CC - OPAG (fully executed) FIRST AMENDED OPERATING AGREEMENT
OF
SOUTHRIDGE FARM LLC
(an Idaho Limited Liability Company)
Effective: January 2, 2015
Table of Contents
ARTICLE I FORMATION OF THE COMPANY................................................................... I
1.1 Formation................................................................................................................ 1
1.2 Name....................................................................................................................... 1
1.3 Designated Office and Registered Agent................................................................ 1
1.4 Principal Office....................................................................................................... 1
1.5 Purposes and Powers............................................................................................... 1
1.6 Term........................................................................................................................2
1.7 Nature of Members' Interests. ................................................................................ 2
1.8 Independent Activities. ........................................................................................... 2
1.9 Conflicts with Laws................................................................................................ 2
1.10 Agreement............................................................................................................... 3
ARTICLE2 DEFINITIONS........................................................................................................3
2.1 Definitions............................................................................................................... 3
ARTICLE3 MANAGEMENT.................................................................................................... 6
3.1 Number and Qualifications of Managers................................................................ 6
3.2 Authority of Managers............................................................................................ 6
3.3 Other Activities....................................................................................................... 6
3.4 Resignation. ............................................................................................................ 7
3.5 Removal of Managers by Members........................................................................ 7
3.6 Vacancy................................................................................................................... 7
3.7 Managers' Compensation. ...................................................................................... 7
3.8 Managers' Standard of Care. .................................................................................. 7
3.9 Tax Matters............................................................................................................. 8
ARTICLE 4 RIGHTS AND OBLIGATIONS OF MEMBERS............................................... 8
4.1 Names and Addresses. ............................................................................................ 8
4.2 Additional Members. .............................................................................................. 8
4.3 No Management by Members................................................................................. 8
4.4 Limited Liability. .................................................................................................... 8
4.5 Redemption of a Membership Interest.................................................................... 9
ARTICLE 5 ACTIONS AND MEETINGS OF MEMBERS.................................................... 9
5.1 General.................................................................................................................... 9
5.2 Annual Meetings..................................................................................................... 9
5.3 Special Meetings................................................................................................... 10
5.4 Place of Meetings.................................................................................................. 10
5.5 Notice of Meeting. ................................................................................................ 10
5.6 Record Date. ......................................................................................................... 10
5.7 Quorum. ................................................................................................................ 10
5.8 Proxies................................................................................................................... 10
5.9 Voting. .................................................................................................................. 10
5.tO Designated Representative.................................................................................... 11
5.11 Actions of Members without Meetings................................................................. 11
5.12 Waiver of Notice................................................................................................... 11
TABLE OF CONTENTS-i
5.13 Meetings of All Members..................................................................................... 11
5.14 Meeting by Communications Device.................................................................... 11
ARTICLE 6 CAPITAL CONTRIBUTIONS; LOANS; GUARANTEES............................. 12
6.1 Initial Capital Contributions of Members............................................................. 12
6.2 No Withdrawal or Return of Capital Contributions.............................................. 12
6.3 No Interest............................................................................................................. 12
6.4 Loans..................................................................................................................... 12
6.5 Additional Capital Contributions.......................................................................... 12
6.6 Enforceability........................................................................................................ 13
6.7 Guaranty of Loans, Contribution and Indemnity.................................................. 13
ARTICLE 7 ALLOCATIONS AND DISTRIBUTIONS........................................................ 14
7.1 Capital Accounts................................................................................................... 14
7.2 Allocations............................................................................................................ 14
7.3 Distributions.......................................................................................................... 14
7.4 Tax Matters Partner............................................................................................... 14
ARTICLE 8 TRANSFER OF INTERESTS AND ADMISSION OF MEMBERS............... 15
8.1 Transferability of Membership Interests............................................................... 15
8.2 Rights of Assignees. ............................................................................................. 15
8.3 Admission of Members......................................................................................... 15
8.4 Right of First Refusal............................................................................................ 16
ARTICLE 9 DISSOLUTION AND LIQUIDATION OF THE COMPANY........................ 16
9.1 Dissolution Events. ............................................................................................... 16
9.2 Effect of Dissolution............................................................................................. 16
9.3 Distribution. .......................................................................................................... 17
9.4 Statement of Termination. .................................................................................... 17
ARTICLE 10 INDEMNIFICATION AND INSURANCE...................................................... 18
10.1 Indemnification..................................................................................................... 18
10.2 Limitation of Liability........................................................................................... 18
10.3 Insurance............................................................................................................... 18
ARTICLE11 AMENDMENTS................................................................................................. 18
It.I By Members.......................................................................................................... 18
11.2 By Managers......................................................................................................... 19
ARTICLE12 MISCELLANEOUS........................................................................................... 19
12.1 Fiscal Year. ........................................................................................................... t9
12.2 Books and Records. .............................................................................................. 19
12.3 Reports.................................................................................................................. 19
12.4 Notices. ................................................................................................................. 19
12.5 Representations of Members................................................................................. 20
12.6 Survival of Rights. ................................................................................................ 20
12.7 Interpretation and Governing Law........................................................................ 20
12.8 Severability. .......................................................................................................... 20
12.9 Agreement in Counterparts................................................................................... 20
12.10 Third Pal-ties..........................................................................................................21
12.11 Remedies............................................................................................................... 21
12.12 Time is of the Essence. ......................................................................................... 21
TABLE OF CONTENTS-ii
12.13 Schedules Included in Exhibits; Incorporation by Reference............................... 21
Exhibit A—Capital Contributions
Exhibit B—Form of Consent to Terms of Operating Agreement
Exhibit C— Special Allocations
TABLE OF CONTENTS-III
FIRST AMENDED OPERATING AGREEMENT
OF
SOUTHRIDGE FARM LLC
THIS FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM
LLC, an Idaho limited liability company organized pursuant to the Idaho Uniform Limited
Liability Company Act, is executed effective as of the 2nd day of January, 2015, by and among
the Company and the persons executing this Agreement as the Members.
ARTICLE I
FORMATION OF THE COMPANY
1.1 Formation.
The Company was formed on October 30, 2012, upon filing of the Certificate of
Organization with the Idaho Secretary of State. In consideration of the mutual premises and
covenants contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby aclmowledged, the parties hereto agree that the rights and
obligations of the parties and the administration and termination of the Company shall be
governed by this First Amended Operating Agreement (hereinafter "Agreement" or "Operating
Agreement"), the Articles and the Act. The Members as of the date of this Agreement have
made the Capital Contributions set forth on Exhibit A attached hereto and incorporated herein by
this reference.
1.2 Name.
The name of the Company is as set forth on the cover page of this Agreement.
1.3 Designated Office and Registered Agent.
The Company's initial designated office is at 401 W. Front Street, Suite 401, Boise,
Idaho 83702 and the name of its initial registered agent at that address is Scott A. Tschirgi,
Chartered.
1.4 Principal Office.
The principal office of the Company shall be located at 6152 West Half Moon Lane,
Eagle, Idaho 83616. The Members may relocate the principal office or establish additional
offices from time to time in their discretion.
1.5 Purposes and Powers.
1.5.1 The purpose and business of the Company shall be: (i) own, operate,
farm, hold, maintain, finance, mortgage, encumber, lease, sale, exchange, and otherwise deal
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-1
with real property located in Ada County, Idaho, and (ii) to engage in any and all activities
incidental or related to the foregoing, subject to the terms and conditions of this Agreement.
1.5.2 The Company shall have any and all powers, which are necessary or
desirable to carry out the purposes and business of the Company, to the extent the same may be
legally exercised by limited liability companies under the Act. The Company shall carry out the
foregoing activities pursuant to the arrangements set forth in the Articles and this Agreement.
1.6 Term.
The Company commenced its existence upon the filing of the Articles and shall continue
in existence until the Company is dissolved and its affairs wound up in accordance with the
provisions of this Agreement and the Act.
1.7 Nature of Members' Interests.
The Membership Interests in the Company shall be personal property for all purposes.
Legal title to all Company Property shall be held in the name of the Company. Neither any
Member nor a successor, representative or assign of such Member, shall have any right, title or
interest in or to any Company Property or the right to partition any Company Property.
1.8 Independent Activities.
Subject to Article 3 (Management), the Managers, the Members and any of their
Affiliates may engage in or possess interests in other business ventures of every nature and
description, independently, with other Persons without having or incurring any obligation to
offer any interest in such activities to the Company. This Agreement shall not be construed to
grant any right, privilege or option to a Member to participate in any manner in any other
business, corporation, partnership or investment in which the other Members or Mangers may
participate. Each Member expressly waives the doctrine of corporate opportunity (or any
analogous doctrine) with respect to any other such business, corporation, partnership or
investment of any other Member or Affiliate, even if that business or activity may be the same or
similar to the Company's business or in direct competition therewith. Each Member waives any
right the Members may otherwise have to share or participate in such other interests or activities
of either the Managers or other Members or the Member's Affiliates.
1.9 Conflicts with Laws.
If state or federal laws, regulations, interpretations or rulings are enacted, issued or
applied, or if any other legal developments occur, which in the opinion of the counsel for the
Company raise questions regarding the enforceability of this Agreement or if strict compliance
with this Agreement would not be consistent with applicable laws, regulations, interpretations or
rulings, the Managers shall promptly notify the Members of the applicable legal developments
and in good faith diligently work with the Members to devise a plan pursuant to which the
Company may maintain the economic benefit to the Company and each Member as
contemplated hereby, including the modification of this Agreement and any other contracts or
agreements entered into by the Company. In the event the Members and Managers are unable to
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-2
devise such a plan within a reasonable time period not to exceed ninety (90) days, the Managers
shall commence dissolution of the Company as provided in Article 9.
1.10 Agreement.
The Members hereby agree to the terms and conditions of this Agreement, as it may from
time to time be amended according to its terms. To the extent any provision of the Agreement is
prohibited or ineffective under the Act, the Agreement shall be considered amended to the
smallest degree possible in order to make the Agreement effective under the Act. In the event
the Act is subsequently amended or interpreted in such a way to make any provision of the
Agreement that was formerly invalid, valid, such provision shall be considered to be valid from
the effective date of such interpretation or amendment. Further, it is the express intention of the
Members that the Company be treated as a partnership for purposes of federal and state taxation.
The Members agree to take such actions and make such elections as may be necessary or
convenient to cause the Company to be treated as a partnership. If it is determined that the
Company is not, or will not be, classified as a partnership under the Code, then the Agreement
shall be considered amended to the smallest degree possible in whatever manner necessary to
ensure that the Company is or shall be treated as a partnership under the Code for purposes of
federal and state taxation.
ARTICLE 2
DEFINITIONS
2.1 Definitions.
The terms used in this Agreement shall have the meanings (unless otherwise expressly
provided herein) as set forth in this Article 2:
2.1.1 "Act" means the Idaho Uniform Limited Liability Company Act, Title
30, Chapter 6, Idaho Code, as the same may be amended from time to time.
2.1.2 "Affiliate" of a specified Person means (i) any Person directly or
indirectly controlling, controlled by or under common control with the specified Person; (ii) any
Person owning or controlling 10% or more of the outstanding voting interest of such specified
Person; (iii) any officer, director or partner of such specified Person; (iv) if the specified Person
is a manager, officer, director or partner, any entity for which the specified Person acts in such
capacity; and (v) any family member of such specified Person or an Affiliate of such family
member.
2.1.3 "Agreement" means this Operating Agreement, as amended, modified,
restated or supplemented from time to time.
2.1.4 "Articles" means the Certificate of Organization of a Limited Liability
Company of the Company filed with the Secretary of State, as amended or restated from time to
time.
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-3
2.1.5 "Assignee" has the meaning ascribed to it in Section 8.2. "Assignees"
refers to such Persons as a group.
2.1.6 "Bankruptcy" means with respect to a Member, when such Member (i)
makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii)
is adjudged as bankrupt or insolvent, or has entered against such Member an order for relief, in
any bankruptcy or insolvency proceeding; (iv) files a petition or answer seeking for such
Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against such Member in any
proceeding of the type described in clauses (i)-(iv) above; 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 such Member's properties. "Bankruptcy" shall also be deemed to have occurred to a
Member one hundred twenty (120) days after the commencement of any proceeding against such
Member seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, if the proceeding has not been
dismissed, or if within ninety (90) days after the appointment without such Member's consent or
acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of
such Member's properties, the appointment is not vacated or stayed, or within ninety (90) days
after the expiration of any such stay, the appointment is not vacated.
2.1.7 "Capital Account" means, with respect to any Member, the capital
account maintained for such Member in accordance with this Agreement and in accordance with
the Code and Treasury Regulations.
2.1.8 "Capital Contributions" means all contributions to the Company of
cash or property made by a Member or such Member's predecessor in interest which shall
include, without limitation, those contributions made pursuant to Article 6 of this Agreement.
2.1.9 "Code" means the Internal Revenue Code of 1986, as amended from
time to time (and any corresponding provisions of succeeding law).
2.1.10 "Company" means Southridge Farm , an Idaho limited liability
company,
2.1.11 "Company Property"means any and all property and assets acquired by
the Company, real and/or personal (including, without limitation, intangible property).
2.1.12 "Distribution" means any money or other property distributed to a
Member with respect to the Member's Membership Interest, but shall not include any payment to
a Member for materials or services rendered, including, without limitation, pursuant to an
employment contract, nor any reimbursement to a Member for expenses permitted in accordance
with this Agreement.
2.1.13 "Encumbrance" means any lien, pledge, encumbrance, collateral
assignment or hypothecation.
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-4
2.1.14 "Fiscal Year" means an annual accounting period ending December 31
of each year during the term of the Company, unless otherwise specified by the Managers.
2.1.15 "Majority in Interest" means, with respect to any referenced group of
Members, a combination of any such Members who, in the aggregate own more than fifty
percent (50%) of the Membership Interests entitled to vote on a particular matter.
2.1.16 "Managers" means such Persons elected or appointed pursuant to
Section 3.1 responsible for operational control of the Company on a day-to-day basis, subject to
the limitations contained in Section 3.2.
2.1.17 "Member" means each Person designated as a Member of the Company
on Exhibit A, or any additional Person admitted as Member of the Company in accordance with
Article 8. "Members" refers to such Persons as a group.
2.1.18 "Membership Interest" means the Sharing Ratio of the Member. Each
Member's Membership Interest is represented by the number of Units owned by the respective
Member.
2.1.19 "Person" means an individual, a foreign or domestic corporation, a
professional corporation, a partnership, a limited partnership, a limited liability company, a
foreign limited liability company, an unincorporated association, or other legal entity.
2.1.20 "Pro-Rata Basis" means in connection with an allocation or
Distribution in proportion to the respective Sharing Ratio for the applicable fiscal year of the
Company.
2.1.21 "Secretary of State" means the Secretary of State of Idaho.
2.1.22 "Service" means the Internal Revenue Service.
2.1.23 "Sharing Ratio" means only the economic interests of the Member in
the Company-which shall be calculated as set forth in Article 6.
2.1.24 "Tax Matters Partner" means the Person designated by the Members as
the "tax matters partner" as that term is defined in the Code.
2.1.25 "Terminating Event" means in the case of any Member means (i) the
improper Transfer (or attempt to Transfer) of such Member's Membership Interest, or any part
thereof; (ii) the conviction or entry of a plea of nolo contender for fraud, misappropriation or
embezzlement, (iii)the Bankruptcy of any Member; and (iv)the breach of this Agreement.
2.1.26 "Transfer" means a sale, assigm-nent, gift, pledge, exchange, or any
other disposition or Encumbrance.
2.1.27 "Treasury Regulations" means the Income Tax Regulations and
Temporary Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-5
2.L28 "Units" means one hundred (100) equal Membership Interests in the
Company as the same may be adjusted from time to time.
2.L29 "Value" means the book value of the Company's assets calculated
pursuant to the Company's generally established method for financial reporting as consistently
applied to the Company's operations, In all events, the Value of the Company and/or related
Membership Interests calculated pursuant to Article 4 shall not take into account any goodwill or
"blue sky" associated with the Company.
ARTICLE 3
MANAGEMENT
3.1 Number and Qualifications of Managers.
The Company shall be Manager managed and there shall be two (2) Managers from time
to time. The Managers are not required to be Members and the initial Managers shall be EAMI,
LLC, a Delaware limited liability company and Corey D. Barton(collectively the "Managers").
3.2 Authority of Managers.
3.2.1 Subject to provisions hereof limiting its authority, the Managers shall have
full charge at their sole discretion of the management, conduct and operation of the Company's
business, within the confines of such business, and their decisions shall be binding on the
Company, and in particular, without limitation upon the generality of the foregoing, the
Managers shall have authority to cause the Company: to employ or engage the services of such
agents, employees, independent contractors, attorneys, and accountants, as they deem reasonably
necessary; to create, by grant or otherwise, easements and servitudes; to develop, alter, improve,
repair, raze, replace, and rebuild Company property; to effect insurance for the Company and the
Members; to pay, collect, compromise, arbitrate, or otherwise adjust any and all claims or
demands of or against the Company; to enter into any and all other transactions involving the
Company's property, real or personal, or business affairs; and to abandon any unconsummated
transaction, even if consent thereto by other Members has been obtained (whether or not any
such consent was required).
3.2.2 Subject to any contrary provisions hereof, at any time that there is more
than one Manager each authority granted hereby or hereunder to the Managers may be exercised
with, and only with, the concurrence of a majority of such Managers (or pursuant to a delegation
by such majority to any other person or group of persons). With respect to any transaction, all
persons dealing with the Company shall be entitled to rely upon a certificate executed by a
majority of such Managers as to the approval of such transaction (either in particular or
generically) and delegation to any one or more persons of the authority to act alone on behalf of
the Company in respect thereof and alone to execute all documents and instruments and to take
all actions in connection therewith.
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-6
3.3 Other Activities.
The Managers may have other business interests and may engage in any other activities
in addition to those relating to the Company, including, without limitation, business interests and
activities that are in competition with those of the Company, and shall have no obligation to
account to the Company for such business interests or other activities. Notwithstanding the
foregoing, however, unless otherwise expressly permitted under this Agreement or approved or
ratified by all the Members, the Managers shall account to the Company for any profit or other
benefit derived by such Managers from (a) any transaction in connection with the formation,
conduct, or winding up of the Company or (b) from any use of Company property by such
Manager, including, without limitation, any information developed for the Company, or any
opportunity expressly offered to the Company.
3.4 Resignation.
The Managers may resign at any time by delivering written notice to the Members. The
resignation is effective upon notice, unless the notice specifies a later effective date. Once
delivered, a notice of resignation is irrevocable unless revocation is permitted by the Members.
The resignation of a Manager shall not affect the Manager's rights as a Member and shall not
constitute a withdrawal of the Member.
3.5 Removal of Manager by Members.
Upon the unanimous approval of the Members, the Members may remove a Manager
with or without cause. The Manager may be removed by the Members only at a meeting called
for the purpose of removing such Manager. The notice for such meeting must state that one of
the purposes of the meeting is the removal of such Manager.
3.6 Vacancy.
If a vacancy occurs in the position of Manager, the Members shall fill the vacancy
immediately pursuant to the voting process identified in Section 5.9. A vacancy that will occur
at a specific later date may be filled before the vacancy occurs but the new Manager may not
take office until the vacancy occurs.
3.7 Managers' Compensation.
The Managers shall also be reimbursed by the Company for reasonable out of pocket
expenses directly associated with the Managers' performance of services to the Company in that
capacity.
3.8 Managers' Standard of Care.
The Managers' duty of care in the discharge of such Manager's duties to the
Company and its Members is limited to refraining from engaging in grossly negligent or reckless
conduct, intentional misconduct, or a Imowing violation of law. In discharging its duties, such
Manager shall be fully protected in relying in good faith upon the records required to be
maintained under the Act and upon such information, opinions, reports or statements by any
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC -7
other Members, or agents, or other persons as to matters such Manager reasonably believes are
within such other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, including, without limitation, information,
opinions, reports or statements as to the value and amount of the assets, liabilities, profits or
losses of the Company or any other facts pertinent to the existence and amount of assets from
which distributions to members might properly be paid. A Manager shall not be liable for any
monetary damages to the Company for any breach of such duties, except for receipt of a
financial benefit to which the Manager is not entitled, a knowing violation of any requirements
of law, a breach of the duty imposed by section 30-6-406 of the Idaho Code relating to improper
distributions and other acts or omissions that constitute a breach of the duty of loyalty or bad
faith violations of the implied contractual covenant of good faith and fair dealing, as determined
under the Act.
3.9 Tax Matters.
Except as otherwise specifically provided herein or prohibited by law,the Managers shall
make any and all elections for federal and state income tax purposes, including, without
limitation, any election, if permitted by applicable law to: (i) adjust the basis of Company
property pursuant to Code Sections 754, 734(b), and 743(b), or comparable provisions of state or
local law, in connection with transfers of Membership Interests and Company distributions; (ii)
extend the statute of limitations for assessment of tax deficiencies against Members with respect
to adjustments to the Company's federal, state or local tax returns; and (iii) represent the
Company before taxing authorities or courts of competent jurisdiction in tax matters affecting the
Company.
ARTICLE 4
RIGHTS AND OBLIGATIONS OF MEMBERS
4.1 Names and Addresses.
The name and address of each Member, the Capital Contributions of each Member, Units
purchased, and each Member's initial Membership Interest are set forth on Exhibit A, which
exhibit shall be amended from time to time by the Managers upon the admission of additional
Members or any other event which adjusts the Membership Interests of the Members. The
Sharing Ratio for each Member shall be shown on the books and records of the Company as
calculated at the end of each fiscal year.
4.2 Additional Members.
The Members specifically acknowledge and agree that additional members shall only be
admitted to the Company upon the approval of the Managers. Unless otherwise agreed upon by
the Members, the admission of additional Members shall dilute the Membership Interests of the
existing Members in the total amount of the Membership Interest to be issued to the additional
Member on a pro rata basis according to the respective Membership Interests of the existing
Members. Upon admission as an additional Member, such additional Member shall be required
to make a capital contribution to the Company in an amount agreed upon by the Managers.
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-8
4.3 No Management by Members.
Except as otherwise provided in Article 3, the Members in their capacity as Members
shall not take part in the management or control of the business, nor transact any business for the
Company, nor shall they have the power to sign for or to bind the Company.
4.4 Limited Liability.
No Member shall be required to make any contribution to the capital of the Company
except as set forth in Article 6, nor shall any Member in such Member's capacity as such be
bound by, or personally liable for, any expense, liability or obligation of the Company, except to
the extent of such Member's Capital Contributions to the Company, any guaranties by the
Member or express written assumption by the Member of Company obligations.
4.5 Redemption of a Membership Interest.
4.5.1 Upon the occurrence of a Terminating Event with respect to any Member,
the Company shall purchase the Member's Membership Interest in accordance with this Section
4.5. Provided, further, in the event of Terminating Event, such Member's rights as a Member
shall automatically terminate and such Member shall be entitled only to the rights of an Assignee
pursuant to Section 8.2 for the remaining fiscal year. For purposes of this Section 4.5, with
respect to a Member, an "Adverse Terminating Event" means a Terminating Event as defined in
Section 2.1.25 (i), (ii), (iii), and (vi).
4.5.2 If any Member's Membership Interest is purchased because of the
occurrence of an Adverse Terminating Event, the amount the Company shall pay for the
Membership Interest of such Member shall be fifty percent (50%) of the Value of such
Member's Membership Interest.
4.5.3 Payments for Membership Interests shall be made as follows: Twenty
percent (20%) of the purchase price on the initial payment date, shall be within sixty (60) days
after the determination of the Value of the Company (the "Purchase Date"), and the balance
thereof payable on the anniversary of the Purchase Date, with interest on the outstanding
principal balance at the prime rate as indicated by the Wall Street Journal on the Purchase Date.
4.5.4 Notwithstanding any other provision of this Agreement, upon a
Terminating Event, the Company may offset any liability or damages incurred by the Company,
resulting from such Terminating Event, against any amounts payable to such withdrawing
Member.
ARTICLE 5
ACTIONS AND MEETINGS OF MEMBERS
5.1 General.
Unless otherwise required in this Agreement, actions and consents of the Members may
be communicated or reflected orally, electronically or in writing, and no action need be taken at a
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-9
formal meeting. Members may, but are not required to, meet from time to time on such notice, if
any, as the Member convening the meeting chooses to give. Any consent required to be in
writing may be evidenced by separate written counterparts. Any action of such Members shall
be effective when a sufficient number of Members to take such action communicate their
approval of the action to the Managers. No Member will have any management authority or
right to participate in the management of the Company.
5.2 Annual Meetings.
Annual meetings may be called by the Managers.
5.3 Special Meetings.
Meetings of the Members may be called by the Managers, or by the Members with at
least twenty percent (20%) of the votes entitled to be cast at such meeting, to consider approval
of an action or decision under any provision of this Agreement requiring Member approval.
5.4 Place of Meetings.
The Managers shall have the authority to designate any place within the State of Idaho as
the place of meeting for any meeting of the Members. If no designation is selected, the place of
meeting shall be the principal office of the Company.
5.5 Notice of Meeting.
Written notice stating the day and hour of the meeting and the purpose or purposes for
which the meeting is called shall be delivered not less than five (5)nor more than thirty (30) days
before the date of the meeting, either personally or by mail, by or at the direction of the
Managers, or the Member or group of Members, as applicable, calling the meeting, to each
Member entitled to vote at such meeting.
5.6 Record Date.
For the purpose of determining Members entitled to notice of or to vote at any meeting of
Members or any adjournment thereof, Members admitted to the Company as of the date on
which notice of the meeting is provided shall be the record date for such determination of
Members. When a determination of Members entitled to vote at any meeting of Members has
been made as provided in this Section 5.6, such determination shall apply to any adjournment
thereof.
5.7 Quorum.
The Members holding a Majority in Interest entitled to vote upon a matter, present in
person or represented by proxy, shall constitute a quorum at any meeting of the Members.
Withdrawal of any Members from any meeting after a quorum has been obtained shall not cause
there to be a lack of a duly constituted quorum at any such meeting.
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC- 10
5.8 Proxies.
Any Member entitled to vote at a meeting of Members or to express consent or dissent to
action in writing without a meeting may vote in person or by proxy given to another Member
executed in writing by the Member or by a duly authorized attorney-in-fact. Such proxy shall be
filed with the Managers before or at the time of the meeting. No proxy shall be valid after three
(3) months from the date of its execution, unless otherwise provided in the proxy.
5.9 Voting.
Members entitled to vote shall have voting power in proportion to their Membership
Interests in the Company. At a meeting of Members at which a quorum is present, the
affirmative vote of the Members holding a Majority in Interest of the Membership Interests
entitled to vote on the matter shall be the act of the Members, unless the vote of a greater interest
is required by the Articles, this Agreement or the Act. Any person or entity holding a
Membership Interest, or any portion thereof, that has not been admitted as a Member in
accordance with this Agreement shall not be entitled to vote on any matters. Any Member in
breach of any material provision of this Agreement shall not be permitted to vote on any matters
until such breach has been cured.
5.10 Designated Representative.
Each Member consisting of more than one (1) Person shall designate an authorized
representative agent ("Designated Representative") who shall have full authority to act for and
bind the appointing Member. A Member may change its Designated Representative upon
twenty-four (24) hours written notice to the Managers. Each entity Member shall tak-e such
action as required under applicable law and the constituent documents of the applicable entity to
authorize its Designated Representative as hereinabove provided. Until such Designated
Representative is changed, no other person or persons shall be authorized to act on behalf of the
appointing Member. E4 Partners LLLP appoints Timothy W. Eck as its designated
representative.
5.11 Actions of Members without Meetings.
Action required or permitted to be taken at a meeting of Members may be taken without a
meeting following satisfaction of the notice provisions of Section 5.5 and if the action is
evidenced by one or more written consents or approvals describing the action taken and signed
by Members entitled to cast a sufficient number of votes to approve such action had such action
been properly voted on at a duly called meeting of the Members. Action taken under this Section
5.11 is effective when Members with the requisite Membership Interests have signed the consent
or approval, unless the consent specifies a different effective date. The record date for
determining Members entitled to take action without a meeting shall be the date the first Member
signs a written consent.
5.12 Waiver of Notice.
A Member may waive the requirement of notice of a meeting either by attending such
meeting or executing a written waiver before or after such meeting.
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC- I I
5.13 Meetings of All Members.
If all of the Members shall meet at any time and place, and consent to the holding of a
meeting at such time and place, such meeting shall be valid without call or notice, and at such
meeting lawful action may be taken.
5.14 Meeting by Communications Device.
Meetings of the Members may be held by conference telephone or by any other means of
communication by which all participants can hear each other simultaneously during the meeting,
and such participation shall constitute presence in person at the meeting. A Member
participating in a meeting by this means is deemed to be present in person at the meeting.
ARTICLE 6
CAPITAL CONTRIBUTIONS; LOANS; GUARANTEES
6.1 Initial Capital Contributions of Members.
The Members have made Capital Contributions to the Company in the amounts set forth
on Exhibit A.
6.2 No Withdrawal or Return of Capital Contributions.
Except as otherwise provided herein, no Member shall be entitled or permitted to
withdraw any Capital Contributions or any money or other property from the Company without
the written consent of the Managers. If circumstances require a return of any Capital
Contribution, no Member shall have the right to receive property other than cash, unless
otherwise approved by the Members at the time of such distribution.
6.3 No Interest.
Except as otherwise provided herein, no interest shall be paid on any Capital
Contributions to the Company.
6.4 Loans.
Upon the approval of the Managers, as appropriate pursuant to Article 3, the Company
may borrow money from any Member or other Person upon commercially reasonable terms and
conditions.
6.5 Additional Capital Contributions.
Except as set forth in this Section 6.5, no Member shall be required or permitted to make
any additional capital contributions
6.5.1 In the event that at any time the Managers reasonably determine that
additional funds in excess of the initial Capital Contributions are required by the Company for its
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC- 12
purposes and its obligations, expenses, costs, liabilities or expenditures, in the ordinary course or
for capital improvements or debt service with respect to any Company property, the Members
shall be required to contribute such additional funds in proportion to their Capital Interests. The
Managers may, in their sole discretion, attempt to have the Company borrow the amount of such
additional funds needed prior to requiring the Members to contribute additional funds. In the
event the Managers decide not to borrow funds or the Company is otherwise unable to borrow
funds, the Managers will provide thirty (30) days written notice to the Members prior to the date
contributions from the Members are needed. Affiliates of the Members shall be permitted to
make any additional Capital Contribution on behalf of any Member and such contributing
Affiliate shall receive a Capital Interest in the Company as agreed between the non-contributing
Member and the contributing Affiliate of such Member allocated out of the Interest of the
Company held by such Member.
6.5.2 In the event a Member or any Affiliate of such Member ("Non-
Contributing Member") does not contribute additional funds, the other Members ("Contributing
Members") may, as their sole and exclusive remedy, in proportion to their Membership Interest
(as among the Contributing Members) or as otherwise agreed by the Contributing Members,
contribute additional funds to cover such amount that has not been contributed by the Non-
Contributing Member(s) (an"Over-Contribution").
6.5.3 The Membership Interests of the Contributing Members shall be increased
and that of the Non-Contributing Member shall be decreased as described below:
(a) The Interests of each Contributing Member shall be
increased by Adjustment Percentage X, which shall be calculated for each Contributing Member
according to the following formula. For purposes of this formula, "Total Capital Contributions
of all Members to Date" shall include all Capital Contributions of all Members (excluding Over-
Contributions) including the initial Capital Contributions.
Amount of Contributing Member's Over-Contribution
Adjustment Total Capital Contributions Sum of all Contributing
Percentage X of all Members to Date + Members' Over-Contributions
(excluding Over-Contributions)
(b) The respective Membership Interests of the Non-
Contributing Members shall be decreased (but not below zero) by each such Members' pro rata
share (based on the total Membership Interests of the Non-Contributing Members) of Adjustment
Percentage X as calculated for each Contributing Member.
6.6 Enforceability.
None of the provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Company. No creditor shall have any right, under section 18-
502(b) of the Act or otherwise, to enforce any right of a Member to make any contribution to the
Company, and any such obligation of a Member may be compromised upon the approval of all
the Members.
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-13
6.7 Guaranty of Loans; Contribution and Indemnity.
The Members acknowledge that in order to obtain third-party financing for any
investment by the Company, the Members, Managers or Affiliates of the Members or Managers
may be required by third-party lenders to execute guarantees for such financing (each a
"Guarantor"). With regard to any and all obligations arising from or related to any guarantee of
any loan to the Company (a "Guarantee Obligation"), the Members hereby agree that if any
Guarantor pays any Guarantee Obligation, such Guarantor shall have a right of contribution
against the other Members to the extent of each other Member's respective Membership Interest
multiplied by the Guarantee Obligation paid by such Guarantor. The rights of contribution
provided herein shall include all costs and expenses, including attorney's fees and interest,
reasonably incurred by a Member in enforcing the terms hereof and/or with regard to any such
claim. The Members' obligations to the Members and Guarantors hereunder shall not be limited
by the terms of Section 6.7 herein, or any other provision of this Agreement. The Members'
rights and obligations hereunder for contribution and indemnification are personal to each other
and to the Guarantors and may not be enforced by any third party creditors of the Company.
ARTICLE 7
ALLOCATIONS AND DISTRIBUTIONS
7.1 Capital Account.
A Capital Account shall be maintained for each Member in accordance with the
Regulations, under uniform policies and procedures established by the Managers, after
consultation with the Company's tax advisors.
7.2 Allocations
7.2.1 Except as required by applicable Internal Revenue Service Code and
Regulations, all items of income and gain of the Company shall be allocated to the Members
according to the following schedule:
(a) Except as required by applicable law (including Treasury
Regulations) and as otherwise provided in Exhibit C, all profits (all items of income and gain)
shall be allocated to the Members in proportion to their Membership Interests.
(b) Except as required by applicable law (including Treasury
Regulations) and as otherwise provided in Exhibit C, all losses, deductions and credits shall be
allocated to the members in proportion to their Membership Interests
7.3 Distributions.
Except as restricted by this Article 7 and as otherwise provided in this Agreement,
Distributions shall be authorized by the Managers, provided that the Company shall (except as
reasonably required for reserves) make annual Distributions in an amount equal to not less than
the state and federal income tax due by any Member for their proportionate share of the
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-14
Company's income for the corresponding year. The Company may not make any distributions
prohibited under the Act.
7.4 Tax Matters Partner.
The Tax Matters Partner shall act as the tax matters partner of the Company pursuant to
Section 6231(a)(7) of the Code. The Tax Matters Partner shall take such action as may be
necessary to cause each Member to become a notice partner within the meaning of Section 6223
of the Code. Any Person who is designated Tax Matters Partner may not take any action
contemplated by Sections 6222 through 6232 of the Internal Revenue Code without the consent
of the members.
ARTICLE 8
TRANSFER OF INTERESTS AND ADMISSION OF MEMBERS
8.1 Transferability of Membership Interests.
Exclusive of Non-Adverse Terminating Events, no Member may Transfer all or any
portion of its Membership Interest without the Managers' prior approval, which approval may be
given or withheld for any reason or no reason. Any Membership Interest transferred in
contravention to this Section 8.1 shall be void of all voting, inspection and other rights, and any
such Transfer shall be null and void ab initio and shall be subject to purchase by the Company as
an Adverse Terminating Event pursuant to Section 4.5.
8.2 Rights of Assignees.
If, notwithstanding the prohibition on Transfers in Section 8.1, if a Member Transfers all
or any portion of such Member's Membership Interest (whether voluntarily, involuntarily or by
operation of law, including, but not limited to, the divorce, merger or Bankruptcy of the
Member), and a Person acquires such Membership Interest (an "Assignee"), the Assignee: (i)
unless admitted to the Company as a Member in accordance with Section 8.3, shall not be
entitled to any of the rights, powers, or privileges of a Member, except that the Assignee shall be
entitled to share in the Distributions from the Company with respect to the transferred
Membership Interest; (ii) shall have no right to participate in the business and affairs of the
Company or to exercise any rights of a Member under this Agreement; and (iii) shall be required
to Transfer the Membership Interest to the Company in accordance with the redemption
provisions hereof relating to Adverse Terminating Events.
8.3 Admission of Members.
8.3.1 An Assignee of all or part of the Membership Interest of a Member who
meets the qualifications and criteria set forth in this Agreement may be admitted to the Company
as a Member only upon the approval of the Members and upon furnishing to the Managers all of
the following:
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-15
(a) By signing the Form of Consent attached as Exhibit B, accepting
all the terms and conditions of this Agreement and any other documents required in connection
with the operation of the Company pursuant to the terms of this Agreement;
(b) If the Assignee is an entity, a certified copy of a resolution of its
board of directors or other managing body authorizing it to become a Member under the terms
and conditions of this Agreement;
(c) Such other documents or instruments may be required in order to
effect admission-such Person's as a Member; and
(d) Payment of such reasonable expenses as may be incurred in
connection with admission of such Person as a Member.
8.4 Right of First Refusal.
In addition to the other limitations and restrictions set forth in this Article 8, no Member
shall Transfer all or any portion of such Member's Membership Interest (the "Offered
Membership Interest") unless such Member (the "Seller") first offers to sell the Offered
Membership Interest pursuant to the terms of this Section 8.4.
8.4.1 Prior to making any Transfer that is subject to the terms of this Section
8_.4_, the Seller shall give First Refusal to Purchase Interests to be Voluntarily Transferred. A
Member ("Selling Member proposing to Transfer all or any portion of or interest in its Interest
for value may do so only pursuant to a written bona fide offer to purchase ("Offer"). If the
Selling Member desires to Transfer such Selling Member's Membership Interest pursuant to
such Offer, the Selling Member shall give the other Members written notice which shall contain
a description of all of the material terms and conditions of the Offer and a copy of the Offer (the
"Offer Notice"). The Members shall have the right, pro rata based on the Interests held by each,
to purchase the Selling Member's Membership Interest upon the terms and conditions contained
in the Offer (except that the Members may agree among themselves to purchase such Interest
other than pro rata). The Members shall notify the Selling Member in writing of the intent to
purchase the Selling Member's Membership Interest within thirty (30) days after receipt of the
Offer Notice. If the Members elect to purchase such Interest, they shall consummate the
transaction as if they were the party making the purchase offer, but in no event shall the closing
date be required to occur earlier than sixty (60) days following the date of the Members'
notification to the Selling Member of their determination to purchase the Selling Member's
Membership Interest. If the Members fail to give notice of the exercise of their right of first
refusal within such thirty (30)-day period, the Selling Member shall be free to transfer its
Membership Interest in accordance with the Offer. The Selling Member shall not otherwise
transfer its Interest without complying with the provisions of this Section 8.
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-16
ARTICLE 9
DISSOLUTION AND LIQUIDATION OF THE COMPANY
9.1 Dissolution Events.
9.1.1 The Company will be dissolved upon the happening of any of the
following events:
(a) Approval of the Members to dissolve the Company; or
(b) A Terminating Event with respect to the Company.
9.2 Effect of Dissolution.
Upon the happening of any of the events specified in Section 9.1, the Managers or any
liquidating trustee elected by the Members, will commence as promptly as practicable to wind up
the Company's affairs unless the Managers or liquidating trustee (either the "Liquidator" as
applicable under the circumstances) determine that an immediate liquidation of the Company
assets would cause undue loss to the Company, in which event the liquidation may be deferred
for a time determined by the Liquidator to be appropriate. Assets of the Company may be
liquidated or distributed in kind, as the Liquidator determines to be appropriate. The Members
will continue to share Company profits and losses during the period of liquidation in the manner
set forth in Article 7.
9.3 Distribution.
Following the payment of all debts and liabilities of the Company (other than loans or
advances that have been made by any of the Members) and all expenses of liquidation, the
proceeds of the liquidation and any Company Property that is not sold in connection with the
liquidation will be applied in the following order of priority:
9.3.1 First, to repayment of any loans or advances that may have been made
by any of the Members to the Company, but if the amount available for repayment of such loans
or advances shall be insufficient, then to such Members on account thereof in proportion to their
respective loans or advances;
9.3.2 Second, to the establishment of any reserves deemed appropriate by the
Liquidator for any liabilities or obligations of the Company, which reserves will be held for the
purpose of paying liabilities or obligations and, at the expiration of a period the Liquidator deems
appropriate, will be distributed in the manner provided below;
9.3.3 Third, to the payment to the Members of the positive balances in their
respective Capital Accounts, pro rata, in proportion to the positive balances in those Capital
Accounts after giving effect to all allocations and all Distributions under Article 7 for all prior
periods, including the period during which the process of liquidation occurs; and
FIRST AMENDED OPERATING AGREEMENT OF SOLITHRIDGE FARM LLC-17
Each Member shall look solely to the Company Property for all Distributions with
respect to the Company and such Member's Capital Contributions thereto, and such Member's
share of income, gains, losses and deductions, and no Member shall have recourse against any
other Member or the Managers therefore. No Member shall have any rights to demand or
receive property other than cash upon the liquidation and winding-up of the Company, but the
Liquidator may, upon the Members' approval, distribute property valued at its fair market value
other than cash to a Member or Assignee. Notwithstanding any provision hereof, no Member
shall have an obligation upon liquidation to restore a negative Capital Account balance.
9.4 Statement of Termination.
Upon the dissolution and completion of the winding up of the Company, the Managers
shall cause a statement of termination to be executed on behalf of the Company and filed with
the Secretary of State, and the Managers shall execute, acknowledge and file any and all other
instruments necessary or appropriate to reflect the dissolution and winding up of the Company.
ARTICLE 10
INDEMNIFICATION AND INSURANCE
10.1 Indemnification.
The Company shall indemnify its Members and the Managers to the fullest extent
permissible under Idaho law, as the same exists or may hereafter be amended, against all
liability, loss and costs (including, without limitation, attorney fees through all levels of action)
incurred or suffered by a person by reason of or arising from the fact that such person is or was a
Member, or is or was serving at the request of the Company as the Managers, director, officer,
partner, trustee, employee, or agent of another foreign or domestic limited liability company,
corporation, partnership, joint venture, trust, benefit plan, or other enterprise. The Company
may, upon the Members' approval provide indemnification to employees and agents of the
Company who are not Members or the Managers, The indemnification provided in this Section
10.1 shall not be exclusive of any other rights to which any person may be entitled under the Act
or other statute.
10.2 Limitation of Liability.
A Manager shall not be liable to the Company or its Members for monetary damages for
conduct as a Manager except to the extent that the Act, as it now exists or may hereafter be
amended, prohibits elimination or limitation of liability, and/or except arising from a Manager's
fraud, bad faith, willful misconduct or gross negligence. No repeal or amendment of this Section
10.2 or of the Act shall adversely affect any right or protection of a Member or a Manager for
actions or omissions prior to the repeal or amendment.
10.3 Insurance.
The Company may purchase and maintain insurance on behalf of the Managers or agent
of the Company against any liability asserted against or incurred by the Managers or agent acting
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC- 18
in such capacity or arising out of the Managers' or agent's status as such, whether or not the
Company would have the power to indemnify the Managers or agent against such liability under
this Article or the Act.
ARTICLE I I
AMENDMENTS
11.1 By Members.
Upon the Member's approval, the Members may amend or repeal the provisions of this
Agreement but only upon satisfying the following three conditions: (1) the amendment must be
in writing; (2) the Managers must approve and all Members must sign one or any number of
identical counterparts; and (3) the amendment must clearly state it is an "Amendment to the
Operating Agreement of SOUTHRIDGE FARM LLC." Notwithstanding the foregoing, the
unanimous consent of the Members shall be required to amend or repeal the provisions of this
Agreement if such amendment changes (i) the required vote or degree of consent required to
approve or disapprove any matters or (ii) the economic rights or benefits of the Members.
Provided, further, under no condition, may this Agreement be amended or repealed by oral or
implied agreement or course of conduct of the Members.
11.2 By Managers.
The Managers may not amend or repeal the provisions of this Agreement, except that the
Managers may amend Exhibit A to reflect the admission of additional Members to the extent
permitted by the terms of this Agreement and/or to reflect ad ustments to the Members'
Membership Interests pursuant to Article 6.
ARTICLE 12
MISCELLANEOUS
12.1 Fiscal Year.
The fiscal year will end on December 3 1, unless another fiscal year-end is selected by the
Managers.
12.2 Books and Records.
Proper and complete records and books of account shall be kept by the Managers in
which shall be fully entered fully and accurately all transactions and such other matters relating
to the Company's business as are usually entered into records and books of account maintained
by persons engaged in business of like character. The records of the Company will be
maintained at the principal place of business of the Company, or at any other location the
Managers select provided that the Company keep at its principal place of business the records
required by the Act to be maintained there, Appropriate records in reasonable detail will be
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC- 19
maintained to reflect income tax information by the Members. Each Member may inspect and
make copies of the records maintained by the Company during reasonable business hours and
upon reasonable notice. Each Member, at the Member's expense, may make copies of the
records maintained by the Company and may require an audit of the books of account
maintained by the Company to be conducted by the independent accountants for the Company.
12.3 Reports.
The Managers, at the expense of the Company, will cause to be prepared in accordance
with the method of accounting then used by the Company and distributed to each Member within
ninety (90) days after the end of each Fiscal Year, a balance sheet as of the close of the Fiscal
Year and the annual income tax returns and related schedules of the Company for the Fiscal
Year.
12.4 Notices.
The Managers will notify the Members of any change in the name, principal or registered
office or registered agent of the Company. Any notice or other communication required by this
Agreement must be in writing. Notices and other communications will be deemed to have been
given when delivered by hand or dispatched by telegraph, telex or other means of electronic
facsimile transmission, or three business days after being deposited in the United States mail,
postage prepaid, addressed to the Member to whom the notice is intended to be given at the
Member's address set forth on Exhibit A of this Agreement or, in the case of the Company, to its
principal place of business provided for in Section 1.4. A Person may change the Person's
address by providing to the Company, at the principal place of business, notice in writing of the
change.
12.5 Representations of Members.
Each Member represents and warrants to the Company and every other Member that such
Member: (i) is fully aware of, and is capable of bearing, the risks relating to an investment in the
Company; (ii) understands that such Member's interest in the Company has not been registered
under Securities Act of 1933, as amended, or the securities law of any jurisdiction in reliance
upon exemptions contained in those laws; and (iii) has acquired a Membership Interest in the
Company for such Member's own account, with the intention of holding the interest for
investment and without any intention of participating directly or indirectly in any redistribution
or resale of any portion of the interest in violation of the Securities Act of 1933, as amended, or
any applicable law.
12.6 Survival of Rights.
Except as otherwise provided to the contrary, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.
12.7 Interpretation and Governing Law.
When the context in which words are used in this Agreement indicates that such is the
intent, words in the singular number shall include the plural and vice versa. The masculine
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-20
gender shall included the feminine and neuter. The Article and Section headings or titles and the
table of contents shall not define, limit, extend or interpret the scope of this Agreement or any
particular Article or Section. This Agreement shall be governed and construed in accordance
with the laws of the State of Idaho without giving effect to the conflicts of laws provisions
thereof.
12.8 Severability.
If any provision, sentence ph-rase or word of this Agreement or the application thereof to
any Person or circumstance shall be held invalid, the remainder of this Agreement or the
application of such provision, sentence, ph-rase, or word to Persons or circumstances, other than
those as to which is held invalid, shall not be affected thereby.
12.9 Agreement in Counterparts.
This Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same instrument. In addition, this
Agreement may contain more than one counterpart of the signature pages and this Agreement
may be executed by the affixing of the signatures of each of the Members to one of such
counterpart signature pages; all of such signature pages shall be read as one, and they shall have
the same force and effects as though all of the signers had signed a single signature page.
12.10 Third Parties.
The agreements, covenants, and representations contained herein are for the benefit of the
parties hereto inter se. Nothing in this Agreement is intended to benefit any third parties
including, without limitation, any creditor of the Company and/or a Member. No creditor of the
Company or any Member will be entitled to require the Managers to solicit or accept any loan of
additional capital contribution for the Company or to enforce any right which the Company or
any Member may have against a Member, whether arising under this Agreement or otherwise.
12.11 Remedies.
A non-defaulting Member shall have all rights against a defaulting party hereunder
available at law or in equity.
12.12 Time is of the Essence.
Time is of the essence in the performance of each and every obligation herein imposed.
12.13 Schedules Included in Exhibits; Incorporation by Reference.
Any reference to an exhibit to this Agreement contained herein shall be deemed to
include any schedules to such exhibit. Each of the exhibits referred to in this Agreement, and
each schedule to such exhibits, is hereby incorporated by reference in this Agreement as if such
schedules and exhibits were set out in full in the text of this Agreement.
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-21
IN WITNESS WHEREOF, the undersigned, hereby assume and agree to be bound by
and to perform all of the terms and provisions set forth in this Agreement.
[Signature page to follow]
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-22
MEMBERS:
E4 PARTNERS, LLLP
The Eck Children's Trust A, General Partner
—By':- Timothy W. Eck
Its: Trustee
The Eck Children's Trust B, General Partner
By: Timothy W. Eck
Its: Trustee
COREY D. BARTON
Corey D. Barton
FIRST AMENDED OPERATING AGREEMENT OF SOUTHRIDGE FARM LLC-23
EXHIBIT A
CAPITAL CONTRIBUTIONS
As shown on the books and records of the Company.
EXHIBIT A
EXHIBIT B
FORM OF CONSENT
TO TERMS OF OPERATING AGREEMENT
The undersigned, , desiring to participate in SOUTHRIDGE
FARM LLC, an Idaho limited liability company (the "Company") by and through
, hereby acknowledges that he has reviewed,
understands and agrees to be bound by all of the terms and conditions of the Operating
Agreement of SOUTHRIDGE FARM LLC, dated effective January 2, 2015 (the "Operating
Agreement"), The undersigned authorizes this signature page to be attached to the Operating
Agreement.
Date:
Address:
EXHIBIT B
EXHIBIT C
SPECIAL ALLOCATIONS
1.1 Special Allocations. The following special allocations are made in the following
order:
(a) Minimum Gain Chargebac . Notwithstanding any other provision of
Article 7 of the Agreement, except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, if there is a net decrease in Company minimum gain during any Fiscal Year, each
Member is specially allocated items of Company income and gain for the Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to the Person's share of the net decrease
in Company minimum gain, determined in accordance with Section 1.704-2(g) of the Treasury
Regulations. Allocations pursuant to the previous sentence are made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto. The items to be so
allocated are determined in accordance with Sections 1.704-2(f)(6) and 1.704-20)(2) of the
Treasury Regulations. This Section 1.1(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Treasury Regulations and shall be
interpreted consistently therewith.
(b) Member Minimum Gain Chargebac Notwithstanding any other
provision of Article 7 of the Agreement, except as otherwise provided in Section 1.704-2(i)(4) of
the Treasury Regulations, if there is a net decrease in Member nonrecourse debt minimum gain
attributable to a Member non-recourse debt during any Fiscal Year, each Person who has a share
of the Member nonrecourse debt minimum gain attributable to the Member nonrecourse debt,
determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations, is specially
allocated items of Company income and gain for the Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to the Person's share of the net decrease in Member
nonrecourse debt minimum gain attributable to the Member non-recourse debt, determined in
accordance with Section 1.704-2(i)(4) of the Treasury Regulations. Allocations pursuant to the
previous sentence are made in proportion to the respective amounts required to be allocated to
each Member pursuant thereto. The items to be so allocated are determined in accordance with
Sections 1.704-2(i)(4) and 1.704-20)(2) of the Treasury Regulations. This Section 1.1(b) is
intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Treasury Regulations and shall be interpreted consistently therewith.
(c) Qualified Income Offset. If any Member unexpectedly receives any
adjustments, allocations, or distributions described in Section 1.704-2(b)(2)(ii)(d)(4), Section
1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations, items of
Company income and gain are specially allocated to each Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations, the adjusted deficit of
the Member as quickly as possible, provided that an allocation pursuant to this Section 1.1(c) is
made only if and to the extent that the Member would have an adjusted deficit after all other
allocations provided for in Article 7 of the Agreement have been tentatively made as if this
Section t.I(c)were not in the Agreement.
EXHIBIT C
(d) Gross Income Allocation. If any Member has a deficit Capital Account
at the end of any Fiscal Year which is in excess of the sum of
(1) The amount the Member is obligated to restore pursuant to any
provision of the Agreement, and
(2) The amount the Member is deemed to be obligated to restore
pursuant to the next to the last sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Treasury Regulations, each Member is specially allocated items of Company income and gain in
the amount of the excess as quickly as possible, provided that an allocation pursuant to this
Section 1.1(d) is made only if and to the extent that the Member would have a deficit Capital
Account in excess of such sum after all other allocations provided for in Article 7 of the
Agreement have been made as if Section 1.1(c) of this Exhibit and this Section 1.1(d) were not in
the Agreement.
(e) Nonrecourse Deductions. Nonrecourse deductions for any Fiscal Year
are specially allocated as Profits are allo,,ated under Section 7.3 of the Agreement.
(f) Member Nonrccourse Deductions. Any Member nonrecourse
deductions for any Fiscal Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member nonrecourse debt to which the Member
nonrecourse deductions are attributable in accordance with Section 1.704-2(i)(1) of the Treasury
Regulations.
W Section 754 A4justments. To the extent an adjustment to the adjusted tax
basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required,
pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury
Regulations, to be taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of the Member's interest in the Company, the
amount of the adjustment to Capital Accounts is treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the basis) and the gain or loss
is specially allocated to the members in accordance with their Membership Interests in the event
that Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies or to the Member to
whom the distribution was made in the event that Section 1.704-1(b)(2)(iv)(m)(4) of the
Treasury Regulation applies.
(h) Allocations Relating to Taxable Issuance of Company. Any income
gain, loss or deduction realized as a direct or indirect result of the issuance of an interest by the
Company to a Member (the "Issuance Items") is allocated among the Members so that, to the
extent possible, the net amount of the Issuance Items, together with all other allocations under
the Agreement to each Member, shall be equal to the net amount that would have been allocated
to each Member if the Issuance Items had not been realized.
EXHIBIT C
1.2 Curative Allocations. The allocations set forth in Section 7.3 of the Agreement
and Sections 1.1(a) — 1.1(g) of this Exhibit (the "Regulatory Allocations") are intended to
comply with certain requirements of the Treasury Regulations. It is the intent of the Members
that, to the extent possible, all Regulatory Allocations are offset either with other Regulatory
Allocations or with special allocations of other items of Company income, gain, loss or
deduction pursuant to this Section 1.2. Therefore, notwithstanding any other provision of Article
7 of the Agreement (other than the Regulatory Allocations), the Members shall make offsetting
special allocations of Company Income, gain, loss or deduction in whatever manner the
Members shall determine appropriate so that, after the offsetting allocations are made, each
Member's Capital Account is, to the extent possible, equal to the Capital Account the Member
would have had if the Regulatory Allocations were not part of the Agreement and all Company
items were allocated pursuant to Section 7.3 of the Agreement. In exercising discretion under
this Section 1.2, the Members shall take into account future Regulatory Allocations under
Sections 1.1(a) and I.-IN of this Exhibit that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Section 1.1(e) and Section L I(f) of this Exhibit.
1.3 Other Allocation Rules.
(a) For the purposes of determining the profits, losses, or any other items
allocable to any period, profits, losses, and any other items are determined on a daily, monthly,
or other basis, as determined by the Members using any permissible method under Code Section
706 and the Treasury Regulations thereunder.
(b) In making any allocation among the Members of income or gain from the
sale or other disposition of Company Property, the ordinary income portion, if any of the income
and gain resulting from the recapture of cost recovery or other deductions are allocated among
those Members who were previously allocated (or whose predecessors-in-interest were
previously allocated) the cost recovery deductions or other deductions resulting in the recapture
items, in proportion to the amount of the cost recovery deductions or other deductions previously
allocated to them.
(c) All allocations to the Members shall, except as otherwise provided, be
divided among them in proportion to the Membership Interests held by each Member.
(d) The Members are aware of the income tax consequences of the allocations
made by Article 7 of the Agreement and hereby agree to be bound by the provisions thereof in
reporting their shares of Company income and loss for income tax purposes.
(e) Solely for purposes of determining a Member's proportionate share of the
excess nonrecourse liabilities of the Company within the meaning of Section 1.752-3(a)(3) of the
Treasury Regulations, the Members' interests in Company profits are as profits are allocated
after any priority return .
EXHIBIT C
To the extent permitted by Section 1.704-2(h)(3) of the Treasury Regulations,the Members shall
endeavor to treat distributions of Net Cash Flow as having been made from the proceeds of a
nonfecourse liability or a Member nonrecourse debt only to the extent that the distributions
would cause or increase an adjusted deficit for any Member.
EXHIBIT C