HomeMy WebLinkAboutCC - Articles Of Incorporation DocuSign Envelope ID:327CC504-56DC-4AD6-83EF-BF2EADC2FA38
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
425 WATERTOWER LLC
DATED 3/29/2024
THE UNITS (AS DEFINED IN THIS AGREEMENT) OF 425 WATERTOWER LLC EVIDENCED
BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY OTHER APPLICABLE
SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, TRANSFERRED,ASSIGNED, PLEDGED,
OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER
THE SECURITIES ACT AND THE SECURITIES LAWS OF ANY STATE COVERING THE UNITS,
OR AN APPLICABLE REGISTRATION EXEMPTION THEREFROM, AND OTHERWISE IN
COMPLIANCE WITH THE TRANSFERABILITY RESTRICTIONS SET FORTH IN THIS
AGREEMENT.THEREFORE,PURCHASERS OF UNITS WILL BE REQUIRED TO BEAR THE RISK
OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
DocuSign Envelope ID:327CC504-56DC-4AD6-83EF-BF2EADC2FA38
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
425 WATERTOWER LLC
03/29/2024
THIS AMENDED AND RESTATED OPERATING AGREEMENT ("Agreement") of 425
Watertower LLC ("Company") is made and entered into effective as of the date set forth
above ("Effective Date") by and among the Members and Manager of the Company. This
Agreement amends and restates, in its entirety, any operating agreement by and among the
Members and Manager of the Company dated or adopted before the date of this Agreement.
WHEREAS, Copium Investments, LLC, an Oklahoma limited liability company (the
"Withdrawing Manager"),desires to assign its position as manager of the Company and any
and all equity therein to Copium OZ 2 Manager, LLC, an Idaho limited liability company (the
"Manager") and simultaneously withdraw as the manager of the Company;
WHEREAS, the Members and the Manager desire to approve the assignment by the
Withdrawing Manager of its position as manager of the Company and any and all equity
therein to the Manager and to amend and restate this Agreement in its entirety to reflect the
foregoing;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
GENERAL
1.1 Formation. The Company was formed on July 17, 2023, upon the filing of the
Company's Certificate of Organization with the Idaho Secretary of State. The Company is
organized as an Idaho limited liability company under and subject to this Agreement and the
Idaho Uniform Limited Liability Company Act (Idaho Code Section 30-25-101 etseq., as now
in effect or subsequently amended or superseded,the "Act").
1.2 Certificate of Organization. The Company may change its Certificate of
Organization from time to time through appropriate filings with the Idaho Secretary of State.
1.3 Name. The name of the Company is 425 Watertower LLC, and all business of
the Company must be conducted under that name or one or more additional names as may
be adopted by the Company under applicable law.
1.4 Duration. The Company continues to exist in perpetuity until dissolved
pursuant to Article 7.
1.5 Purposes and Powers. The Company is organized solely to own and operate
real estate investment properties.The Company intends to qualify as a Qualified Opportunity
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Zone Business ("QOZB") as recognized by the Tax Cut and Jobs Act of 2017 ("TCJA"). The
Company has the power to do all things necessary or convenient to carry on its activities.
1.6 Registered Agent and Office.The Company's registered agent for the service
of process is initially the Person reflected on the Company's Certificate of Organization, and
thereafter the Person reflected on the Company's current annual report filed with the Idaho
Secretary of State. If the registered agent is not a commercial registered agent under the
Idaho Uniform Business Organizations Code (Idaho Code Section 30-21-401 et seq., as now
in effect or subsequently amended or superseded), the registered office is initially the
location reflected on the Company's Certificate of Organization, and thereafter the location
reflected on the Company's current annual report filed with the Idaho Secretary of State.The
Company may change its registered agent or office from time to time through appropriate
filings with the Idaho Secretary of State.
1.7 Designated Office.The Company's designated office,which also serves as the
Company's principal office, is initially the location reflected on the Company's Certificate of
Organization, and thereafter the Company's mailing address reflected on the Company's
current annual report filed with the Idaho Secretary of State. The Company may change its
designated office from time to time through appropriate filings with the Idaho Secretary of
State.
1.8 Limited Liability Company as Separate Entity. The Company is an entity
separate and independent from its Manager and Members.As evidence of its separate status:
(i) To the extent reasonably practicable, the Company shall be specifically
identified as "425 Watertower LLC" in all writings containing its name,
including stationery, invoices,business cards, and checks;
(ii) The Company's financial accounts shall be kept completely separate
from those of the Manager and Members;
(iii) The Company's funds shall not be commingled with those of the
Manager or Members;
(iv) The Manager and Members shall not use the Company's funds for
personal purposes;
(v) The Company shall not use the personal funds of the Manager or
Members for the Company's 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.
1.9 Miscellaneous Definitions.For the purposes of this Agreement,the following
terms have the following meanings:
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(i) "Affiliate" means, with respect to the Company, any Person that
controls, is controlled by (exclusively or in combination with others),
or is under common control with the Company, and, with respect to a
Manager or Member: (i) the spouse, parents, stepparents, children,
stepchildren, siblings,mothers and fathers-in-law, sons and daughters-
in-law, brothers and sisters-in-law of the Member or Manager, and
anyone (other than domestic employees)who shares such Member's or
Manager's home, (ii) corporations, partnerships, limited liability
companies,trusts and other entities in which a Member or Manager has
an interest (directly or indirectly, whether or not the interest is a
controlling interest, but excluding publicly traded entities in which the
Member or Manager holds less than a five percent interest), (iii) trusts
of which the Member or Manager is a beneficiary,and (iv) shareholders,
partners, members, beneficiaries or other persons or entities with an
ownership interest,beneficial interest, or other interest in the Member
or Manager and the immediate family members of such shareholders,
partners, members, beneficiaries or other persons or entities with an
ownership interest,beneficial interest, or other interest in the Member
or Manager;
(ii) "Construction Management Fee" has the meaning set forth in Section
3.8.1.
(iii) "Class A Members" means the Members holding Class A Units.
(iv) "Class B Members" means the Members holding Class B Units.
(v) "Class A Units" means the Units designated as Class A Units.
(vi) "Class B Units" means the Units designated as Class B Units.
(vii) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including any replacement provisions;
(viii) "Covered Person" or "Covered Persons" means the Manager, the
Partnership Representative, any of the Principals or other Related
Parties, or, as determined by the Manager in its sole discretion, any
Affiliates of the Company or any officers, directors, managers,
members,partners,stockholders,employees,or agents of the Company,
the Manager, any Related Party, or any Affiliate thereof acting in
furtherance of their duties or responsibilities with respect to the
Company or serving in board or management related roles in any
Related Entities;
(ix) "Default Rate" means interest at the lesser of (i) 18% per year or
(ii) the maximum rate permitted at law;
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(x) "Fiscal Year" means the Company's fiscal year and taxable year, which
is the calendar unless such other taxable year is otherwise required by
Section 706 of the Code;
(xi) "Company Property" means all property owned by the Company,
whether real or personal, tangible or intangible, including money, real
estate, fixtures, furniture, equipment, inventory, advertising materials,
goodwill,confidential or proprietary information of the Company,other
property entrusted to any Person as a result of the Person's status as a
Member, and any legal or equitable interest in such property;
(xii) "IRS" means the United States Internal Revenue Service;
(xiii) "Market Value" of a Member's Units means the Member's pro rata
share (based on the Member's Percentage Interest) of the fair market
value of the Company's assets reduced by its liabilities, and using the
latest valuation of the assets as determined an appraisal of the assets
(which may be a valuation performed by Member Copium OZ Fund 2,
LLC as part of its valuation process) obtained with twelve months of
any date on which a determination of value is required by this
Agreement. If the Member whose interest is subject to valuation gives
notice within 30 days that such appraised value is not acceptable, that
Member may retain another appraiser that specializes in valuing
property in the Company's industry, and shall submit the second
appraisal within 30 days. If the higher of the two appraisals is more
than 110% of the lower appraisal and the parties cannot agree upon
the Market Value, the two appraisers shall together appoint a similarly
qualified third appraiser within 20 days after written demand is made
by either party. If the appraisers are unable or unwilling to agree on a
qualified third appraiser, either party may apply to the district court for
selection of the third appraiser. The selected third appraiser shall
develop an independent opinion of value for the Member's Units,based
on a review of the two prior appraisals, and select the appraisal with
the most similar final estimate of value to the third appraiser's opinion
of value, based on his/her review of the two prior appraisals, to
establish the definitive and binding Market Value of the Member's
Units. If the higher of the two appraisals is equal to or less than 110%
of the lower appraisal,the amount obtained by averaging the respective
appraisals will be the Market Value of the Member's Units. Each party
shall pay its respective appraiser's fee plus one-half of the third
appraiser's fee. The existence of any encumbrances on the Company
and its assets must be taken into consideration when determining the
Market Value. There shall be no minority or lack of marketability
discount applied when determining Market Value for purposes of a
dissociation pursuant to Sections 6.6(b) and 6.6(c). In all other
instances,a minority and lack of marketability discount shall be applied
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when determining Market Value. Any insurance proceeds payable as a
result of an Event of Dissociation giving rise to the determination of
Market Value shall not be taken into consideration when determining
the Market Value;
(xiv) "Majority" means, with respect to the Members, a Percentage Interest
above 50%, and,with respect to the Manager, a majority of the number
of Manager or, if there are only two Manager, both Manager.
(xv) "Asset Management Fee" has the meaning set forth in Section 3.8.2.
(xvi) "Net Distributable Cash" means 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, net proceeds of sale or refinancing; minus the sum of(A) all
cash expenditures of the Company during the year, including 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 all
fees, if any, payable to any Manager, Member, or Affiliate thereof, and
(D) such reserves and retentions as the Managers determine to be
necessary or desirable in connection with the Company's operations,
including adequate capital to pay taxes, insurance payments, debt
payments, and anticipated operating or capital expenditures, such as
the acquisition of new equipment, remodeling or new construction.
(xvii) "Person" means any 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;
(xviii) "Principal" or "Principals" means Isaac Waitman, and any other
natural person serving as a manager of Copium OZ 2 Manager, LLC, an
Idaho limited liability company, or of any replacement Manager;
(xix) "Related Party" or "Related Parties" means any of the Principals, or
any officers,managers, members, employees, agents, or Affiliates of the
Manager or any of its Affiliates;
(xx) "Supermajority" means at least 75% in Percentage Interests among
the issued and outstanding Class A Units; and
(xxi) "Treasury Regulations" means the regulations promulgated by the
United States Department of Treasury from time to time under the
Code.
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ARTICLE 2
MEMBERSHIP
2.1 Members. The "Members" of the Company consist of each Person that is
initially a Member upon formation of the Company or is subsequently admitted as a new
Member. If at any time the Company has only one Member, then any reference in this
Agreement to "Members" is deemed to refer to such single Member.
2.2 Membership Interests. Each Member holds a "Membership Interest" in the
Company. Each Membership Interest is comprised of certain obligations and rights relating
to the finances and governance of the Company, as further described in this Agreement.
2.2.1 Units. The Fund is authorized to issue two classes of Membership
Interests to the Members in the form of Class A Units and Class B Units (collectively,"Units").
The Class A Units have the following unique rights:
(a) The limited right to seek contribution from the Class B Members
as set forth in Section Error! Reference source not found.;
(b) The right to receive a preferential return of their respective
Capital Contributions as set forth in Section Error! Reference source not found.; and
(c) The class voting rights for the Class A Units as set forth in this
Agreement.
2.2.2 Percentage Interest. The relative size of a Member's Membership
Interest or a group of Members' Membership Interests may be expressed as a percentage
that is determined by the total number of Units held by the Member or group of Members
divided by the total number of Units held by all of the Members (referred to as a"Percentage
Interest").
2.2.3 Separate Property of Members. The Units of each Member are the
sole and separate property of the Member. Nothing in this 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 Agreement on account of the Member's Units.
2.3 Schedule of Members. The names, addresses, contributions, Units, and
Percentage Interests of the Members as of the Effective Date are as set forth in Schedule 2.3
("Schedule of Members"). The Company shall use its reasonable efforts to update the
Schedule of Members as information regarding the Members changes from time to time and
to maintain in its records at all times an accurate and complete Schedule of Members.
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2.4 Members' Authority. 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 out to any other
Person as having, any authority to bind the Company.
2.5 Limited Liability. Except for any return of Company distributions as may be
required under the Act notwithstanding this Agreement, no Member is personally liable for
any of the Company's debts or liabilities or any of the Company's losses in excess of such
Member's Capital Contributions. The failure of the Company to observe any formalities or
requirements relating to the exercise of its powers or management of its business or affairs
under this Agreement or the Act is not grounds for imposing personal liability on the
Members for liabilities of the Company.
2.6 No Participation in Management. No Member, as such, shall take part in the
management of the business of, or transact any business for,the Company, or have any right,
power,or authority to sign for or bind the Company to any agreement,oral or written,or any
instrument or other document. Each Member has only the voting rights that are expressly
granted to the Members in this Agreement.
2.7 Voting Rights of Members.
2.7.1 Limited Voting Rights. Except as otherwise provided in this
Section 2.7, or otherwise provided in this Agreement, all determinations, decisions,
approvals,and actions affecting the Company and its business and affairs will be determined,
made, approved, or authorized by the Manager. All Members will be entitled to vote on any
matter submitted to a vote of the Members by the Manager.
2.7.2 Member Consent Required. Notwithstanding any other provision of
this Agreement to the contrary,the vote or consent of a Majority of the Members, along with
the vote or consent of the Manager, is required to authorize the Company to:
(a) Amend this Agreement, as provided in Section 9.12;
(b) Conduct any other business other than as specifically set forth
in Section 1.5; or
(c) Dissolve the Company, as provided in Article 7.
2.7.3 Manner of Acting. The Members may take action either (i) at any
meeting at which Members holding more than 50% of the Units entitled to vote on the action
are represented in person or by proxy, 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 2.7.2,or (ii)by written consent describing the action to be taken,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 2.7.2. If Units are held in the name of a
corporation, partnership, or trust, such Units may be voted by the officer, partner, agent,
trustee,or proxy of that entity as the organic enabling documents of that entity or resolutions
duly adopted by that entity may prescribe.
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2.8 Contributions. Members are required to make contributions to the
Company's capital as provided in this Section 2.8.
2.8.1 Existing Contributions. The Schedule of Members attached as
Schedule 2.3 shows the contribution made by each Member as of the Effective Date (each,an
"Initial Capital Contribution"). Each new Member may be required to make a contribution
as a condition to the new Member's admission under Section 2.10.
2.8.2 Additional Contributions.
(a) In addition to the Initial Capital Contributions, the Members
shall make additional Capital Contributions in cash, in proportion to their respective
Membership Interests, as determined by the Manager from time to time to be reasonably
necessary to pay any operating, capital, or other expenses relating to the Fund (the
"Additional Capital Contributions"). Upon making such determination for Additional
Capital Contributions, the Manager shall deliver to the Members a written notice of the
Fund's need for Additional Capital Contributions, which notice must specify in reasonable
detail (i) the purpose for the Additional Capital Contributions, (ii) the aggregate amount of
the Additional Capital Contributions, (iii) each Member's share of the aggregate amount of
Additional Capital Contributions based upon each Member's Membership Interest, and
(iv) the date (which date must be at least five Business Days from the date that such notice is
given) on which such Additional Capital Contributions must be made by the Members.
(b) If any Member fails to timely make, or notifies the other
Members that it will not make, all or any portion of any Additional Capital Contribution that
such Member is obligated to make under Section 2.8.2(a),then such Member will be a "Non-
Contributing Member". The non-defaulting Members (the "Contributing Members") may,
but are not obligated to, contribute an additional amount equal to the Additional Capital
Contribution the Non-Contributing Member(s) should have made (the "Shortfall
Amount(s)"), receiving in consideration Membership Interests proportionally equal to the
amount contributed, thereby diluting the Non-Contributing Member's (or Members')
Membership Interest(s).
(c) If none of the Contributing Members elect to contribute
additional capital to cover the Shortfall Amounts(s), or if they do not contribute sufficient
additional capital to pay the full Shortfall Amount(s), then, notwithstanding any other
provisions of this Agreement, any amount that otherwise would be paid or distributed to a
Non-Contributing Member under Section 2.9 or Section 7.4, as the case may be, will not be
paid to the Non-Contributing Member but will instead be deemed paid and applied on behalf
of such Non-Contributing Member to any Additional Capital Contribution of such Non-
Contributing Member that has not been paid and is not deemed to have been paid.
(d) If a Non-Contributing Member fails to make its Additional
Capital Contribution in accordance with Section 2.8.2(a), and without limiting any other
available rights or remedies that may be available,the Contributing Member(s) may:
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(i) To the extent the Contributing Member(s) did not
contribute additional capital to cover the Shortfall Amount(s), institute proceedings against
the Non-Contributing Member(s), either in the Contributing Member's own name or on
behalf of the Fund, to obtain payment of the Non-Contributing Member's portion of the
Additional Capital Contributions,together with interest thereon at the Default Rate from the
date that such Additional Capital Contribution was due until the date that such Additional
Capital Contribution is made, at the cost and expense of the Non-Contributing Member; or
(ii) purchase the Non-Contributing Member(s)' Membership
Interest(s) a price equal to 50% of the lesser of (A) the price paid by the Non-Contributing
Member for its Membership Interest and (B) the Market Value of the Non-Contributing
Member's Membership Interest.
(e) Except as set forth in this Section Error! Reference source not
found., no Member is obligated to make any additional contributions beyond the Initial
Capital Contributions.
2.8.3 Form of Contributions. Contributions may consist of tangible or
intangible property or other benefits to the Fund, including money, services performed,
promissory notes, agreements to contribute money or property, but excluding contracts for
services to be performed.The Fund may require that contributions be made in any particular
form.
2.8.4 Liabilities Regarding Contributions. The liability of any Member to
make contributions is limited to the terms set forth in this Section 2.8.A Member's obligation
to make a contribution to the Company is not excused by the Member's death, disability,
dissolution, insolvency, or other inability to perform. No Member has any obligation to
contribute to the Company for, or in respect of, the debts, obligations, or other liabilities of
the Company. All contributions are to be expended in furtherance of the Company's
activities. 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 provided in this Agreement.
2.9 Distributions.
2.9.1 Interim Distributions. From time to time, the Manager, in its sole
discretion, may determine to what extent, if any,there is Distributable Property from which
to make distributions to the Members. All distributions to be made under this Section 2.9.1
must be made according to the respective Percentage Interests of the Members.
2.9.2 Distribution Waterfall. Subject to the provisions of Section 2.9.7,
distributions of Net Distributable Cash will be calculated quarterly by dividing by four the
Manager's reasonable estimation of the total Net Distributable Cash that would be available
to distribute to the Members if the amount of Net Distributable Cash were being distributed
at the end of the applicable Fiscal Year. If the Manager's quarterly estimation results in a
positive amount of Net Distributable Cash, such amount will be allocated among the
Members and distributed in the following manner:
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(a) First, 10%yearly accruable preferred return (calculated on total
contributed capital) paid out at then sole discretion of the Manager in
the form of a dividend to the Class A Members pro rata in proportion to
their holdings of Class A Units (the "Preferred Return"); and
(b) Second, pro rata and pari passu: (i) 70%to the Class A Members
pro rata in proportion to their holdings of Class A Units; and (ii) 30%to
the Class B Members pro rata in proportion in proportion to their
holdings of Class B Units
2.9.3 Liquidating Distributions. Liquidating distributions following
dissolution of the Company will be made pursuant to Article 7.
2.9.4 Form of Distributions. All distributions will be made to the Members
in cash. Members do not have a right to demand or receive distributions in any particular
form.
2.9.5 Liabilities regarding Distributions. The liability of the Company to
make distributions is limited to the conditions set forth in this Section 2.9. Members do not
have a right to demand or receive a distribution from the Company, except as otherwise
provided in this Agreement.
2.9.6 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 or allowed
to be withheld pursuant to the Code or provisions of applicable federal, state, or local law.
All amounts paid or withheld pursuant to this Section 2.9.6 are treated as amounts
distributed to the Member for purposes of this Section 2.9.
2.9.7 Limitation on Distributions. The Company shall not make a
distribution to the Members if, after the distribution, (i) the Company would not be able to
pay its debts as they become due in the ordinary course of the Company's activities or(ii) the
Company's total assets would be less than its total liabilities (without taking into account any
preferential rights upon dissolution and winding up), as calculated under the Act.
2.10 Admission of New Members. Additional Persons may be admitted as
Members with the consent of the Manager..
2.11 Limitations regarding Dissociated Members and Non-Member
Transferees.Any dissociated Member or non-Member transferee is entitled only to the right
to receive distributions according to the provisions of this Agreement on account of the
dissociated Member's or non-Member transferee's ownership of Units. The Units owned by
a dissociated Member or non-Member transferee are not counted for purposes of
determining whether a quorum exists, determining which Persons to provide notice of a
meeting of the Members, or calculating Percentage Interests (other than for purposes of
Section 9.12) and otherwise determining whether an action is approved by the Members.
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ARTICLE 3
MANAGEMENT
3.1 Manager-Managed.The Company is managed by one"Manager" as provided
in this Article 3. If at any time the Company has more than one Manager, then any reference
in this Agreement to "Manager" is deemed to refer to all such Managers collectively.
3.2 Manager. As of the Effective Date, the Company is managed by one Manager
and Copium OZ 2 Manager, LLC, an Idaho limited liability company is elected to serve as the
Manager.
3.3 Manager's Authority. Except as otherwise required by the Act or this
Agreement,the Manager has the sole and exclusive right to manage,control,and conduct the
affairs of the Company and to do any acts on behalf of the Company, including exercise of
rights to elect to adjust the tax basis of Company assets and to revoke such elections and to
make such other tax elections as the Manager deems appropriate. In addition, the Manager
will provide portfolio management and administrative services to the Company, including
investigating, analyzing, structuring, and negotiating potential investment opportunities,
making investment decisions on behalf of the Company, monitoring performance of
investments,revising or updating the Company's investment objectives or strategy,advising
and directing the Company as to disposition opportunities, making disposition decisions on
behalf of the Company,and communicating and reporting to the Members.The Manager may
delegate from time to time any of its authority under this Agreement to one or more officers
of the Company. Such officers shall have the duties and responsibilities assigned to them
from time to time by the Manager.Any officer may be appointed or removed by the Manager
in its sole discretion.
3.4 Resignation, Removal, and Replacement of the Manager.
3.4.1 Removal Process. The Manager may only be removed as the manager
of the Company upon the vote or consent of a Majority of the Members if the Manager or a
Principal has (a)been convicted of(or pleads nolo contendere to having committed) a felony,
(b) has materially breached this Agreement, which breach is not cured within 30 days after
a Majority of the Members deliver to the Manager or the Principal,as the case may be,written
notice of the breach, (c) misappropriates funds from, or perpetrates a fraud upon, the
Company,or(d) commits willful misconduct in the performance of its duties to the Company.
However, no removal right will arise under this Section 3.4.1 if, in the case of the acts of a
Principal, such Principal is removed as a manager and controlling member of the Manager
and an officer of the Company within 5 days after the Manager's receipt of a written notice
of removal of the Manager under this Section 3.4.1. The Manager shall promptly provide the
Members with written notice of any event described in this Section 3.4.1 that would give rise
to the right to remove the Manager.
3.4.2 Effect of Removal of Manager. If the Manager is removed under
Section 3.4.1 or the Manager resigns and is not replaced under Section 3.4.3, the Company
will dissolve in accordance with Article 7 unless a Majority of the Members elect to continue
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the Company and appoint a new manager of the Company within 90 days after the removal
of the Manager. Upon the Manager's removal or resignation, the former Manager will have
no further rights or powers as the manager of the Company, but the removal or resignation
will not affect the former Manager's status as a Member or the former Manager's right to
receive distributions under this Agreement.
3.4.3 Replacement Manager. The Principals may replace the Manager at
any time with another partnership, corporation, or entity controlled by the Principals upon
written notice to the Members.
3.5 No Control by the Members. No Member shall take part in the control or
management of the affairs of the Company nor does any Member have any authority to act
for or on behalf of the Company or to vote on any matter relative to the Company and its
affairs except as is specifically permitted by this Agreement.
3.6 Other Businesses. The Manager and each Principal shall devote as much of
their business time as is reasonably necessary for the affairs of the Company. Subject to the
foregoing,the Manager or any of the Principals may from time to time form,operate,manage,
advise, or provide other services to, or serve as a manager, officer, board member, or
observer of, any investment funds other than the Company (even if they have the same or a
similar investment strategy as the Company).
3.7 Investment Opportunities and Limitations.
(a) Notwithstanding any other provision of this Agreement to the
contrary, each Member acknowledges and agrees that, the Manager may offer to any other
Persons (including any Members, Principals or other Related Parties, or any Affiliates,
members, employees, or agents of the foregoing, the right to participate in investment
opportunities of the Company or opportunities which may meet the investment objectives of
the Company(as determined by the Manager in good faith)whenever the Manager,in its sole
discretion,so determines,and may charge fees or carried interests with regard to the portion,
if any, of any investment opportunity that the Manager so allocates to such Persons.
(b) The Members understand and acknowledge that any of the
Principals or any of the other Related Parties may have various potential conflicts of interest
involving the Company or the Manager, including an equity, convertible debt, or other
financial interest in the Manager, the Company, or any other Related Entity or a services,
advisory, board, officer, management, or other contractual relationship with the Company,
the Manager, any Portfolio Company, or any other Related Entity,whether or not on behalf of
the Company or the Manager. The Manager, any of the Principals or any of the other Related
Parties,or any of their Affiliates or family members may engage in or own and interest in any
other business, partnership, limited liability company, limited liability partnership,
corporation or other entity or association (including, without limitation, buying and selling
Securities for their own accounts and the accounts of other investment vehicles). Each
Member waives any of the conflicts of interest,whether actual or potential,that are described
in this Section 3.7(b) or elsewhere in this Agreement.
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3.8 Manager's Compensation. The Manager shall be entitled to collect and shall
be paid the following fees:
(i) An asset management fee of one and one-half percent (1.5%) of the
total contributed capital in the Company paid annually; and
(ii) A construction management fee in an amount equal to three percent
(3%) of the total project costs for new construction, as determined by
the construction budget prepared by the Manager and submitted to and
approved by a construction lender,if applicable ("Total Project Costs")
shall be paid to the Manager (the "Construction Management Fee").
The Construction Management Fee shall be paid to Manager by the
Company upon the commencement of any such new construction, as
determined by the Manager. For purposes of calculating the
Construction Management Fee, the Total Project Costs shall include all
actual costs of labor and materials for the project from inception to
stabilization, excluding the site acquisition costs, soft costs (including
financing costs, consultant costs, interest, operating reserves,
syndication fees, origination fees, etc.), and any other fees owed to
Manger as provided in this Section 3.8.
(iii) If the Manager provides property management and/or leasing services
to the company directly, the Manager will be compensated at fair
market rates. If a third party provides such services, the Manager will
not be compensated. If any Member disagrees with the Manager's
assessment of fair market rates for such services,the Members and the
Manager will agree on a third party to assess the compensation ("Fee
Assessment"). In the event the Fee Assessment is less than the
Manager's compensation,the Manager must return all funds charged in
excess of the Fee Assessment over the life of the Project.
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 under 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, and
are not to be treated as distributions for purposes of computing the recipient Member's
Capital Account.
3.9 Expense Reimbursement. The Manager shall be reimbursed for all
reasonable expenses incurred in managing the Company.
ARTICLE 4
STANDARD OF CARE
4.1 Standard of Care. Decisions concerning investments or potential investments
involve the exercise of judgment and the risk of loss and that the business of the Company
involves the investment of its funds in ventures involving a high degree of risk. None of the
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Manager, the Principals, the Partnership Representative, any other officers of the Company,
or any other Persons acting under the authority of the Manager on behalf of the Company
will be liable to the Company or any Member for any losses, claims, damages or liabilities
(including any tax, penalty, or interest related thereto) imposed upon the Company or any
Member so long as such Person has acted or omitted to act in a manner reasonably believed
by such Person to be in, or not opposed to, the best interest of the Company. The foregoing
limitation of liability does not apply if the act or omission in question constitutes gross
negligence, willful misconduct, fraud, or violation of applicable law. In discharging their
duties, the Manager, each Principal, the Partnership Representative, and each other officer
of the Company or other Person acting under the authority of the Manager on behalf of the
Company will be fully protected in relying in good faith upon the records required to be
maintained under Section 9.1 and upon such information,opinions,reports or statements by
any of the Company's Members, employees, or agents, or by any other Person, as to matters
the Manager,the Partnership Representative, such Principal, or such officer or other Person
reasonably believes are within such Person's professional or expert competence and who
has been selected with reasonable care by or on behalf of the Company, including
information, opinions, reports or statements as to the value and amount of the assets,
liabilities and profits or losses of the Company. Subject to the foregoing, no Covered Person
shall be liable,responsible or accountable in damages or otherwise to the Company or to any
Member for:
(a) Any actions or omissions within the scope of the authority
conferred on such Covered Person by,or under,this Agreement or in furtherance of the duties
or responsibilities of such Covered Person with respect to the Company and its activities and
investments;
(b) Any actions or omissions of such Covered Person on the advice
of legal counsel, accountants, brokers, or consultants to the Company;
(c) The negligence, dishonesty, or bad faith of any broker,
consultant, or agent of the Company selected, engaged, or retained by the Manager; or
(d) Any actions or omissions of such Covered Person in connection
with providing management, advisory, or oversight of any Related Entity or serving in any
board or management related roles in any Related Entity.
4.2 Confidentiality. Each Manager and Member owes to the Company and the
Members a duty of confidentiality. The duty of confidentiality includes 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, unless otherwise authorized by the Company. For the purposes of this
Agreement, the Company's "Confidential Information" means information, in any form,
that the Company desires to protect from disclosure. Confidential Information includes
visual and other information obtained from site visits, as well as any reports or other
documents resulting from the disclosure of Confidential Information. If a Manager or a
Member is uncertain whether information is confidential, that party shall treat that
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information as confidential.Confidential Information does not include information,however
designated, that: (a) is or becomes known publicly through no fault of a Manager or a
Member; (b) is learned by a Manager or a Member from a third party whom that Manager or
Member believes in good faith is entitled to disclose it; (c) is already known to a Manager or
a Member before disclosure by the Company as shown by that Manager's or Member's
written records; or (d) is independently developed by a Manager or a Member as shown by
that Manager's or Member's written records. Each Manager and Member shall take all
actions reasonably necessary to assure that its Affiliates abide by this duty of confidentiality
4.3 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 Manager and Members in connection with their respective rights and
obligations under this Agreement.
ARTICLE 5
CAPITAL ACCOUNTS AND TAXES
5.1 Capital Accounts. The Company shall establish and maintain an account
recording each Member's capital interest in the Company (each a "Capital Account"), in
accordance with the provisions of Code Section 704(b) and the related Treasury Regulations.
If the Manager determines, after consulting with the Company's professional accountants
that the manner in which Capital Accounts are to be maintained pursuant to the provisions
of this Section 5.1 should be modified to comply with Code Section 704(b) and the related
Treasury Regulations, then notwithstanding anything to the contrary contained in this
Section 5.1 the method by which Capital Accounts are maintained will be so modified,
provided, however, that any change in the manner of maintaining Capital Accounts may not
materially alter the economic agreements of the Members.
5.1.1 Increases and Decreases in Capital Accounts.
(a) Increases. Each Member's Capital Account will 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 that are separately stated
under Code Section 702(a); and (iv) any items in the nature of income and gain that are
specially allocated to the Member, excluding special allocations under Section 5.3.2.
(b) Decreases. Each Member's Capital Account will 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;
OPERATING AGREEMENT- 15
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and (v) allocations to the Member of deductions and losses of the Company, including
deductions and losses that are separately stated under Code Section 702(a).
5.1.2 Allocations upon Transfers. Upon a Transfer of a Member's Units to
another Person other than the Company,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 is 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 proration is based on the portion of the calendar year that has elapsed before the
Transfer, and the balance of the income, gain, loss, deduction, and credit attributable to the
transferred Units is allocated to the transferee.
5.2 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 Code) are allocated to such Member in accordance
with the applicable provisions of the Code.
5.3 Multiple Member LLC Taxation. 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 5.3 apply.
5.3.1 Income, Gain, Loss, Deduction and Credit. Except as provided in
Section 5.3.2,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
Interests.
5.3.2 Special Allocations.
(a) Allocation of Code Section 704(c) Items. With respect to real
and personal property contributed to the Company by a Member, 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
OPERATING AGREEMENT- 16
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the treatment of the gain as recapture income. For this purpose "recapture income" means
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. If any Member receives an allocation under this Article 5 that 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.
5.3.3 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 5,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.
5.4 Compliance with Code and Treasury Regulations. The provisions of this
Article 5 as they relate 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 5 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 5 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 5, the method in which
Capital Accounts are maintained will 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 5 may be construed as creating a deficit restoration
obligation or otherwise personally obligating any Member to make a contribution.
5.5 Partnership Representative. C. Isaac Waitman is designated as the
partnership representative of the Company ("Partnership Representative") pursuant to
Code Section 6223. The Manager may from time to time designate another Member, or any
other person, with a substantial presence in the United States as the Partnership
Representative.The Partnership Representative shall cause the preparation and timely filing
of all tax returns required to be filed by the Code.The Partnership Representative may make
any election allowed under Code Section 6221. The Partnership Representative 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.
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5.5.1 Allocation Elections. The Partnership Representative is expressly
authorized to make any applicable election under the Code or the Treasury Regulations,
including an election under Code Section 754 and elections, consistent with the terms of this
Agreement, regarding allocation methods under Treasury Regulation Section 1.704-3.
5.5.2 Limitations on Authority. With respect to a taxing authority's audit
and potential adjustment done at the Member (partner)-level, the Partnership
Representative shall not enter into any extension of the period of limitations for making
assessments on behalf of the Members without first obtaining the consent of the Members.
The Partnership Representative shall not bind any Member to a settlement agreement
without first obtaining the consent of such affected Member.Any Member that enters into a
settlement agreement with respect to any Company item affecting the income tax reporting
or liability of any Member or the Company itself shall notify the other Members of such
settlement agreement and its terms within 30 days from the date of the settlement.
5.5.3 Adjustment at Member Level. With respect to a taxing authority's
audit and potential adjustment done at the Company-level, the financial burden of any
imputed underpayment and associated interest, adjustments to tax and penalties arising
from a partnership adjustment that are imposed on the Company, and the cost of contesting
any such partnership adjustment, shall be borne by the Members and former Members pro
rata based on their respective distribution entitlements during the reviewed fiscal year. To
the extent feasible, the preceding sentence shall be implemented through adjustments to
distributions, but Members and former Members shall indemnify and hold harmless the
Company to the extent that the preceding sentence cannot be so implemented. The
provisions contained in this subsection 5.5.3 survive the termination of the Company and
the withdrawal or termination of any Member.
5.5.4 Survival. The provisions of this Section 5.5 survive the termination of
the Company or the termination of any Member's ownership interest in the Company and
remain binding on the Members for as long a period of time as is necessary to resolve with
any taxing authority any and all matters regarding the U.S. federal, state or local income
taxation of the Company or the Members.
5.6 Member Taxes. Each Member shall promptly provide the Partnership
Representative with all information regarding the Member's tax returns and tax liabilities as
requested from time to time, including proof that the Member has filed an amended return
and paid any resulting tax, the Member's address, taxpayer identification number and
current contact information, the Member's status as a tax-exempt Member, the tax rate
applicable to the Member and the Member's status as an eligible Member. The Member's
obligations hereunder continue notwithstanding the Member ceasing to be a Member
whether resulting from a transfer, sale, withdrawal or other disposition of its Membership
Interest. Each Member shall notify the Partnership Representative of any inconsistent
treatment of any Company item on the Member's return and of any settlement with the IRS
regarding any Company items.
OPERATING AGREEMENT- 18
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ARTICLE 6
TRANSFERS AND DISSOCIATIONS
6.1 Prohibition on Transfers. Except as otherwise provided in this Article 6, (i) a
Member may not Transfer the Member's Units and (ii) a Member has no right to withdraw,
be redeemed, dissociate, or otherwise cease to be a Member at any time.A"Transfer" of the
Units or any interest in the entity comprising the Member or any Person holding an interest
in the entity(ies) comprising the Member at any level includes 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 or any of the rights associated therewith,directly or indirectly.
However, a change in any trustee or fiduciary of the Member is not a Transfer under this
Article 6.
6.1.1 General Limitations under Applicable Law. Notwithstanding
anything in this Agreement to the contrary, no Member has the right to Transfer the Units
(i) if the Transfer would cause termination of the Company under Code
Section 708(b)(1)(B), (ii) if the transferee is not eligible to be a Member of the Company
under this Agreement, the Act, or other applicable law, or (iii) if the Transfer would cause
the Company to no longer qualify for its tax elected status under the Code.
6.1.2 Reasonableness of Restrictions; Enforcement. The Members
acknowledge the reasonableness of the restrictions set forth in this Article 6 in view of the
Company's scope and purposes and the relationships among the Members. The restrictions
on Transfers set forth in this Article 6 are specifically enforceable.
6.2 Requirements for Transfer. No Member shall Transfer or otherwise dispose
of its interest in the Company, directly or indirectly, without the Manager's prior written
consent,which consent the Manager may grant or withhold in its sole discretion. In addition,
no Transfer or other disposition of an interest in the Company by a Member will be permitted
until the Manager has received an opinion of counsel satisfactory to it (provided, that the
Manager may, in its sole discretion,waive the requirement of an opinion of counsel) that the
effect of such transfer or disposition would not:
(a) result in a violation of the Securities Act or any comparable state
law;
(b) require the Company to register as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); or require the
Company, the Manager, or any member of the Manager to register as an investment advisor
under the 1940 Act;
(c) result in a violation of any law,rule or regulation by the Member,
the Company,the Manager, any Principal, or any member of the Manager; or
(d) result in a violation of this Agreement.
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If required, the transferring Member or the proposed transferee shall provide such legal
opinion to the Manager. The transferring Member or the proposed transferee shall bear all
costs associated with such legal opinion. Upon request, the Manager will use its good faith
diligent efforts to provide any information possessed by the Company and reasonably
requested by a transferring Member to enable it to render the foregoing opinion.
6.3 Substitution as a Member. A transferee of a Member's interest under this
Article 6 will become a substituted Member only with the consent of the Manager and only
if such transferee (a) elects to become a substituted Member and (b) executes,
acknowledges, and delivers to the Company such other instruments as the Manager may
deem necessary or advisable to effect the admission of such transferee as a substituted
Member,including the written acceptance and adoption by such transferee of the provisions
of this Agreement. A transferee of a Member's interest under this Article 6, unless and until
admitted as a substitute Member, will have no right to vote with respect to the Member's
interest, inspect the books of account or records of the Company, or otherwise participate in
the affairs of the Company,but instead will only be entitled to receive an allocation of profits
or losses or distributions with respect to the Member's interest. No assignment by a Member
of its interest in the Company will release the assignor from its liabilities to the Company.
However,if the assignee becomes a Member as provided in this Section 6.3,the assignor will
thereupon so be released (in the case of a partial assignment, to the extent of such
assignment).
6.4 Expenses of Transfer.Any costs or expenses (including reasonable attorneys'
fees) incurred by the Company in connection with the Transfer of an interest in the Company
(including any costs associated with any legal opinion required under Section 6.2) shall be
borne jointly and severally by the transferring Member and the proposed transferee.
6.5 Mandatory Redemption by the Company. A dissociated Member shall
surrender the Units held by the dissociated Member for redemption by the Company if the
Company determines to exercise its redemption right under Section 6.8. The purchase price
for the Units transferred under this Section 6.5 is 50% the Market Value, except if the
Member was dissociated under either Section 6.6(b) or 6.6(c), in which case the purchase
price will be the full Market Value, and the material terms of the Transfer may include the
Standard Payment Terms.Closing on the Transfer shall occur within 60 days after the Market
Value is determined.
6.5.1 Standard Payment Terms.The"Standard Payment Terms"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, include at a minimum a five year maturity date,
interest accruing on the principal at an annual rate equal to the greater of 5% and the
applicable federal rate published by the Internal Revenue Service for the month in which the
Transfer occurs, and equal annual installment payments of principal and interest amortized
over a five-year period.
OPERATING AGREEMENT-20
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6.6 Events of Dissociation.A Member is 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 under this Article 6.
(b) Death. The Member dies.
(c) Incapacity. The Company determines the Member is
incapacitated.A Member is "incapacitated" if the Member suffers from a physical or mental
illness or disability that: (i) prevents the Member from performing his/her duties for the
Company on a full-time basis for more than 180 consecutive days or an aggregate of 240 days
in any 365-day period; or(ii)(1)the Company determines,in compliance with applicable law,
is likely to prevent such Member from performing such duties for such period of time and (2)
30 days have elapsed since delivery to such Member of the Company's determination and
such Member has not resumed his/her performance. For purposes of this Agreement, if at
any time in the opinion of Company a question arises whether or not a Member is
incapacitated, then the Company will promptly employ three 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. If the Member refuses to submit to examination or otherwise cooperate
with such examination, the Company's determination of a disability shall be binding.
(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 this Article 6.
(e) Illegality.It is unlawful to carry on the Company's business with
the Member.
(f) Dissolution. The Member is an organization that has been
dissolved and is winding up its business.
(g) Judicial Determination. The Member is expelled from the
Company by judicial determination, upon the application by the Company, the Manager, or
another Member,that the Member or Affiliate of the Member(i) engaged in wrongful conduct
that adversely and materially affected the Company's business, (ii) willfully or persistently
committed a material breach of this Agreement or committed a material breach of the duties
owed to the Company, the Manager or the Members, or (iii) engaged in conduct that makes
it not reasonably practicable to carry on the Company's business with the Member.
(h) 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
OPERATING AGREEMENT-21
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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.
(i) Criminal Conviction. The Member enters any plea of nolo
contendere to, enters into a withheld judgment for, or is convicted of a felony.
(j) Fraud or Dishonesty. The Member or any Affiliate thereof
commits any act of fraud or dishonesty resulting or intended to result in a gain to the Member
or Affiliate at the expense of the Company.
6.7 Effect of Prohibited Transfers.A Transfer in violation of this Article 6 is void
and has the following additional effects:
(i) The transferee does not become a Member;
(ii) The transferee is entitled only to the right to receive distributions
pursuant to the provisions of this Agreement on account of the
transferee's ownership of Units and is not entitled to any other rights
with respect to the transferee's ownership of Units; and
(iii) The transferring Member is dissociated as a Member of the Company
as set forth in Section 6.6(d).
6.8 Effect of Dissociation.Upon the occurrence of an Event of Dissociation (as set
forth in Section 6.6):
(i) The dissociated Member immediately ceases to be a Member;
(ii) To the extent the dissociated Member holds any Units at the time of
dissociation, the dissociated Member is entitled only to the right to
receive distributions pursuant to the provisions of this Agreement on
account of the dissociated Member's ownership of the Units and is not
entitled to any other rights with respect to the dissociated Member's
ownership of the Units;
(iii) The Company has the right to redeem all or any portion of the Units
from the dissociated Member pursuant to Section 6.5;
(iv) The dissociated Member's duties and obligations under this Agreement
continue with regard to matters arising before the time of dissociation;
and
(v) The Member's dissociation will not cause the dissolution of the
Company.
OPERATING AGREEMENT-22
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ARTICLE 7
DISSOLUTION
7.1 Dissolution. The Company will dissolve upon the first of the following events
to occur (each a "Dissolution Event"):
(a) By Agreement. The Manager and the Members, by vote in
accordance with Section 2.7.2, agree to dissolve the Company.
(b) No Manager. 90 days after the removal or resignation of the
Manager, unless a Supermajority of the Class A Members elect to continue the Company and
appoint a new manager of the Company before the end of that 90-day period.
(c) No Members.The passage of 90 consecutive days during which
the Company has no Members.
(d) Judicial Decree. The entry of a decree of judicial dissolution
that (i) the conduct of all or substantially all of the Company's activities is unlawful, (ii) it is
not reasonably practicable to carry on the Company's activities in conformity with this
Agreement,including because of a deadlock among the Members, (iii) the Manager has acted,
is acting, or will act in a manner that is illegal or fraudulent, or (iv) the Manager has acted or
is acting in a manner that is oppressive and was, is, or will be directly harmful to a Member.
(e) Required Dissolution.Any other event causing dissolution of a
limited liability company under the Act.
7.2 Statement of Dissolution. Upon the occurrence of a Dissolution Event, the
Company shall file a Statement of Dissolution with the Idaho Secretary of State.The Company
will continue in existence thereafter only for the purpose of winding up its business and
affairs.
7.3 Winding Up. To wind up the Company's business and affairs, a Person
selected by the Manager shall act as a liquidator (the"Liquidator").The Liquidator will have
full power and authority to (i) sell, assign, and encumber any of the Company Property,
(ii) wind-up and liquidate the Company's business and affairs in a reasonable manner,
(iii) prepare and distribute accounting reports, and (iv) distribute the proceeds from
liquidation and any remaining Company Property in accordance with Section 7.4.
7.4 Distribution of Assets after Dissolution. Upon the winding up of the
Company, and following the allocation of the Company's income, gain, loss, deductions, and
credits, the Liquidator shall distribute all liquidation proceeds and any remaining Company
Property within the later of (i) 60 days of the end of the Company's tax year or (ii) 90 days
after all debts, liabilities and obligations of the Company have been paid and discharged or
reasonably adequate provisions therefor have been made. The distributions made pursuant
to this Section 7.4 are to be made in cash or other real and personal property as determined
by the Liquidator. The Liquidator shall distribute all liquidation proceeds in the following
manner:
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7.4.1 Creditors. First, to creditors, including Members who are creditors, to
the extent permitted by law, in satisfaction of the liabilities of the Company.
7.4.2 Reserves. Second, to the establishment of and additions to reserves
that are determined by the Liquidator in its sole discretion to be reasonably necessary for
any contingent unforeseen liabilities or obligations of the Company.
7.4.3 Class A Members' Positive Capital Account Balances. Third,to Class
A Members in accordance with positive Capital Account balances taking into account all
Capital Account adjustments for the Fund's taxable year in which the liquidation occurs,
including adjustments to the Class A Members' Capital Accounts immediately before the
liquidation as provided by Treasury Regulation Section 1.704-1(b)(2)(f)(5)(ii).
7.4.4 Class B Members' Positive Capital Account Balances. Fourth, to
Class B Members in accordance with positive Capital Account balances taking into account
all Capital Account adjustments for the Fund's taxable year in which the liquidation occurs,
including adjustments to the Class B Members' Capital Accounts immediately before the
liquidation as provided by Treasury Regulation Section 1.704-1(b)(2)(f)(5)(ii).
7.4.5 Percentage Interests. Fifth,to all Members in the following manner:
(a) First,any accrued and unpaid Preferred Return paid to the Class
A Members pro rata in proportion to their holdings of Class A Units; and
(b) Second, pro rata and pari passu: (i) 70%to the Class A Members
pro rata in proportion to their holdings of Class A Units; and (ii) 30%to
the Class B Members pro rata in proportion in proportion to their
holdings of Class B Units
7.5 Deficit Capital Account Restoration Obligation. In no event is any Member
obligated to restore a deficit balance in the Member's Capital Account upon liquidation.
7.6 Distribution in Kind. If the Liquidator determines 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 Company Property to be distributed as
of a date reasonably close to the date of liquidation. Any unrealized appreciation or
depreciation will be (i) allocated among the Members in accordance with the provisions of
Article 5 assuming that all of the Company 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 Company Property in kind to a Member is
considered a distribution of an amount equal to the fair market value of the property so
distributed for purposes of Section 7.4.
7.7 Company Name. The Company has and retains the exclusive right to use the
name "425 Watertower LLC" as long as the Company continues. Upon termination of the
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Company,the Company shall assign whatever rights it may have in that name to the Manager.
No value shall be placed upon the name or the goodwill attached to it for the purpose of
determining the value of any Member's Capital Account or interest in the Company.
7.8 Completion of Winding Up and Termination. The winding up of the
Company's business and affairs will 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 liquidation proceeds and remaining Company Property has
been distributed. The Company shall then file a Statement of Termination with the Idaho
Secretary of State and the Company's existence will thereupon terminate.
ARTICLE 8
INDEMNIFICATION; DISPUTE RESOLUTION
8.1 Indemnification.
(a) To the fullest extent permitted by law, the Company shall
indemnify, hold harmless and defend each Covered Person from and against any losses,
claims, damages, liabilities, whether joint or several, expenses (including legal fees and
expenses), judgments, fines and other amounts paid in settlement (collectively, "Losses"),
incurred or suffered by such Covered Person,as a party or otherwise,in connection with any
threatened, pending, or completed claim, demand, action, suit, or proceeding (each, a
"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
if the Covered Person's conduct was not conduct involving gross negligence, willful
misconduct, fraud, or violation of applicable law.
(b) A Covered Person may employ separate counsel in any action as
to which indemnification may be sought under any provision of this Agreement and to
participate in the defense thereof,but the Covered Person shall pay the fees and expenses of
such counsel unless (i) the Company has agreed in writing to pay such fees and expenses,
(ii) the Company has failed to assume the defense thereof and employ counsel within a
reasonable period of time after being given the notice required above, or (iii) the Covered
Person has been advised by its counsel that representation of such Covered Person and other
parties by the same counsel would be inappropriate under applicable standards of
professional conduct (regardless of whether such representation by the same counsel has
been proposed) due to actual or potential differing interests between them.
(c) To the fullest extent permitted by law and subject to
Section 8.1(b), expenses incurred by a Covered Person in defending any Proceeding subject
to this Article 8 shall, from time to time, be advanced by the Company before the final
disposition of such Proceeding upon receipt by the Company of an undertaking by or on
behalf of the Covered Person to repay such amount unless it is determined that such Covered
Person is entitled to be indemnified therefor pursuant to this Article 8. A Covered Person
shall not be denied indemnification in whole or in part under this Article 8 merely because
the Covered Person had an interest in the transaction with respect to which the
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indemnification applies, if the transaction was not otherwise prohibited by the terms of this
Agreement and the conduct of the Covered Person satisfied the conditions set forth in
Section 8.1(a).
8.2 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 owed by the Member,the Member will 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 reimburse itself for any amounts paid by the
Company on account of such liability by withholding amounts from distributions to the
Member.
8.3 Limited Liability. The Manager and Members have limited liability. In
particular and without limiting the generality of the foregoing sentence:
(i) No Manager or Member is liable to the Company or any Manager or
Member for monetary damages, except for (i) breach of the duties
under Article 4, (ii) receipt of a financial benefit to which the Manager
or Member is not entitled, (iii) approval of a distribution in violation of
Section 2.9.7, (v) intentional infliction of harm on the Company or a
Member, (vi) intentional violation of criminal law, or (vii) tax liability
under Section 8.2;
(ii) No Manager or Member is,by virtue of the Manager or Member's status
as a Manager or Member, 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) The Company's debts, obligations, or other liabilities, whether arising
in contract, tort, or otherwise, are solely Company's debts, obligations,
or other liabilities;
(iv) Any indemnification provided under this Article 8 must be satisfied
solely out of Company assets, as a Company expense, and no Member
will be personally liable because of these indemnification provisions;
(v) Unless otherwise set forth in or determined in accordance with this
Agreement, no Member has any obligation to contribute to the
Company for,or in respect of,the Company's debts,obligations,or other
liabilities;
(vi) No Manager or Member may represent or imply to any Person that the
Manager or Member, or any other Manager or Member, is personally
liable for any debt, obligation, or other liability of the Company; and
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(vii) The failure of the Company to observe any particular formalities
relating to the exercise of its powers or management of its activities is
not a ground for imposing liability on any Manager or Member for the
debts, obligations, or other liabilities of the Company.
8.4 Liability Insurance. The Company shall acquire and maintain adequate
liability insurance at Company expense with customary limits and deductibles covering the
Covered Persons against Losses subject to the foregoing indemnification provisions. The
Company shall not incur the cost of that portion of any insurance that insures any party
against any liability the indemnification of which is prohibited by this Agreement. Any
Person entitled to indemnification from the Company under this Agreement shall first use
its best efforts to seek recovery under any other indemnity or any insurance policies by
which such Person is indemnified or covered, but if such recovery or advancement is not
promptly forthcoming, the Company shall provide the indemnification and shall be
subrogated to the right of the indemnified party to recover from such other sources. If any
Covered Person recovers any amounts in respect of any Losses from any insurance coverage,
then such Covered Person shall, to the extent that such recovery is duplicative, reimburse
the Company for any amounts previously paid to such Covered Person by the Company in
respect of such Losses.
8.5 Settlements. The Company is not liable for any settlement of any such action
effected without its written consent, but if settled with such written consent, or if there is a
final judgment against the Covered Person in any such action, the Company shall indemnify
and hold harmless the Covered Person to the extent provided above from and against any
loss, claim, damage, liability. or expense by reason of such settlement or judgment.
8.6 Amendments; Survival. Any amendment of this Article 8 will not adversely
affect any right or protection of a Covered Person who was serving at the time of such
amendment or repeal, and such rights and protections survive such amendment or repeal
with respect to events that occurred before such amendment or repeal. The indemnification
obligations in this Article 8 survive the termination of this Agreement.
8.7 Claim. The term "Claim" is 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 Agreement, the operation of the Company, or the Act, including Claims by
third parties, Manager, Members or Affiliates thereof. With respect to a Member, a Claim
includes any action to enforce the Member's rights and otherwise protect the Member's
interests, including rights and interests under this Agreement or the Act or arising
independently of the membership relationship.
8.8 Claim Resolution Procedure. Except as provided with respect to injunctive
relief, in the event of any Claim, the parties shall first attempt to resolve the Claim by direct
discussions.If the parties do not resolve the Claim through direct discussions within a period
of 30 days,then upon written notice by any party to the other parties, and within a period of
the next 30 days, the parties shall attempt to resolve the Claim by mediation administered
OPERATING AGREEMENT-27
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by the American Arbitration Association under its Commercial Mediation Rules. Thereafter,
any unresolved Claim may be resolved as allowed by applicable law.
8.9 Reservation of Rights and Remedies. Except as expressly provided in this
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 Agreement. Any rights and remedies
described in this Agreement are cumulative and not alternative to any other rights and
remedies available at law or in equity. Notwithstanding the foregoing, no Member has 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 may be maintained only derivatively and in
accordance with applicable law governing derivative actions.
8.10 Injunctive Remedies. In addition to any other right or remedy the Company
and the Members may have, the Company and the Members have the right to specifically
enforce this Agreement, including to the restrictions on Transfer set forth in Article 6. Each
Member agrees that the other Members and the Company will be irreparably damaged if this
Agreement is not specifically enforced. Upon a breach or threatened breach of any term,
covenant or condition of this Agreement by any party, each of the other parties may, in
addition to all other remedies,seek a temporary and permanent injunction,without showing
any actual damage, and may seek a decree for specific performance.
8.11 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.
8.12 Waiver. The waiver of any right, obligation, or remedy must 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 because of another party's failure to observe or perform a term or
condition set forth in this Agreement does not constitute a waiver of the term or condition.
A waiver by a party (i) does not affect any term or condition other than the one specified in
the waiver, (ii) constitutes a waiver of the specified term or condition only for the time and
in the manner specifically stated in the waiver, and (iii) constitutes a waiver of the specified
term or condition only for the parties expressly named in the waiver and for no other parties.
8.13 Governing Law, Jurisdiction, and Venue. The parties intend for this
Agreement to be governed by and construed under the laws of the State of Idaho,but without
giving effect to that state's conflicts of laws jurisprudence. The state and federal courts in
Boise, Ada County, Idaho have jurisdiction and venue for mediation, litigation, and all other
proceedings will be located in Boise,Ada County, Idaho.
OPERATING AGREEMENT-28
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ARTICLE 9
MISCELLANEOUS
9.1 Books; Place;Access. The Manager shall maintain, or cause to be maintained,
books of account on behalf of the Company at the Company's principal office or such other
place as may be designated by the Manager. Such will be made available for inspection and
copying by the Manager and Members (whether current or former) in accordance with the
rights and limitations set forth in the Act and any additional reasonable restrictions and
conditions on the use of and access to such records established by the Company, including
designation information as Confidential Information and imposing nondisclosure
obligations on the recipient.
9.2 Company Cash. Cash held by the Company shall be promptly deposited into
an account in a reputable bank or financial institution (as determined by the Manager in its
reasonable discretion).
9.3 Notices. All notices and other communications must be in writing, addressed
to the last address known by the sender to be the address of the recipient, 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 e-mail,
with oral confirmation and the date of the notice being the date of the e-mail, or (iv) 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.
9.4 Waiver of Notice. Whenever any notice is required to be given a waiver in
writing signed by the Person entitled to such notice will be deemed equivalent to the giving
of the notice. The waiver is effective whether signed before or after the event concerning
which the notice is required.
9.5 Successors and Assigns. The provisions of this Agreement are binding upon
any successors of the Members, the Manager, or the Company. The rights, duties, and
obligations of any Member may not be assigned except in accordance with the provisions of
Article 6 and any purported assignment in violation of this Agreement is void.
9.6 Coordination of Agreement and Act and Other Applicable Law. Except to
the extent a provision of this Agreement is prohibited or ineffective under the Act or other
applicable law, this Agreement governs, even when inconsistent with or different than, the
Act or other applicable law. To the extent any provision of this Agreement is prohibited or
ineffective under the Act or other applicable law, this Agreement shall be considered
amended to the smallest degree possible in order to resolve the prohibition or
ineffectiveness. If the Act or other applicable law is subsequently amended, superseded, or
interpreted to make any provision of this Agreement valid or invalid, the provision shall be
considered to be valid or invalid, as the case may be, from the effective date of the
amendment, supersession, or interpretation.
OPERATING AGREEMENT-29
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9.7 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 for non-tax purposes.The Members intend not to be partners one to another, or
partners as to any third party for non-tax purposes. 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 for non-tax purposes,the Member making the wrongful representation shall
be liable to any other Member who incurs personal liability by reason of the wrongful
representation.
9.8 Rights of Creditors and Third Parties. The 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 Agreement is not intended to benefit
any creditor of the Company or has have any rights under (i) this Agreement or (ii) any
agreement between the Company and any Member regarding any contribution or otherwise.
9.9 Severability.The invalidity of any portion of this Agreement will not affect the
validity of any other portion of this 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.
9.10 Time of the Essence. Time is of the essence with respect to the obligations to
be performed under this Agreement.
9.11 Entire Agreement. All Schedules to this Agreement constitute a part of this
Agreement. This Agreement, together with the accompanying Schedules, constitutes the
entire, completely integrated agreement among the parties concerning the subject matter of
this Agreement, and supersedes all prior memoranda, correspondence, conversations, and
negotiations.
9.12 Amendment. This Agreement cannot be amended orally or by conduct of the
parties.All amendments of this Agreement must be in writing and must be approved by the
Manager and a Majority of the Members (including the representative of any dissociated
Member as a result of Sections 6.6(b) or 6.6(c)). No provision of this Agreement (other than
the Schedule of Members as described below) may be modified, amended, waived or
terminated except as provided in the preceding sentence. No course of dealing between the
parties will modify,amend,waive or terminate any provision of this Agreement or any rights
or obligations of any party under or by reason of this Agreement. Notwithstanding the
foregoing, the Manager shall amend the Schedule of Members without having to obtain the
consent of any Member, as appropriate to reflect accurately any changes to the information
contained thereon that were done in accordance with the terms of this Agreement. The
Manager shall promptly deliver a copy of any such amendment to each Member; provided
that, a failure of the Manager to deliver a copy of any amendment to the Members will not
OPERATING AGREEMENT- 30
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invalidate such amendment. The Members intend that compliance with the requirements of
this Section 9.12 is a condition precedent to any amendment of this Agreement for the
purposes of Sections 30-25-105(a)(4) and 30-25-107(a) of the Act and that any purported
amendment of this Agreement that does not comply with the requirements of this
Section 9.12 is ineffective.
9.13 Power of Attorney. By signing this Agreement, each Member designates and
appoints the Manager its true and lawful attorney, in its name, place, and stead to make,
execute, sign, and file the Certificate of Organization and any amendment thereto and such
other instruments, documents, or certificates that may from time to time be required of the
Company by the laws of the United States of America, the laws of the State of Idaho, or any
other state in which the Company may conduct its affairs in order to qualify or otherwise
enable the Company to conduct its affairs in such jurisdictions. Such attorney is not granted
any authority on behalf of the Members to amend this Agreement except that as attorney for
each of the Members, the Manager has the authority to amend this Agreement and the
Certificate of Organization (and to execute any amendment to the Agreement or the
Certificate of Organization on behalf of itself and as attorney in fact for each of the Members)
as may be required to effect:
(i) Admission of additional Members under Article 2;
(ii) Additional capital contributions under Article 2; and
(iii) Transfers of Units under Article 6.
This power of attorney granted by each Member expires as to such Member immediately
after the dissolution of the Company or the amendment of the Schedule of Members to reflect
the complete withdrawal of such Member as a Member of the Company.
9.14 Adoption and Ratification. This Agreement is adopted as of the Effective
Date. This Agreement is a private agreement among the Members, the Manager, 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.
9.15 Interpretation. For purposes of this Agreement, (a) the words "include,"
"includes," and"including" are deemed to be followed by the words "without limitation;" (b)
the word "or" is not exclusive; and (c) the words "herein," "hereof," "hereby," "hereto," and
"hereunder" refer to this Agreement as a whole. This Agreement must be construed without
regard to any presumption or rule requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be drafted.
9.16 Counterparts. This 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. Delivery of an executed counterpart signature page of this
Agreement by facsimile, electronic mail in portable document format (.pdf), or by any other
OPERATING AGREEMENT- 31
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electronic means intended to preserve the original graphic and pictorial appearance of a
document, has the same effect as delivery of an executed original of this Agreement.
[Signature pages follow]
OPERATING AGREEMENT- 32
DocuSign Envelope ID:327CC504-56DC-4AD6-83EF-BF2EADC2FA38
Each of the parties is signing this Agreement effective as of the Effective Date.
COMPANY:
425 Watertower LLC
By: Copium OZ 2 Manager, LLC
Its: Manager
DocuSigned by:
By. SSW �au{vticUA
Name: C. Isaac Waitman
Title: Managing Partner
MANAGER:
Copium OZ 2 Manager, LLC
DocuSigned by:
By:
�SGaa �ou{�cuA,
-...-""
Name: C. Isaac Waitman
Title: Managing Partner
Solely to effect its withdrawal:
WITHDRAWING MANAGER:
Copium Investments, LLC
DocuSigned by:
By SSW U MaJA,
Name: C. Isaac Waitman
Title: Managing Partner
SIGNATURE PAGE TO OPERATING AGREEMENT
DocuSign Envelope ID:327CC504-56DC-4AD6-83EF-BF2EADC2FA38
MEMBER COUNTERPART SIGNATURE PAGE TO THE OPERATING AGREEMENT
OF
425 WATERTOWER LLC
The undersigned, by executing this Counterpart Signature Page, agrees to become a
Member in 425 WATERTOWER, LLC, an Idaho limited liability company (the "Company"),
and a party to the Operating Agreement of the Fund (the "Agreement"), and agrees to be
bound by the terms, conditions and limitations set forth in the Agreement. Execution below
by or on behalf of a corporation, partnership, limited liability company, trust or other non-
individual entity (an "Entity') constitutes a representation and warranty that: (a) the Entity
is duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization; (b) it has full organizational power to execute and agree to the Agreement and
to perform its obligations thereunder and to become a Member in the Fund; and (c) the
individual executing below on behalf of such Entity has been duly authorized to do so and to
bind the Entity.
Individual Subscriber: Entity Subscriber:
Print Name of Individual Print Name of Entity
Signature Signature
Name
Title
Date Signed: Date Signed:
SCHEDULE 2.2 -MEMBER COUNTERPART SIGNATURE PAGE