Company.
4.2 Authority of Managers. As long as the Company has only one (1) Manager,
that Manager shall have the authority to act as an agent of the Company and bind the Company
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 10
as provided in Article 3. If the Company has at any time more than one (1) Manager, (i) the
Managers acting as a collegial body are the Company's agent, (ii) the Managers' actions as a
collegial body bind the Company, and (iii) the individual Managers are not agents of the
Company and have no individual authority to bind the Company.
4.3 Statement of Authority. As permitted under the Act, the Company may file with
the Delaware Secretary of State from time to time a Statement of Authority that states the
authority, or limitations on authority, of the Managers, Members, or other Persons to execute
any instrument or to enter into any transaction on behalf of or otherwise to act for or bind the
Company, as set forth in or determined in accordance with this Operating Agreement.
4.4 Status of Limited Liability Company as Separate Entity. The Company shall
be an entity separate and independent from its Managers and Members. As evidence of its
separate status:
(i) To the extent reasonably practicable, the Company shall
be specifically identified as "Alturas Management Group LLC" in all writings containing its name,
including without limitation Company stationery, invoices, business cards, and checks;
(ii) The Company's financial accounts shall be completely
separate from those of the Managers and Members;
(iii) There shall be no commingling of the funds of the
Company with the funds of the Managers or Members;
(iv) The Managers and Members shall make no use of
Company funds for personal purposes;
(v) The Company shall not use personal funds of the
Managers or Members for its purposes;
(vi) All Company Property shall be owned by the Company;
and
(vii) No Manager or Member, individually, shall have any
ownership interest in any Company Property.
4.5 Limited Liability. The liability of the Managers and Members shall be limited as
provided in the Act, regardless of any participation in management of the Company. In
particular, but without limiting the foregoing sentence:
(i) No Manager or Member shall be personally liable to the
Company or any Manager or Member for monetary damages, except for breach of the duty of
loyalty under Section 5.3, receipt of a financial benefit to which the Manager or Member is not
entitled, approval of a distribution in violation of Section 2.6.6, intentional infliction of harm on
the Company or a Member, or an intentional violation of criminal law;
(ii) No Person shall, by virtue of the Person's status as a
Manager or Member of the Company, be liable to any third party under any judgment, decree or
order of a court, or in any other manner, for any debt, obligation, or liability of the Company,
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 11
whether arising in contract, tort, or otherwise, or for the acts or omissions of any other Manager,
Member, or Affiliate thereof;
(iii) Unless otherwise set forth in or determined in accordance
with this Operating Agreement, no Member shall have any further liability to contribute to the
Company for, or in respect of, the debts, obligations, or other liabilities of the Company and no
Member shall be personally liable for any debts, obligations, or other liabilities of the Company;
(iv) The failure of the Company to observe any formalities or
requirements relating to the exercise of its powers or the management of its business or affairs
under this Operating Agreement or the Act shall not be grounds for imposing personal liability
on any Manager or Member for any debt, obligation, or liability of the Company; and
(v) No Manager or Member shall represent or imply to any
Person that the Manager or Member, or any other Manager or Member, is personally liable for
any obligation of the Company.
ARTICLE 5
STANDARDS OF CONDUCT
5.1 Fiduciary Duties. Each Manager and each Member owes to the Company and
the Members the fiduciary duties set forth in this Article 5. To the fullest extent permitted by the
Act, the Members and the Company intend that the provisions of this Article 5 (i) set forth the
entirety of the fiduciary duties owed by each Manager and Member to the Company and its
Managers and Members and (ii) shall supersede any contrary fiduciary duties or limitations on
fiduciary duties imposed by the Act.
5.2 Duty of Care. Each Manager owes to the Company and the Members a duty of
care as set forth in this Section 5.2. Subject to the business judgment rule, the duty of care
shall require each Manager to act with the care that a Person in a like position would reasonably
exercise under similar circumstances and in a manner the Manager reasonably believes to be in
the best interests of the Company. A Manager's duty of care includes, without limitation, the
duty (i) to be informed regarding the Company's activities, (ii) to disclose to the Members all
material information, (iii) to refrain from engaging in grossly negligent or intentional misconduct,
(ii) to refrain from acting in bad faith, and (iii) to refrain from committing a knowing violation of
law. In discharging such duties, a Manager shall be fully protected in relying in good faith upon
the records required to be maintained under this Operating Agreement and upon the opinions,
reports, statements, or other information provided by any other Manager, Member, or Affiliate
thereof the Manager reasonably believes is a competent and reliable source for such
information.
5.3 Duty of Loyalty. Except as otherwise provided in this Section 5.3, each
Manager and Member owes to the Company and the Members a duty of loyalty as set forth in
this Section 5.3. The duty of loyalty shall generally require each Manager and Member to place
the interests of the Company prior to the personal, family, business, and other relationships and
interests of the Manager and Member. Each Manager and Member shall actively seek to further
the business operations and interests of the Company and shall deal fairly with the Company
with respect to any business operations or interests of a Manager or Member that directly or
indirectly may conflict with the business operations of the Company.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 12
5.3.1 Company Opportunity. Each Manager and Member agrees, for
itself and on behalf of its Affiliates, to refrain from competing with the Company in the conduct of
the Company's business operations or the winding up of the Company's activities.
Notwithstanding the foregoing, Members may own other business or investment property and
such ownership does not constitute a violation of the duty of loyalty hereunder.
5.3.2 Account. Each Manager and each Member agrees, for itself and on
behalf of its Affiliates, to account to the Company and hold as trustee for the Company any
property, including (without limitation) any Company Property, profit or benefit derived by the
Manager, Member, or Affiliate thereof (i) in the conduct or winding up of the Company's
activities, and (ii) from the use by the Manager, Member, or Affiliate thereof of any Company
Property for the personal use or benefit of that Manager, Member, or Affiliate thereof.
5.3.3 Loans. The Company may borrow money from a Manager, Member,
or Affiliate thereof on terms and conditions that are no more beneficial to the Manager, Member,
or Affiliate than the terms and conditions that are most favorable to the Company that are
offered to the Company by commercial lenders. A loan that complies with this Section 5.3.4 is
not a Conflicting Interest Transaction.
5.3.4 Conflicting Interest Transactions. If a Manager, Member, or
Affiliate thereof has a direct or indirect interest in a transaction ("Conflicting Interest
Transaction"), that Manager or Member shall not represent the Company in the negotiations
and shall not vote or take any action for the Company regarding the negotiation or approval of
the transaction. The Managers shall designate a Person with no conflict of interest to represent
the Company in the negotiations. The rights and obligations of a Manager, Member, or Affiliate
thereof who transacts business with the Company are the same as those of a Person who is not
a Manager, Member, or Affiliate thereof, subject to other applicable law. No transaction with the
Company shall be voidable solely because a Manager, Member, or Affiliate thereof has a direct
or indirect interest in the transaction if either (i) the transaction is fair to the Company, or (ii) the
disinterested Members, knowing all material facts regarding the transaction, authorize, approve
or ratify the transaction in accordance with Section 2.4. In connection with the negotiation of
any Conflicting Interest Transaction, the parties (i) shall disclose to one another all material facts
concerning the transaction and any Manager's, Member's, or Affiliate's interest in the
transaction, and (ii) shall bargain in good faith.
5.4 Confidentiality. Each Manager and Member owes to the Company and the
Members a duty of confidentiality, which shall include the duty to (i) maintain the confidentiality
of the Company's Confidential Information and (ii) not use or disclose any of the Company's
Confidential Information for purposes other than the Company's purposes (as set forth in
Section 1.4) unless otherwise authorized by the Managers. For the purposes of this Operating
Agreement, the Company's "Confidential Information" shall include any information,
regardless of the medium, relating to the Company's business, products, services,
organizational structure, personnel data, marketing philosophy and objectives, project plans,
strategy and vision statements, business initiatives, system design, methodologies, processes,
competitive advantages and disadvantages, systems, operations, technology, customer and
customer prospects lists, vendor lists, price lists, design process, business plans, advertising,
software, sales programs, or any other information that might give the Company an opportunity
to obtain an advantage over the Company's competitors. Each Manager and Member shall take
all actions reasonably necessary to assure that its Affiliates abide by this duty of confidentiality.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 13
5.5 Good Faith and Fair Dealing. Each Manager and Member must act in
accordance with the implied contractual duty of good faith and fair dealing owed to the
Company and its Managers and Members in connection with their respective rights and
obligations under this Operating Agreement. Each Manager and Member shall actively seek to
further the interests of the Company, and shall deal fairly with the Company with respect to any
business operations or interests of a Manager or Member that directly or indirectly may affect
the Company or the Company Property. Subject to those overriding standards, a Manager,
Member, or Affiliate thereof is not prohibited from otherwise dealing with the Company in
compliance with this Article 5.
ARTICLE 6
INFORMATION RIGHTS
6.1 Information Rights. To the fullest extent permitted by the Act, the Members and
the Company intend that the provisions of this Article 6 set forth the rights and obligations of
each Manager and Member with respect to information pertaining to the Company and shall
supersede any contrary rights or obligations imposed by the Act.
6.2 Books of Account. The Company shall maintain complete and accurate books
of account of the Company's affairs. Such records shall be available for inspection and/or
copying by the Managers and current or former Members in accordance with the rights and
limitations set forth in this Article 6.
6.3 Records to be Maintained. The Company shall maintain the following records
and information at the Company's principal office or, if appropriate, at the offices of the
Company's lawyers or accountants.
6.3.1 Members and Addresses. A listing setting forth the full name and last
known mailing address of each current and past Manager and Member, and any permitted
transferee of a Member's Units who is not otherwise a Member, if known to the Company.
6.3.2 Certificate of Organization. A copy of the Company's Certificate of
Organization and all amendments to the Certificate of Organization.
6.3.3 Operating Agreement. A copy of this Operating Agreement and all
amendments to this Operating Agreement, and copies of any written operating agreements no
longer in effect.
6.3.4 Statement of Authority. A copy of the Company's Statement of
Authority and all amendments or cancellations filed with respect to the Statement of Authority.
6.3.5 Tax Returns. Copies of the Company's federal, foreign, state, and local
income tax returns and reports, if any, for the three (3) most recent years.
6.3.6 Contributions. A ledger setting forth the type and amount of each
contribution made by a Member and each contribution a Member has agreed to make in the
future, including without limitation any terms and conditions applying to such agreement.
6.4 Managers. Each Manager shall have the duty to furnish to any other Manager (i)
without demand, any record or other information concerning the Company's activities, financial
condition, and other circumstances which is reasonably required for the proper exercise of the
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 14
Manager's rights and duties under this Operating Agreement, including (without limitation) any
Company records, wherever located, required to be maintained by the Company pursuant to
Sections 6.2 or 6.3, and (ii) on demand, any other information concerning the Company's
activities, condition, and circumstances.
6.5 Members. Whenever any law or this Operating Agreement provides for a
Member to give or withhold consent to a matter, before the consent is given or withheld, the
Company shall, without demand, provide the Member with all information that is known to the
Company and is material to the Member's decision. The Company shall furnish to each
Member, without demand, information concerning the Company's activities, financial condition,
and other circumstances of the Company, which is material to the interests of the Member,
except to the extent the Company can establish that it reasonably believes the Member already
knows the information. During regular business hours and at a reasonable location specified by
the Company, a Member may obtain from the Company and inspect and copy true and full
information regarding the activities, financial condition, and other circumstances of the Company
as is just and reasonable if (i) the Member seeks the information for a purpose material to the
Member's interest as a Member, (ii) the Member makes a demand in a record received by the
Company describing with reasonable particularity the information sought and the purpose for
seeking the information, and (iii) the information sought is directly connected to the Member's
purpose. Within ten (10) days after receiving a demand, the Company shall in a record inform
the Member that made the demand (i) the information that the Company will provide in response
to the demand, (ii) when and where the Company will provide the information, and (iii) if the
Company declines to provide any demanded information, the Company's reasons for declining.
6.6 Former Members. On ten (10) days' demand made in a record received by the
Company, a former Member may have access to whatever information and records the Person
was entitled to inspect and copy while a Member if (i) the information or record pertains to the
period during which the Person was a Member, (ii) the Person seeks the information or record in
good faith, and (iii) the Person satisfies the requirements otherwise imposed on a Member by
this Article 6. The Company shall respond to a demand made pursuant to this Section 6.6 in the
same manner as set forth in Section 6.5.
6.7 Protection of Company. The Company may impose reasonable restrictions on
the use of information obtained under this Article 6, including without limitation designating
information confidential and imposing nondisclosure, nonuse, and safeguarding obligations on
the recipient. In a dispute concerning the reasonableness of a restriction under this Section 6.7,
the Company has the burden of proving reasonableness.
6.8 Reasonable Charges. A Company may charge a Person that makes a demand
under this Article 6 any reasonable costs of copying, which shall be limited to the costs of labor
and material.
6.9 Transferees. The rights stated in this Article 6 do not extend to any transferee of
a Member's Units, whether or not such Transfer is permitted by this Operating Agreement,
unless and until the transferee is admitted as a new Member.
6.10 Audit. A Member has a right to require an audit of the financial condition and
operations of the Company, provided that the requesting Member shall pay for all fees and
expenses of the auditor and all related fees and expenses incurred by the Company.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 15
ARTICLE 7
ACCOUNTING AND TAXES
7.1 Capital Accounts. The Company shall establish and maintain an account
recording the capital of each Member (referred to as a "Capital Account"), in accordance with
the provisions of Code Section 704(b) and the related Treasury Regulations. If in the opinion of
the Company's accountants the manner in which Capital Accounts are to be maintained
pursuant to the provisions of this Section 7.1 should be modified to comply with Code Section
704(b) and the related Treasury Regulations, then notwithstanding anything to the contrary
contained in the provisions of this Section 7.1 the method by which Capital Accounts are
maintained shall be so modified; provided, however, that any change in the manner of
maintaining Capital Accounts shall not materially alter the economic agreements of the
Members.Increases and Decreases in Capital Accounts.
(a) Increases. Each Member's Capital Account is to be increased by
(i) the amount of any money contributed by the Member; (ii) the fair market value of any
property contributed by the Member, as determined by the Company and the Member at arm's
length at the time of contribution (net of property liabilities or other liabilities assumed by the
Company within the meaning of Code Section 752); (iii) allocations to the Member of income
and gain, including items of income and gain which are separately stated under Code Section
702(a); (iv) any items in the nature of income and gain that are specially allocated to the
Member, excluding special allocations under Section 7.3.2; and (v) allocations to the Member of
income and gain exempt from federal income tax.
(b) Decreases. Each Member's Capital Account is to be decreased
by (i) the amount of any money distributed to the Member; (ii) the fair market value of any
Company Property distributed to the Member, as determined by the Company and the Member
at arm's length at the time of distribution (net of liabilities of the Company or Company Property
assumed by the Member within the meaning of Code Section 752); (iii) allocations to the
Member of expenditures described in Code Section 705(a)(2)(B); (iv) any items in the nature of
deduction and loss that are specially allocated to the Member; and (v) allocations to the Member
of deductions and losses of the Company, including without limitation deductions and losses
which are separately stated under Code Section 702(a).
7.1.2 Allocations upon Permitted Transfers. Upon a Transfer of a Member's
Units that is permitted under Article 8, the Capital Account of the transferring Member that is
attributable to the transferred Units carries over to the transferee in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). The share of income, gain, loss, deduction, and credit of
the transferring Member shall be determined by taking into account the Member's proportionate
share of the amount of the income, gain, loss, deduction, and credit for the year. The Managers
shall make the proration based on the portion of the calendar year that has elapsed prior to the
Transfer, and shall allocate the balance of the income, gain, loss, deduction, and credit
attributable to the transferred Units to the transferee. Notwithstanding the foregoing, a Majority
of the Members may elect to use an allocation method different than that set forth above,
including (i) an interim closing of the books based on actual income and deductions through the
transfer date; (ii) proration of annual income based on the time the Member's Units are held by
each Member during the year; and (iii) the proration method listed in (ii) but with the option to
make adjustments for extraordinary items based on the time period each is incurred.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC - 16
7.2 Single Member LLC Taxation. If and for so long as the Company has only a
single Member, the Company intends to be treated as a "disregarded entity" solely for purposes
of state and federal income taxes; and all items of income, gain, loss, deduction and credit (as
those terms are defined in the applicable provisions of the Code) shall be allocated to such
Member in accordance with the applicable provisions of the Code.
7.3 Multiple Member LLC Taxation. Unless the Members unanimously agree to
elect Subchapter S corporation status, during any period in which the Company has more than
one Member, (i) the Company intends to be treated for federal and state tax purposes as a
partnership under Subchapter K of the Code, and (ii) the following provisions of this Section 7.3
shall apply.
7.3.1 Income, Gain, Loss, Deduction and Credit. Except as provided in
Section 7.3.2, all items of (i) income, gain, loss, deduction and credit (as defined in the Code),
including items described in Code Section 702(c), (ii) income or gain exempt from federal taxes,
and (iii) expenditures described in Code Section 705(a)(2)(B), shall be determined on an annual
basis and allocated to the Members in proportion to their respective Capital Accounts.
7.3.2 Special Allocations.
(a) Allocation of Code Section 704(c) Items. With respect to real and
personal property contributed to the Company by a Member and with respect to real and
personal property revalued in accordance with Section 7.1, there may be a difference between
the agreed values or "carrying values" of the real and personal property at the time of
contribution or revaluation and the adjusted tax basis of the real and personal property at that
time. All items of tax depreciation, cost recovery, amortization, amount realized, and gain or
loss with respect to the real and personal property shall be allocated among the Members so as
to take into account the book-tax disparities in accordance with the provisions of Code
Sections 704(b) and 704(c) and the Treasury Regulations.
(b) Recapture Items. To the extent of any recapture income (as
defined below) resulting from the sale or other taxable disposition of Company Property, the
amount of any gain from the disposition allocated to or recognized by a Member for federal
income tax purposes shall be deemed to consist of recaptured income to the extent the Member
has been allocated or has claimed any deduction directly or indirectly giving rise to the
treatment of the gain as recapture income. For this purpose "recapture income" shall mean
any gain recognized by the Company (but computed without regard to any adjustment required
by Code Sections 734 and 743) upon the disposition of any Company Property that does not
constitute capital gain for federal income tax purposes because the gain represents the
recapture of deductions previously taken with respect to the real and personal property or
assets.
(c) Special Allocations in the Event of Deficit Capital Account
Balances. In the event that any Member receives an allocation under this Article 7 which results
in a negative Capital Account balance, the Member shall be specially allocated items of
Company income, gain, loss, deduction, and credit in an amount sufficient to bring the Capital
Account to a zero balance as quickly as possible.
7.3.3 Integration with Code Section 754 Election. All items of income, gain,
loss, deduction and credit recognized by the Company for federal income tax purposes and
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ALTURAS MANAGEMENT GROUP LLC - 17
allocated to the Members in accordance with the provisions in this Article 7, and all basis
allocations to the Members, shall be determined without regard to any election under Code
Section 754 that may be made by the Company. However, allocations, once made, shall be
adjusted as necessary or appropriate to take into account the adjustments permitted by Code
Sections 734 and 743.
7.4 Compliance with Code and Treasury Regulations. The provisions of this
Article 7 as they related to the maintenance of Capital Accounts are intended and shall be
construed to cause the allocations of profits, losses, income, gain, and credit pursuant to this
Article 7 to have substantial economic effect under Code Section 704(b) and the Treasury
Regulations. If, in the opinion of the Company's legal counsel or accountants, the manner in
which Capital Accounts are to be maintained pursuant to this Article 7 should be modified in
order to comply with Code Section 704(b) and the Treasury Regulations, then notwithstanding
anything to the contrary contained in this Article 7, the method in which Capital Accounts are
maintained is to be so modified. However, any change in the manner of maintaining Capital
Accounts shall not materially alter the economic agreements among the Members and nothing
in this Article 7 shall be construed as creating a deficit restoration obligation or otherwise
personally obligate any Member to make a contribution.
7.5 Tax Matters Partner. Pursuant to Code Section 6231(a), the Managers shall
designate a Member to be the Tax Matters Partner for the Company ("Tax Matters Partner").
Alturas Capital, LLC shall serve as the Tax Matters Partner. The Tax Matters Partner is
expressly authorized to perform on behalf of the Company or any Member any act that may be
necessary to make this designation effective under any regulation, ruling, procedure, or
instruction that may be issued by the Internal Revenue Service. The Tax Matters Partner is also
expressly authorized to make any applicable election under the Code or the Treasury
Regulations, including without limitation an election under Code Section 754 and elections
regarding allocation methods under Treasury Regulation Section 1.704-3.
ARTICLE 8
TRANSFERS OF UNITS
8.1 Prohibition on Transfers. Except as otherwise provided in this Article 8, the
Members may not Transfer the Units. In particular, but without limitation, except as otherwise
provided in this Article 8, a Member has no right to withdraw, be redeemed, dissociate, or
otherwise cease to be a Member by voluntary act at any time. A "Transfer" of the Units shall
include any sale, assignment, exchange, pledge, encumbrance, gift, redemption, purchase, or
other transfer, whether voluntarily or by operation of law, and whether actual, partially
completed, or merely attempted, of any of the Units.
8.1.1 General Limitations under Applicable Law. Notwithstanding anything
in this Operating Agreement to the contrary, neither the Company nor any Member shall have
the right to Transfer the Units (i) if the Transfer would cause termination of the Company
pursuant to Code Section 708(b)(1)(B), and (ii) if the transferee is not eligible to be a Member of
the Company under this Operating Agreement, the Act, and other applicable law.
8.1.2 Reasonableness of Restrictions; Enforcement. Each of the Company
and the Members acknowledges the reasonableness of the restrictions set forth in this Article 8
in view of the Company's purposes and the relationships among the Members and between the
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ALTURAS MANAGEMENT GROUP LLC - 18
Members and the Managers. The restrictions on Transfers set forth in this Article 8 are
specifically enforceable.
8.2 Effect of Prohibited Transfers. A Transfer in violation of this Article 8 shall be
null and void and shall have the following additional effects:
(i) The transferee shall not become a Member and shall not
be entitled to any Units or Membership Interest as a result of the Transfer; and
(ii) The transferring Member shall be dissociated as a Member
of the Company as set forth in Article 9.
8.3 Permitted Transfers. The following Transfers are permitted as provided in this
Section 8.3.
8.3.1 Voluntary Redemption. The Company may redeem all or any portion of
a Member's Units, if such Member elects to sell such Units to the Company, upon written notice
to the other Members and the prior approval of the Transfer by the other Members in
accordance with Section 2.4. The material terms of a Transfer pursuant to this Section 8.3.1
shall be as agreed by the parties to the Transfer and approved by the other Members.
8.3.2 Mandatory Redemption. A dissociated Member (or in the case of death
or disability, the dissociated Member's representative) shall be required to surrender the Units
held by the dissociated Member for redemption by the Company in the event the Company
determines to exercise such redemption right pursuant to Section 9.3. The purchase price for
the Units transferred pursuant to this Section 8.3.2 shall be the Fair Value (as defined in Section
8.3.2(a)) and the material terms of the Transfer shall include, at a minimum, the Standard
Payment Terms (as defined in Section 8.3.2(b)).
(a) Fair Value. The "Fair Value" of a dissociated Member's Units
shall for purposes of this Agreement be established in the following order of priority: (1) By
agreement of the Company and the Member or the Member's representative; (2) If the
Company and Member can't agree, then the Fair Value will be the value of the Company last
approved by the unanimous consent of the Members, multiplied by the dissociated Member's
Percentage Interest. The value of the Company may be determined by the Members using
whatever method they choose in their discretion; and (3) If it has been more than one year since
the Members last agreed on the value of the Company, then either the Member or the Company
may elect to have the Fair Value determined by an appraisal. If so elected then the Member or
the Member's representative and the Company shall mutually agree upon and hire a recognized
business appraiser to determine the Fair Value and the Company will pay all costs associated
with such appraisal.
(b) Standard Payment Terms. The "Standard Payment Terms" shall
allow the transferee to pay up to 80% of the purchase price for the Units pursuant to an
unsecured promissory note. The terms of such note shall include, at a minimum, a five (5) year
maturity date, interest accruing on the principal at a rate of five percent (5%) per annum, and
equal annual installment payments of principal and interest amortized over a five (5) year
period.
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ALTURAS MANAGEMENT GROUP LLC - 19
8.3.3 Transfer to Another Member. A Member may transfer all or any portion
of the Member's Units to another Member upon written notice to the other Members and the
prior approval of the Transfer by the other Members in accordance with Section 2.4. The
material terms of a Transfer pursuant to this Section 8.3.3 shall be as agreed upon by the
parties to the Transfer and approved by the other Members.
8.3.4 Transfer to a Third Party. A Member may transfer all or any portion of
the Member's Units to a Person eligible to be a Member of the Company under this Operating
Agreement, the Act, and other applicable law, other than the Company or another Member,
upon written notice to the Company and the other Members, subject to the Company's first
option to purchase the Units (as described in Section 8.3.4(a)) and the other Members' second
option to purchase the Units (as described in Section 8.3.4(b); provided, however, that if neither
the Company nor any of the other Members purchase the Units pursuant to their respective
options, the other Members may nevertheless determine, in accordance with Section 2.4, to
dissolve the Company pursuant to Article 10 in lieu of permitting the Transfer. The material
terms of a Transfer pursuant to this Section 8.3.4 shall be as agreed by the parties to the
Transfer; and if either the Company or any of the other Members determine to exercise their
respective options, the purchase price and material terms of that Transfer shall be at least as
favorable to the transferring Member as the purchase price and material terms of the proposed
Transfer between the Member and the third-party.
(a) The Company's First Option to Purchase. The Member shall
provide written notice of the Transfer and the offer to sell to the Company and the Company
shall have the right to purchase all (but not less than all) of such Units pursuant to this Section
8.3.4(a). The Company must provide written notice to the Member of the Company's decision
whether to waive or exercise the Company's first option right within ten (10) days after the date
the Company receives the written notice of the offer to sell from the Member. If the Company
chooses to exercise the Company's first option right, it must close the Transfer under this
Section 8.3.4(a) within thirty (30) days after the date the Company receives the written notice of
the offer to sell from the Member.
(b) The Members' Second Option to Purchase. If the Company
waives or fails to timely exercise its first option right under Section 8.3.4(a), the Member shall
provide written notice of the Transfer and the offer to sell to the other Members and each other
Member shall have the right to purchase all (but not less than all) of such Units pursuant to this
Section 8.3.4(b). Each other Member must provide written notice to the selling Member of the
other Member's decision whether to waive or exercise the other Member's second option right
within ten (10) days after the date the Company waives or fails to timely waive or exercise the
Company's first option right, whichever occurs first. Each of the other Members that choose to
exercise their second option right (the "Participating Members") shall be entitled to purchase a
portion of the Units based on such Participating Member's Percentage Interest in comparison to
the sum of the Percentage Interests of all of the Participating Members, unless the Participating
Members unanimously agree to a different allocation of the Units among them. The
Participating Members must close the Transfer under this Section 8.3.4(b) within thirty (30) days
after the date the Company waives or fails to timely waive or exercise the Company's first option
right, whichever occurs first.
8.4 Effect of Permitted Transfers. A Transfer completed in compliance with this
Article 8 shall be valid and enforceable and shall have the additional effects set forth in this
Section 8.4.
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ALTURAS MANAGEMENT GROUP LLC -20
(a) New Members. If the transferee is a Person other than the
Company or an existing Member, and the transferee is eligible to be a Member of the Company
under this Operating Agreement, the Act, and other applicable law, the transferee shall be
admitted as a new Member. The transferee shall be required as a condition of the transferee's
admission as a new Member to (i) execute and deliver all documents necessary for the
admission of the new Member, including (without limitation) a counterpart to this Operating
Agreement, in the form and substance satisfactory to the Managers, and (ii) pay all reasonable
expenses incurred in connection with the admission of the new Member as may be required by
the Managers, including (without limitation) the cost of preparing and completing any
amendment to this Operating Agreement, the Company's Certificate of Organization or the
Company's Statement of Authority as necessary or desirable in connection with the admission
of the new Member. The admission of a new Member in partial or complete substitution for an
existing Member, without more, does not release the existing Member from any liability or duty
to the Company that may have arisen prior to the substitution. Once admitted, the new Member
has all the rights and obligations and is subject to all the restrictions and liabilities of all other
Members.
(b) Existing Members. If the transferee is an existing Member, the
transferee's Units and Membership Interest shall be increased by the Units and Membership
Interest subject to the Transfer.
(c) Redemptions. If the transferee is the Company, the Units shall be
redeemed and cancelled by the Company and the Percentage Interests of the remaining
Members shall be adjusted accordingly.
(d) Effect on Transferring Member. If the transferor is an existing
Member, the transferring Member's Units shall be decreased by the Units and Membership
Interest subject to the Transfer, and if such decrease results in the transferring Member
retaining no Units or Membership Interest in the Company, then the transferring Member shall
be dissociated as set forth in Article 9.
ARTICLE 9
DISSOCIATION
9.1 No Right to Dissociate. Except for a Member's dissociation pursuant to Section
9.2(a), (b), or (c), a Member has no right to withdraw, be redeemed, dissociate or otherwise
cease to be a Member by voluntary act at any time, and the Member's dissociation from the
Company shall result in the dissociated Member's breach of this Operating Agreement.
9.2 Events of Dissociation. A Member shall be dissociated from the Company
upon the occurrence of any one or more of the following circumstances ("Events of
Dissociation"):
(a) Permitted Transfers. The Member Transfers all of the Member's
Units in a permitted Transfer pursuant to Article 8.
(b) Death. The Member or Affiliate thereof dies.
(c) Disability. The Member or Affiliate thereof is determined to have a
disability. For purposes of this Operating Agreement, if at any time in the opinion of Company a
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ALTURAS MANAGEMENT GROUP LLC -21
question arises as to the disability of a Member or Affiliate thereof, then the Company shall
promptly employ three (3) physicians who are members of the American Medical Association to
examine such Person and determine if the Person's physical and/or mental condition renders
the Person incapable of performing the Member's essential duties with respect to the Company,
either with or without a reasonable accommodation.
(d) Violation of Restrictions on Transfers of Units. The Member
Transfers all or any portion of the Member's Units in violation of the restrictions on Transfers set
forth in Article 8.
(e) Dissolution. The Member is an organization that has been
dissolved and is winding up its business.
(f) Judicial Determination. The Member is expelled from the
Company by judicial determination, upon the application by the Company, the Managers or
another Member, that the Member or an Affiliate thereof (i) engaged in wrongful conduct that
adversely and materially affected the Company's business, (ii) willfully or persistently committed
a material breach of this Operating Agreement or committed a material breach of the duties
owed to the Company, the Managers or the Members, or (iii) engaged in conduct that makes it
not reasonably practicable to carry on the Company's business with the Member.
(g) Bankruptcy. The Member (i) makes an assignment for the benefit
of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudicated a bankrupt or insolvent,
(iv) 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, (v) files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Member in any proceeding of this nature, or (vi) seeks,
consents to, or acquiesces in the appointment of a trustee, receiver or liquidator of the Member
or of all or any substantial part of the Member's property.
(h) Failure to Devote Full Time. If the Member or Affiliate thereof
works for the Company, the Member or Affiliate thereof is absent from work for more than one
hundred twenty (120) work days (whether or not consecutive) per calendar year, exclusive of
personal time off and sick leave.
(i) Criminal Conviction. The Member or Affiliate thereof enters any
plea of nolo contendere to, enters into a withheld judgment for, or is convicted of a felony.
a) Fraud; Dishonesty. The Member or Affiliate thereof commits any
act of fraud or dishonesty resulting or intended to result in a gain to such Person at the expense
of the Company (including, without limitation, embezzlement or diversion of Company's funds),
or other misconduct related to Company's assets, activities, operations, or employees.
9.3 Effect of Dissociation. Upon the occurrence of an Event of Dissociation (as set
forth in Section 9.2), the dissociated Member immediately ceases to be a Member, and, to the
extent the dissociated Member holds any Units at the time of dissociation, the dissociated
Member (or in the case of death or disability, the dissociated Member's representative)
immediately forfeits all Governance Rights and shall retain only the Financial Rights attributable
to those Units. The Company shall have the right to redeem all or any portion of such Units
from the dissociated Member (or in the case of death or disability, the dissociated Member's
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -22
representative) pursuant to Section 8.3.2. The dissociated Member's duties and obligations
under this Operating Agreement shall continue with regard to matters arising before the time of
dissociation. A Member's dissociation shall not cause the dissolution of the Company.
ARTICLE 10
DISSOLUTION
10.1 Dissolution. The Members may vote or consent to dissolve the Company at any
time pursuant to Section 2.4. Otherwise the Company shall dissolve upon the first to occur of
the following events (each a "Dissolution Event"):
(a) In Lieu of Permitted Transfer. The Members elect to dissolve the
Company in lieu of a permitted Transfer under Section 8.3.4 as provided therein.
(b) No Members. The passage of ninety (90) consecutive days
during which the Company has no Members.
(c) Judicial Decree. The entry of a decree of judicial dissolution that
(A) the conduct of all or substantially all of the Company's activities is unlawful, (B) it is not
reasonably practicable to carry on the Company's activities' in conformity with this Operating
Agreement, including (without limitation) because of a deadlock among the Managers or
Members, (C) the Managers have acted, are acting or will act in a manner that is illegal or
fraudulent, or (D) the Managers have acted or are acting in a manner that is oppressive and
was, is or will be directly harmful to a Member.
(d) Disposition of Assets. If the Company (i) voluntarily or (ii)
involuntarily (by way of condemnation or similar proceeding) disposes of all or substantially all of
the Company Property.
(e) Required Dissolution. Any other event causing dissolution of a
limited liability company under the Act.
10.2 Effect of Dissolution. The Company may execute and file a Statement of
Dissolution with the Delaware Secretary of State. Upon the Company's dissolution, the
Company shall cease to carry on, and shall wind up, the Company's affairs. The Company shall
continue in existence thereafter only for the purpose of winding up its business and affairs.
Upon completion of the winding up, the Company shall be terminated by filing a Statement of
Termination with the Delaware Secretary of State.
10.3 Winding Up. To wind up the Company's business, a person selected by the
Managers shall act as a liquidator (the "Liquidator"). The Liquidator shall have full power and
authority to (i) sell, assign and encumber any or all of the Company Property, (ii) wind-up and
liquidate the Company's affairs in a commercially reasonable manner, (iii) prepare and distribute
an accounting from the date of the last previous accounting to the date of dissolution, and from
the date of dissolution to the date of termination, and (iv) distribute the proceeds from liquidation
in accordance with Section 10.4.
10.4 Distribution of Assets after Dissolution. Upon the winding up of the
Company, following the allocation of the Company's income, gain, loss, deductions, and credits,
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ALTURAS MANAGEMENT GROUP LLC -23
the Liquidator shall distribute all liquidation proceeds and Company Property in the following
manner:
10.4.1 Creditors. To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of the liabilities of the Company.
10.4.2 Remaining Proceeds and Property. Second, the Liquidator shall
distribute any remaining liquidation proceeds and Company Property to Members 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, including (without limitation)
adjustments to the Members' Capital Accounts immediately prior to the liquidation as provided
by Treasury Regulation Section 1.704-1(b)(2)(f)(5)(ii). Liquidation proceeds are to be paid
within the later of (i) 60 days of the end of the Company's tax year or (ii) 90 days after the final
date of liquidation. The distributions made pursuant to this Section 10.4.2 are to be made in
cash or other real and personal property (which need not be distributed proportionately) or partly
in both, as determined by the Managers.
10.4.3 Deficit Capital Account Restoration Obligation. In no event shall any
Member be obligated to restore a deficit balance in the Member's Capital Account upon
liquidation.
10.5 Distribution in Kind. If the Liquidator shall determine that any Company
Property should be distributed in kind to the Members, the Liquidator shall obtain an
independent appraisal of the fair market value of the real and personal property as of a date
reasonably close to the date of liquidation. Any unrealized appreciation or depreciation with
respect to the all real and personal property shall be (i) allocated among the Members in
accordance with the provisions of Article 7 assuming that all real and personal property was
sold for the appraised value and (ii) taken into consideration in determining the balance in the
Members' Capital Accounts as of the date of liquidation. Distribution of real and personal
property in kind to a Member shall be considered a distribution of an amount equal to the fair
market value of the real and personal property for purposes of Section 10.4. All distributions
pursuant to this Article 10 shall be subject to the provisions of Code Section 704(c).
10.6 Completion of Winding Up and Termination. 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 real and personal property and assets of the Company have been distributed to the
Members. The Company shall then file a Statement of Termination with the Delaware Secretary
of State; and the Company's existence shall thereupon terminate.
ARTICLE 11
DISPUTE RESOLUTION
11.1 Indemnification by Company. To the fullest extent permitted by law, the
Company will indemnify, hold harmless and defend the Managers and Members from all claims,
damages, liabilities (including legal fees and expenses), judgments, and other amounts paid in
settlement, incurred or suffered by the indemnitee, in connection with any threatened, pending
or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether formal or informal, arising out of or in connection with the business or
the operation of the Company, or by reason of the indemnitee's status as a Manager or
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -24
Member. In particular (but without limitation of the foregoing sentence), the Company shall
defend, indemnify and hold harmless the Managers and Members from all judgments,
settlements, penalties, fines or expenses incurred in a proceeding to which such Person is a
party because such Person is or was a Manager or Member. However, no Manager or Member
shall be indemnified from any liability for breach of the duty of loyalty under Section 5.3, receipt
of a financial benefit to which the Manager or Member is not entitled, approval of a distribution in
violation of Section 2.6.6, intentional infliction of harm on the Company or a Member, an
intentional violation of criminal law, gross negligence, willful misconduct, or bad faith.
11.1.1 Payment of Expenses. To the fullest extent permitted by law,
expenses incurred by an indemnitee in defending any claim, demand, action, suit or proceeding
subject to this Section 11.1 will, from time to time, be advanced by the Company prior to the
final disposition of the claim, demand, action, suit or proceeding upon receipt by the Company
of an undertaking on behalf of the indemnitee to repay such amounts unless it is determined
that the indemnitee is entitled to be indemnified for the amounts paid under the terms of this
Section 11.1. If an indemnitee wishes to make a claim under this Section 11.1, the indemnitee
should notify the Company in writing within thirty (30) days after receiving notice of the
commencement of any action that may result in a right to be indemnified under this Section
11.1; provided, however, that the failure to notify the Company will not relieve the Company of
any liability for indemnification pursuant to this Section 11.1, except to the extent that the failure
to give notice will have been materially prejudicial to the Company.
11.1.2 Right to Counsel and Control of Action. An indemnitee will have
the right to employ separate legal counsel in any action pursuant to this Section 11.1 and to
participate in the defense of the action. The fees and expenses of such legal counsel will be at
the expense of the indemnitee unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense of the action without
reservation and to employ counsel within a reasonable period of time after being given the
notice required above, or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnitee and the Company and the indemnitee has been advised by
its legal counsel that representation of the indemnitee and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct because of actual or
potential differing interests between them. It is understood, however, that the Company will, in
connection with any one such action in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys at any time for all such indemnities having actual or potential different
interests with the Company. The Company will not be liable for any settlement of any action
agreed to without the Company's written consent. The indemnification obligations set forth in
this Section 11.1 will survive the termination of this Operating Agreement.
11.1.3 Insurance. The Company may purchase and maintain insurance on
behalf of any Manager, Member, or Affiliate thereof against liability asserted against or incurred
by the Manager, Member, or Affiliate thereof in that capacity or arising from that status,
including (without limitation) any liability arising from breach of any of the duties set forth in
Article 5.
11.2 Indemnification by Member for Failure to Pay Taxes. If the Company is liable
for the payment of any tax as a result of a Member's failure to file a tax return or to pay a tax
liability, the Member shall be personally liable to the Company for any such tax, plus penalties
and interest, and attorney fees and costs incurred by Company in connection therewith. The
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ALTURAS MANAGEMENT GROUP LLC -25
Company may pay such liability from funds allocated to the Member's capital account or from
real or personal property otherwise distributable to the Member.
11.3 Claim. The term "Claim" shall be broadly construed to include any actual or
alleged dispute, controversy, breach, loss, default, harm, damage, penalty, fee or cost relating
to or arising under this Operating Agreement or the operation of the Company, including
(without limitation) Claims by third parties, Managers, Members or Affiliates thereof. With
respect to a Member, "Claim" includes any action to enforce the Member's rights and otherwise
protect the Member's interests, including rights and interests under this Operating Agreement or
the Act or arising independently of the membership relationship, subject however to Section
11.5.
11.4 Claim Notice and Cure Period. In the event of a Claim, then the aggrieved
party shall give the defaulting party reasonable written notice of the Claim. From the date of
notice the defaulting party shall have twenty-eight (28) days to cure the Claim.
11.5 Claim Resolution Procedure. If a Claim arises, the parties shall first attempt to
settle the Claim by direct discussions. If the Claim cannot be settled by the parties by direct
discussions, then the parties agree to endeavor to settle the Claim in an amicable manner by
mediation administered by the American Arbitration Association under its Commercial Mediation
Rules. Thereafter, any unresolved controversy or Claim arising from or relating to this
Operating Agreement or a breach of this Operating Agreement shall be resolved as provided by
law.
11.6 Rights and Remedies. Except as expressly provided in this Operating
Agreement, and to the extent permitted by law, an aggrieved party has all the rights and
remedies available in law, in equity, and in this Operating Agreement. Any rights and remedies
described in this Operating Agreement are cumulative and not alternative to any other rights
and remedies available at law or in equity. Notwithstanding the foregoing, no Member shall
have the right to maintain a direct action against the Company or any Manager or Member of
the Company except in connection with a harm incurred by the Member independently of any
harm caused or threatened to be caused to the Company or to the Members generally and in
proportion to their respective Membership Interests. Claims relating to any harm caused or
threatened to be caused to the Company or to the Members generally and in proportion to the
Members' respective Membership Interests shall be maintained only derivatively and in
accordance with applicable law governing derivative actions.
11.7 Injunction Remedies. In addition to any other right or remedy the Company, the
Members may have, the Company and the Members shall have the right, subject to Section
11.5, to specifically enforce this Operating Agreement, including (without limitation) to the
restrictions on Transfer set forth in Article 8. Each member agrees that the other Members and
the Company will be irreparably damaged if this Operating Agreement is not specifically
enforced. Upon a breach or threatened breach of any term, covenant or condition of this
Operating Agreement by any party, each of the other parties shall, in addition to all other
remedies, be entitled to seek a temporary and permanent injunction, without showing any actual
damage, and may seek a decree for specific performance.
11.8 Attorney Fees and Costs. In the event of a Claim, the prevailing party shall be
awarded reasonable attorney fees and costs in any suit, action or proceeding, including trial,
arbitration, mediation, or appeal, as awarded by the court, arbitrator or mediator.
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ALTURAS MANAGEMENT GROUP LLC-26
11.9 Waiver. The waiver of any right, obligation or remedy shall be in writing and
signed by all parties affected by the waiver. The failure or neglect of a party to enforce any right
or remedy available by reason of the failure of the other party to observe or perform a term or
condition set forth in this Operating Agreement shall not constitute a waiver of the term or
condition. A waiver by a party (i) shall not affect any term or condition other than the one
specified in the waiver, (ii) shall waive a specified term or condition only for the time and in the
manner specifically stated in the waiver, and (iii) shall waive a specified term or condition only
for the parties expressly named in the waiver and for no other parties.
11.10 Governing Law, Jurisdiction, and Venue. This Operating Agreement shall be
governed by Delaware law. The state and federal courts of Idaho have jurisdiction; and venue
for mediation, state court litigation and all other proceedings shall be located in Ada County,
Idaho.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. All notices and other communications ("Notices") must be in writing
and may be delivered (i) in person, with the date of notice being the date of personal delivery,
(ii) by United States Mail, postage prepaid for certified or registered mail, return receipt
requested, with the date of notice being the date of the postmark on the return receipt, (iii) by
fax, with confirmation of the transmittal of the fax and a copy of the fax deposited on the same
day in the United States Mail, with the date of notice being the date of the fax, (iv) by e-mail,
with confirmation of sending of the e-mail and a copy of the e-mail deposited on the same day in
the United States Mail with the date of notice being the date of the e-mail, (v) by nationally
recognized delivery service such as Federal Express, with the date of notice being the date of
delivery as shown on the confirmation provided by the delivery service.
12.2 Waiver of Notice. Whenever any notice is required to be given a waiver in
writing signed by the persons entitled to such notice shall be equivalent to the giving of the
notice. The waiver is effective whether duly signed before or after the event concerning which
the notice is given.
12.3 Successors and Assigns. The provisions of this Operating Agreement shall be
binding upon successors-in-interest to any Units or Membership Interests.
12.4 Coordination of Operating Agreement and Act. Except as provided in Section
2.2.4, or to the extent a provision of the Operating Agreement expressly incorporates federal
income tax rules by reference to sections of the Code or Treasury Regulations, or to the extent
a provision of this Operating Agreement is expressly prohibited or ineffective under the Act, the
Operating Agreement shall govern, even when inconsistent with, or different than, the provisions
of the Code, the Act or any other law or rule. To the extent any provision of the 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 Operating Agreement
effective under the Act. In the event the Act is subsequently amended or interpreted to make
any provision of the Operating Agreement that was formerly invalid to be valid, the provision
shall be considered to be valid from the effective date of the interpretation or amendment.
12.6 No Partnership Intended for Non-Tax Purposes. The Members have formed
the Company under the Act, and expressly intend not to form a partnership or limited
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC-27
partnership. The Members intend not 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 the
wrongful representation shall be liable to any other Member who incurs personal liability by
reason of the wrongful representation.
12.6 Rights of Creditors and Third Parties. The Operating Agreement is intended
for the exclusive benefit of the Company, its Members, and their successors and assigns.
There are no intended or incidental third party beneficiaries. This Operating Agreement is not
intended to benefit any creditor of the Company or any other Person. Except as otherwise
provided in the Act, no creditor or third party shall have any rights under (i) this Operating
Agreement or (ii) any agreement between the Company and any Member regarding any
contribution or otherwise.
12.7 Severability. The invalidity of any portion of this Operating Agreement shall not
affect the validity of any other portion of this Operating Agreement. If the invalidity or
unenforceability is due to the unreasonableness of any restrictions, the restrictions shall be
effective to the extent that a court may determine them to be reasonable. If any covenant or
restriction is held to be unenforceable, the covenant or restriction shall be first modified to be
enforceable. If the covenant or restriction cannot be modified to be enforceable, then the
covenant or restriction shall be eliminated to the extent necessary to permit the remaining
restrictions to be enforced.
12.8 Time of the Essence. Time is of the essence with respect to the obligations to
be performed under this Operating Agreement.
12.9 Entire Agreement. All Schedules to this Operating Agreement constitute a part
of this Operating Agreement. This Operating Agreement, together with the accompanying
Schedules, constitutes the entire, completely integrated agreement among the parties
concerning the subject matter of this Operating Agreement, and supersedes all prior
memoranda, correspondence, conversations and negotiations.
12.10 Amendment. This Operating Agreement cannot be amended orally or by
conduct of the parties. All amendments of this Operating Agreement must be in writing and
must be approved by the Members in accordance with Section 2.4.
12.11 Counterparts. This Operating Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
12.12 Adoption and Ratification. This Operating Agreement is adopted as of the
Effective Date. This Operating Agreement is a private agreement among the Members and the
Company; and its terms and conditions shall not be disclosed in any form or manner to Persons
other than the Company, its Manager, Members, and Affiliates, or to accountants, attorneys or
other professional advisors thereof.
The following Member(s) and Manager(s) of Alturas Management Group LLC hereby
adopt and execute this Operating Agreement effective as of the Effective Date.
[Signatures to follow]
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -28
MEMBERS:
Alturas Capital, LLC,
an Idaho limited liability company
By:_�; Pr I
Bla a Han en, its Manager
Travis J. Barney Asset Management LLC,
an Idaho limited liability company
By:
Travis Bar Ts-Manager
MANAGER:
Alturas Capital, LLC,
an Idaho limited liability company
By:
Blake Hans n, its Manager
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -29
EXHIBIT A_
OFFICERS
Name Title Duties
Blake Hansen Chief Investment Officer Responsible for the
development, maintenance and
oversight of the Fund's
strategic investment objectives
and the establishment and
maintenance of financial and
operational processes and
overall risk management.
Travis Barney Chief Credit Officer Responsible for day to day
oversight and administration of
Fund investment activities,
including sourcing, underwriting
ongoing asset
management.
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -30
SCHEDULE 2.3
SCHEDULE OF MEMBERS
Name and Address Capital Units Percentage Interest
Contribution
Alturas Capital, LLC
435 E Shore Drive Suite 201 $1,350,000 9,000 80%
Eagle, ID 83616
Travis J. Barney Asset $875,000
Management LLC 2,250 20%
3650 W Miners Farm
Boise, ID 83714
Totals: 11,250 100%
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -31
SCHEDULE 2.4
ACTIONS REQUIRING MEMBER APPROVAL
Action Percentage Interest Required
for Approval
Additional contributions by one or more Members (see
Section 2.5.2) 100%
Admission of new Members (see Section 2.7) 100%
Appointment, election, or removal of Managers (see Section
3.5) Greater than 50%
Compensation of Managers (see Section 3.8) Greater than 50%
Authorization, approval, or ratification of Conflicting Interest
Transactions (see Section 5.3.4) Greater than 50%
Approval of voluntary redemptions of Members (see Section
8.3.1) Greater than 50%
Approval of Transfers between Members (see Section 8.3.3) Greater than 50%
Dissolution of the Company in lieu of Transfers to third
parties (see Section 8.3.4) Greater than 50%
Dissolution of the Company or continuation of the Company
after dissolution (see Section 10.1) Greater than 50%
Amendment of the Operating Agreement (see Section
12.10) 100%
A sale, lease, exchange or other disposition of all or
substantially all of the assets of the Company Greater than 50%
Any activity outside the ordinary course of business of the
Company, or authorizing any Member or Manager to do any
act on behalf of the Company that contravenes the Greater than 50%
Operating Agreement
AMENDED AND RESTATED OPERATING AGREEMENT
ALTURAS MANAGEMENT GROUP LLC -32
SPOUSAL CONSENT
Printed Name: ttney arney
ALTURAS MANAGEMENT GROUP LLC
CONSENT OF MEMBER
IN LIEU OF MEETING
The undersigned, being the sole Member of Alturas Management Group LLC, a
Delaware limited liability company (the "Company"), does hereby consent to, adopt and
approve in writing the following action without a meeting:
CHANGE OF NAME
RESOLVED, that the name of the Company shall be changed to Alturas
Capital Partners LLC.
RESOLVED FURTHER, that Blake Hansen is hereby authorized and
directed to take all action necessary to carry out the intent and accomplish
the purposes of the foregoing resolution.
DATED NQWIZ-a 0'^ 12017.
MEMBER:
ALTURAS MANAGEMENT GROUP LLC
a Delaware limited liability company
By: Altums Capital,LLC
Its: Member
By: 1 T. 14---
Blake J. Hansen, its Manager
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
1. Name of Limited Liability Company: Alturas management Group
LLC
2. The Certificate of Formation of the limited liability company is hereby amended
as follows:
Change the name from Alturas management Group LLC to
Alturas Capital Partners LLC
IN WITNESS WHEREOF,the undersigned have executed this Certificate on
the OU day of Nwta '-" ' ^ ,A.D. 2017
By: }i 1 —
Authorized Person(s)
Name:Blake Hansen
Print or Type
214
AMENDMENT OF FOREIGN
REGISTRATION STATEMENT
Title 30, Chapter 21, Idaho Code
Filing fee: $30 typed, $50 not typed
Complete and submit the application in duplicate,
1. Entity name: Allures Management Group LLC
2. The entity name is amended to: Allures Capital Partners LLC
a. If the new name is not available or permissible in Idaho,the name to be used in Idaho is:
3. The entity type is amended to:
❑ Business Corporation ❑ General Partnership
❑ Nonprofit Corporation ❑General Cooperative Association
❑ Limited Liability Partnership ❑Limited Partnership(Including a limited liability limited partnership
❑Limited Liability Company ❑Statutory Trust, Business Trust, or Common-law Business Trust
❑Other.
(Prwde unlisted foreign entity type here)
4. The entity's jurisdiction is amended to.
5. The street and mailing address(es)of its principal office is amended to:
Street Addresaf
(Mailing Address.6 different)
6. The name,capacity, and mailing address of the governors) is amended to:
iNane) (Capacitp IAddrass)
INainel 6'epdaityl (fvldress)
Typed Name: Blake Hansen
Signature:
N
Capacity: Autorized person
INSTRUCTIONS
If the document is incorrect, provide contact information where can you be reached for corrections:
208-345-3333 tmorris@stm-law.com
Phom Number Email addmss
Note: Complete and submit the application in duplicate.
Line 1 - Enter the original entity name as registered with this office.
Line 2- If the amendment is a change of name, list the new name of the entity. Include a certificate
of existence (or goodstandina)when you submit this amendment, A certified copy will not b
accepted.
a. If the new name of the entity is not available,or does not contain an ending which is permissible
to Idaho Code, indicate a fictitious name to use in Idaho which meets such specifications.
Line 3- If the amendment is a change of entity type select the entity type you wish to change to. If your
entity type is not listed, select"other"and print the domestic entity type in the space provided. Include
a_certificate of existence for aoodstandinal from the new jurisdiction when you submit this
amendment
Line 4- If the amendment is a change of jurisdiction enter the new jurisdiction in the space provided.
Include a certificate of existance (or 000dstandinal from the new i urisdiction when you submit this
amendment
Line 6- If the amendment is a change of address of the principal office enter the street and/or mailing
addresses) in the spaces provided.
Line 6- If the amendment is a change of governor information enter the name, capacity, and street address
in the spaces provided.
The application must be signed by an officer or director of a corporation, a member or manager of an LLC,
or a partner of an LP. Please identify the name of the signer by typing his/her name, and indicate in what
capacity he/she signs.
Enclose the appropriate fee(makes checks payable to Idaho Secretary of State:
a. If the form is typed, the filing fee is $30.00
b. If the form is not typed, the fee is$50.00
c. If expedited service is requested, add $20.00 to the filing fee.
d. If the fees are to be paid from the filing party's pre-paid customer account,
conspicuously indicate the customer account number in the cover letter or transmittal
document.
Pursuant to Idaho Code § 67-910(6), the Secretary of State's Office may delete a business entity filing from our
database if payment for the filing is not completed.
Mail or deliver to:
Office of the Secretary of State
450 N 4th Street
PO Box 83720
Boise ID 83720-0080
If you have questions or need help, call the Secretary of State's office at(208) 334-2301.
214
z AMENDMENT OF FOREIGN
REGISTRATION STATEMENT
Title 30, Chapter 21, Idaho Code
Filing fee: $30 typed, $50 not typed
Complete and submit the application in duplicate.
1. Entity name: Allures Management Group LLC
2. The entity name is amended to:Allures Capital Partners LLC
a. If the new name is not available or permissible in Idaho,the name to be used in Idaho is:
3. The entity type is amended to:
❑Business Corporation ❑General Partnership
❑Nonprofit Corporation ❑General Cooperative Association
❑Limited Liability Partnership ❑Limited Partnership(Including a limited liability limited partnership
❑Limited Liability Company ❑Statutory Trust, Business Trust, or Common-law Business Trust
❑Other:
(Provide unlisted foreign entity type here)
4. The entity's jurisdiction is amended to:
5. The street and mailing address(es)of its principal office is amended to:
(Street Address)
(Malli�Address,if difere0)
6. The name, capacity,and mailing address of the governor(s) is amended to:
(Name) (capacity) (Address)
(Name) (Capacity) (NWress)
Typed Name: Blake Hansen _
Signature:
5
Capacity:
Autorized person
m
m
Rea. 15
UNANIMOUS WRITTEN CONSENT OF
THE MEMBERS OF ALTURAS CAPITAL PARTNERS,LLC AND THE MANAGER
OF ALTURAS REAL ESTATE FUND LLC
January 1, 2025
The undersigned being the members of Alturas Capital Partners, LLC, a Delaware limited liability
company (the "Company"), by this writing hereby consent to the actions and adopts the
resolutions below, effective as of the date first set forth above, in accordance with the Delaware
Uniforrn Limited Liability Company Act and the Company's Amended and Restated Operating
Agreement dated effective January 1, 2017 (the"Operating Agreement"). And, Company,being
the manager of Alturas Real Estate Fund LLC, a Delaware limited liability company ("Alturas
Real Estate Fund, LLC" or"AREF"), by this writing hereby consents to the actions and adopts
the resolutions below,effective as of the date first set forth above,in accordance with the Delaware
Uniform Limited Liability Company Act and AREF's operating agreement dated January 1, 2018,
as amended ("AREF Operating Agreement"). Any capitalized terms used herein and not
otherwise defined herein shall have the meaning given to them in the respective operating
agreements, whichever is appropriate.
AUTHORITY OF OFFICERS
WHEREAS,the Operating Agreement provides that the Members of Company may designate any
or all of rights or powers to conduct the day-to-day business of the Company to the Company's
Manger or Officers.
WHEREAS,the operating agreement of Alturas Real Estate Fund,LLC provides that the managers
of Alturas Real Estate Fund,LLC may designate any or all of their rights or powers to conduct the
day-to-day business of the Alturas Real Estate Fund, LLC. The Company is the sole manager of
Alturas Real Estate Fund, LLC.
WHEREAS, the Members of the Company desires to designate certain officers and employees of
the Company who may sign contracts and agreements on behalf of the Company.
WHEREAS, the Company, as the sole manager of Alturas Real Estate Fund, LLC, desires to
designate certain officers and employees of the Company,who may sign contracts and agreements
on behalf of Alturas Real Estate Fund, LLC.
RESOLVED that Exhibit A lists certain Officers and employees of the Company and their
requisite office.
RESOLVED that the Officers and employees of the Company, as listed on Exhibit A, each acting
alone, are authorized to execute and deliver in the name of and on behalf of the Company and
Alturas Real Estate Fund, LLC such contracts, agreements, notices, consents or other documents
as specifically listed in Exhibit B, as directed by the Manager of the company, or as determined
by the Officers of the company to be reasonable and necessary in the conduct of the ordinary
business of the Company or Alturas Real Estate Fund, LLC (as applicable), with such Officer's
execution and delivery thereof to be conclusive evidence of their authority so to act and of the
Company's or Alturas Real Estate Fund, LLC's (as applicable) approval thereof,
RESOLVED, that all prior lawful acts taken or caused to be taken by or on behalf of the Company
or Alturas Real Estate Fund (as applicable), by its Managers, Officers, agents, or authorized
representatives in connection with resolutions set forth herein,and all other documents and actions
ancillary thereto, be, and the same are, authorized, approved, adopted, ratified, and confirmed as
the valid acts of the Company or Alturas Real Estate Fund.
RESOLVED, that this unanimous written consent shall be filed with the minutes of the Company
and may be executed in any number of counterparts, each of which shall be an original hereof.
[SIGNATURE PAGE FOLLOWS]
MEMBERS OF ALTURAS CAPITAL
PARTNERS, LLC:
Alturas Capital,LLC,an Idaho limited liability
company
coo"'��
Blake Hansen, its Manager
Travis J. Barney Asset Management LLC, an
Idaho limited liability company
Travis iey, its Manager
MANAGER OF ALTURAS REAL ESTATE
FUND,LLC:
Alturas Capital Partners, LLC
By:
Blake Hansen
Its: Manager
EXHIBIT A
OFFICERS
Name Office Held
Blake Hansen Chief Investment Officer
Travis Barney Chief Executive Officer
Devin Morris Chief Operating Officer
Bailey Breish Chief Financial Officer
Dean Coombs Director of Asset Management
Daniel Trevino Director of Investor Relations
Joshua Utke Director of Acquisitions
John Bankhead Chief Financial Officer of Alturas LLC
EXHIBIT B
AUTHORITY
Authority Officers and Employees
Execute lease agreements for properties
owned by Alturas Capital Partners,LLC, Blake Hansen,Travis Barney, and Devin
Alturas Real Estate Fund, LLC, and Morris
subsidiaries.
Blake Hansen,Travis Barney, and Devin
Execute vendor contracts on behalf of Alturas orris
Capital Partners, LLC, and Alturas Real Bailey Breish,John Bankhead,Dean Coombs,
Estate Fund, LLC, and subsidiaries. Daniel Trevino, and Joshua Utke, (contracts less
than $75,000.00 per annum)
Execute software, audit preparation and tax Bailey Breish, John Bankhead
preparation contracts on behalf of Alturas
Capital Partners, LLC, and Alturas Real
Estate Fund, LLC, and subsidiaries.
Execute leasing agreements for Alturas
Capital Partners,LLC, and Alturas Real Blake Hansen, Travis Barney, Devin Morris,
Estate Fund, LLC, and subsidiaries. Dean Coombs
Execute loan agreement and in any way
encumber the assets of Alturas Capital Blake Hansen, Travis Barney, and Devin
Partners,LLC, and Alturas Real Estate Fund, Morris
LLC, and subsidiaries.
Execute agreements for the purchase or sale
of assets on behalf of Alturas Capital Blake Hansen, Travis Barney, and Devin
Partners,LLC, and Alturas Real Estate Fund, orris
LLC, and subsidiaries.
Execute operating agreement on behalf of
subsidiaries of Alturas Capital Partners,LLC, Blake Hansen,Travis Barney, and Devin
and Alturas Real Estate Fund, LLC, and Morris
subsidiaries.
Execute construction contracts on behalf of lake Hansen,Travis Barney,Devin Morris,
Alturas Capital Partners, LLC, and Alturas and Dean Coombs
Real Estate Fund, LLC, and subsidiaries.
Sign checks on behalf of Alturas Capital lake Hansen,Travis Barney, and Devin
Partners, LLC, and Alturas Real Estate Fund, iMorris
LLC, and subsidiaries.
Approve wire transfers on behalf of Alturas lake Hansen,Travis Barney,and Devin
Capital Partners, LLC, and Alturas Real orris
Estate Fund, LLC, and subsidiaries.
Approve wire transfers on behalf of Alturas Bailey Breish, John Bankhead, Mia Rodriguez,
Capital Partners, LLC, and Alturas Real Johnny Martin,and Greg Chapman
Estate Fund, LLC, and subsidiaries for the
following:
-invoices approved in the accounting system
-recurring loan payments
-recurring contract employee payments
-recurring cash flow funding
Approve ACH and wire bank transactions for ailey Breish, John Bankhead
all investor transactions including distributions,
transfers and redemption's related to the
Alturas Real Estate Fund.
Execute investor subscription documents on Blake Hansen,Travis Barney,Devin Morris
behalf of Alturas Real Estate Fund, LLC. and Daniel Trevino
Partnership authorized representatives to Bailey Breish, John Bankhead
execute tax returns on behalf of Alturas Capital
Partners, LLC, and Alturas Real Estate Fund,
LLC, and subsidiaries.
OPERATING AGREEMENT
OF
ALTURAS USTICK, LLC
EFFECTIVE DATE: JUNE 10, 2021
TRANSFER RESTRICTIONS
THE INTEREST(S) EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR
THE REGULATORY AGENCY OF ANY STATE. THEY HAVE BEEN ISSUED
PURSUANT TO EXEMPTIONS UNDER THE FEDERAL SECURITIES ACT OF 1933,
AS AMENDED, AND SIMILAR EXEMPTIONS UNDER STATE LAW. BY SIGNING
THIS AGREEMENT, THE MEMBERS ARE CONFIRMING THAT THEY ARE
ACQUIRING THE INTERESTS FOR AN INVESTMENT AND NOT FOR RESALE OR
DISTRIBUTION. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION, OR OTHER DISPOSITION OF ANY OF THE INTEREST(S) IS
RESTRICTED AND MAY NOT BE ACCOMPLISHED EXCEPT IN ACCORDANCE
WITH THIS AGREEMENT AND (1) AN APPLICABLE REGISTRATION STATEMENT
OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE MEMBERSHIP THAT
A REGISTRATION STATEMENT IS UNNECESSARY.
MORRIS BOWER&HAWS PLLC
12550 W.EXPLORER DRIVE,SUITE 100 1 BOISE,ID 83713
PHONE: (208) 345-3333 1 FAX: (208)345-4461
WW W.MORRISBOWERHAWS.COM
TABLE OF CONTENTS
Page
ARTICLE 1 GENERAL................................................................................................................1
1.1 Formation ............................................................................................................1
1.2 Name...................................................................................................................1
1.3 Organization ........................................................................................................1
1.4 Purposes and Powers..........................................................................................1
1.5 Duration...............................................................................................................1
1.6 Registered Agent.................................................................................................1
1.7 Principal Office.....................................................................................................2
1.8 Miscellaneous Definitions.....................................................................................2
ARTICLE 2 MEMBERSHIP................................................ ................................................2
2.1 Members..............................................................................................................2
2.2 Membership Interest....................... .................................................................2
2.2.1 Units....................................................................................................3
2.2.2 Percentage Interest..................................................................................3
2.2.3 Separate Property of the Members................................................. .3
2.2.4 Representations and Warranties of the Members.....................................3
2.3 Schedule of Members; Updates...........................................................................3
2.4 Approval of Actions by Members..........................................................................3
2.4.1 Member Meetings.....................................................................................4
2.4.2 Member Consents....................................................................................5
2.5 Contributions........................................................................................................5
2.5.1 Initial Contributions...................................................................................5
2.5.2 Additional Contributions............................................................................5
2.5.3 Form of Contribution.................................................................................5
2.5.4 Liability Regarding Contributions..............................................................6
2.6 Distributions.........................................................................................................6
2.6.1 Interim Distributions..................................................................................6
2.6.2 Liquidating Distributions ...........................................................................6
2.6.3 Form of Distributions ................................................................................6
2.6.4 Withholding and Treating Amounts Withheld as Distributions...................7
2.6.5 Distributions to Pay Taxes........................................................................7
2.6.6 Limitation on Distributions ........................................................................7
2.7 New Members......................................................................................................7
ARTICLE 3 MANAGEMENT .......................................................................................................8
3.1 Management Authority.........................................................................................8
3.2 Manner of Acting..................................................................................................8
3.3 Compensation......................................................................................................8
ARTICLE 4 AUTHORITY AND LIMITED LIABILITY..................................................................10
4.1 Authority of Members.........................................................................................10
4.3 Statement of Authority .......................................................................................10
4.4 Status of Limited Liability Company as Separate Entity......................................10
4.5 Limited Liability ..................................................................................................11
i
ARTICLE 5 STANDARDS OF CONDUCT ................................................................................12
5.1 Fiduciary Duties.................................................................................................12
5.2 Duty of Care.......................................................................................................12
5.3 Duty of Loyalty...................................................................................................12
5.3.1 Competition............................................................................................12
5.3.2 Company Opportunity.............................................................................12
5.3.3 Account..................................................................................................12
5.3.4 Loans .....................................................................................................13
5.3.5 Conflicting Interest Transactions ............................................................13
5.4 Confidentiality....................................................................................................13
5.5 Good Faith and Fair Dealing ..............................................................................13
ARTICLE 6 INFORMATION RIGHTS........................................................................................13
6.1 Information Rights..............................................................................................13
6.2 Books of Account...............................................................................................14
6.3 Records to be Maintained ..................................................................................14
6.3.1 Members and Addresses........................................................................14
6.3.2 Certificate of Organization ......................................................................14
6.3.3 Operating Agreement.............................................................................14
6.3.4 Statement of Authority............................................................................14
6.3.5 Tax Returns............................................................................................14
6.3.6 Contributions..........................................................................................14
6.4 Managers...........................................................................................................14
6.5 Members............................................................................................................14
6.6 Former Members ...............................................................................................15
6.7 Protection of Company.......................................................................................15
6.8 Reasonable Charges .........................................................................................15
6.9 Transferees........................................................................................................15
6.10 Audit ..................................................................................................................15
ARTICLE 7 ACCOUNTING AND TAXES..................................................................................15
7.1 Capital Accounts................................................................................................15
7.1.1 Increases and Decreases in Capital Accounts........................................16
7.1.2 Allocations upon Permitted Transfers.....................................................16
7.2 Single Member LLC Taxation.............................................................................16
7.3 Multiple Member LLC Taxation ..........................................................................16
7.3.1 Income, Gain, Loss, Deduction and Credit .............................................16
7.3.2 Special Allocations .................................................................................17
7.3.3 Integration with Code Section 754 Election ............................................17
7.4 Compliance with Code and Treasury Regulations..............................................17
7.5 Partnership Representative................................................................................18
ARTICLE 8 TRANSFERS OF UNITS........................................................................................18
8.1 Prohibition on Transfers.....................................................................................18
8.1.1 General Limitations under Applicable Law..............................................18
8.1.2 Reasonableness of Restrictions; Enforcement .......................................18
8.2 Effect of Prohibited Transfers.............................................................................18
8.3 Permitted Transfers ...........................................................................................18
8.3.1 Voluntary Redemption............................................................................18
8.3.2 Mandatory Redemption ..........................................................................19
8.3.3 Transfer to Another Member...................................................................19
ii
8.3.4 Transfer to a Third Party.........................................................................19
8.4 Effect of Permitted Transfers .............................................................................20
ARTICLE 9 DISSOCIATION .....................................................................................................21
9.1 No Right to Dissociate .......................................................................................21
9.2 Events of Dissociation........................................................................................21
9.3 Effect of Dissociation .........................................................................................23
ARTICLE 10 DISSOLUTION.....................................................................................................23
10.1 Dissolution .........................................................................................................23
10.2 Effect of Dissolution ...........................................................................................23
10.3 Winding Up........................................................................................................24
10.4 Distribution of Assets after Dissolution...............................................................24
10.4.1 Creditors.................................................................................................24
10.4.2 Remaining Proceeds and Property.........................................................24
10.4.3 Deficit Capital Account Restoration Obligation .......................................24
10.5 Distribution in Kind.............................................................................................24
10.6 Completion of Winding Up and Termination.......................................................24
ARTICLE 11 DISPUTE RESOLUTION .....................................................................................25
11.1 Indemnification by Company..............................................................................25
11.1.1 Payment of Expenses.............................................................................25
11.1.2 Right to Counsel and Control of Action...................................................25
11.1.3 Insurance ...............................................................................................26
11.2 Indemnification by Member for Failure to Pay Taxes..........................................26
11.3 Claim .................................................................................................................26
11.4 Claim Notice and Cure Period............................................................................26
11.5 Claim Resolution Procedure ..............................................................................26
11.6 Rights and Remedies.........................................................................................26
11.7 Injunction Remedies ..........................................................................................26
11.8 Attorney Fees and Costs....................................................................................27
11.9 Waiver ...............................................................................................................27
11.10 Governing Law, Jurisdiction, and Venue............................................................27
ARTICLE 12 MISCELLANEOUS...............................................................................................27
12.1 Notices...............................................................................................................27
12.2 Waiver Of Notice................................................................................................27
12.3 Successors and Assigns....................................................................................27
12.4 Coordination of Operating Agreement and Act...................................................27
12.5 No Partnership Intended for Non-Tax Purposes.................................................28
12.6 Rights of Creditors and Third Parties .................................................................28
12.7 Severability........................................................................................................28
12.8 Time of the Essence ..........................................................................................28
12.9 Entire Agreement...............................................................................................28
12.10 Amendment .......................................................................................................28
12.11 Counterparts......................................................................................................29
12.12 Adoption and Ratification ...................................................................................29
iii
Schedules
Schedule 2.3— Schedule of Members
Schedule 2.4—Actions Requiring Member Approval
iv
OPERATING AGREEMENT
OF
ALTURAS USTICK, LLC
Effective June 10, 2021 ("Effective Date"), this Operating Agreement ("Operating
Agreement") is adopted by those individuals signing this Operating Agreement, as the initial
Members of Alturas Ustick, LLC ("Company"). The Company is deemed to be a party to this
Operating Agreement.
ARTICLE 1
GENERAL
1.1 Formation. The Company was formed upon the filing of the Company's
Certificate of Organization with the Idaho Secretary of State.
1.2 Name. The name of the Company is Alturas Ustick, LLC and all business of the
Company shall be conducted under that name or one or more assumed business names as
may be adopted by the Company under applicable law.
1.3 Organization. The Company is subject to the provisions of the Idaho Uniform
Limited Liability Company Act, Idaho Section 30-25-101 et seq. (as now in effect or as hereafter
amended or superseded by any successor Idaho limited liability company act, the "Act"), and
this Operating Agreement.
1.4 Purposes and Powers. The purposes of the Company shall be to transact any
and all lawful business that a limited liability company may conduct under the Act. The
Company will be operated for cash income, tax benefits, and long-term appreciation. The
Company shall have and may exercise all powers necessary or convenient to effectuate these
purposes.
1.5 Duration. The Company shall continue in perpetuity, unless earlier dissolved
pursuant to Article 10.
1.6 Registered Agent. The Company's registered agent for service of process shall
be initially the Person reflected on the Company's Certificate of Organization, and thereafter the
Person reflected on any statement of change filed with the Idaho Secretary of State. The
Company may change its registered agent from time to time through appropriate filings with the
Idaho Secretary of State.
1.7 Principal Office. The Company's principal office shall be initially the location
reflected on the Company's Certificate of Organization, and thereafter the Company's mailing
address reflected on the Company's then-current annual report filed with the Idaho Secretary of
State. The Company may change its principal office from time to time through appropriate
filings with the Idaho Secretary of State.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 1
1.8 Miscellaneous Definitions. For the purposes of this Operating Agreement, the
following terms shall have the following meanings:
(i) The term "Affiliate" means, with respect to the Company,
any Person that directly or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with the Company (for the 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 and policies of a
Person, whether through the ownership of voting securities, by contract, or otherwise), and, with
respect to a Manager or Member, any director, officer, partner, manager, member, employee or
other agent of the Manager or Member;
(ii) The term "Code" means the Internal Revenue Code of
1986, as amended;
(iii) The term "Company Property" means all property owned
by the Company, whether real or personal, tangible or intangible, including (without limitation)
money, real estate, fixtures, furniture, equipment, inventory, advertising materials, goodwill,
intellectual property and any other property entrusted to any Person as a result of the Person's
status as a Manager or Member, and any legal or equitable interest in such property;
(iv) The term "Person" means an individual, corporation,
estate, trust, partnership, limited liability company, business trust, association, joint venture,
public corporation, government or governmental subdivision, agency, or instrumentality, or any
other legal or commercial entity; and
(v) The term "Treasury Regulations" means the regulations
promulgated by the United States Department of Treasury from time to time under the Code.
ARTICLE 2
MEMBERSHIP
2.1 Members. The "Members" of the Company consist of each Person that (i)
executes this Operating Agreement or a counterpart to this Operating Agreement, (ii) is an initial
Member or is subsequently admitted as a new Member, and (iii) has not ceased to be a
Member. If the Company has only one Member, references in this Operating Agreement to
"Members" shall be deemed to refer to the single Member.
2.2 Membership Interest. Each Member holds a "Membership Interest" in the
Company, which refers to both (i) the financial obligations and rights of a Member to the extent
so provided in this Operating Agreement, including (without limitation) the obligation to make
contributions and the right to receive distributions ("Financial Rights"), and (ii) the governance
obligations and rights of a Member as granted or limited by this Operating Agreement, including
(without limitation) the obligation to comply with limits on participation in the management of the
Company and voting rights and other rights to participate in management and direction of the
business of the Company ("Governance Rights").
2.2.1 Units. The Company is authorized to issue a single class of Membership
Interests in the form of units ("Units").
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 2
2.2.2 Percentage Interest. Each Member's Membership Interest may be
expressed as a percentage that is determined by dividing the total number of Units held by the
Member by the total number of Units held by all of the Members (referred to as a Member's
"Percentage Interest").
2.2.3 Separate Property of the Members. The Units of each Member are the
sole and separate property of the Member. Nothing in this Operating Agreement will be
construed as granting any current or former spouse of any Member any right, title, or interest in
the Member's Units, whether by community property law or other applicable law. In the event it
is determined that any portion of a Member's Units is community property, then the right, title or
interest of the current or former spouse of the Member with respect to such community property
will be limited to a right to receive a proportion of the distributions made pursuant to the
provisions of this Operating Agreement on account of the Member's Units.
2.2.4 Representations and Warranties of the Members. Each Member, and
in the case of an organization, each Person executing this Operating Agreement on behalf of
the organization, represents and warrants to the Company and each other Member that:
(i) The Member has the investment power and authority to
control the voting and disposition of the Member's Units and to exercise all rights of a Member
under this Operating Agreement relating to the Member's Membership Interest without the
consent of the Member's spouse or any other Person;
(ii) The Member is acquiring the Units for the Member's own
account, for personal use or investment purposes, and without any intent to sell or distribute the
Units; and
(iii) The Member acknowledges that the Units have not been
registered under the Securities Act of 1933, as amended, or any applicable state securities
laws, and may not be resold or transferred by the holders thereof without appropriate
registration or the availability of an exemption from the registration requirements.
2.3 Schedule of Members; Updates. The names, addresses, initial contributions,
initial Units, and initial Percentage Interests of the initial Members are set forth in Schedule 2.3
("Schedule of Members"). The Company shall use its reasonable efforts to maintain in its
records at all times a current Schedule of Members, which shall reflect the changes from time to
time in the information regarding the Members, including without limitation additional
contributions, issuances of additional Units, transfers of Units, dissociations of Members, and
admissions of new Members.
2.4 Approval of Actions by Members. The actions of the Company that are
subject to approval by the Members and the corresponding percentages of the Units entitled to
vote on or consent to the actions that are required for the approval of the actions by the
Members are set forth in Schedule 2.4. The actions set forth in Schedule 2.4 may not be taken
by the Company or the Managers absent approval by the Members in accordance with this
Section 2.4. Unless otherwise provided in this Operating Agreement, any actions that are not
set forth in Schedule 2.4 may be taken by the Managers on behalf of the Company pursuant to
Article 3, without approval by the Members. The Members may take action by either (i) a vote
of the Members at any meeting pursuant to Section 2.4.1, or (ii) by written consent of the
Members pursuant to Section 2.4.2.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 3
2.4.1 Member Meetings. If a quorum is present at a duly noticed and properly
conducted Member meeting, the Members may take action by the affirmative vote of Members
holding such percentage of the Units entitled to vote on the action that is required for the
approval of the action under Section 2.4. Each Member shall have the number of votes equal to
the number of Units entitled to vote on the action held by such Member. If a Member is an
organization, a representative of such organization acting within the authority granted to such
representative by the organization may vote on behalf of the organization. The following
additional provisions shall apply to Member meetings:
(a) Annual Meetings. An annual meeting is not required but if
desired, an annual meeting of the Members shall be held at a date, time, and place to be
determined by the Managers. At the annual meeting, the Members shall transact such business
as may come before the meeting.
(b) Special Meetings. A special meeting of the Members may be
called by Members holding at least twenty percent (20%) of the Units entitled to vote on the
actions to be taken at the special meeting.
(c) Notice. Written notice stating the place, day, and hour of any
Member meeting and, in the case of any special meeting of the Members, the purpose or
purpose(s) for which the meeting is called shall be delivered to the Members not less than three
(3) and no more than thirty (30) days before the date of the meeting. When any notice is
required to be given to Members, a waiver of the notice in writing signed by the Person entitled
to the notice, whether signed before, at, or after the time of the Meeting, shall be equivalent to
the giving of the notice.
(d) Place. The Managers may designate any place, either within or
without the State of Idaho, as the place of meeting for any Member meeting. If no designation is
made, the place of meeting shall be Company's designated office unless the Members
unanimously agree on another location.
(e) Electronic Participation. Any Member may participate in any
meeting by telephone or other electronic means. If no other Member raises objection as to the
electronically participating Member's identity, a Member so participating shall be considered as
participating in person at the meeting and may vote.
(f) Record Date. For the purpose of determining Members (i) entitled
to notice of, or to vote at, any meeting or any adjournment thereof, or (ii) for any other purpose,
the Managers may by resolution fix a future date as the record date, provided that the record
date is not more than thirty (30) days prior to the meeting. If the Managers do not fix the record
date for a meeting, the date on which notice of the meeting is mailed, faxed or e-mailed to the
Members shall be the record date. When a determination of Members entitled to notice of and
to vote at any meeting has been made as provided in this Section 2.4.1, such determination
shall apply to any adjournment thereof.
(g) Quorum. The presence of Members holding more than fifty
percent (50%) of the Units entitled to vote on the actions to be taken at a meeting shall
constitute a quorum for such meeting. In the absence of a quorum, Members holding twenty-
five percent (25%) of the Units so represented at the meeting may adjourn the meeting from
time to time for a period not to exceed sixty (60) days without further notice. However, if the
OPERATING AGREEMENT
ALTURAS USTICK, LLC -4
adjournment is for more than sixty (60) days, or if after the adjournment a new date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each Member
entitled to notice of and to vote at the meeting. At such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been transacted at the
meeting as originally noticed. The Members present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during such meeting of
Members holding that number of Units whose absence would cause less than a quorum to be
present.
2.4.2 Member Consents. The Members may take action by written consent
describing the action to be taken and signed by Members holding such percentage of the Units
entitled to consent to the action that is required for the approval of the action under Section 2.4.
If a Member is an organization, a representative of such organization acting within the authority
granted to such representative by the organization may execute the consent on behalf of the
organization. The following additional provisions shall apply to Member consents:
(a) Filing; Records. The Company shall use its reasonable efforts to
ensure that Member consents are included in the Company minutes and filed in the Company
records.
(b) Effective Date. Action taken by Member consent is effective upon
receipt of the signatures required to approve such action, unless the Member consent specifies
a different effective date.
(c) Record Date. The record date for determining Members entitled
to take action pursuant to a Member consent shall be the date the first Member signs the
Member consent.
2.5 Contributions. Members may be required to make contributions to the
Company as provided in this Section 2.5.
2.5.1 Initial Contributions. Each initial Member shall make the initial
contribution in exchange for the initial Units as set forth in Schedule 2.3. Each new Member
may be required to make an initial contribution as a condition to the new Member's admission
pursuant to Section 2.7.
2.5.2 Additional Contributions. Except as provided in this Section 2.5.2, no
Member shall be obligated to make any additional contributions beyond the initial contributions
set forth in Section 2.5.1. The Members may agree in accordance with Section 2.4 that one or
more of the Members shall make an additional contribution, which agreement shall also provide
for the type and value of such additional contributions and the extent to which additional Units
shall be issued to the Members in consideration of such additional contributions.
2.5.3 Form of Contribution. A contribution may consist of tangible or
intangible property or other benefit to the Company, including (without limitation) money,
services performed, promissory notes, and agreements to contribute money or property, but
excluding contracts for services to be performed.
2.5.4 Liability Regarding Contributions. The liability of any Member to
contribute to the Company is limited to the amount of the total contribution to be made by such
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 5
Member pursuant to this Section 2.5. The Members have no further liability to contribute money
or other property to the Company for, or relating to, the debts, obligations, or other liabilities of
the Company. The Members are not personally liable for any debts, obligations, or other
liabilities of the Company, including (without limitation) the return or repayment of any
contribution. Contributions are to be expended in furtherance of the business of the Company.
All costs and expenses of the Company are to be paid from the Company's funds. The
Company shall not pay interest on contributions. No Member has any right to receive a return
of contributions, except as otherwise expressly provided in this Operating Agreement.
2.6 Distributions. Members may receive distributions from the Company as
provided in this Section 2.6.
2.6.1 Interim Distributions. From time to time, the Managers shall
determine in their reasonable judgment to what extent, if any, there is Cash Available for
Distribution. To the extent that Cash Available for Distribution exists, the Company may, but
shall not be required to, make distributions to the Members from the Company's net income
after expenses. All distributions to be made to the Members under this Section 2.6.1 shall be
made according to the Members' respective Percentage Interests. For the purposes of this
Section 2.6.1, whether "Cash Available for Distribution" exists shall be calculated as follows:
(i) The sum of (a) all cash and cash equivalents existing at
the first of the year, plus (b) all cash received by the Company from the operations of the
Company during the year, including (without limitation) net proceeds of sale or refinancing;
minus
(ii) The sum of (a) all cash expenditures of the Company
during the year, including (without limitation) capital expenditures and payments of principal and
interest on indebtedness, whether or not the payments are made to a Manager, Member, or
Affiliate thereof, (b) expenditures for repairs, maintenance, capital improvements, and
replacements of existing assets, (c) all other cash expenditures related to the operations of the
Company, including (without limitation) all fees, if any, payable to any Manager, Member, or
Affiliate thereof under the terms of this Operating Agreement, and (d) such reserves and
retentions as the Managers determine to be necessary or desirable in connection with Company
operations, including (without limitation) adequate capital to pay taxes, insurance payments,
debt payments, and anticipated operating or capital expenditures, such as the acquisition of
new equipment.
2.6.2 Liquidating Distributions. Liquidating distributions following
dissolution of the Company shall be made to the Members pursuant to Article 10.
2.6.3 Form of Distributions. Distributions may be paid in the form of cash, or
real or personal property or any combination thereof, as determined by the Managers.
Non-cash assets, if any, shall be distributed in a manner that reflects how cash proceeds from
the sale of the non-cash assets for fair market value would have been distributed (after any
unrealized gain or loss attributable to the non-cash assets has been allocated among the
Members in accordance with Article 7), and the Capital Accounts of the Members shall be
adjusted to account for the Members' allocable shares as determined under Article 7.
2.6.4 Withholding and Treating Amounts Withheld as Distributions. The
Company is authorized to withhold from distributions to Members and to pay over to the
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 6
appropriate federal, state, or local governmental authority any amounts required to be withheld
pursuant to the Code or provisions of applicable federal, state, or local law. All amounts
withheld pursuant to this Section 2.6.4 in connection with any distribution to any Member shall
be treated as amounts distributed to the Member for the purposes of this Section 2.6.
2.6.5 Distributions to Pay Taxes. To the extent the Company has Cash
Available for Distribution (as defined in Section 2.6.1), the Company shall make a distribution to
the Members in an amount that is reasonably estimated to be sufficient to enable the Members
to pay the estimated federal and state income taxes attributable to their allocated shares of the
Company's net long-term and Code Section 1231 capital gains and non-separately computed
income under applicable provisions of the Code. This estimated tax liability shall be computed
by the accountant who regularly prepares the Company's tax returns and shall be computed
using the highest incremental tax rate applicable to individuals, even though some Members
may have different, or even zero, tax rates. With respect to the preceding tax year, these
distributions shall be declared and paid annually no later than April 15th of each year. Any
distributions made to Members during the taxable year in question may be taken into account by
the Managers in determining the extent of the minimum distributions to be made under this
Section 2.6.6 for that particular taxable year.
2.6.6 Limitation on Distributions. The Company may not make a distribution
to the Members if, after the distribution, the Company would not be able to pay its debts as they
become due in the ordinary course of the Company's activities.
2.7 New Members. Any Person eligible to be a Member of the Company under this
Operating Agreement, the Act, and other applicable law may be issued Units by the Company
and admitted as a new Member upon the approval of the Members in accordance with Section
2.4. If admitted, the new Member has all the rights and obligations and is subject to all the
restrictions and liabilities of all other Members. The following additional conditions shall apply to
the admission of a new Member:
(a) Documents. The new Member shall execute and deliver all
documents necessary for the admission of the new Member, including without limitation a
counterpart to this Operating Agreement, in the form and substance satisfactory to the
Managers.
(b) Payment of Expenses. The new Member shall pay all reasonable
expenses incurred in connection with the admission of the new Member as may be required by
the Managers, including (without limitation), the cost of preparing and completing any
amendment to this Operating Agreement, the Company's Certificate of Organization, or the
Company's Statement of Authority, as necessary or desirable in connection with the admission
of the new Member.
(c) Contribution. The new Member shall be required to make an
initial contribution to the Company in exchange for the Company's issuance of Units, to the
extent required and as determined by the Members in accordance with Section 2.4.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 7
ARTICLE 3
MANAGEMENT
3.1 Managers. The Company will be managed by one or more "Managers" as
provided in this Article 3. If the Company has only a single Manager, references in this
Operating Agreement to "Managers" shall be deemed to refer to the single Manager.
3.2 Management Authority. Except as otherwise provided in this Operating
Agreement, the management of the Company shall be vested in its Managers and the
Managers shall have the right and power to manage and direct the business and affairs of the
Company, to take actions on behalf of the Company, to bind the Company, and to do all other
things necessary or convenient to carry out the business and affairs of the Company. All
policies, procedures and protocols affecting the Company, its business, or Company Property
shall be determined, made, approved, or authorized by the Managers. Notwithstanding the
foregoing, the Managers do not have authority to take any of the actions set forth in Section 2.4
absent the requisite approval of the Members in accordance with 2.4.
3.3 Manner of Acting. As long as the Company has only one (1) Manager, that
Manager shall have the authority to act as an agent of the Company and bind the Company as
provided in this Article 3. If the Company has at any time more than one (1) Manager, the
Managers shall act as a collegial body and no individual Manager shall have the authority to
speak for the Company or to make decisions on behalf of the Company, except as authorized
by the Managers acting as a group. Each Manager has an equal vote in the management and
conduct of the activities of the Company. The Managers may take action by either (i) a vote of
the Managers at any meeting pursuant to Section 3.3.1, or (ii) by written consent of the
Managers pursuant to Section 3.3.2.
3.3.1 Manager Meetings. If a quorum is present at a duly noticed and properly
conducted Manager meeting, the Managers may take action by the affirmative vote of a majority
of the number of Managers entitled to vote on the action. If a Manager is an organization, a
representative of such organization acting within the authority granted to such representative by
the organization may vote on behalf of the organization. The following additional provisions
shall apply to Manager meetings:
(a) Annual Meetings. An annual meeting is not required but if
desired, an annual meeting of the Managers shall be held at a date, time, and place to be
determined by the Managers. At the annual meeting, the Managers shall transact such
business as may come before the meeting.
(b) Special Meetings. A special meeting of the Managers may be
called at any time by any Manager.
(c) Notice. Written notice stating the place, day, and hour of any
Manager meeting and, with respect to a special meeting, the purpose or purposes for which the
meeting is called shall be delivered to the Managers not less than three (3) and no more than
thirty (30) days before the date of the meeting. When any notice is required to be given to
Managers, a waiver of the notice in writing signed by the Person entitled to the notice, whether
signed before, at, or after the time of the meeting, shall be equivalent to the giving of the notice.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 8
(d) Place. The Managers may designate any place, either within or
without the state of Idaho, as the place of meeting for any Manager meeting. If no designation
is made, the place of meeting shall be Company's designated office unless the Managers
unanimously agree on another location.
(e) Electronic Participation. Any Manager may participate in any
meeting by telephone or other electronic means. A Manager so participating may vote if no
other Manager raises objection as to the electronically participating Manager's identity.
(0 Quorum. The presence of a majority of the Managers entitled to
vote on the actions to be taken at a Manager meeting shall constitute a quorum for such
meeting. In the absence of a quorum, a majority of the Managers so represented at the meeting
may adjourn the meeting from time to time for a period not to exceed sixty (60) days without
further notice. However, if the adjournment is for more than sixty (60) days, or if after the
adjournment a new date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each Manager entitled to notice of and to vote at the meeting. At such
adjourned meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally noticed. The Managers present at a
duly organized meeting may continue to transact business until adjournment, notwithstanding
the withdrawal during such meeting of a number of Managers whose absence would cause less
than a quorum to be present.
3.3.2 Manager Consents. The Managers may take action by written consent
describing the action to be taken and signed by a majority of the number of Managers entitled to
consent to the action. If a Manager is an organization, a representative of such organization
acting within the authority granted to such representative by the organization may execute the
consent on behalf of the organization as a Manager. The following additional provisions shall
apply to Manager consents:
(a) Filing; Records. The Company shall use its reasonable efforts to
ensure that each Manager consent is included in the Company minutes and filed in the
Company records.
(b) Effective Date. Action taken by Manager consent is effective upon
receipt of the signatures required to approve such action, unless the Manager consent specifies
a different effective date.
(c) Record Date. The record date for determining Managers entitled
to take action pursuant to a Manager consent shall be the date the first Manager signs the
Manager consent.
3.4 Number. The Managers shall initially consist of one Persons appointed or
elected to serve as the Managers. The initial Manager is Alturas Capital Partners LLC, a
Delaware limited liability company.
3.5 Appointment; Term; Removal. A Manager may be appointed or elected by the
Members in accordance with Section 2.4. A Manager shall serve until a successor has been
chosen, unless the Manager sooner resigns, becomes disabled, is removed, or dies. A
Manager may be removed at any time by the Members in accordance with Section 2.4. The
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 9
Members may not cumulate their votes for the election or removal of any Manager. Any Person
shall be eligible to serve as a Manager, regardless if the Person is not also a Member.
3.6 Effect of Cessation of Status as either a Manager or Member. If a Manager
is also a Member: (i) the cessation of that Person's status as a Manager shall not affect the
Person's rights as a Member and shall not result in the cessation of that Person's status as a
Member; and (ii) the cessation of that Person's status as a Member shall result in the cessation
of that Person's status as a Manager. The Company shall not be dissolved as a result of the
cessation of a Manager's status as a Member or a Member's status as a Manager.
3.7 Expense Reimbursement. A Manager shall be reimbursed for all reasonable
expenses incurred in managing the Company.
3.8 Compensation. Unless approved by the Members in accordance with Section
2.4, no Manager shall receive compensation from the Company for services provided to the
Company. If approved by the Members, a Manager shall be entitled to compensation for
services provided to the Company in such amount and subject to such other terms and
conditions as approved by the Members. Any compensation paid to a Manager of the Company
shall be a payment for management and other services provided to the Company. To the extent
compensation of any Manager is authorized, the compensation is cumulative and, to the extent
not paid in any taxable year, is a debt of the Company to the Manager. Amounts paid pursuant
to this Section 3.8 to any Manager who is also a Member are intended to constitute guaranteed
payments within the meaning of Code Section 707(c), and are not to be treated as distributions
for purposes of Section 2.6 or computing the recipient Member's Capital Account under Article
7.
ARTICLE 4
AUTHORITY AND LIMITED LIABILITY
4.1 Authority of Members. A Member is not an agent of the Company solely by
reason of being a Member. No Member or Affiliate thereof shall have, or hold himself out to any
other Person as having, any actual authority to bind the Company.
4.2 Authority of Managers. As long as the Company has only one (1) Manager,
that Manager shall have the authority to act as an agent of the Company and bind the Company
as provided in Article 3. If the Company has at any time more than one (1) Manager, (i) the
Managers acting as a collegial body are the Company's agent, (ii) the Managers' actions as a
collegial body bind the Company, and (iii) the individual Managers are not agents of the
Company and have no individual authority to bind the Company.
4.3 Statement of Authority. As permitted under the Act, the Company may file with
the Idaho Secretary of State from time to time a Statement of Authority that states the authority,
or limitations on authority, of the Managers, Members, or other Persons to execute any
instrument or to enter into any transaction on behalf of or otherwise to act for or bind the
Company, as set forth in or determined in accordance with this Operating Agreement.
4.4 Status of Limited Liability Company as Separate Entity. The Company shall
be an entity separate and independent from its Managers and Members. As evidence of its
separate status:
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 10
(i) To the extent reasonably practicable, the Company shall
be specifically identified as " Alturas Ustick, LLC" in all writings containing its name, including
without limitation Company stationery, invoices, business cards, and checks;
(ii) The Company's financial accounts shall be completely
separate from those of the Managers and Members;
(iii) There shall be no commingling of the funds of the
Company with the funds of the Managers or Members;
(iv) The Managers and Members shall make no use of
Company funds for personal purposes;
(v) The Company shall not use personal funds of the
Managers or Members for its purposes;
(vi) All Company Property shall be owned by the Company;
and
(vii) No Manager or Member, individually, shall have any
ownership interest in any Company Property.
4.5 Limited Liability. The liability of the Managers and Members shall be limited as
provided in the Act, regardless of any participation in management of the Company. In
particular, but without limiting the foregoing sentence:
(i) No Manager or Member shall be personally liable to the
Company or any Manager or Member for monetary damages, except for breach of the duty of
loyalty under Section 5.3, receipt of a financial benefit to which the Manager or Member is not
entitled, approval of a distribution in violation of Section 2.6.6, intentional infliction of harm on
the Company or a Member, or an intentional violation of criminal law;
(ii) No Person shall, by virtue of the Person's status as a
Manager or Member of the Company, be liable to any third party 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 other Manager,
Member, or Affiliate thereof;
(iii) Unless otherwise set forth in or determined in accordance
with this Operating Agreement, no Member shall have any further liability to contribute to the
Company for, or in respect of, the debts, obligations, or other liabilities of the Company and no
Member shall be personally liable for any debts, obligations, or other liabilities of the Company;
(iv) The failure of the Company to observe any formalities or
requirements relating to the exercise of its powers or the management of its business or affairs
under this Operating Agreement or the Act shall not be grounds for imposing personal liability
on any Manager or Member for any debt, obligation, or liability of the Company; and
(v) No Manager or Member shall represent or imply to any
Person that the Manager or Member, or any other Manager or Member, is personally liable for
any obligation of the Company.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 11
ARTICLE 5
STANDARDS OF CONDUCT
5.1 Fiduciary Duties. Each Manager and each Member owes to the Company and
the Members the fiduciary duties set forth in this Article 5. To the fullest extent permitted by the
Act, the Members and the Company intend that the provisions of this Article 5 (i) set forth the
entirety of the fiduciary duties owed by each Manager and Member to the Company and its
Managers and Members and (ii) shall supersede any contrary fiduciary duties or limitations on
fiduciary duties imposed by the Act.
5.2 Duty of Care. Each Manager owes to the Company and the Members a duty of
care as set forth in this Section 5.2. Subject to the business judgment rule, the duty of care
shall require each Manager to act with the care that a Person in a like position would reasonably
exercise under similar circumstances and in a manner the Manager reasonably believes to be in
the best interests of the Company. A Manager's duty of care includes, without limitation, the
duty (i) to be informed regarding the Company's activities, (ii) to disclose to the Members all
material information, (iii) to refrain from engaging in grossly negligent or intentional misconduct,
(ii) to refrain from acting in bad faith, and (iii) to refrain from committing a knowing violation of
law. In discharging such duties, a Manager shall be fully protected in relying in good faith upon
the records required to be maintained under this Operating Agreement and upon the opinions,
reports, statements, or other information provided by any other Manager, Member, or Affiliate
thereof the Manager reasonably believes is a competent and reliable source for such
information.
5.3 Duty of Loyalty. Except as otherwise provided in this Section 5.3, each
Manager and Member owes to the Company and the Members a duty of loyalty as set forth in
this Section 5.3. The duty of loyalty shall generally require each Manager and Member to place
the interests of the Company prior to the personal, family, business, and other relationships and
interests of the Manager and Member. Each Manager and Member shall actively seek to further
the business operations and interests of the Company and shall deal fairly with the Company
with respect to any business operations or interests of a Manager or Member that directly or
indirectly may conflict with the business operations of the Company.
5.3.1 Company Opportunity. Each Manager and Member agrees, for
itself and on behalf of its Affiliates, to refrain from competing with the Company in the conduct of
the Company's business operations or the winding up of the Company's activities.
Notwithstanding the foregoing, Members may own other business or investment property and
such ownership does not constitute a violation of the duty of loyalty hereunder.
5.3.2 Account. Each Manager and each Member agrees, for itself and on
behalf of its Affiliates, to account to the Company and hold as trustee for the Company any
property, including (without limitation) any Company Property, profit or benefit derived by the
Manager, Member, or Affiliate thereof (i) in the conduct or winding up of the Company's
activities, and (ii) from the use by the Manager, Member, or Affiliate thereof of any Company
Property for the personal use or benefit of that Manager, Member, or Affiliate thereof.
5.3.3 Loans. The Company may borrow money from a Manager, Member,
or Affiliate thereof on terms and conditions that are no more beneficial to the Manager, Member,
or Affiliate than the terms and conditions that are most favorable to the Company that are
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 12
offered to the Company by commercial lenders. A loan that complies with this Section 5.3.4 is
not a Conflicting Interest Transaction.
5.3.4 Conflicting Interest Transactions. If a Manager, Member, or
Affiliate thereof has a direct or indirect interest in a transaction ("Conflicting Interest
Transaction"), that Manager or Member shall not represent the Company in the negotiations
and shall not vote or take any action for the Company regarding the negotiation or approval of
the transaction. The Managers shall designate a Person with no conflict of interest to represent
the Company in the negotiations. The rights and obligations of a Manager, Member, or Affiliate
thereof who transacts business with the Company are the same as those of a Person who is not
a Manager, Member, or Affiliate thereof, subject to other applicable law. No transaction with the
Company shall be voidable solely because a Manager, Member, or Affiliate thereof has a direct
or indirect interest in the transaction if either (i) the transaction is fair to the Company, or (ii) the
disinterested Members, knowing all material facts regarding the transaction, authorize, approve
or ratify the transaction in accordance with Section 2.4. In connection with the negotiation of
any Conflicting Interest Transaction, the parties (i) shall disclose to one another all material facts
concerning the transaction and any Manager's, Member's, or Affiliate's interest in the
transaction, and (ii) shall bargain in good faith.
5.4 Confidentiality. Each Manager and Member owes to the Company and the
Members a duty of confidentiality, which shall include the duty to (i) maintain the confidentiality
of the Company's Confidential Information and (ii) not use or disclose any of the Company's
Confidential Information for purposes other than the Company's purposes (as set forth in
Section 1.4) unless otherwise authorized by the Managers. For the purposes of this Operating
Agreement, the Company's "Confidential Information" shall include any information,
regardless of the medium, relating to the Company's business, products, services,
organizational structure, personnel data, marketing philosophy and objectives, project plans,
strategy and vision statements, business initiatives, system design, methodologies, processes,
competitive advantages and disadvantages, systems, operations, technology, customer and
customer prospects lists, vendor lists, price lists, design process, business plans, advertising,
software, sales programs, or any other information that might give the Company an opportunity
to obtain an advantage over the Company's competitors. Each Manager and Member shall take
all actions reasonably necessary to assure that its Affiliates abide by this duty of confidentiality.
5.5 Good Faith and Fair Dealing. Each Manager and Member must act in
accordance with the implied contractual duty of good faith and fair dealing owed to the
Company and its Managers and Members in connection with their respective rights and
obligations under this Operating Agreement. Each Manager and Member shall actively seek to
further the interests of the Company, and shall deal fairly with the Company with respect to any
business operations or interests of a Manager or Member that directly or indirectly may affect
the Company or the Company Property. Subject to those overriding standards, a Manager,
Member, or Affiliate thereof is not prohibited from otherwise dealing with the Company in
compliance with this Article 5.
ARTICLE 6
INFORMATION RIGHTS
6.1 Information Rights. To the fullest extent permitted by the Act, the Members and
the Company intend that the provisions of this Article 6 set forth the rights and obligations of
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 13
each Manager and Member with respect to information pertaining to the Company and shall
supersede any contrary rights or obligations imposed by the Act.
6.2 Books of Account. The Company shall maintain complete and accurate books
of account of the Company's affairs. Such records shall be available for inspection and/or
copying by the Managers and current or former Members in accordance with the rights and
limitations set forth in this Article 6.
6.3 Records to be Maintained. The Company shall maintain the following records
and information at the Company's designated office or, if appropriate, at the offices of the
Company's lawyers or accountants.
6.3.1 Members and Addresses. A listing setting forth the full name and last
known mailing address of each current and past Manager and Member, and any permitted
transferee of a Member's Units who is not otherwise a Member, if known to the Company.
6.3.2 Certificate of Organization. A copy of the Company's Certificate of
Organization and all amendments to the Certificate of Organization.
6.3.3 Operating Agreement. A copy of this Operating Agreement and all
amendments to this Operating Agreement, and copies of any written operating agreements no
longer in effect.
6.3.4 Statement of Authority. A copy of the Company's Statement of
Authority and all amendments or cancellations filed with respect to the Statement of Authority.
6.3.5 Tax Returns. Copies of the Company's federal, foreign, state, and local
income tax returns and reports, if any, for the three (3) most recent years.
6.3.6 Contributions. A ledger setting forth the type and amount of each
contribution made by a Member and each contribution a Member has agreed to make in the
future, including without limitation any terms and conditions applying to such agreement.
6.4 Managers. Each Manager shall have the duty to furnish to any other Manager (i)
without demand, any record or other information concerning the Company's activities, financial
condition, and other circumstances which is reasonably required for the proper exercise of the
Manager's rights and duties under this Operating Agreement, including (without limitation) any
Company records, wherever located, required to be maintained by the Company pursuant to
Sections 6.2 or 6.3, and (ii) on demand, any other information concerning the Company's
activities, condition, and circumstances.
6.5 Members. Whenever any law or this Operating Agreement provides for a
Member to give or withhold consent to a matter, before the consent is given or withheld, the
Company shall, without demand, provide the Member with all information that is known to the
Company and is material to the Member's decision. The Company shall furnish to each
Member, without demand, information concerning the Company's activities, financial condition,
and other circumstances of the Company, which is material to the interests of the Member,
except to the extent the Company can establish that it reasonably believes the Member already
knows the information. During regular business hours and at a reasonable location specified by
the Company, a Member may obtain from the Company and inspect and copy true and full
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 14
information regarding the activities, financial condition, and other circumstances of the Company
as is just and reasonable if (i) the Member seeks the information for a purpose material to the
Member's interest as a Member, (ii) the Member makes a demand in a record received by the
Company describing with reasonable particularity the information sought and the purpose for
seeking the information, and (iii) the information sought is directly connected to the Member's
purpose. Within ten (10) days after receiving a demand, the Company shall in a record inform
the Member that made the demand (i) the information that the Company will provide in response
to the demand, (ii) when and where the Company will provide the information, and (iii) if the
Company declines to provide any demanded information, the Company's reasons for declining.
6.6 Former Members. On ten (10) days' demand made in a record received by the
Company, a former Member may have access to whatever information and records the Person
was entitled to inspect and copy while a Member if (i) the information or record pertains to the
period during which the Person was a Member, (ii) the Person seeks the information or record in
good faith, and (iii) the Person satisfies the requirements otherwise imposed on a Member by
this Article 6. The Company shall respond to a demand made pursuant to this Section 6.6 in the
same manner as set forth in Section 6.5.
6.7 Protection of Company. The Company may impose reasonable restrictions on
the use of information obtained under this Article 6, including without limitation designating
information confidential and imposing nondisclosure, nonuse, and safeguarding obligations on
the recipient. In a dispute concerning the reasonableness of a restriction under this Section 6.7,
the Company has the burden of proving reasonableness.
6.8 Reasonable Charges. A Company may charge a Person that makes a demand
under this Article 6 any reasonable costs of copying, which shall be limited to the costs of labor
and material.
6.9 Transferees. The rights stated in this Article 6 do not extend to any transferee of
a Member's Units, whether or not such Transfer is permitted by this Operating Agreement,
unless and until the transferee is admitted as a new Member.
6.10 Audit. A Member has a right to require an audit of the financial condition and
operations of the Company, provided that the requesting Member shall pay for all fees and
expenses of the auditor and all related fees and expenses incurred by the Company.
ARTICLE 7
ACCOUNTING AND TAXES
7.1 Capital Accounts. The Company shall establish and maintain an account
recording the capital of each Member (referred to as a "Capital Account"), in accordance with
the provisions of Code Section 704(b) and the related Treasury Regulations. If in the opinion of
the Company's accountants the manner in which Capital Accounts are to be maintained
pursuant to the provisions of this Section 7.1 should be modified to comply with Code Section
704(b) and the related Treasury Regulations, then notwithstanding anything to the contrary
contained in the provisions of this Section 7.1 the method by which Capital Accounts are
maintained shall be so modified; provided, however, that any change in the manner of
maintaining Capital Accounts shall not materially alter the economic agreements of the
Members.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 15
7.1.1 Increases and Decreases in Capital Accounts.
(a) Increases. Each Member's Capital Account is to be increased by
(i) the amount of any money contributed by the Member; (ii) the fair market value of any
property contributed by the Member, as determined by the Company and the Member at arm's
length at the time of contribution (net of property liabilities or other liabilities assumed by the
Company within the meaning of Code Section 752); (iii) allocations to the Member of income
and gain, including items of income and gain which are separately stated under Code Section
702(a); (iv) any items in the nature of income and gain that are specially allocated to the
Member, excluding special allocations under Section 7.3.2; and (v) allocations to the Member of
income and gain exempt from federal income tax.
(b) Decreases. Each Member's Capital Account is to be decreased
by (i) the amount of any money distributed to the Member; (ii) the fair market value of any
Company Property distributed to the Member, as determined by the Company and the Member
at arm's length at the time of distribution (net of liabilities of the Company or Company Property
assumed by the Member within the meaning of Code Section 752); (iii) allocations to the
Member of expenditures described in Code Section 705(a)(2)(B); (iv) any items in the nature of
deduction and loss that are specially allocated to the Member; and (v) allocations to the Member
of deductions and losses of the Company, including without limitation deductions and losses
which are separately stated under Code Section 702(a).
7.1.2 Allocations upon Permitted Transfers. Upon a Transfer of a Member's
Units that is permitted under Article 8, the Capital Account of the transferring Member that is
attributable to the transferred Units carries over to the transferee in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). The share of income, gain, loss, deduction, and credit of
the transferring Member shall be determined by taking into account the Member's proportionate
share of the amount of the income, gain, loss, deduction, and credit for the year. The Managers
shall make the proration based on the portion of the calendar year that has elapsed prior to the
Transfer, and shall allocate the balance of the income, gain, loss, deduction, and credit
attributable to the transferred Units to the transferee. Notwithstanding the foregoing, a majority
of the Members may elect to use an allocation method different than that set forth above,
including (i) an interim closing of the books based on actual income and deductions through the
transfer date; (ii) proration of annual income based on the time the Member's Units are held by
each Member during the year; and (iii) the proration method listed in (ii) but with the option to
make adjustments for extraordinary items based on the time period each is incurred.
7.2 Single Member LLC Taxation. If and for so long as the Company has only a
single Member, the Company intends to be treated as a "disregarded entity" solely for purposes
of state and federal income taxes; and all items of income, gain, loss, deduction and credit (as
those terms are defined in the applicable provisions of the Code) shall be allocated to such
Member in accordance with the applicable provisions of the Code.
7.3 Multiple Member LLC Taxation. Unless the Members unanimously agree to
elect Subchapter S corporation status, during any period in which the Company has more than
one Member, (i) the Company intends to be treated for federal and state tax purposes as a
partnership under Subchapter K of the Code, and (ii) the following provisions of this Section 7.3
shall apply.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 16
7.3.1 Income, Gain, Loss, Deduction and Credit. Except as provided in
Section 7.3.2, all items of (i) income, gain, loss, deduction and credit (as defined in the Code),
including items described in Code Section 702(c), (ii) income or gain exempt from federal taxes,
and (iii) expenditures described in Code Section 705(a)(2)(B), shall be determined on an annual
basis and allocated to the Members in proportion to their respective Percentage Interest.
7.3.2 Special Allocations.
(a) Allocation of Code Section 704(c) Items. With respect to real and
personal property contributed to the Company by a Member and with respect to real and
personal property revalued in accordance with Section 7.1, there may be a difference between
the agreed values or "carrying values" of the real and personal property at the time of
contribution or revaluation and the adjusted tax basis of the real and personal property at that
time. All items of tax depreciation, cost recovery, amortization, amount realized, and gain or
loss with respect to the real and personal property shall be allocated among the Members so as
to take into account the book-tax disparities in accordance with the provisions of Code
Sections 704(b) and 704(c) and the Treasury Regulations.
(b) Recapture Items. To the extent of any recapture income (as
defined below) resulting from the sale or other taxable disposition of Company Property, the
amount of any gain from the disposition allocated to or recognized by a Member for federal
income tax purposes shall be deemed to consist of recaptured income to the extent the Member
has been allocated or has claimed any deduction directly or indirectly giving rise to the
treatment of the gain as recapture income. For this purpose "recapture income" shall mean
any gain recognized by the Company (but computed without regard to any adjustment required
by Code Sections 734 and 743) upon the disposition of any Company Property that does not
constitute capital gain for federal income tax purposes because the gain represents the
recapture of deductions previously taken with respect to the real and personal property or
assets.
(c) Special Allocations in the Event of Deficit Capital Account
Balances. In the event that any Member receives an allocation under this Article 7 which results
in a negative Capital Account balance, the Member shall be specially allocated items of
Company income, gain, loss, deduction, and credit in an amount sufficient to bring the Capital
Account to a zero balance as quickly as possible.
7.3.3 Integration with Code Section 754 Election. All items of income, gain,
loss, deduction and credit recognized by the Company for federal income tax purposes and
allocated to the Members in accordance with the provisions in this Article 7, and all basis
allocations to the Members, shall be determined without regard to any election under Code
Section 754 that may be made by the Company. However, allocations, once made, shall be
adjusted as necessary or appropriate to take into account the adjustments permitted by Code
Sections 734 and 743.
7.4 Compliance with Code and Treasury Regulations. The provisions of this
Article 7 as they related to the maintenance of Capital Accounts are intended and shall be
construed to cause the allocations of profits, losses, income, gain, and credit pursuant to this
Article 7 to have substantial economic effect under Code Section 704(b) and the Treasury
Regulations. If, in the opinion of the Company's legal counsel or accountants, the manner in
which Capital Accounts are to be maintained pursuant to this Article 7 should be modified in
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 17
order to comply with Code Section 704(b) and the Treasury Regulations, then notwithstanding
anything to the contrary contained in this Article 7, the method in which Capital Accounts are
maintained is to be so modified. However, any change in the manner of maintaining Capital
Accounts shall not materially alter the economic agreements among the Members and nothing
in this Article 7 shall be construed as creating a deficit restoration obligation or otherwise
personally obligate any Member to make a contribution.
7.5 Partnership Representative. If the Company is classified as a partnership for
U.S. federal income tax purposes, the Manager(s) shall designate a party to (i) prepare and
sign, on behalf of the Company, the tax returns of the Company and (ii) be designated as the
"partnership representative" of the Company under Section 6223(a) of the Code to the extent
allowed under the law.
ARTICLE 8
TRANSFERS OF UNITS
8.1 Prohibition on Transfers. Except as otherwise provided in this Article 8, the
Members may not Transfer the Units. In particular, but without limitation, except as otherwise
provided in this Article 8, a Member has no right to withdraw, be redeemed, dissociate, or
otherwise cease to be a Member by voluntary act at any time. A "Transfer" of the Units shall
include any sale, assignment, exchange, pledge, encumbrance, gift, redemption, purchase, or
other transfer, whether voluntarily or by operation of law, and whether actual, partially
completed, or merely attempted, of any of the Units.
8.1.1 General Limitations under Applicable Law. Notwithstanding anything
in this Operating Agreement to the contrary, neither the Company nor any Member shall have
the right to Transfer the Units (i) if the Transfer would cause termination of the Company
pursuant to Code Section 708(b)(1)(B), and (ii) if the transferee is not eligible to be a Member of
the Company under this Operating Agreement, the Act, and other applicable law.
8.1.2 Reasonableness of Restrictions; Enforcement. Each of the Company
and the Members acknowledges the reasonableness of the restrictions set forth in this Article 8
in view of the Company's purposes and the relationships among the Members and between the
Members and the Managers. The restrictions on Transfers set forth in this Article 8 are
specifically enforceable.
8.2 Effect of Prohibited Transfers. A Transfer in violation of this Article 8 shall be
null and void and shall have the following additional effects:
(i) The transferee shall not become a Member and shall not
be entitled to any Units or Membership Interest as a result of the Transfer; and
(ii) The transferring Member shall be dissociated as a Member
of the Company as set forth in Article 9.
8.3 Permitted Transfers. The following Transfers are permitted as provided in this
Section 8.3.
8.3.1 Voluntary Redemption. The Company may redeem all or any portion of
a Member's Units by selling such Units to the Company upon written notice to the other
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 18
Members and the prior approval of the Transfer by the other Members in accordance with
Section 2.4. The material terms of a Transfer pursuant to this Section 8.3.1 shall be as agreed
by the parties to the Transfer and approved by the other Members.
8.3.2 Mandatory Redemption. A dissociated Member (or in the case of death
or disability, the dissociated Member's representative) shall be required to surrender the Units
held by the dissociated Member for redemption by the Company in the event the Company
determines to exercise such redemption right pursuant to Section 9.3. The purchase price for
the Units transferred pursuant to this Section 8.3.2 shall be the price agreed upon by the
dissociated Member and the Company, but if no such agreement can be obtained, then the
purchase price shall be Fair Value (as defined in Section 8.3.2(a) and the material terms of the
Transfer shall include, at a minimum, the Standard Payment Terms (as defined in Section
8.3.2(b)).
(a) Fair Value. The "Fair Value" of a dissociated Member's Units
shall be determined by the Company's independent accountant using the following formula:
(i) The Company's total net assets multiplied by the
dissociated Member's Percentage Interest, (where the
Company's total net assets equals the total assets other
than Distributable Cash, minus the sum of intangible
assets plus current liabilities plus long-term liabilities plus
the amount of liquidation preference of all Membership
Interests having a liquidation preference (if any); plus
(ii) That portion of Distributable Cash that would be distributed
to the dissociated Member based on the dissociated
Member's Sharing Ratio for services rendered prior to
dissociation; minus
(iii) Any damages incurred by the Company as a result of the
Member's dissociation in breach of this Operating
Agreement, including (without limitation) damages
reasonably estimated by the Managers on account of
(among other things) specific capital expenditures and
variable overheads incurred by the Company in reliance on
the expectation of the dissociated Member's continued
membership in the Company.
Notwithstanding the foregoing, if a majority of the Members so elect, the dissociated Member's
Units shall be appraised by an appraiser jointly selected by the Company and the dissociated
Member and the appraised value shall then be the Fair Value.
(b) Standard Payment Terms. The "Standard Payment Terms" shall
allow the transferee to pay up to 80% of the purchase price for the Units pursuant to an
unsecured promissory note. The terms of such note shall include, at a minimum, a five (5) year
maturity date, interest accruing on the principal at a rate of five percent (5%) per annum, and
equal annual installment payments of principal and interest amortized over a five (5) year
period.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 19
8.3.3 Transfer to Another Member. A Member may transfer all or any portion
of the Member's Units to another Member upon written notice to the other Members and the
prior approval of the Transfer by the other Members in accordance with Section 2.4. The
material terms of a Transfer pursuant to this Section 8.3.3 shall be as agreed upon by the
parties to the Transfer and approved by the other Members.
8.3.4 Transfer to a Third Party. A Member may transfer all or any portion of
the Member's Units to a Person eligible to be a Member of the Company under this Operating
Agreement, the Act, and other applicable law, other than the Company or another Member,
upon written notice to the Company and the other Members, subject to the Company's first
option to purchase the Units (as described in Section 8.3.4(a)) and the other Members' second
option to purchase the Units (as described in Section 8.3.4(b); provided, however, that if neither
the Company nor any of the other Members purchase the Units pursuant to their respective
options, the other Members may nevertheless determine, in accordance with Section 2.4, to
dissolve the Company pursuant to Article 10 in lieu of permitting the Transfer. The material
terms of a Transfer pursuant to this Section 8.3.4 shall be as agreed by the parties to the
Transfer; and if either the Company or any of the other Members determine to exercise their
respective options, the purchase price and material terms of that Transfer shall be at least as
favorable to the transferring Member as the purchase price and material terms of the proposed
Transfer between the Member and the third-party.
(a) The Company's First Option to Purchase. The Member shall
provide written notice of the Transfer and the offer to sell to the Company and the Company
shall have the right to purchase all (but not less than all) of such Units pursuant to this Section
8.3.4(a). The Company must provide written notice to the Member of the Company's decision
whether to waive or exercise the Company's first option right within ten (10) days after the date
the Company receives the written notice of the offer to sell from the Member. If the Company
chooses to exercise the Company's first option right, it must close the Transfer under this
Section 8.3.4(a) within thirty (30) days after the date the Company receives the written notice of
the offer to sell from the Member.
(b) The Members' Second Option to Purchase. If the Company
waives or fails to timely exercise its first option right under Section 8.3.4(a), the Member shall
provide written notice of the Transfer and the offer to sell to the other Members and each other
Member shall have the right to purchase all (but not less than all) of such Units pursuant to this
Section 8.3.4(b). Each other Member must provide written notice to the selling Member of the
other Member's decision whether to waive or exercise the other Member's second option right
within ten (10) days after the date the Company waives or fails to timely waive or exercise the
Company's first option right, whichever occurs first. Each of the other Members that choose to
exercise their second option right (the "Participating Members") shall be entitled to purchase a
portion of the Units based on such Participating Member's Percentage Interest in comparison to
the sum of the Percentage Interests of all of the Participating Members, unless the Participating
Members unanimously agree to a different allocation of the Units among them. The
Participating Members must close the Transfer under this Section 8.3.4(b) within thirty (30) days
after the date the Company waives or fails to timely waive or exercise the Company's first option
right, whichever occurs first.
8.4 Effect of Permitted Transfers. A Transfer completed in compliance with this
Article 8 shall be valid and enforceable and shall have the additional effects set forth in this
Section 8.4.
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 20
(a) New Members. If the transferee is a Person other than the
Company or an existing Member, and the transferee is eligible to be a Member of the Company
under this Operating Agreement, the Act, and other applicable law, the transferee shall be
admitted as a new Member. The transferee shall be required as a condition of the transferee's
admission as a new Member to (i) execute and deliver all documents necessary for the
admission of the new Member, including (without limitation) a counterpart to this Operating
Agreement, in the form and substance satisfactory to the Managers, and (ii) pay all reasonable
expenses incurred in connection with the admission of the new Member as may be required by
the Managers, including (without limitation) the cost of preparing and completing any
amendment to this Operating Agreement, the Company's Certificate of Organization or the
Company's Statement of Authority as necessary or desirable in connection with the admission
of the new Member. The admission of a new Member in partial or complete substitution for an
existing Member, without more, does not release the existing Member from any liability or duty
to the Company that may have arisen prior to the substitution. Once admitted, the new Member
has all the rights and obligations and is subject to all the restrictions and liabilities of all other
Members.
(b) Existing Members. If the transferee is an existing Member, the
transferee's Units and Membership Interest shall be increased by the Units and Membership
Interest subject to the Transfer.
(c) Redemptions. If the transferee is the Company, the Units shall be
redeemed and cancelled by the Company and the Percentage Interests of the remaining
Members shall be adjusted accordingly.
(d) Effect on Transferring Member. If the transferor is an existing
Member, the transferring Member's Units shall be decreased by the Units and Membership
Interest subject to the Transfer, and if such decrease results in the transferring Member
retaining no Units or Membership Interest in the Company, then the transferring Member shall
be dissociated as set forth in Article 9.
ARTICLE 9
DISSOCIATION
9.1 No Right to Dissociate. Except for a Member's dissociation pursuant to Section
9.2(a), (b), or (c), a Member has no right to withdraw, be redeemed, dissociate or otherwise
cease to be a Member by voluntary act at any time, and the Member's dissociation from the
Company shall result in the dissociated Member's breach of this Operating Agreement.
9.2 Events of Dissociation. A Member shall be dissociated from the Company
upon the occurrence of any one or more of the following circumstances ("Events of
Dissociation"):
(a) Permitted Transfers. The Member Transfers all of the Member's
Units in a permitted Transfer pursuant to Article 8.
(b) Death. The Member or Affiliate thereof dies.
(c) Disability. The Member or Affiliate thereof is determined to have a
disability. For purposes of this Operating Agreement, if at any time in the opinion of Company a
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ALTURAS USTICK, LLC - 21
question arises as to the disability of a Member or Affiliate thereof, then the Company shall
promptly employ three (3) physicians who are members of the American Medical Association to
examine such Person and determine if the Person's physical and/or mental condition renders
the Person incapable of performing the Member's essential duties with respect to the Company,
either with or without a reasonable accommodation.
(d) Required Additional Contributions. The Member fails to make an
additional contribution as required under Section 2.5.2.
(e) Violation of Restrictions on Transfers of Units. The Member
Transfers all or any portion of the Member's Units in violation of the restrictions on Transfers set
forth in Article 8.
(fJ Illegality. It is unlawful to carry on the Company's business with
the Member.
(g) Dissolution. The Member is an organization that has been
dissolved and is winding up its business.
(h) Judicial Determination. The Member is expelled from the
Company by judicial determination, upon the application by the Company, the Managers or
another Member, that the Member or an Affiliate thereof (i) engaged in wrongful conduct that
adversely and materially affected the Company's business, (ii) willfully or persistently committed
a material breach of this Operating Agreement or committed a material breach of the duties
owed to the Company, the Managers or the Members, or (iii) engaged in conduct that makes it
not reasonably practicable to carry on the Company's business with the Member.
(i) Bankruptcy. The Member (i) makes an assignment for the benefit
of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudicated a bankrupt or insolvent,
(iv) 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, (v) files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Member in any proceeding of this nature, or (vi) seeks,
consents to, or acquiesces in the appointment of a trustee, receiver or liquidator of the Member
or of all or any substantial part of the Member's property.
6) Failure to Devote Full Time. If the Member or Affiliate thereof
works for the Company, the Member or Affiliate thereof is absent from work for more than sixty
(60) work days (whether or not consecutive) per calendar year, exclusive of personal time off
and sick leave.
(k) Substance Abuse. The Member or Affiliate thereof abuses
substances, which abuse materially impairs such Person's ability to provide services on behalf
of the Company.
(1) Criminal Conviction. The Member or Affiliate thereof enters any
plea of nolo contendere to, enters into a withheld judgment for, or is convicted of a felony.
(m) Violation of Company Policy. The Member or Affiliate thereof
commits any willful violation of Company's policies.
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(n) Fraud; Dishonesty. The Member or Affiliate thereof commits any
act of fraud or dishonesty resulting or intended to result in a gain to such Person at the expense
of the Company (including, without limitation, embezzlement or diversion of Company's funds),
or other misconduct related to Company's assets, activities, operations, or employees.
(o) Moral Turpitude. The Member or Affiliate thereof fails to conduct
itself, himself or herself with due regard to public convictions and morals.
(p) Negligence. The Member or Affiliate thereof is negligent in the
providing of any services on behalf of the Company.
9.3 Effect of Dissociation. Upon the occurrence of an Event of Dissociation (as set
forth in Section 9.2), the dissociated Member immediately ceases to be a Member, and, to the
extent the dissociated Member holds any Units at the time of dissociation, the dissociated
Member (or in the case of death or disability, the dissociated Member's representative)
immediately forfeits all Governance Rights and shall retain only the Financial Rights attributable
to those Units. The Company shall have the right to redeem all or any portion of such Units
from the dissociated Member (or in the case of death or disability, the dissociated Member's
representative) pursuant to Section 8.3.2. The dissociated Member's duties and obligations
under this Operating Agreement shall continue with regard to matters arising before the time of
dissociation. A Member's dissociation shall not cause the dissolution of the Company.
ARTICLE 10
DISSOLUTION
10.1 Dissolution. The Members may vote or consent to dissolve the Company at any
time pursuant to Section 2.4. Otherwise the Company shall dissolve upon the first to occur of
the following events (each a "Dissolution Event"):
(a) In Lieu of Permitted Transfer. The Members elect to dissolve the
Company in lieu of a permitted Transfer under Section 8.3.4 as provided therein.
(b) No Members. The passage of ninety (90) consecutive days
during which the Company has no Members.
(c) Judicial Decree. The entry of a decree of judicial dissolution that
(A) the conduct of all or substantially all of the Company's activities is unlawful, (B) it is not
reasonably practicable to carry on the Company's activities' in conformity with this Operating
Agreement, including (without limitation) because of a deadlock among the Managers or
Members, (C) the Managers have acted, are acting or will act in a manner that is illegal or
fraudulent, or (D) the Managers have acted or are acting in a manner that is oppressive and
was, is or will be directly harmful to a Member.
(d) Disposition of Assets. If the Company (i) voluntarily or (ii)
involuntarily (by way of condemnation or similar proceeding) disposes of all or substantially all of
the Company Property.
(e) Required Dissolution. Any other event causing dissolution of a
limited liability company under the Act.
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10.2 Effect of Dissolution. The Company may execute and file a Statement of
Dissolution with the Idaho Secretary of State. Upon the Company's dissolution, the Company
shall cease to carry on, and shall wind up, the Company's affairs. The Company shall continue
in existence thereafter only for the purpose of winding up its business and affairs. Upon
completion of the winding up, the Company shall be terminated by filing a Statement of
Termination with the Idaho Secretary of State.
10.3 Winding Up. To wind up the Company's business, a person selected by the
Managers shall act as a liquidator (the "Liquidator"). The Liquidator shall have full power and
authority to (i) sell, assign and encumber any or all of the Company Property, (ii) wind-up and
liquidate the Company's affairs in a commercially reasonable manner, (iii) prepare and distribute
an accounting from the date of the last previous accounting to the date of dissolution, and from
the date of dissolution to the date of termination, and (iv) distribute the proceeds from liquidation
in accordance with Section 10.4.
10.4 Distribution of Assets after Dissolution. Upon the winding up of the
Company, following the allocation of the Company's income, gain, loss, deductions, and credits,
the Liquidator shall distribute all liquidation proceeds and Company Property in the following
manner:
10.4.1 Creditors. To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of the liabilities of the Company.
10.4.2 Remaining Proceeds and Property. Second, the Liquidator shall
distribute any remaining liquidation proceeds and Company Property to Members 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, including (without limitation)
adjustments to the Members' Capital Accounts immediately prior to the liquidation as provided
by Treasury Regulation Section 1.704-1(b)(2)(f)(5)(ii). Liquidation proceeds are to be paid
within the later of (i) 60 days of the end of the Company's tax year or (ii) 90 days after the final
date of liquidation. The distributions made pursuant to this Section 10.4.2 are to be made in
cash or other real and personal property (which need not be distributed proportionately) or partly
in both, as determined by the Managers.
10.4.3 Deficit Capital Account Restoration Obligation. In no event shall any
Member be obligated to restore a deficit balance in the Member's Capital Account upon
liquidation.
10.5 Distribution in Kind. If the Liquidator shall determine that any Company
Property should be distributed in kind to the Members, the Liquidator shall obtain an
independent appraisal of the fair market value of the real and personal property as of a date
reasonably close to the date of liquidation. Any unrealized appreciation or depreciation with
respect to the all real and personal property shall be (i) allocated among the Members in
accordance with the provisions of Article 7 assuming that all real and personal property was
sold for the appraised value and (ii) taken into consideration in determining the balance in the
Members' Capital Accounts as of the date of liquidation. Distribution of real and personal
property in kind to a Member shall be considered a distribution of an amount equal to the fair
market value of the real and personal property for purposes of Section 10.4. All distributions
pursuant to this Article 10 shall be subject to the provisions of Code Section 704(c).
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 24
10.6 Completion of Winding Up and Termination. 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 real and personal property and assets of the Company have been distributed to the
Members. The Company shall then file a Statement of Termination with the Idaho Secretary of
State; and the Company's existence shall thereupon terminate.
ARTICLE 11
DISPUTE RESOLUTION
11.1 Indemnification by Company. To the fullest extent permitted by law, the
Company will indemnify, hold harmless and defend the Managers and Members from all claims,
damages, liabilities (including legal fees and expenses), judgments, and other amounts paid in
settlement, incurred or suffered by the indemnitee, in connection with any threatened, pending
or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether formal or informal, arising out of or in connection with the business or
the operation of the Company, or by reason of the indemnitee's status as a Manager or
Member. In particular (but without limitation of the foregoing sentence), the Company shall
defend, indemnify and hold harmless the Managers and Members from all judgments,
settlements, penalties, fines or expenses incurred in a proceeding to which such Person is a
party because such Person is or was a Manager or Member. However, no Manager or Member
shall be indemnified from any liability for breach of the duty of loyalty under Section 5.3, receipt
of a financial benefit to which the Manager or Member is not entitled, approval of a distribution in
violation of Section 2.6.6, intentional infliction of harm on the Company or a Member, an
intentional violation of criminal law, gross negligence, willful misconduct, or bad faith.
11.1.1 Payment of Expenses. To the fullest extent permitted by law,
expenses incurred by an indemnitee in defending any claim, demand, action, suit or proceeding
subject to this Section 11.1 will, from time to time, be advanced by the Company prior to the
final disposition of the claim, demand, action, suit or proceeding upon receipt by the Company
of an undertaking on behalf of the indemnitee to repay such amounts unless it is determined
that the indemnitee is entitled to be indemnified for the amounts paid under the terms of this
Section 11.1. If an indemnitee wishes to make a claim under this Section 11.1, the indemnitee
should notify the Company in writing within thirty (30) days after receiving notice of the
commencement of any action that may result in a right to be indemnified under this Section
11.1; provided, however, that the failure to notify the Company will not relieve the Company of
any liability for indemnification pursuant to this Section 11.1, except to the extent that the failure
to give notice will have been materially prejudicial to the Company.
11.1.2 Right to Counsel and Control of Action. An indemnitee will have
the right to employ separate legal counsel in any action pursuant to this Section 11.1 and to
participate in the defense of the action. The fees and expenses of such legal counsel will be at
the expense of the indemnitee unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense of the action without
reservation and to employ counsel within a reasonable period of time after being given the
notice required above, or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnitee and the Company and the indemnitee has been advised by
its legal counsel that representation of the indemnitee and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct because of actual or
potential differing interests between them. It is understood, however, that the Company will, in
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ALTURAS USTICK, LLC - 25
connection with any one such action in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys at any time for all such indemnities having actual or potential different
interests with the Company. The Company will not be liable for any settlement of any action
agreed to without the Company's written consent. The indemnification obligations set forth in
this Section 11.1 will survive the termination of this Operating Agreement.
11.1.3 Insurance. The Company may purchase and maintain insurance on
behalf of any Manager, Member, or Affiliate thereof against liability asserted against or incurred
by the Manager, Member, or Affiliate thereof in that capacity or arising from that status,
including (without limitation) any liability arising from breach of any of the duties set forth in
Article 5.
11.2 Indemnification by Member for Failure to Pay Taxes. If the Company is liable
for the payment of any tax as a result of a Member's failure to file a tax return or to pay a tax
liability, the Member shall be personally liable to the Company for any such tax, plus penalties
and interest, and attorney fees and costs incurred by Company in connection therewith. The
Company may pay such liability from funds allocated to the Member's capital account or from
real or personal property otherwise distributable to the Member.
11.3 Claim. The term "Claim" shall be broadly construed to include any actual or
alleged dispute, controversy, breach, loss, default, harm, damage, penalty, fee or cost relating
to or arising under this Operating Agreement or the operation of the Company, including
(without limitation) Claims by third parties, Managers, Members or Affiliates thereof. With
respect to a Member, "Claim" includes any action to enforce the Member's rights and otherwise
protect the Member's interests, including rights and interests under this Operating Agreement or
the Act or arising independently of the membership relationship, subject however to Section
11.5.
11.4 Claim Notice and Cure Period. In the event of a Claim, then the aggrieved
party shall give the defaulting party reasonable written notice of the Claim. From the date of
notice the defaulting party shall have twenty-eight (28) days to cure the Claim.
11.5 Claim Resolution Procedure. If a Claim arises, the parties shall first attempt to
settle the Claim by direct discussions. If the Claim cannot be settled by the parties by direct
discussions, then the parties agree to endeavor to settle the Claim in an amicable manner by
mediation administered by the American Arbitration Association under its Commercial Mediation
Rules. Thereafter, any unresolved controversy or Claim arising from or relating to this
Operating Agreement or a breach of this Operating Agreement shall be resolved as provided by
law.
11.6 Rights and Remedies. Except as expressly provided in this Operating
Agreement, and to the extent permitted by law, an aggrieved party has all the rights and
remedies available in law, in equity, and in this Operating Agreement. Any rights and remedies
described in this Operating Agreement are cumulative and not alternative to any other rights
and remedies available at law or in equity. Notwithstanding the foregoing, no Member shall
have the right to maintain a direct action against the Company or any Manager or Member of
the Company except in connection with a harm incurred by the Member independently of any
harm caused or threatened to be caused to the Company or to the Members generally and in
proportion to their respective Membership Interests. Claims relating to any harm caused or
OPERATING AGREEMENT
ALTURAS USTICK, LLC - 26
threatened to be caused to the Company or to the Members generally and in proportion to the
Members' respective Membership Interests shall be maintained only derivatively and in
accordance with applicable law governing derivative actions.
11.7 Injunction Remedies. In addition to any other right or remedy the Company, the
Members may have, the Company and the Members shall have the right, subject to Section
11.5, to specifically enforce this Operating Agreement, including (without limitation) to the
restrictions on Transfer set forth in Article 8. Each member agrees that the other Members and
the Company will be irreparably damaged if this Operating Agreement is not specifically
enforced. Upon a breach or threatened breach of any term, covenant or condition of this
Operating Agreement by any party, each of the other parties shall, in addition to all other
remedies, be entitled to seek a temporary and permanent injunction, without showing any actual
damage, and may seek a decree for specific performance.
11.8 Attorney Fees and Costs. In the event of a Claim, the prevailing party shall be
awarded reasonable attorney fees and costs in any suit, action or proceeding, including trial,
arbitration, mediation, or appeal, as awarded by the court, arbitrator or mediator.
11.9 Waiver. The waiver of any right, obligation or remedy shall be in writing and
signed by all parties affected by the waiver. The failure or neglect of a party to enforce any right
or remedy available by reason of the failure of the other party to observe or perform a term or
condition set forth in this Operating Agreement shall not constitute a waiver of the term or
condition. A waiver by a party (i) shall not affect any term or condition other than the one
specified in the waiver, (ii) shall waive a specified term or condition only for the time and in the
manner specifically stated in the waiver, and (iii) shall waive a specified term or condition only
for the parties expressly named in the waiver and for no other parties.
11.10 Governing Law, Jurisdiction, and Venue. This Operating Agreement shall be
governed by Idaho law. The state and federal courts of Idaho have jurisdiction; and venue for
mediation, state court litigation and all other proceedings shall be located in Ada County, Idaho.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. All notices and other communications ("Notices") must be in writing
and may be delivered (i) in person, with the date of notice being the date of personal delivery,
(ii) by United States Mail, postage prepaid for certified or registered mail, return receipt
requested, with the date of notice being the date of the postmark on the return receipt, (iii) by
fax, with confirmation of the transmittal of the fax and a copy of the fax deposited on the same
day in the United States Mail, with the date of notice being the date of the fax, (iv) by e-mail,
with confirmation of sending of the e-mail and a copy of the e-mail deposited on the same day in
the United States Mail with the date of notice being the date of the e-mail, (v) by nationally
recognized delivery service such as Federal Express, with the date of notice being the date of
delivery as shown on the confirmation provided by the delivery service.
12.2 Waiver of Notice. Whenever any notice is required to be given a waiver in
writing signed by the persons entitled to such notice shall be equivalent to the giving of the
notice. The waiver is effective whether duly signed before or after the event concerning which
the notice is given.
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ALTURAS USTICK, LLC - 27
12.3 Successors and Assigns. The provisions of this Operating Agreement shall be
binding upon successors-in-interest to any Units or Membership Interests.
12.4 Coordination of Operating Agreement and Act. Except as provided in Section
2.2.4, or to the extent a provision of the Operating Agreement expressly incorporates federal
income tax rules by reference to sections of the Code or Treasury Regulations, or to the extent
a provision of this Operating Agreement is expressly prohibited or ineffective under the Act, the
Operating Agreement shall govern, even when inconsistent with, or different than, the provisions
of the Code, the Act or any other law or rule. To the extent any provision of the 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 Operating Agreement
effective under the Act. In the event the Act is subsequently amended or interpreted to make
any provision of the Operating Agreement that was formerly invalid to be valid, the provision
shall be considered to be valid from the effective date of the interpretation or amendment.
12.5 No Partnership Intended for Non-Tax Purposes. The Members have formed
the Company under the Act, and expressly intend not to form a partnership or limited
partnership. The Members intend not 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 the
wrongful representation shall be liable to any other Member who incurs personal liability by
reason of the wrongful representation.
12.6 Rights of Creditors and Third Parties. The Operating Agreement is intended
for the exclusive benefit of the Company, its Members, and their successors and assigns.
There are no intended or incidental third-party beneficiaries. This Operating Agreement is not
intended to benefit any creditor of the Company or any other Person. Except as otherwise
provided in the Act, no creditor or third party shall have any rights under (i) this Operating
Agreement or (ii) any agreement between the Company and any Member regarding any
contribution or otherwise.
12.7 Severability. The invalidity of any portion of this Operating Agreement shall not
affect the validity of any other portion of this Operating Agreement. If the invalidity or
unenforceability is due to the unreasonableness of any restrictions, the restrictions shall be
effective to the extent that a court may determine them to be reasonable. If any covenant or
restriction is held to be unenforceable, the covenant or restriction shall be first modified to be
enforceable. If the covenant or restriction cannot be modified to be enforceable, then the
covenant or restriction shall be eliminated to the extent necessary to permit the remaining
restrictions to be enforced.
12.8 Time of the Essence. Time is of the essence with respect to the obligations to
be performed under this Operating Agreement.
12.9 Entire Agreement. All Schedules to this Operating Agreement constitute a part
of this Operating Agreement. This Operating Agreement, together with the accompanying
Schedules, constitutes the entire, completely integrated agreement among the parties
concerning the subject matter of this Operating Agreement, and supersedes all prior
memoranda, correspondence, conversations and negotiations.
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ALTURAS USTICK, LLC - 28
12.10 Amendment. This Operating Agreement cannot be amended orally or by
conduct of the parties. All amendments of this Operating Agreement must be in writing and
must be approved by the Members in accordance with Section 2.4. The Members intend that
compliance with the requirements of this Section 12.10 is a condition precedent to any
amendment of this Operating Agreement for the purposes of Section 30-25-107(a) of the Act
and that any purported amendment of this Operating Agreement which does not comply with the
requirements of this Section 12.10 is ineffective.
12.11 Counterparts. This Operating Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
12.12 Adoption and Ratification. This Operating Agreement is adopted as of the
Effective Date. This Operating Agreement is a private agreement among the Members and the
Company; and its terms and conditions shall not be disclosed in any form or manner to Persons
other than the Company, its Manager, Members, and Affiliates, or to accountants, attorneys or
other professional advisors thereof.
The following Members of Alturas Ustick, LLC hereby adopt and execute this Operating
Agreement effective as of the Effective Date.
[Signatures to follow]
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MEMBERS:
Alturas Real Estate Fund, LLC,
a Delaware limited liability company
By: Alturas Capital Partners LLC,
a Delaware limited liability company
By:
Travis Barney, CEO
MANAGER:
Alturas Capital Partners LLC,
a Delaware limited liability company
By:
Travis Barney, CEO
OPERATING AGREEMENT
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SCHEDULE 2.3
SCHEDULE OF MEMBERS
Name and Address Contribution Units Percentage Interest
Alturas Real Estate Fund LLC
500 E Shore Drive Suite 120 $100 100 100.00%
Eagle, ID 83616
Totals: $100 100 100%
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SCHEDULE 2.4
ACTIONS REQUIRING MEMBER APPROVAL
Action Units Required for Approval
Additional contributions by one or more Members (see
Section 2.5.2) 51%
Admission of new Members (see Section 2.7) 51%
Initial contributions from new Members (see Section 2.7(c)) 51%
Appointment, election, or removal of Managers (see Section
3.5) 51%
Compensation of Managers (see Section 3.8) 51%
Authorization, approval, or ratification of Conflicting Interest
Transactions (see Section 5.3.5) 51%
Approval of voluntary redemptions of Members (see Section
8.3.1) 51%
Approval of Transfers between Members (see Section 8.3.3) 51%
Dissolution of Company in lieu of Transfers to third parties
(see Section 8.3.4) 51%
Dissolution of the Company or continuation of the Company
after dissolution (see Section 10.1) 51%
Amendment of the Operating Agreement (see Section
12.10) 51%
A sale of substantially all of the assets of the Company 51%
Any activity outside the ordinary course of business of the
Company, or authorizing any Member or Manager to do any
act on behalf of the Company that contravenes the 51%
Operating Agreement
OPERATING AGREEMENT
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