Exhibit 10.33

EXECUTION VERSION

 

 

 

 

 

 

CLEAN COAL SOLUTIONS, LLC

 

 

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

Dated as of May 27, 2011

THE UNITS ISSUED UNDER THIS OPERATING AGREEMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS (THE “STATE ACTS”). SUCH UNITS MAY NOT BE SOLD, ASSIGNED,
PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION
UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM THE ACT AND THE APPLICABLE STATE
ACTS, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH
HEREIN, INCLUDING (WITHOUT LIMITATION) THE PROVISIONS OF ARTICLE IX.

 

 

 

 

 

* Indicates portions of the exhibit that have been omitted pursuant to a request
for confidential treatment. The non-public information has been separately filed
with the Securities and Exchange Commission.

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TABLE OF CONTENTS

 

Article I

  

DEFINITIONS AND RULES OF CONSTRUCTION

     6   

1.1  

  

Definitions.

     6   

1.2  

  

Rules of Construction.

     18   

Article II

  

FORMATION OF THE COMPANY

     19   

2.1  

  

Name and Formation

     19   

2.2  

  

Operating Agreement

     19   

2.3  

  

Principal Place of Business; Qualification

     19   

2.4  

  

Registered Office and Registered Agent

     19   

2.5  

  

Term

     19   

2.6  

  

Purposes and Powers.

     20   

2.7  

  

Default Rules Under the Act

     20   

2.8  

  

Existing LLC Agreement

     20   

2.9  

  

Title to Property

     20   

2.10

  

Intent

     20   

Article III

  

CAPITAL CONTRIBUTIONS AND ACCOUNTS; ADJUSTMENT OF SHARING RATIOS

     21   

3.1  

  

Initial Capital Contributions and Ownership Structure.

     21   

3.2  

  

Additional Capital Contributions; Adjustment of Sharing Ratios and Units.

     22   

3.3  

  

Failure to Make a Required Additional Capital Contribution.

     23   

3.4  

  

No Third Party Right to Enforce

     24   

3.5  

  

Capital Accounts.

     24   

3.6  

  

No Interest on Capital

     25   

3.7  

  

Creditor’s Interest in Company

     25   

3.8  

  

Return of Capital

     25   

3.9  

  

Distributions In-Kind

     26   

3.10

  

Transfer of Capital Accounts

     26   

Article IV

  

ALLOCATIONS AND DISTRIBUTIONS

     26   

4.1  

  

Allocations

     26   

4.2  

  

Special Allocations.

     26   

4.3  

  

Offsetting Allocations.

     28   

4.4  

  

Tax Allocations

     28   

4.5  

  

Distributions.

     29   

4.6  

  

Incorrect Payments

     34   

4.7  

  

Limitation Upon Distributions

     34   

4.8  

  

Profit Sharing Program

     35   

4.9  

  

Withholding and Indemnification for Payments on Behalf of a Member

     35   

 

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Article V

  

BOARD OF MANAGERS; POWERS AND DUTIES OF MANAGERS; APPOINTMENT OF OFFICERS

     36   

5.1  

  

Board of Managers.

     36   

5.2  

  

Actions by Board.

     38   

5.3  

  

Stalemate

     40   

5.4  

  

Appointment of Committees and Officers

     41   

5.5  

  

Compensation

     41   

5.6  

  

Board Decisions

     41   

5.7  

  

Exculpation; Limitation of Liability

     43   

5.8  

  

Reliance

     43   

Article VI

  

MEMBERS; TYPES OF UNITS; ISSUANCE OF UNITS AND OPTIONS TO PURCHASE UNITS

     44   

6.1  

  

Authority and Power

     44   

6.2  

  

Voting; Approval of the Members

     46   

6.3  

  

Limitation of Liability

     46   

6.4  

  

Actions by Members

     47   

6.5  

  

Authorized Units; Modification of Units; Issuance of Additional Units; Admission
of Additional Members

     49   

6.6  

  

Preemptive Rights.

     49   

6.7  

  

Rights Attributable to Units

     50   

6.8  

  

Certificates Representing Units

     50   

6.9  

  

Restrictions on Transfer

     51   

6.10

  

Effect of a Non-payment Election by NexGen

     51   

6.11

  

Compensation and Reimbursement of Members

     51   

6.12

  

Force Majeure

     52   

Article VII

  

RECORDS, FINANCIAL STATEMENTS, TAX MATTERS, AND FISCAL YEAR

     52   

7.1  

  

Records

     52   

7.2  

  

Financial Statements

     53   

7.3  

  

Tax Matters

     53   

7.4  

  

Bank Accounts

     56   

Article VIII

  

DISSOLUTION AND LIQUIDATION

     56   

8.1  

  

Dissolution.

     56   

8.2  

  

Liquidation.

     57   

8.3  

  

Compliance with the Act

     57   

Article IX

  

TRANSFERS OF UNITS; PURCHASE AND SALE RIGHTS; REDEMPTION

     58   

9.1  

  

Permitted Transfers

     58   

9.2  

  

Purchase Right Upon Attempted Transfer

     58   

9.3  

  

Tag-Along Rights

     60   

9.4  

  

Drag-Along Rights.

     63   

9.5  

  

Redemption

     65   

 

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Article X

  

INDEMNIFICATION

     65   

10.1  

  

Indemnification by Company.

     65   

10.2  

  

Indemnification by the Parties

     67   

Article XI

  

MISCELLANEOUS PROVISIONS

     70   

11.1  

  

Notices

     70   

11.2  

  

Application of Colorado Law

     72   

11.3  

  

No Action for Partition

     72   

11.4  

  

Amendment of Articles or this Agreement

     72   

11.5  

  

Binding Effect

     72   

11.6  

  

Counterparts

     72   

11.7  

  

Dates

     72   

11.8  

  

Confidentiality.

     72   

11.9  

  

Covenant Not to Compete; Business Opportunities.

     75   

11.10

  

Limitation on Liability

     76   

11.11

  

Invalidity of Provisions

     76   

11.12

  

Representations and Warranties.

     76   

11.13

  

Expenses

     77   

11.14

  

Public Announcements

     77   

11.15

  

Entire Agreement

     78   

11.16

  

Additional Agreements with GS

     78   

11.17

  

Operation and Distributions of Subsidiaries of the Company

     78   

Exhibits and Schedules

 

Exhibit A

   Unit Ownership and Sharing Ratios

Exhibit B

   Addresses of Members

Exhibit C

   Chemicals and Additives

Exhibit D

   Technical Engineering Services

Schedule 4.5(a)

   Pre-Closing Cash Calculation

Schedule 4.5(b)

   Calculation of Projected Distributable Value

Schedule 5.1(c)

   Managers

Schedule 6.11(a)

   Arrangements with Affiliates

 

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SECOND AMENDED AND RESTATED OPERATING AGREEMENT

OF CLEAN COAL SOLUTIONS, LLC

This Second Amended and Restated Operating Agreement of Clean Coal Solutions,
LLC is made and entered into to be effective as of May 27, 2011 (the “Effective
Date”), by and among ADA-ES, Inc., a Colorado corporation (“ADA”), NexGen
Refined Coal, LLC, a Wyoming limited liability company (“NexGen”), GSFS
Investments I Corp., a Delaware corporation (“GS”), as members (each
individually a “Member” and collectively the “Members”), and Clean Coal
Solutions, LLC, a Colorado limited liability company (the “Company”). ADA,
NexGen, GS and the Company are hereinafter sometimes referred to each
individually as a “party” and collectively as the “parties.”

RECITALS:

A. ADA formed the Company on October 31, 2006, under the name “ADA-NexCoal, LLC”
pursuant to the laws of the State of Colorado for the purpose of engaging in the
Chemicals Business and the Section 45 Business described herein.

B. The Company changed its name to “Clean Coal Solutions, LLC” on January 1,
2007.

C. ADA, NexGen and the Company are parties to that certain Amended and Restated
Operating Agreement of the Company, dated as of November 3, 2006 (the “Existing
LLC Agreement”).

D. Prior to entry into this Agreement (as hereinafter defined) and the other
Transaction Agreements (as hereinafter defined) and consummation of the
transactions contemplated hereby and thereby, ADA and NexGen each owned fifty
(50) Units of membership interests in the Company, representing in the aggregate
one hundred percent (100%) of the Company’s fully diluted equity.

E. The Company and GS are entering into that certain Class B Unit Purchase
Agreement on the date hereof (the “Purchase Agreement”) pursuant to which the
Company will issue and sell to GS, and GS will purchase from the Company, Class
B Units (as hereinafter defined) representing fifteen and fifteen-nineteenths
percent (15 15/19%) of the Company’s fully diluted equity, all in accordance
with, and subject to the conditions set forth in, the Purchase Agreement.

F. NexGen, ADA and GS have agreed to amend and restate the Existing LLC
Agreement to set forth their mutual understanding and agreement regarding the
matters set forth herein, and in connection with such amendment and restatement
of the Existing LLC Agreement, the Units owned by ADA and NexGen prior to the
Effective Date will be cancelled and exchanged for Class A Units (as hereinafter
defined) in accordance with the terms of this Agreement.

 

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ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION

1.1 Definitions.

The terms defined in this Article I, wherever used and capitalized in this
Agreement, have the meanings set forth below. Certain other capitalized terms
are defined in the text of this Agreement in the Sections where such terms are
first used, and such definitions shall apply throughout this Agreement wherever
such terms are used.

“AAA” has the meaning given such term in Section 5.3.

“Accounting Firm” has the meaning given such term in Section 7.3(a)(i).

“Act” shall mean the statutes governing limited liability companies in the State
of Colorado, which, as of the Effective Date, is Chapter 80 of Title 7 of the
Colorado Revised Statutes, as the same may be in effect from time to time.

“Action” means any action, suit, proceeding, claim, arbitration, or
investigation.

“ADA” has the meaning given such term in the preamble hereof.

“ADA Guarantee” means the Guarantee, dated as of May 27, 2011, between ADA and
GS in the form attached as Exhibit F to the Purchase Agreement.

“ADA Managers” has the meaning given such term in Section 5.1(c).

“Adjusted Capital Account Deficit” means, with respect to any Capital Account as
of the end of any Fiscal Year, the amount by which the balance in such Capital
Account is less than zero. For this purpose, a Person’s Capital Account balance
shall be (i) reduced by any items described in Treasury Regulation Section 1.704
1(b)(2)(ii)(d)(4), (5), and (6) with respect to such Member, and (ii) increased
by any amount such Person is obligated to contribute or is treated as being
obligated to contribute to the Company pursuant to Treasury Regulation Sections
1.704 1(b)(2)(ii)(c) (relating to partner liabilities to a partnership), 1.704
2(g)(1) (relating to Minimum Gain) and 1.704-2(i) (relating to partner
nonrecourse debt minimum gain).

“Affiliate” of any Person means any other Person, directly or indirectly,
Controlling, Controlled by or under common Control with such particular Person.

“Agreement” means this Second Amended and Restated Operating Agreement of the
Company, as adopted on the Effective Date and as the same may be further amended
or restated from time to time.

“Appraiser” has the meaning given such term in Section 9.2(d).

“Appraised Value” has the meaning given such term in Section 9.2(d).

 

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“Articles” has the meaning given such term in Section 2.1.

“Bankruptcy” means the filing by a Person of a petition commencing a voluntary
case under any Bankruptcy Law; a general assignment by a Person for the benefit
of such Person’s creditors; an admission in writing by a Person of its inability
to pay such Person’s debts as they become due; the seeking or acquiescence by a
Person in the appointment of any trustee, receiver, or liquidator for the Person
or for any part of the Person’s property; or the commencement against a Person
of an involuntary case under any Bankruptcy Law, or a proceeding under any
receivership, composition, readjustment, liquidation, insolvency, dissolution or
similar law or statute, if not dismissed or vacated within sixty (60) days.

“Bankruptcy Law” means Title 11 of the United States Code, 11 U.S.C. §§ 101 et.
seq., or any similar federal or state law.

“Board Decision Threshold” means *.

“Board Observer” has the meaning given such term in Section 5.1(d).

“Board of Managers” or “Board” means the Managers appointed pursuant to
Section 5.1(c).

“Book Value” means, with respect to any asset of the Company, the asset’s
adjusted basis for federal income tax purposes, except that the Book Value of
all assets of the Company may be adjusted to equal their respective fair market
values, in accordance with the rules set forth in Treasury Regulations
Section 1.704-1(b)(2)(iv)(f) immediately prior to: (i) the date of the
acquisition of any additional Units or other equity interest in the Company by
any new or existing Member in exchange for more than a de minimis capital
contribution to the Company; (ii) the date of the distribution of more than a de
minimis amount of assets of the Company to a Member; (iii) the date any Unit(s)
or other equity interest in the Company is relinquished to the Company;
provided, however, that adjustments pursuant to clauses (i), (ii) and
(iii) above shall be made only if the Board reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members. The initial Book Value of any asset contributed (or
deemed contributed under Treasury Regulations Section 1.704-1(b)(1)(iv)) by a
Member to the Company will be the fair market value of the asset at the date of
its contribution thereto. If the Book Value of any Company asset is adjusted
pursuant to clauses (i)-(iii) above, such Book Value shall thereafter be
adjusted for depreciation taken into account with respect to such property for
purposes of computing Profits and Losses and other items allocated pursuant to
Article IV.

“Business” has the meaning given such term in Section 2.6(a).

“Capital Account” means the capital account maintained for a Member pursuant to
Section 3.5(a).

“Capital Call” has the meaning given such term in Section 3.2(a).

 

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“Capital Contribution” means any contribution by a Member to the capital of the
Company in cash or property whenever made. The value of Capital Contributions
other than those made in cash shall be the fair market value of the property
contributed to the capital of the Company, as determined by the Board in good
faith.

“Chairman” means the Member elected as Chairman of a Members’ meeting in
accordance with Section 6.4(a)(ii).

“Change of Control” means (i) any transaction or series of related transactions
(including a merger, consolidation or other reorganization) pursuant to or as a
result of which the holders of Units immediately prior to such transaction or
series of related transactions (and their Affiliates) no longer hold Units
representing a majority of the Company’s outstanding voting power immediately
following such transaction or series of related transactions, (ii) the sale,
lease, exclusive license or other Transfer by the Company or any Subsidiary of
the Company of all or substantially all of the assets of the Company and its
Subsidiaries (taken as a whole) in any transaction or series of related
transactions, or (iii) a NexGen Change of Control occurring on or before
December 31, 2012 to which GS has not consented pursuant to Section 6.1(b)(ix).

“Chemicals and Additives” means the chemicals and additives set forth in
Exhibit C.

“Chemicals Business” means the business of marketing and selling Chemicals and
Additives and Technical Engineering Services, in each case specifically
pertaining to NOx and mercury emissions controls from cyclone coal-fired
boilers.

“Claim Notice” has the meaning given such term in Section 10.2(b).

“Class A Unit” means a Unit having the rights and obligations specified with
respect to Class A Units in this Agreement. The Class A Units are Voting Units.

“Class A Member” means a Member holding Class A Units.

“Class B Unit” means a Unit having the rights and obligations specified with
respect to Class B Units in this Agreement. The Class B Units are Non-voting
Units.

“Class B Member” means a Member holding Class B Units.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.
All references to particular sections of the Code shall be deemed to include
reference to corresponding provisions of subsequent federal tax law.

“Company” has the meaning given such term in the preamble hereof.

“Company Option Period” has the meaning given such term in Section 9.2(a).

“Confidential Information” has the meaning given such term in Section 11.8(a).

 

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“Control” means the possession, directly or indirectly, of the power to direct,
or cause the direction of, the management and policies of a Person whether
through the ownership of voting securities, by contract or otherwise. The terms
“Controlled” and “Controlling” shall have correlative meanings.

“Damages” has the meaning given such term in Section 10.1(a).

“Deemed Sale” has the meaning given such term in Section 3.1(b).

“Default Amount” has the meaning given such term in Section 3.3.

“Default Rule” means a provision of the Act that would apply to the Company or
the Members unless otherwise provided in, or modified by, this Agreement.

“Defaulting Member” has the meaning given such term in Section 3.3.

“Determined Values” has the meaning given such term in Section 4.5(b)(iii).

“Direct Claim Notice” has the meaning given such term in Section 10.2(g).

“Disability” means, unless otherwise defined in an employment or similar
agreement between an individual and the Company or a Subsidiary of the Company,
the physical or mental impairment to the extent that the individual in question
becomes unable, despite any reasonable accommodation required by Law, to perform
the essential functions of his or her position with the Company, including his
or her role as a Manager.

“Disputed Calculations” has the meaning given such term in Section 4.5(b)(ii).

“Distributable Cash” means, with respect to any period prior to the dissolution
of the Company, all cash and cash equivalents received by the Company or any of
its Subsidiaries during such period (including proceeds of any Indebtedness
incurred by the Company or any of its Subsidiaries that are to be, and have not
yet been as of the date of measurement, Distributed to the Members), less an
amount of cash necessary for the Company to service and repay its debt
obligations as determined by the Board in good faith.

“Distributable Value” means the sum of the pre-tax value, determined in
accordance with Schedule 4.5(b), of any allocated Tax Credits, Distributable
Cash or other property to be Distributed by the Company to its Members.

“Distribution” means each distribution of Distributable Value or Company assets
made by the Company to a Member, whether by liquidating distribution,
redemption, repurchase or otherwise; provided, however, that none of the
following shall be a Distribution: any pro rata exchange of outstanding equity
interests of the Company for newly issued equity interests of the Company, and
any subdivision (by Unit split or otherwise) or any combination (by reverse Unit
split or otherwise) of any outstanding Units. “Distributed” and other forms of
the word “Distribute” shall have correlative meanings.

 

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“Distribution Calculations” has the meaning given such term in
Section 4.5(b)(ii).

“Drag-Along Proceeds” has the meaning given such term in Section 9.4(c)(ii).

“Drag-Along Sale” has the meaning given such term in Section 9.4(a).

“Effective Date” has the meaning given such term in the preamble hereto.

“Excess Liquidation Preference” has the meaning given such term in
Section 4.5(c)(i).

“Excluded Member” means a Member who is not an “accredited investor,” as such
term is defined under the Securities Act.

“Existing LLC Agreement” has the meaning given such term in the recitals hereto.

“Existing Units” has the meaning given such term in Section 3.1(a).

“Facility” means a Refined Coal production facility.

“Fiscal Quarter” means each calendar quarter ending
March 31, June 30, September 30 and December 31, or such other quarterly
accounting period as may be established by the Board.

“Fiscal Year” means the Company’s fiscal year, which shall end on December 31 of
each year unless otherwise determined by the Board.

“Force Majeure” means an act of God, war, terrorism, hostilities, riot, fire,
explosion, accident, flood or sabotage; lack of adequate fuel, power, raw
materials, containers or transportation for reasons beyond the affected party’s
reasonable control; labor trouble, strike, lockout or injunction (provided that
neither party shall be required to settle a labor dispute against its own best
judgment); compliance with governmental Laws or orders requiring unreasonable
effort or expense; breakage or failure of machinery or apparatus; or any other
cause whether or not of the class or kind enumerated above, including a severe
economic decline or recession, which prevents or materially delays the
performance of this Agreement in any material respect arising from or
attributable to acts, events, non-happenings, omissions or accidents beyond the
reasonable control of the party affected; provided, however, that Force Majeure
shall not relieve any party of the obligation to make any payments required
hereunder unless such event affects normal banking transactions.

“GAAP” means United States generally accepted accounting principles,
consistently applied and as in effect from time to time.

“GS” has the meaning given such term in the preamble hereto.

“GS Calculations” has the meaning given such term in Section 4.5(b)(iii).

“GS Investment Amount” means $60,000,000.00.

 

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“Indebtedness” means, with respect to the Company or any Subsidiary: (i) any
indebtedness of the Company or such Subsidiary for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money (including
interest and prepayment penalties or obligations); (ii) obligations of the
Company or such Subsidiary evidenced by any note, bond, debenture or similar
instrument; (iii) obligations by which the Company or such Subsidiary assures a
creditor against loss (including contingent reimbursement liabilities with
respect to letters of credit); (iv) obligations of the Company or such
Subsidiary in respect of any hedging transaction or any financial hedge; and
(v) any guarantee of Indebtedness in any manner by the Company or such
Subsidiary (including guarantees in the form of an agreement to repurchase or
reimburse); provided, however, that trade payables incurred in the ordinary
course of business by the Company or any Subsidiary shall not constitute
Indebtedness for any purpose hereunder; provided further, that the drawing or
redrawing of Indebtedness under a revolving or similar credit facility that is
in effect as of the Effective Date, or a revolving credit or similar facility
that has received Board and Member approval in accordance herewith prior to such
drawing or redrawing, shall not be considered incurrence of Indebtedness for any
purpose hereunder, including for purposes of any consent or approval required
prior to incurring Indebtedness; and provided further, that the granting of any
guarantee or indemnification by the Company or any Subsidiary of the Company in
connection with any monetization transaction in connection with the Business of
the Company shall not be considered Indebtedness for any purpose hereunder.

“Indemnified Losses” means any losses, claims, damages, liabilities,
obligations, fines, penalties, judgments, settlements, costs, expenses, and
disbursements (including reasonable attorneys’ fees and expenses), but excluding
any special, consequential, exemplary or punitive damages, unless such damages
are paid by an Indemnitee to a third party in connection with a Third Party
Claim.

“Indemnitee” has the meaning given such term in Section 10.2.

“Indemnitor” has the meaning given such term in Section 10.2.

“Investor Indemnified Party” has the meaning given such term in the Purchase
Agreement.

“Know-How” means technical information, ideas, concepts, confidential
information, trade secrets, know-how, discoveries, inventions, processes,
methods, formulas, source and object codes, data, programs, other works of
authorship, improvements, developments, designs and techniques related to the
reduction of NOx and mercury emissions from cyclone coal-fired boilers other
than as embodied in the Patents, that are owned or controlled by ADA and that
are necessary or desirable to use the Patents in the Chemicals Business or the
Section 45 Business.

“Law” means any foreign or domestic law, order, writ, judgment, action,
injunction, decree, ordinance, award, stipulation, statute, judicial or
administrative doctrine, rule, regulation or legally enforceable guidance or
legally enforceable interpretation of a governmental authority.

 

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“License Agreement” means that certain Amended and Restated License Agreement,
dated as of October 30, 2009, by and between ADA and the Company pursuant to
which ADA granted the Company an exclusive, royalty-free license to use the
Licensed Property, as the same may be amended or restated from time to time.

“Licensed Property” means any products or methods related to the reduction of
NOx and mercury emissions from cyclone coal-fired boilers, whether owned by ADA
or licensed by ADA that are (i) covered by any Valid Claims(s) contained in any
of the Patents, and/or (ii) based on the products, processes or methods
developed using the Technology.

“Lien” means any mortgage, deed of trust, lien (statutory or otherwise), pledge,
hypothecation, charge, deposit arrangement, preference, priority, security
interest, option, right of first refusal or other transfer restriction or
encumbrance of any kind (including preferential purchase rights, conditional
sales agreements or other title retention agreements, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable Law of any jurisdiction to evidence any of the foregoing).

“Liquidation Event” means (i) a liquidation, dissolution or winding up, whether
voluntary or involuntary, of the Company, or (ii) a Change of Control.

“Liquidation Preference” has the meaning given such term in Section 4.5(c)(i).

“Make-Whole Payment” has the meaning given such term in Section 4.5(c)(i).

“Manager” or “Managers” has the meaning given such term in Section 5.1(a).

“Member” or “Members” means each of the Persons named as a Member in the
introductory paragraph hereof, so long as such Person is the owner of one or
more Units, and shall include (i) Persons acquiring newly issued Units as
authorized herein, (ii) those Persons acquiring Units after the Effective Date
who have succeeded to all or part of the Units as a Permitted Transferee
pursuant to this Agreement, and (iii) any other Person admitted as a Member
pursuant to Section 6.5. The Members and their respective Unit ownership and
Sharing Ratios are as set forth in Exhibit A, as the same may be updated or
amended from time to time.

“Member Option Period” has the meaning given such term in Section 9.2(b).

“NexGen” has the meaning given such term in the preamble hereof.

“NexGen Change of Control” means (i) any transaction or series of related
transactions (including a merger, consolidation or other reorganization)
pursuant to or as a result of which the holders of equity interests in NexGen
immediately prior to such transaction or series of related transactions (and
their Affiliates) no longer hold equity interests in NexGen representing a
majority of NexGen’s outstanding voting power immediately following such
transaction or series of related transactions or (ii) the sale, lease, exclusive
license or other Transfer by NexGen of all or substantially all of the assets of
NexGen in any transaction or series of related transactions.

 

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“NexGen Guarantee” means the Guarantee, dated as of May 27, 2011, between NexGen
and GS in the form attached as Exhibit F to the Purchase Agreement.

“NexGen Managers” has the meaning given such term in Section 5.1(c).

“NexGen Purchase Agreement” means that certain Purchase and Sale Agreement,
dated as of November 3, 2006 and amended as of October 26, 2009, by and among
ADA and NexGen, as the same may be amended or restated from time to time.

“Non-Defaulting Members” has the meaning given such term in Section 3.3.

“Non-payment Election” has the meaning given such term in the NexGen Purchase
Agreement.

“Non-transferring Member” has the meaning given such term in Section 9.2(a).

“Non-voting Units” means Units that have no associated voting rights and
represent only an economic interest in the Company and the consent rights
expressly set forth herein, including Class B Units.

“Non-voting Member” means a Person owning no Units other than Non-voting Units
and which Person has been admitted as a Member of the Company in accordance with
all requirements of this Agreement.

“Notice Period” has the meaning given such term in Section 10.2(b).

“Officer” means a Person appointed as an officer of the Company by the Board
pursuant to Section 5.4(a).

“Option Units” has the meaning given such term in Section 9.2.

“Organizational Documents” means this Agreement and the Articles, in each case
as the same may be amended or restated from time to time in accordance with the
terms hereof.

“Participating Member” has the meaning given such term in Section 3.3.

“party” or “parties” has the meaning given such term in the preamble hereof.

“Patents” means (i) U.S. Patent No. 6,773,471 B2 entitled “Low Sulfur Coal
Additive for Improved Furnace Operation” issued on August 10, 2004; (ii) U.S.
Patent No. 6,729,248 B2 entitled “Low Sulfur Coal Additive for Improved Furnace
Operation” issued on May 4, 2004; (iii) Patent Application No. 10/209,083
entitled “Low Sulfur Coal Additive for Improved Furnace Operation” filed
July 30, 2002; (iv) U.S. Provisional Patent Application Serial No. 60/730,971
entitled “Additives for Catalysis of Mercury Oxidation in Coal-Fired Power
Plants” filed October 27, 2005; and (v) any and all continuations,
continuations-in-part, and divisionals, and all patents issuing which are based
on such applications, and all reissues, reexaminations, or extensions thereof,
as well as any foreign counterparts, continuations, continuations-in-part or

 

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divisions thereof and patents and patent applications on any improvements,
advancements, modifications, revisions or developments that are developed by or
for ADA, together with any other patents (U.S. or foreign and even if not listed
herein) that share a common claim of priority with said patents or that cover
inventions substantially similar to said patents.

“Permitted Transfer” has the meaning given such term in Section 9.1.

“Permitted Transferee” has the meaning given such term in Section 9.1.

“Person” means an individual, business entity (including a corporation, limited
partnership, general partnership, registered limited partnership, registered
limited liability partnership or limited liability company), business trust,
estate, trust, association, joint venture, government, governmental subdivision
or agency, or any other legal or commercial entity organized or existing in any
jurisdiction.

“Pre-Closing Cash” means all cash and cash equivalents received by the Company
or its Subsidiaries on or prior to the Effective Date plus all cash and cash
equivalents received by the Company or its Subsidiaries prior to July 31, 2011
pursuant to contracts or other legally binding arrangements in effect on the
Effective Date; provided that the amount of Pre-Closing Cash with respect to any
Distribution shall be calculated in accordance with the example set forth in
Schedule 4.5(a).

“Prime Rate” means the “prime rate” published in The Wall Street Journal from
time to time.

“Profits or Losses” means, for each Fiscal Year, the taxable income or loss of
the Company as determined for federal income tax purposes, as adjusted by
Section 3.5(b). Profits and Losses shall be determined net of any amounts
allocated pursuant to Section 4.2 and Section 4.3.

“Proceeding” has the meaning given such term in Section 10.1(a).

“Profit Sharing Distribution Amount” has the meaning given such term in
Section 4.8.

“Projected Distributable Value” has the meaning given such term in
Section 4.5(b)(ii).

“Projected Investment Value” means, as of any measurement date, fifteen and
fifteen-nineteenths percent (15 15/19%) of the Projected Distributable Value as
of such date.

“Proposed Transferor” has the meaning given such term in Section 9.2.

“Purchase Agreement” has the meaning given such term in the recitals hereto.

“Purchase Price” has the meaning given such term in Section 9.2(d).

“Purchasing Members” has the meaning given such term in Section 9.2(c).

 

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“Redemption” has the meaning given such term in Section 9.5.

“Redemption Notice” has the meaning given such term in Section 9.5.

“Refined Coal” means a liquid, gaseous or solid fuel produced from coal that
produces, upon sale to an unrelated person, a credit under Section 45.

“Regulatory Allocations” has the meaning given such term in Section 4.2(h).

“Related Business Opportunity” has the meaning given such term in
Section 11.9(a).

“Representatives” has the meaning given such term in Section 11.8(d).

“Sale Notice” has the meaning given such term in Section 9.3(c).

“Section 45” means Section 45 of the Code or any successor or replacement
provision thereof, or any amendment thereto.

“Section 45 Business” means each business of the Company or a Subsidiary of the
Company in respect of which, inter alia, the Company shall have “placed in
service” (within the meaning of Section 45(d)(8)(A) of the Code) a Facility
prior to January 1, 2012, for the production of Refined Coal to be used to
reduce NOx and mercury emissions in cyclone coal-fired boilers, and as to which
the Company has entered into an agreement or agreements to sell a Facility to a
third party, and such third party would be thereafter entitled to Tax Credits
for the Refined Coal produced from such Facility. The foregoing January 1, 2012
date shall be extended from time to time to be coterminous with any extension of
the January 1, 2012 date currently in Section 45(d)(8) of the Code or with any
alternative extension or the elimination of the “placed in service” deadline for
a “refined coal production facility” provided for in such Section 45(d)(8).

“Securities Act” means the Securities Act of 1933, as amended, and applicable
rules and regulations thereunder, and any successor to such statute, rules or
regulations.

“Sharing Ratio” means the sharing ratio of a Member, expressed as a percentage
of the total, in allocations of Profits, Losses and other items of income, gain,
loss or deduction and distributions of cash and property. The initial Sharing
Ratio shall be equal to the ownership by each Member of Units, expressed as a
ratio equal to the number of Units held by such Member over the number of
outstanding Units, as set forth on Exhibit A. Thereafter, the Sharing Ratio
shall be adjusted and Exhibit A shall be amended or updated from time to time to
reflect the Sharing Ratio in effect at any given time, as required by this
Agreement, based on (i) the Capital Contributions made by each Member and the
ownership of Units that reflect such Capital Contributions, and (ii) any
Transfers of Units.

“Stalemate” has the meaning given such term in Section 5.3.

“Stalemate Determination” has the meaning given such term in Section 5.3.

 

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“Subsidiary” or “Subsidiaries” of the Company means any other Person (i) more
than 50% of whose outstanding shares or securities representing the right to
vote for the election of directors or other managing authority of such other
Person are, now or hereafter, owned or controlled, directly or indirectly, by
the Company, but such other Person shall be deemed to be a Subsidiary of the
Company only so long as such ownership or control exists, or (ii) which does not
have outstanding shares or securities with such right to vote, as may be the
case in a partnership, joint venture or unincorporated association, but more
than 50% of whose ownership interest representing the right to make the
decisions for such other Person is, now or hereafter, owned or controlled,
directly or indirectly, by the Company, but such other Person shall be deemed to
be a Subsidiary of the Company only so long as such ownership or control exists.
For the avoidance of doubt, Clean Coal Solutions Services, LLC, a Colorado
limited liability company, is not, and shall not be considered for any purposes
of this Agreement, a Subsidiary of the Company.

“Tag-Along Member” has the meaning given such term in Section 9.3(b).

“Tag-Along Notice” has the meaning given such term in Section 9.3(e).

“Tag-Along Right” has the meaning given such term in Section 9.3(b).

“Tag-Along Sale” has the meaning given such term in Section 9.3(b).

“Tag-Along Transferor” has the meaning given such term in Section 9.3(b).

“Tag-Along Units” has the meaning given such term in Section 9.3(a).

“Tax Credit” means the credit provided by Section 45 for the production and sale
of Refined Coal.

“Tax Matters Partner” or “TMP” has the meaning given such term in
Section 7.3(c)(i).

“Technical Engineering Services” means the technical engineering services set
forth in Exhibit D.

“Technology” means the Patents and the Know-How specifically pertaining to NOx
and mercury emissions control for cyclone coal-fired boilers, as well as any
Know-How which is based on the knowledge contained in the Patents; provided,
however, that such Know-How shall be a trade secret of ADA until such time as it
is the subject of a published patent application.

“Term Sheet” means that certain indicative term sheet, dated as of May 4, 2011,
by and between the Company and Goldman, Sachs & Co. and the side letter thereto
dated May 10, 2011.

“Third Party Accountant” has the meaning given such term in Section 7.3(a)(i).

“Third Party Claim” has the meaning given such term in Section 10.2(b).

“Third Party Terms” has the meaning given such term in Section 9.3(c).

 

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“TMP” has the meaning given such term in Section 7.3(c)(i).

“Transaction Agreements” means this Agreement, the Purchase Agreement, that
certain Exclusive Right to Lease Agreement, dated as of the date hereof, between
the Company and GS, the ADA Guarantee and the NexGen Guarantee, as the same are
in effect as of the Effective Date.

“Transfer” means any direct or indirect sale, transfer, assignment, pledge,
mortgage, exchange, hypothecation, gift, grant of a security interest or other
direct or indirect disposition or encumbrance (whether with or without
consideration, whether voluntarily or involuntarily or by operation of law) or
the acts thereof, including derivative or similar transactions or arrangements
whereby a portion or all of the economic interest in, or risk of loss or
opportunity for gain with respect to, Units is transferred or shifted to another
Person; provided, however, that the indirect pledge, mortgage or grant of a
security interest in the proceeds derived from Units or the ownership interest
in any Member by any direct or indirect parent of such Member in order to secure
commercially reasonable borrowing or other Indebtedness shall not constitute a
“Transfer” of such Units; and provided further, that the Transfer of any or all
of the equity interests in any Member or in any direct or indirect parent entity
of such Member shall in no event be considered a “Transfer” of the Units held by
such Member. Unless otherwise defined herein, the terms “Transferee,”
“Transferred,” and other forms of the word “Transfer” shall have the correlative
meanings.

“Transfer Notice” has the meaning given such term in Section 9.2(a).

“Treasury Regulations” means the income tax regulations promulgated by the
United States Treasury Department pursuant to the Code, as amended from time to
time.

“Unit” means a limited liability company interest in the Company denominated in
a unit with the rights and obligations as set forth in this Agreement and the
Act, including the Unit owner’s undivided right to share in the profits and
losses of the Company and the right to receive distributions of assets and, in
the case of Voting Units only, the right to participate in the management of the
Company as set forth herein. Unless the context otherwise requires, any
reference herein to Units shall include Class A Units and Class B Units and
shall be deemed to refer to Voting Units and Non-voting Units, as appropriate
and as the context requires.

“Unrecovered Investment Balance” means the amount, as of any measurement date,
equal to the GS Investment Amount, less (i) the aggregate amount of all
Distributable Value Distributed or deemed Distributed to the holders of Class B
Units as of such date, using an implied interest rate of fifteen percent
(15%) per annum, as accrued annually, and less (ii) to the extent not
duplicative of clause (i) above, the aggregate amount of all Distributable Cash
Distributed or deemed Distributed to the holders of Class B Units as of such
date. For purposes of determining the Unrecovered Investment Balance, (A) Tax
Credits will be deemed to have been Distributed (to the extent such Tax Credits
have been allocated to holders of Class B Units) as provided in Schedule 4.5(b),
and (B) only Distributions with respect to the Class B Units acquired by GS
pursuant to the Purchase Agreement shall be taken into account, and, for
avoidance of doubt, no consideration paid with respect to any Units acquired by
GS pursuant to the preemptive rights set forth in Section 6.6 shall be taken
into account when determining the Unrecovered Investment Balance.

 

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“Valid Claim(s)” means any claim contained in an issued and unexpired patent
included within the Patents that has not been held unenforceable, unpatentable
or invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal, and
that has not been admitted to be invalid or unenforceable through reissue or
disclaimer.

“Valuation Expert” has the meaning given such term in Section 4.5(b)(iii).

“Voting Member” means a Member owning Voting Units.

“Voting Units” means Units that have all associated voting, consent or approval
rights in addition to an economic interest in the Company and all other rights
associated with Units, including Class A Units.

1.2 Rules of Construction.

(a) Section References. When a reference is made in this Agreement to an
Article, Section, Paragraph, Exhibit or Schedule, such reference shall be to an
Article, Section or Paragraph of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. Unless otherwise indicated, the words “herein,”
“hereof,” “hereunder” and other words of similar import refer to this Agreement
as a whole, and not to any particular Article, Section, Paragraph or clause in
this Agreement.

(b) Construction. Unless the context of this Agreement clearly requires
otherwise: (i) references to the plural include the singular and vice versa,
(ii) the masculine shall include feminine and neuter, and the neuter shall
include the masculine and feminine, (iii) the word “including” shall mean
“including, without limitation,” and (iv) the use of the words “or,” “either”
and “any” shall not be exclusive. Unless otherwise specified, all references to
days or months shall be deemed references to calendar days or months, and all
references to “$” shall be deemed references to United States dollars.

(c) Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or any provision of this Agreement.

(d) No Interpretation Against Author. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.

(e) Conflicts with Related Documents. The relationship of the parties is being
memorialized in this Agreement and in the other Transaction Agreements. In the
event of a

 

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conflict between any term(s) or provision(s) of this Agreement and anything
contained in any of the other Transaction Agreements, this Agreement shall be
overriding and controlling but solely to the extent of such conflict.

ARTICLE II

FORMATION OF THE COMPANY

2.1 Name and Formation. The name of the Company is Clean Coal Solutions, LLC.
The Company was formed under the name “ADA-NexCoal, LLC” by the filing of
Articles of Organization of the Company (as amended, the “Articles”) with the
Secretary of State of the State of Colorado on October 31, 2006, pursuant to the
Act. The Company changed its name to “Clean Coal Solutions, LLC” by the filing
of Articles of Amendment with the Secretary of State of the State of Colorado on
January 10, 2007, pursuant to the Act. The Company’s Business may be conducted
under such other name(s) as the Board may from time to time agree to be
necessary or advisable. The rights and liabilities of the parties hereto shall
be as provided in the Act except as herein otherwise expressly provided.

2.2 Operating Agreement. The Members hereby execute this Agreement for the
purpose of organizing the affairs of the Company and the conduct of its business
in accordance with the provisions of the Act. The Members hereby agree that
during the term of the Company set forth in Section 2.5, the rights, powers and
obligations of the Members with respect to the Company will be determined in
accordance with the terms and conditions of this Agreement and the Act.

2.3 Principal Place of Business; Qualification. The principal place of business
of the Company shall be located at 8100 SouthPark Way, Unit B, Littleton, CO
80120. The Company may locate its place(s) of business and registered office at
any other place(s) as the Board may from time to time deem necessary or
advisable. The Company shall qualify to do business in such states or other
jurisdictions in which such qualification is necessary.

2.4 Registered Office and Registered Agent. The address of the registered office
of the Company in the State of Colorado shall be the office of the initial
registered agent named in the Articles or such other office (which need not be a
place of business of the Company) as the Board may designate from time to time
in the manner provided by applicable Law, and the registered agent for service
of process on the Company in the State of Colorado at such registered office
shall be the registered agent named in the Articles or such other Person or
Persons as the Board may designate from time to time in the manner provided by
applicable Law.

2.5 Term. The term of the Company commenced on the filing of the Articles with
the Secretary of State of the State of Colorado, and the existence of the
Company shall be unlimited, subject to the Company being dissolved in accordance
with the provisions of this Agreement and applicable Law.

 

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2.6 Purposes and Powers.

(a) Purposes. The purposes and character of the business of the Company shall be
to (i) enter into the Transaction Agreements, (ii) accept contributions by the
Members in accordance with the provisions of this Agreement and the Purchase
Agreement, (iii) engage in the Chemicals Business and the Section 45 Business,
and (iv) engage in other business consistent with or in furtherance of the
foregoing related to Refined Coal, as may be necessary or appropriate to
accomplish the purposes set forth herein or as may be approved by the Board from
time to time (collectively, the “Business”). The Company will not engage in any
other business or activity not within the scope of the Business or otherwise
permitted or contemplated by this Agreement (whether or not permitted by the
Articles) unless approved by the Board or, if required, the Members in
accordance with Section 6.1.

(b) Powers. The Company shall have all powers which are necessary or desirable
to carry out the purposes and Business of the Company, to the maximum extent the
same are available and may be legally exercised by limited liability companies
under the Act.

2.7 Default Rules Under the Act. Regardless of whether this Agreement
specifically refers to a particular Default Rule: (i) if any provision of this
Agreement conflicts with a Default Rule, the provision of this Agreement
controls and such Default Rule is hereby modified or negated accordingly, and
(ii) if it is necessary to construe a Default Rule as modified or negated in
order to effectuate any provision of this Agreement, such Default Rule is hereby
modified or negated accordingly.

2.8 Existing LLC Agreement. This Agreement amends, restates and supersedes the
Existing LLC Agreement in its entirety.

2.9 Title to Property. All real and personal property, whether tangible or
intangible, owned by the Company shall be owned by the Company as an entity and
no Member shall have any ownership interest in such property in such Member’s
individual name, and each Member’s interest in the Company shall be personal
property for all purposes. Except as otherwise provided in this Agreement, the
Company shall hold all of its real and personal property in the name of the
Company and not in the name of any Member.

2.10 Intent.

(a) Tax Treatment. It is the intent of the Members that the Company be
classified as a partnership for federal and state income tax purposes. The
Company shall take all appropriate actions to ensure that the Company will be
treated as a partnership for federal and state income tax purposes, including
the making of available tax elections. No election may be made to treat the
Company as an association taxable as a corporation for federal or state income
tax purposes without obtaining the unanimous written consent of all of the
Members pursuant to Section 6.1(a). Neither the Company nor any Member shall
take any action inconsistent with the express intent of the parties hereto as
set forth in this Section 2.10.

 

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(b) No State-Law Partnership. Except with respect to tax treatment as set forth
in Section 2.10(a), the Members intend that the Company not be a partnership
(including a limited partnership) or joint venture, and that no Member be a
partner or joint venturer of any other Member by virtue of this Agreement, and
neither this Agreement nor any other document entered into by the Company or any
Member relating to the subject matter hereof shall be construed to suggest
otherwise.

ARTICLE III

CAPITAL CONTRIBUTIONS AND ACCOUNTS; ADJUSTMENT OF SHARING RATIOS

3.1 Initial Capital Contributions and Ownership Structure.

(a) Prior to the Effective Date, ADA contributed one thousand dollars
($1,000.00) and the Licensed Property to the Company pursuant to the terms of
the License Agreement, in receipt for which ADA received one hundred Units
(100) in the Company, representing one hundred percent (100%) of the membership
interests in the Company at that time. ADA later sold fifty (50) of its Units to
NexGen so that, immediately prior to the execution of this Agreement, ADA and
NexGen each owned fifty (50) Units in the Company (the “Existing Units”),
representing one hundred percent (100%) of the membership interests of the
Company at that time. Upon execution of this Agreement and the other Transaction
Agreements by the parties hereto and thereto, the Existing Units will
automatically be cancelled without any action on the part of the Company or any
Member and in exchange therefor ADA and NexGen will each receive forty-two and
two-nineteenths (42 2/19) Class A Units, and following such cancellation and
exchange, each of ADA and NexGen will own forty-two and two-nineteenths percent
(42 2/19%) of the total fully diluted membership interests in the Company. In
accordance with the Purchase Agreement, GS has agreed to make a Capital
Contribution in the amount of the GS Investment Amount, in consideration for
such Capital Contribution the Company has agreed to issue and sell to GS fifteen
and fifteen-nineteenths (15 15/19) Class B Units, and following such issuance of
Class B Units to GS, GS will own fifteen and fifteen-nineteenths percent (15
15/19%) of the total fully diluted membership interests in the Company.
Notwithstanding anything to the contrary contained in this Agreement, the Class
B Units issued to GS pursuant to the Purchase Agreement shall at all times
represent at least fifteen and fifteen-nineteenths percent (15 15/19%) of the
total fully diluted membership interests in the Company, and the Sharing Ratio
of GS shall at all times be equal to at least fifteen and fifteen-nineteenths
percent (15 15/19%). Immediately following the Capital Contribution by GS of the
GS Investment Amount, to the fullest extent permitted by Law, the Company shall
Distribute the GS Investment Amount to the Members of the Company immediately
prior to the Effective Date pro rata based on the number of Units then held by
each such Member as compared to the aggregate number of Units then held by all
such Members on a total fully diluted membership interest basis, without regard
to the Distribution requirements set forth in Section 4.5 or elsewhere in this
Agreement or the Existing LLC Agreement. The Members agree that the Unit
ownership and the Sharing Ratios of the Members, on and immediately after the
Effective Date, shall be as set forth in Exhibit A hereto.

(b) The Members and the Company agree that for all applicable Tax purposes the
contribution by GS of the GS Investment Amount followed by the Distribution of
the GS

 

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Investment Amount to the Members of the Company immediately prior to the
Effective Date shall be treated as a sale by the Members of the Company as of
the Effective Date of Class B Units to GS under Section 707(a) of the Code (the
“Deemed Sale”). The Company and GS agree to report the transaction in accordance
with this Section 3.1(b), and the Company and the Members agree to take no
position on any Tax return, financial accounting record or other similar
document that would be inconsistent with such treatment. The Company shall make
the election under Section 754 of the Code for the Company’s taxable year in
which the Deemed Sale occurs to adjust the basis of Company property in the
manner provided in Section 743 of the Code.

3.2 Additional Capital Contributions; Adjustment of Sharing Ratios and Units.

(a) Additional Capital Contributions. Notwithstanding anything else in this
Agreement to the contrary, (i) except for the GS Investment Amount to be
contributed to the Company by GS pursuant to the Purchase Agreement, GS shall
not be required to make any Capital Contribution unless such Capital
Contribution has been approved by GS in writing, and (ii) no other Member shall
make, or be required to make, any Capital Contribution except in accordance with
this Section 3.2 and/or Section 3.3. The Board shall consider any capital
requirements of the Company and will notify the Members, no less than thirty
(30) days prior to the need therefor, of any projected need for additional
Capital Contributions in order to fund operations or to further the purposes of
the Company. The Class A Members shall be required to make additional Capital
Contributions only if such additional Capital Contributions are approved by all
of the Class A Members in writing. The Board shall give the Class A Members
notice of each request for additional Capital Contributions that has been
approved by the Class A Members in accordance with this Section 3.2 (each, a
“Capital Call”) at least fifteen (15) days prior to the date on which the
Capital Contributions are due and will include in such Capital Call, in
reasonable detail, (i) the purpose or purposes for which additional Capital
Contributions are required, (ii) the amount of the additional Capital
Contribution to be made by each Class A Member and the number of additional
Units or other securities, if any, to be issued as a result of such Capital
Call, (iii) whether such issued Units or other securities, if any, will be
Voting Units or Non-voting Units, and (iv) the date on which such additional
Capital Contributions must be made. Unless otherwise agreed by all of the
Class A Members in writing, the Class A Members shall be required to make any
additional Capital Contributions requested pursuant to this Section 3.2 pro rata
based on the number of Class A Units then held by each such Class A Member as
compared to the aggregate number of Class A Units then held by all Class A
Members. Except as otherwise provided herein or as agreed to by all of the
Class A Members in writing, the Class A Members will have the preemptive right
to acquire any additional Units to be issued in return for additional Capital
Contributions in accordance with Section 6.6.

(b) Adjustment of Sharing Ratios and Units. Unless otherwise agreed in writing
by all of the Members, in no event will additional Units be issued in connection
with any Capital Contribution made pursuant to Section 3.2(a). The Capital
Account balances, and Sharing Ratios in effect at the time of a Capital
Contribution made pursuant to Section 3.2(a) shall be adjusted in proportion to
the respective amounts of additional capital contributed by each Class A Member
in response to a Capital Call, subject to the provisions of Section 3.3 in the
event a Class A Member fails to timely make all or any portion of the Capital
Contribution

 

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required to be made by such Class A Member pursuant to a Capital Call. Following
all Capital Contributions made by one or more Class A Members pursuant to
Section 3.2(a), including any advances made by one or more Participating Members
pursuant to Section 3.3, the number of Class A Units held by each Class A Member
shall be deemed to equal (i) the aggregate number of Class A Units then
outstanding, multiplied by (ii) a fraction, the numerator of which is the
aggregate fair market value (as of the date such Capital Contributions were
made) of all Capital Contributions made by, or transferred to, such Class A
Member since the inception of the Company with respect to Class A Units then
held by such Member, and the denominator of which is the aggregate fair market
value (as of the date such Capital Contributions were made) of all Capital
Contributions made by all Class A Members since the inception of the Company.
Following each Capital Contribution made pursuant to Section 3.2(a) or
Section 3.3, Exhibit A shall be updated appropriately to reflect any changes in
the Sharing Ratio and/or the number of Class A Units held by each Class A
Member. For the avoidance of doubt, the Sharing Ratio and number of Class B
Units held by each Class B Member shall in no way be affected by any Capital
Contributions made by the Class A Members pursuant to Section 3.2(a) or
Section 3.3, and in no event will any such Capital Contribution trigger any
preemptive right, right of first refusal, tag-along right, drag-along right, or
any similar right in favor of the Company or any Member, whether pursuant to
Section 6.6, Section 9.2, Section 9.3, Section 9.4, or otherwise.

3.3 Failure to Make a Required Additional Capital Contribution.

(a) If a Class A Member (the “Defaulting Member”) does not make all or any
portion of an additional Capital Contribution that such Defaulting Member is
required to make pursuant to a Capital Call in accordance with Section 3.2(a) by
the date set forth in such Capital Call (the portion of such Capital
Contribution not made, the “Default Amount”), then the Company shall forthwith
notify the other Class A Members (the “Non-Defaulting Members”) of the Default
Amount, and the Non-Defaulting Members may take the following actions: within
twenty (20) days after a Defaulting Member’s default, the Non-Defaulting Members
may advance Capital Contributions, in each Non-Defaulting Member’s sole
discretion, in an aggregate amount not in excess of the Default Amount in such
proportions as they may agree, or if they cannot agree, pro rata in accordance
with their respective Sharing Ratios in effect immediately prior to such
advancement of Capital Contributions (with any Non-Defaulting Member making such
an advance referred to as a “Participating Member”).

(b) Advances from Participating Members under Section 3.3(a) shall be treated as
Capital Contributions by the Participating Members, and the Sharing Ratios and
Capital Account balances of the Class A Members shall be adjusted in accordance
with Section 3.2(b) to accurately reflect all such advances. The number of
Class A Units held by each Member following any advance made by one or more
Participating Members pursuant to Section 3.3(a) shall be determined in
accordance with Section 3.2(b).

(c) In the event the Non-Defaulting Members elect not to make up all of the
Default Amount, the Company shall have the right to take any action available at
law or in equity against the Defaulting Member for failure to make the required
Capital Contribution, including suing for damages, specific performance or any
combination of available remedies. All remedies available to the Company shall
be cumulative, and the election of any one shall not preclude the availability
of another, to the extent permitted under applicable Law. In any action brought
by

 

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the Company to enforce its rights under this Section 3.3, the prevailing party
in such action shall be entitled to recover all costs and fees (including
reasonable attorneys’ fees) incurred by it in connection with such action,
including any appeals.

3.4 No Third Party Right to Enforce. No Person other than the Company or a
Member shall have the right to enforce any obligation of a Member to make a
Capital Contribution hereunder, and specifically no lender or other third party
shall have any such rights.

3.5 Capital Accounts.

(a) Maintenance of Capital Accounts. The Company shall maintain a separate
Capital Account for each Member in accordance with the requirements of Treasury
Regulation Section 1.704-1(b)(2)(iv). Each Member’s Capital Account (a) shall be
increased by (i) the amount of money contributed by such Member to the Company,
(ii) the Book Value of property contributed by such Member to the Company (net
of liabilities secured by the contributed property that the Company is
considered to assume or take subject to under Code Section 752) and
(iii) allocations to such Member of Profits and any other items of income or
gain allocated to such Member, and (b) shall be decreased by (i) the amount of
money distributed to such Member by the Company, (ii) the Book Value of property
distributed to such Member by the Company (net of liabilities secured by the
distributed property that such Member is considered to assume or take subject to
under Code Section 752), and (iii) allocations to such Member of Losses and any
other items of loss or deduction allocated to such Member. For this purpose, the
Company may, upon the occurrence of the events specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in
accordance with the rules of such regulation and Treasury Regulation
Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of the Company’s property,
provided that, the Board in its reasonable judgment determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members in the Company. The Company intends to effect a
revaluation of its Capital Accounts as soon as reasonably practicable following
the closing of the transactions contemplated by this Agreement, which
revaluation shall be effective immediately prior to the transactions
contemplated by this Agreement.

(b) Computation of Profits and Losses. For purposes of computing the Profits or
Losses of the Company for any period, and any item of the Company’s income,
gain, loss or deduction to be allocated pursuant to Article IV and to be
reflected in the Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including any
method of depreciation, cost recovery or amortization used for this purpose);
provided, that:

(i) the computation of all items of income, gain, loss and deduction shall
include those items described in Code Section 705(a)(1)(B) or Code
Section 705(a)(2)(B) and Treasury Regulation Section 1.704-1(b)(2)(iv)(i),
without regard to the fact that such items are not includable in gross income or
are not deductible for federal income tax purposes;

 

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(ii) if the Book Value of any of the Company’s property is adjusted pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such property;

(iii) items of income, gain, loss or deduction attributable to the disposition
of the Company’s property having a Book Value that differs from its adjusted
basis for tax purposes shall be computed by reference to the Book Value of such
property;

(iv) items of depreciation, amortization and other cost recovery deductions with
respect to the Company’s property having a Book Value that differs from its
adjusted basis for tax purposes shall be computed by reference to the property’s
Book Value in accordance with Treasury Regulation Section 1.704-3(d);

(v) to the extent an adjustment to the adjusted tax basis of any asset of the
Company pursuant to Code Sections 732(d), 734(b) or 743(b) is required, pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis); and

(vi) any items that are allocated pursuant to Section 4.2 shall be determined by
applying rules analogous to those set forth in clauses (a) through (g) hereof
but shall not be taken into account in computing Profits and Losses.

(c) A Member that has more than one membership interest in the Company shall
have a single Capital Account that reflects all such interests, regardless of
the class of interest owned and regardless of the time or manner in which the
interests were acquired; provided, however, that the Capital Accounts shall be
maintained in such manner as will facilitate a determination of the portion of
each Capital Account attributable to Class A Units and the portion attributable
to Class B Units.

3.6 No Interest on Capital. No interest shall be paid by the Company on the
Capital Contributions by the Members, as reflected in their Capital Accounts
from time to time.

3.7 Creditor’s Interest in Company. No creditor of the Company (including a
creditor who makes a loan to the Company or a creditor who provides goods or
services to the Company) shall have or acquire, at any time as a result of
making the loan or providing the goods and services, any direct or indirect
interest in the profits, capital or property of the Company other than as a
creditor.

3.8 Return of Capital. Except as otherwise provided in this Agreement, no Member
shall have the right to demand the return of any Capital Contribution. Except as
required by the Act, no Member shall have any liability for the return of the
Capital Contributions of any other Member. Except as otherwise provided in this
Agreement, no Member shall have priority over any other Member either as to the
return of Capital Contributions or as to any cash or other

 

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Distributions by the Company. Except as otherwise provided in this Agreement, no
Member shall have the right to (i) receive property other than cash as a return
of Capital Contributions or as any other Distributions, (ii) withdraw any part
of the Member’s Capital Contributions, or (iii) receive any funds or property of
the Company.

3.9 Distributions In-Kind. To the extent that the Company distributes property
in-kind to the Members, the Company shall be treated as making a Distribution
equal to the fair market value of such property, as determined by the Board in
good faith, for purposes of Section 4.1 and such property shall be treated as if
it were sold for an amount equal to its fair market value and any resulting gain
or loss shall be allocated to the Members’ Capital Accounts in accordance with
Sections 4.2 through 4.4.

3.10 Transfer of Capital Accounts. On the Transfer of all or part of a Member’s
Units, the portion of the Capital Account of the Transferor Member that is
attributable to the Transferred Units shall carry over to the Transferee Member
in accordance with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(l). The Capital Account of any Member whose interest
in the Company shall be increased or decreased by means of the repurchase of
Units shall be appropriately adjusted to reflect such repurchase. Any reference
in this Agreement to a Capital Contribution of or Distribution to a Member that
has succeeded any other Member shall include any Capital Contributions or
Distributions previously made by or to the former Member on account of the Units
of such former Member Transferred to such Member.

ARTICLE IV

ALLOCATIONS AND DISTRIBUTIONS

4.1 Allocations. After making the allocations required by Section 4.2, any
remaining Profits or Losses for any Fiscal Year, and to the extent the Board
determines in its reasonable judgment it is necessary or appropriate, individual
items of income, gain, loss and deduction of the Company, shall be allocated
among the Members in such a manner as to reduce or eliminate, to the extent
possible, any difference, as of the end of such Fiscal Year, between (a) the sum
of (i) the Capital Account of each Member, (ii) such Member’s share of Minimum
Gain (as determined according to Treasury Regulation Section 1.704-2(g)) and
(iii) such Member’s partner nonrecourse debt minimum gain (as defined in
Treasury Regulation Section 1.704-2(i)(2)) and (b) the respective net amounts,
positive or negative, which would be distributed to them or for which they would
be liable to the Company under this Agreement and the Act, determined as if the
Company were to (A) sell the assets of the Company for an amount equal to their
Book Value (B) satisfy all Company liabilities in accordance with their terms
(limited, in the case of any nonrecourse liability to the Book Value of the
Company assets securing such liability) and (C) distribute the proceeds of such
sale pursuant to Section 4.5, including any Liquidation Preference, if
applicable.

4.2 Special Allocations.

(a) Minimum Gain Chargeback. Notwithstanding any other provision of this
Section 4.2, if there is a net decrease in the Minimum Gain during any Fiscal
Year, each Member shall be allocated items of Company income and gain for such
Fiscal Year (and, if necessary, for

 

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subsequent Fiscal Years) in the amounts and of such character as determined
according to Treasury Regulation Section 1.704-2(f). This Section 4.2(a) is
intended to be a Minimum Gain chargeback provision that complies with the
requirements of Treasury Regulation Section 1.704-2(j)(4), and shall be
interpreted in a manner consistent therewith.

(b) Member Nonrecourse Debt Minimum Chargeback. Notwithstanding any provision of
this Section 4.2 other than Section 4.2(a) above, if there is a net decrease
during a Fiscal Year in partner nonrecourse debt minimum gain (as defined in
Treasury Regulation Section 1.704-2(i)(2)), items of Company income and gain for
such Fiscal Year (and, if necessary, for subsequent Fiscal Years) shall be
allocated to the Members in the amounts and of such character as determined
according to Treasury Regulation Section 1.704-2(i)(4). This Section 4.2(b) is
intended to comply with the partner nonrecourse debt minimum gain chargeback
requirement in Treasury Regulation Section 1.704 2(i)(4) and shall be
interpreted consistently therewith.

(c) Qualified Income Offset. If any Member that unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account
Deficit as of the end of any Fiscal Year, computed after the application of
Sections 4.2(a) and 4.2(b) but before the application of any other provision of
this Article IV, then items of Company income and gain for such Fiscal Year
shall be allocated to such Member in proportion to, and to the extent of, such
Adjusted Capital Account Deficit. This Section 4.2(c) is intended to be a
qualified income offset provision as described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent
therewith.

(d) Adjusted Capital Account Deficit. In the event any Member has an Adjusted
Capital Account Deficit at the end of any Taxable Year, such Member shall be
allocated items of Company gross income and gain in the amount of such excess as
quickly as possible; provided, however, that an allocation pursuant to this
Section 4.2(d) shall be made only if and to the extent that such Member would
have an Adjusted Capital Account Deficit after all other allocations provided in
this Section 4.2 have been tentatively made as if Section 4.2(c) and this
Section 4.2(d) were not in this Agreement.

(e) Nonrecourse Deductions. Nonrecourse deductions (as determined according to
Treasury Regulation Section 1.704-2(b)(1)) for any Fiscal Year shall be
allocated ratably among such Members based upon the manner in which Profits and
Losses are allocated among the Members for such Fiscal Year (and if no Profits
or Losses are allocable in any Fiscal Year, pro rata based on the number of
Units then held by each Member as compared to the number of Units then held by
all Members on a fully diluted membership interest basis).

(f) Partner Nonrecourse Deductions. Partner nonrecourse deductions (as
determined in accordance with Treasury Regulation Section 1.704-2(i)(2)
attributable to partner nonrecourse debt (as defined in Treasury Regulation
Section 1.704-2(b)(4)) for any Taxable Year shall be allocated to the Member or
Members that bear the economic risk of loss (determined in accordance with
Treasury Regulation Section 1.752-2) with respect to the debt to which the
partner nonrecourse deductions are attributable. If more than one Member bears
the

 

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economic risk of loss with respect to a partner nonrecourse debt, partner
nonrecourse deductions attributable thereto shall be allocated between or among
such Members in accordance with the ratios in which they share such economic
risk of loss. This Section 4.2(f) is intended to comply with the provisions of
Treasury Regulation Section 1.704-2(i) and shall be interpreted consistently
therewith.

(g) Allocation of Certain Profits and Losses. Items of income, gain, Loss and
deduction described in Section 3.5(b)(v) shall be allocated in a manner
consistent with the manner that the adjustments to the Capital Accounts are
required to be made pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m).

(h) Curative Allocations. The allocations set forth in Sections 4.2(a)-(c) and
(e)-(f) (the “Regulatory Allocations”) are intended to comply with certain
requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The
Regulatory Allocations may not be consistent with the manner in which the
Members intend to allocate Profit and Loss of the Company or make the Company’s
Distributions. It is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Company income, gain, loss, or
deduction pursuant to this Section 4.2(h). Accordingly, notwithstanding the
other provisions of this Article IV (other than the Regulatory Allocations), but
subject to the Code and the Treasury Regulations, the Board shall make such
offsetting allocations of Company income, gain, deduction and loss in whatever
manner it deems appropriate so that, after such offsetting allocations are made,
each Member’s Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory Allocations
were not part of this Agreement. In exercising its discretion under this
Section 4.2(h), the Board shall take into account future Regulatory Allocations
that, although not yet made, are likely to offset other Regulatory Allocations
previously made.

4.3 Offsetting Allocations. If, and to the extent that, any Member is deemed to
recognize any item of income, gain, deduction or loss as a result of any
transaction between such Member and the Company pursuant to Sections 83, 482, or
7872 of the Code or any similar provision now or hereafter in effect, the Board
shall allocate any corresponding Profit or Loss to the other Members of the
Company.

4.4 Tax Allocations.

(a) Allocations Generally. Except as otherwise provided in this Section 4.4, the
income, gains, losses, deductions and credits of the Company will be allocated
for federal, state and local income tax purposes among the Members in the same
manner as such income, gains, losses, deductions and credits are allocated among
the Members for purposes of computing their Capital Accounts.

(b) Code Section 704(c) Allocations. Items of the Company’s taxable income,
gain, loss and deduction with respect to any property contributed to the capital
of the Company shall be allocated among the Members in accordance with Code
Section 704(c) and the applicable Treasury Regulations thereunder so as to take
account of any variation between the

 

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adjusted basis of such property to the Company for federal income tax purposes
and its Book Value. In addition, if the Book Value of any of the Company’s asset
is adjusted pursuant to the requirements of Treasury Regulation
Section 1.704-1(b)(2)(iv)(e) or (f), then subsequent allocations of items of
taxable income, gain, loss and deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for federal
income tax purposes and its Book Value in the same manner as under Code
Section 704(c). The Board shall determine all allocations pursuant to this
Section 4.4(b) using the “traditional method” described in Treasury Regulation
Section 1.704-3(b), or any other reasonable method selected by the Board.

(c) Allocation of Tax Credits, Tax Credit Recapture, Etc. Allocations of tax
credits, tax credit recapture, and any items related thereto shall be allocated
to the Members according to their interests in the Company at the time such
items of tax credit or tax credit recapture arise, as determined by the Board
taking into account the principles of Treasury Regulation
Section 1.704-1(b)(4)(ii).

(d) Recapture. If any deductions for depreciation or cost recovery are
recaptured as ordinary income upon the sale or other disposition of Company
properties, the ordinary income character of the gain from such sale or
disposition shall be allocated among the Members in the same ratio as the
deductions giving rise to such ordinary income character were allocated.

(e) Other Allocations. All items of income, gain, loss, deduction and credit
allocable to Units that may have been transferred shall be allocated between the
transferor and the transferee as determined by the Board in accordance with a
method permissible under Code Section 706 and the Treasury Regulations
thereunder. If any Units are disposed of or redeemed in compliance with the
provisions of this Agreement, all distributions with respect to which the record
date is before the date of such disposition or redemption shall be made to the
disposing Member, and all distributions with respect to which the record date is
after the date of such disposition, in the case of a disposition other than a
redemption, shall be made to the transferee.

4.5 Distributions.

(a) Distributions of Pre-Closing Cash. Notwithstanding anything else in this
Section 4.5 to the contrary, all Pre-Closing Cash, calculated in accordance with
the example set forth in Schedule 4.5(a), shall be Distributed solely in
accordance with this Section 4.5(a), and no Pre-Closing Cash shall be included
in the calculation or determination of Distributable Value or Distributable Cash
for purposes of Sections 4.5(b), 4.5(c), or 4.5(d). All Pre-Closing Cash that,
but for this Section 4.5(a), would be Distributed to the Members pursuant to
Section 4.5(b), 4.5(c), or 4.5(d) shall be Distributed to the Class A Members,
pro rata based on the number of Class A Units then held by each Class A Member
as compared to the aggregate number of Class A Units then outstanding, at such
times as such Pre-Closing Cash, but for this Section 4.5(a), would have been
Distributed pursuant to Section 4.5(b), 4.5(c), or 4.5(d).

 

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(b) Mandatory Distributions; Determination of Distributable Value.

(i) Subject to Section 4.5(a), beginning after December 31, 2012, the Company
shall make mandatory Distributions to the Members holding Units at least once
per year (on such date or dates as determined by the Board in good faith) in an
amount equal to at least seventy percent (70%) of the Distributable Cash, as
determined by the Board in good faith on at least an annual basis. All
Distributions made pursuant to this Section 4.5(b)(i) shall be allocated among
the Members in accordance with Section 4.5(d)(ii).

(ii) On or as soon as reasonably practicable following March 31, 2012, but in no
event more than ten (10) days following such date, the Board shall calculate,
with respect to each Facility owned or leased by the Company or a Subsidiary of
the Company (or in which the Company or any Subsidiary has any interest), and
with respect to which the Company or a Subsidiary has entered into a
monetization transaction prior to March 31, 2012, the projected Distributable
Value expected to be received by the Company through the remainder of the
ten-year period for which Tax Credits are available with respect to such
Facility, as of March 31, 2012, in accordance with the methodology set forth on
Schedule 4.5(b) (the “Projected Distributable Value”), and the Projected
Distributable Value, as the same may be recalculated from time to time pursuant
hereto, shall at all times be calculated in accordance with the methodology set
forth on Schedule 4.5(b). After March 31, 2012, prior to making any Distribution
pursuant to Sections 4.5(b)(i), 4.5(c) or 4.5(d), the Board shall determine in
good faith, in accordance with the methodology set forth on Schedule 4.5(b), the
Projected Distributable Value, the Unrecovered Investment Balance and the
Projected Investment Value (such calculations, the “Distribution Calculations”)
and shall promptly provide the Distribution Calculations, along with relevant
supporting documentation, to GS. GS shall have five (5) business days from the
date of receipt of such calculations to review and to notify the Board in
writing if GS disagrees with any of the Distribution Calculations (any
Distribution Calculations with which GS disagrees, the “Disputed Calculations”).
If GS does not notify the Board in writing of any disagreement within such five
(5) business day period, GS will be deemed to have accepted the Distribution
Calculations and Distributions of Distributable Value shall be made accordingly.
If GS notifies the Board in writing of any Disputed Calculations within the
aforementioned five (5) business day period, such disagreement shall be resolved
pursuant to Section 4.5(b)(iii).

(iii) As soon as reasonably practicable following any notice of Disputed
Calculations to the Board, but in no event more than five (5) business days
following such notice, GS shall provide the Board with its own calculation of
the Disputed Calculations (such calculations, the “GS Calculations”), along with
all supporting documentation used for the GS Calculations, and the Board and GS
shall designate a third party valuation expert (a “Valuation Expert”) mutually
agreeable to the Board and GS. If the Board and GS are unable, in good faith, to
agree on a Valuation Expert within three (3) days following the Board’s receipt
the GS Calculations, the Board and GS shall each designate a separate third
party valuation expert, and such separate third party valuation experts shall
designate, as soon as reasonably practicable but in no

 

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event more than three (3) days following their designation, a separate third
party valuation expert, and such separate third party valuation expert will be
the Valuation Expert for purposes of this Section 4.5(b)(iii). Upon designation
of a Valuation Expert pursuant to this Section 4.5(b)(iii), the Board shall
provide the Valuation Expert with all supporting documentation underlying the
Distribution Calculations and the GS Calculations, and the Valuation Expert
shall, as soon as reasonably practicable but in no event longer than fifteen
(15) days following receipt of such documentation, render a written report of
its calculations of the values underlying the Disputed Calculations to the Board
and GS (the “Determined Values”); provided, however, that if the Determined
Value with respect to any Disputed Calculation is greater than both the
applicable Disputed Calculation and the applicable GS Calculation, the
applicable Disputed Calculation or the applicable GS Calculation, whichever is
greater, with respect to such Disputed Calculation shall be the Determined Value
with respect to such Disputed Calculation, and if the Determined Value with
respect to any Disputed Calculation is less than both the applicable Disputed
Calculation and the applicable GS Calculation, the applicable Disputed
Calculation or the applicable GS Calculation, whichever is less, with respect to
such Disputed Calculation shall be the Determined Value with respect to such
Disputed Calculation. With respect to each Disputed Calculation, the Determined
Values shall be binding on the parties hereto. In no event shall the Valuation
Expert be provided with the Distribution Calculations or the GS Calculations,
and each of GS and the Board shall have reasonable access to the Valuation
Expert and shall be entitled to explain its methodology and assumptions
underlying the Distribution Calculations and the GS Calculations to the
Valuation Expert. All costs and expenses incurred pursuant to this
Section 4.5(b)(iii), including costs associated with appointing and retaining
the Valuation Expert, shall be split equally between GS and the Company;
provided, however, that any costs and expenses incurred by GS or the Company to
retain any accounting or other advisor in connection with this
Section 4.5(b)(iii) shall be borne solely by the party incurring such costs and
expenses.

(c) Liquidation Preference.

(i) Subject to Section 4.5(a) and, if applicable, Article VIII, if a Liquidation
Event occurs, then GS will be entitled either to (1) if the Company directly
receives proceeds in connection with such Liquidation Event, receive the greater
of (A) a liquidation preference in an amount equal to the Unrecovered Investment
Balance as of the date of such Liquidation Event (the “Liquidation Preference”)
and (B) GS’s pro rata share (based on number of Units then held by GS as
compared to the aggregate number of Units then outstanding on a fully diluted
membership interest basis) of the Distributable Value from such Liquidation
Event, or (2) if the Company does not directly receive proceeds in connection
with such Liquidation Event, exercise the Tag-Along Right provided in
Section 9.3 without first complying with Section 9.2. If GS exercises the
Tag-Along Right pursuant to (2) above and the proceeds received by GS in respect
of the Class B Units Transferred by GS in the Tag-Along Sale are equal to or
greater than the Unrecovered Investment Balance on the date of such Tag-Along
Sale, such proceeds shall constitute the sole consideration due GS in connection
with such Liquidation Event

 

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and GS shall not be entitled to any additional Distribution or other payment in
connection with such Liquidation Event. If GS exercises the Tag-Along Right
pursuant to (2) above and the proceeds received by GS in respect of the Class B
Units Transferred by GS in the Tag-Along Sale are less than the Unrecovered
Investment Balance (or, if less than all of the Class B Units held by GS are
Transferred in the Tag-Along Sale, less than the portion of the Unrecovered
Investment Balance attributable to the Class B Units Transferred by GS in the
Tag-Along Sale) as of the date of such Tag-Along Sale, the Company shall
Distribute to GS the difference between the Unrecovered Investment Balance (or
portion thereof attributable to the Class B Units Transferred by GS in the
Tag-Along Sale) as of the date of the Tag-Along Sale and the proceeds received
by GS in respect of the Class B Units Transferred by GS in the Tag-Along Sale
(such difference, the “Make-Whole Payment”). For the avoidance of doubt, if GS
exercises the Tag-Along Right pursuant to (2) above, the sole right of GS with
respect to the Class B Units Transferred by GS is to receive the proceeds
therefor in the Tag-Along Sale and, if applicable, the Make-Whole Payment. All
proceeds received by GS in a Tag-Along Sale pursuant to (2) above, and any
Make-Whole Payment shall be treated as a Distribution to GS for all purposes of
this Agreement (including reducing the Unrecovered Investment Balance), and GS
shall in no case be entitled to receive a Liquidation Preference that would be
duplicative of such proceeds or Make-Whole Payment. In the event, and to the
extent, that the total Liquidation Preference or proceeds from a Tag-Along Sale
pursuant to (2) above and Make-Whole Payment payable to GS would exceed its
Capital Account balance (after taking into account all items of income which may
be allocated to GS under Section 8.2 (“Excess Liquidation Preference”), (i) such
Excess Liquidation Preference shall be treated as the payment by the Company to
such Member of a guaranteed payment for the use of capital pursuant to
Section 707(c) of the Code, (ii) to the extent so treated, the Liquidation
Preference shall not be treated as a Distribution pursuant to this Agreement,
(iii) to the maximum extent possible consistent with the provisions of this
Article IV and applicable law, any Company deduction in respect of such
guaranteed payment shall be allocated to the Members other than GS, and
(iv) upon final liquidation of the Company, and prior to the distribution of
liquidation proceeds pursuant to Section 8.2(b)(iv), the Company shall pay to GS
an amount equal to the excess, if any, of such Excess Liquidation Preference
over the portions thereof which have either given rise to income allocations
under this Article IV or have been treated as a guaranteed payment pursuant to
clause (ii) above, which payment shall have the effects described in clauses
(i) through (iii) above.

(ii) If GS receives the Liquidation Preference or the proceeds from a Tag-Along
Sale (along with any applicable Make-Whole Payment) upon the occurrence of a
Liquidation Event in accordance with Section 4.5(c)(i), then, after payment in
full of the Liquidation Preference to GS, or the receipt by GS of the proceeds
from the Tag-Along Sale and any applicable Make-Whole Payment, GS will not be
entitled to receive any additional proceeds or Distributions with respect to
such Liquidation Event. Subject to Section 4.5(a), following payment in full of
the Liquidation Preference or the proceeds from a Tag-Along Sale (and any
applicable Make-Whole Payment) to GS pursuant to Section 4.5(c)(i), the
remaining Distributable Value from such Liquidation Event, if any,

 

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shall be distributed pro rata among the other Members (not including GS) based
on the number of Units then held by each such other Member as compared to the
aggregate number of Units then held by all such other Members (not including GS)
on a fully diluted membership interest basis.

(iii) If GS does not receive the Liquidation Preference or the proceeds from a
Tag-Along Sale (and any applicable Make-Whole Payment) upon the occurrence of a
Liquidation Event in accordance with Section 4.5(c)(i), subject to
Section 4.5(a), each Member (including GS) will be entitled to receive its pro
rata share (based on the number of Units then held by such Member as compared to
the aggregate number of Units then held by all Members (including GS) on a fully
diluted membership interest basis) of the Distributable Value from such
Liquidation Event. For avoidance of doubt, no Liquidation Preference will be
paid at any time after the date on which the Unrecovered Investment Balance has
been reduced to zero (0).

(d) Other Distributions. Except as otherwise set forth in Sections 4.5(b) and
4.5(c), and subject to Section 4.5(a), the Board may (but shall not be obligated
to) make Distributions at any time and from time to time as follows:

(i) Subject to Section 4.5(a) and except as provided in Section 4.5(d)(iii), all
Distributions made prior to April 1, 2012, shall be made pro rata among the
Members based on the number of Units then held by each such Member as compared
to the aggregate number of Units then held by all Members on a fully diluted
membership interest basis.

(ii) Subject to Section 4.5(a) and except as provided in Section 4.5(d)(iii),
all Distributions made on or after April 1, 2012, shall be made as follows:

(1) If, at any time prior to such Distribution, the Unrecovered Investment
Balance has been reduced to zero (0) or is less than or equal to the Projected
Investment Value, then each Member will be entitled to receive its pro rata
share (based on number of Units then held by such Member as compared to the
aggregate number of Units then held by all Members on a fully diluted membership
interest basis) of any Distributable Value (taking into account allocations of
Tax Credits pursuant to this Article IV as deemed Distributions), as and when
any such Distribution is made.

(2) If, at any time prior to such Distribution, the Unrecovered Investment
Balance has not been reduced to zero (0) and is greater than the Projected
Investment Value, then GS will be entitled to receive *. All remaining
Distributable Value to be Distributed to the Members and not Distributed to GS
pursuant to this Section 4.5(d)(ii)(2) shall be Distributed pro rata among the
other Members (not including GS) based on the number of Units then held by each
such other Member as compared to the aggregate number of Units then held by all
such other Members (not including GS) on a fully diluted membership interest
basis. For the avoidance of doubt, no Distributions shall be made under this
Section 4.5(d)(ii)(2) at any time after the date on which the Unrecovered
Investment Balance has been reduced to zero (0).

 

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(iii) Subject to Section 4.5(a), the Board may, from time to time in its sole
discretion, Distribute available Distributable Cash to the Members in accordance
with this Article IV for the purpose of payment of taxes.

(iv) The Board may, from time to time in its sole discretion, make Distributions
to GS in an amount greater than GS would otherwise be entitled to receive
pursuant to Sections 4.5(b) or 4.5(d) in order to decrease the Unrecovered
Investment Balance more quickly than would otherwise occur if GS were to receive
the amounts it would otherwise be entitled to pursuant to Sections 4.5(b) and
4.5(d), and in the event of such increased Distribution to GS, the amount of
such Distribution made to the other Members shall be decreased by the amount of
such increase, pro rata among the other Members based on the amount of the
Distribution each such other Member would have been entitled to but for the
increased Distribution to GS. If after giving effect to any such increased
Distribution to GS, the Unrecovered Investment Balance is less than the
Projected Investment Value, all future Distributions of Distributable Value to
GS shall be adjusted downward until such time as the Unrecovered Investment
Balance is equal to the Projected Investment Value.

(v) If the Company makes any indemnification payments to any holder of Class B
Units pursuant Section 8.1 of the Purchase Agreement, other than indemnification
payments made by the Company to reimburse such holder of Class B Units in
respect of payments made by any Investor Indemnified Party in respect of Third
Party Claims (as defined in the Purchase Agreement) and any reasonable related
costs and expenses thereto, the aggregate amount of such payments shall reduce
the Unrecovered Investment Balance in the same manner as a Distribution to any
holder of Class B Units (including GS) hereunder.

4.6 Incorrect Payments. To the extent any Distributions made pursuant to this
Article IV are incorrectly paid, as determined by the Board in good faith upon
review of the Company’s books and records, any Member who receives more than
should have been Distributed to such Member shall promptly repay the amount of
any such excess Distribution, and any such repaid amounts shall be redistributed
pursuant to this Article IV or, at the election of the Board, such excess
Distribution may be offset against future Distributions to the Member receiving
such excess Distribution.

4.7 Limitation Upon Distributions. No Distribution shall be declared and paid
unless (a) the Company remains in compliance with (i) all applicable Laws,
including the Act, and (ii) that certain Credit Agreement, dated as of March 31,
2011, between the Company and CoBiz Bank, a bank doing business in the State of
Colorado as Colorado Business Bank, and the Loan Documents (as defined therein),
and (b) such Distribution is permitted under the terms of all Indebtedness of
the Company and its Subsidiaries.

 

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4.8 Profit Sharing Program. The parties hereto acknowledge and agree that the
Board intends to implement a profit sharing program whereby up to * of the cash
equivalent of the Distributable Value (as determined by the Board in good faith)
of each Distribution made in accordance with this Agreement may be distributed
to certain officers, employees or contractors of the Company and its Affiliates,
as and when determined by the Board in good faith. Any amount distributed to
employees or contractors of the Company or its Affiliates pursuant to this
Section 4.8 shall be referred to herein as a “Profit Sharing Distribution
Amount.” Except for calculation of Distributable Value, the Profit Sharing
Distribution Amount shall not be taken into account when making calculations
with respect to Distributions made pursuant to Section 4.5, including
calculations of the Distributable Value, Projected Distributable Value,
Projected Investment Value and Unrecovered Investment Balance.

4.9 Withholding and Indemnification for Payments on Behalf of a Member. The
Company may withhold Distributions or portions thereof if it is required by Law
to make any payment to a governmental entity that is specifically attributable
to a Member (including federal withholding taxes, state personal property taxes,
state and local severance or extraction taxes and state unincorporated business
taxes), and each such Member hereby authorizes the Company to withhold from or
pay on behalf of or with respect to such Member any such payment that the Board
determines that the Company is required to withhold or pay with respect to any
amount distributable or allocable to such Member pursuant to this Agreement. Any
amounts withheld pursuant to this Section 4.9 will be treated as having been
Distributed to such Member. To the extent that the cumulative amount of such
withholding for any period exceeds the Distributions to which such Member is
entitled for such period, the Company will provide notice to such Member and
(i) such amount will be treated as having been Distributed to such Member as an
advance against the next Distributions that would otherwise be made to such
Member, and such amount shall be satisfied by offset from such next
Distributions or (ii) if requested in writing by the Board, contributed by such
Member to the Company within fifteen (15) days of demand therefore, provided
that any such contribution will not be treated as a Capital Contribution. If a
Member fails to comply with its obligation to contribute to the Company pursuant
to clause (ii) above, such Member shall indemnify the Company in full for the
entire amount paid by the Company (including interest, penalties and related
expenses). Each Member will furnish the Board with such information as may
reasonably be requested by the Board from time to time to determine whether
withholding is required and the amount thereof, and each Member will promptly
notify the Board if such Member determines at any time that it is subject to
withholding. A Member’s obligation to indemnify and make contributions to the
Company under this Section 4.9 shall survive the termination, dissolution,
liquidation and winding up of the Company, and for purposes of this Section 4.9,
the Company shall be treated as continuing in existence. The Company may pursue
and enforce all rights and remedies it may have against each Member under this
Section 4.9 if a Member does not comply with the provisions in this Section 4.9,
including instituting a lawsuit to collect such contribution and indemnification
amounts required to be paid to the Company, with interest calculated at a rate
equal to the Prime Rate plus three (3) percentage points per annum (but not in
excess of the highest rate per annum permitted by Law), compounded on the last
day of each Fiscal Quarter.

 

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ARTICLE V

BOARD OF MANAGERS; POWERS AND DUTIES OF MANAGERS;

APPOINTMENT OF OFFICERS

5.1 Board of Managers.

(a) General. The business and affairs of the Company shall be managed by a Board
of Managers (the Board of Managers is sometimes referred to herein as the
“Board” and the Persons appointed to the Board are referred to as the
“Managers”). Except as specifically provided in this Agreement, the Board may
exercise all powers of the Company and may do all such lawful acts and things as
are not specifically required by statute or by this Agreement to be exercised or
done by the Members. Unless specifically approved by the Board pursuant to the
last sentence of this Section 5.1(a), no Manager in his or her individual
capacity shall have the authority to manage the Company or approve matters
relating to, or otherwise to bind the Company, such powers being reserved to the
Board and to such Officers and other agents of the Company as may be designated
by the Board. The Board shall manage the affairs of the Company in a prudent and
businesslike fashion and, subject to Section 5.6, shall use reasonable efforts
to carry out the purposes and Business of the Company. The Board may delegate
authority to act to any one Manager, in accordance with the provisions of this
Agreement.

(b) Duties. Each Manager shall carry out his or her respective duties in good
faith, in a manner that he or she believes to be in the best interests of the
Company, and with such care as an ordinarily prudent Person in a like position
would use under similar circumstances. Each Manager shall devote such time to
the Business and affairs of the Company as such Manager may determine, in such
Manager’s reasonable discretion, is necessary for the efficient carrying on of
the Company’s Business.

(c) Appointment and Qualifications. The Board shall consist of six (6) Managers.
Initially, ADA shall be entitled to appoint three (3) Managers (the “ADA
Managers”), and NexGen shall be entitled to appoint three (3) Managers (the
“NexGen Managers”). This arrangement shall continue for so long as ADA and
NexGen hold an equal number of Units. In the event that ADA and NexGen do not
hold an equal number of Units, either ADA or NexGen, whichever holds the lesser
number of Units, shall immediately, and without any further action by the
Company, the Board or any other Member, relinquish the right to appoint one
(1) Manager and the other, ADA or NexGen ( whichever holds the greater number of
Units), shall immediately be entitled to appoint one (1) additional Manager. If
either ADA or NexGen files or is otherwise subject to a Bankruptcy, the Member
subject to such Bankruptcy shall immediately, and without any further action by
the Company, the Board or any Member, relinquish the right to appoint one
(1) Manager and the other, ADA or NexGen (whichever is not subject to the
Bankruptcy), shall immediately be entitled to appoint one (1) additional Manager
for so long as the other Member is subject to such Bankruptcy. Managers shall be
appointed by ADA and NexGen annually, for the term beginning with the annual
meeting of the Board as described in Section 5.2(a)(ii), and each Manager shall
hold office until his or her successor shall have been appointed and qualified
or until his or her earlier death, resignation or removal. Managers shall be
natural persons, over the age of eighteen (18), but Managers need not be Members
of the Company or residents of the State of Colorado. The Managers as of and
immediately after the Effective Date are listed on the attached Schedule 5.1(c).

 

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(d) Board Observer. The holders of a majority of the Class B Units outstanding
from time to time shall be entitled to designate one (1) non-voting observer to
the Board to observe all meetings of the Board and all committees thereof (the
“Board Observer”). The Board Observer shall receive copies of all written
materials distributed to the Managers either at or in advance of Board or
committee meetings, including notices of such meetings, at the same time such
written materials are distributed to the Managers.

(e) Vacancies. In the event of a vacancy in the office of any ADA Manager, a
successor shall be appointed by ADA to hold office for the unexpired term of
such Manager (except in the case of a vacancy resulting from a Non-payment
Election, in which case the vacancy shall be filled by ADA pursuant to
Section 6.10). In the event of a vacancy in the office of any NexGen Manager, a
successor shall be appointed by NexGen to hold office for the unexpired term of
such Manager. In the event of a vacancy in the Board Observer position, a
successor may be appointed by the holders of a majority of the Class B Units
then outstanding.

(f) Removal. Except as otherwise provided in this Section 5.1(f), an ADA Manager
may only be removed by ADA, a NexGen Manager may only be removed by NexGen
(except that upon a Non-payment Election ADA shall have the right to remove one
(1) NexGen Manager and fill the resulting vacancy with one (1) Manager appointed
by ADA, who shall thereafter be deemed an “ADA Manager” for all purposes
hereunder), and the Board Observer may only be removed by the holders of a
majority of the Class B Units then outstanding. Notwithstanding the foregoing,
an individual Manager or the Board Observer may be removed by the affirmative
vote of the Board: (i) if such Manager or Board Observer, as the case may be, is
an employee of the Company, upon the occurrence of an event that would be cause
for termination of the Manager’s or Board Observer’s, as the case may be,
employment for cause; (ii) if the Manager or Board Observer, as the case may be,
is not an employee of the Company, (A) if the Manager willfully breaches or
habitually neglects his or her duties pursuant to this Agreement, (B) if the
Manager or Board Observer, as the case may be, commits an act of dishonesty or
moral turpitude with respect to the Company or its Business, or fraud outside
Company Business (as finally determined by a non-appealable order of a court of
competent jurisdiction or as determined by a unanimous Board decision without
voting privilege from the suspected Manager, if applicable), or (C) as a result
of the Manager’s repeated failure to comply with the policies and procedures
adopted from time to time by the Company or the terms and conditions of this
Agreement and which adversely affect the performance of the Manager’s duties or
responsibilities; or (iii) due to the Disability of the Manager or Board
Observer, as the case may be.

(g) Resignation. A Manager may resign at any time by giving written notice to
that effect to the Board. Any such resignation shall take effect at the time of
the receipt of that notice or any later effective time specified in that notice,
and, unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any vacancy caused by
any such resignation or by the death of any Manager or any vacancy for any other
reason shall be filled as provided in Section 5.1(e) hereof, and any Manager so
elected to fill any such vacancy shall hold office until his or her successor is
elected and qualified or until his or her earlier death, resignation or removal.

 

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5.2 Actions by Board.

(a) Action by Meetings.

(i) All meetings of the Board shall be held at the principal office of the
Company or at such other place within or outside of the State of Colorado as may
be determined by the Board in accordance with this Article V and set forth in
the respective notice or waiver of notice of such meeting.

(ii) The annual meeting of the Board shall be held immediately following the
annual meeting of the Members as set forth in Article VI. Such annual meeting of
the Board shall be conducted in the same manner as provided in this Agreement
for special meetings of the Board, except that the purposes of such annual
meeting need be enumerated in the notice of such meeting only to the extent
required by Law in the case of annual meetings.

(iii) Special meetings of the Board may be called by any Manager upon at least
five (5) business days (if the meeting is to be held in person) or three
(3) business days (if the meeting is to be held by conference, telephone or
similar communications) oral or written notice to the Managers, or upon such
shorter notice as may be approved by all of the Managers. Any Manager may waive
such notice as to himself or herself. A record shall be maintained of each
meeting of the Board. Business transacted at all special meetings shall be
confined to the purposes stated in the notice of such meeting.

(iv) Any meeting of the Board may be held in person and/or by means of a
conference, telephone or similar communication equipment by means of which all
Managers and other persons participating in the meeting can hear each other, and
such telephone or similar participation in a meeting shall constitute presence
in person at the meeting.

(v) Written or printed notice stating the place, day and hour of the meeting
and, in the case of special meetings, the purpose or purposes for which the
meeting is called, shall be delivered not less than five (5) days before the
date of the meeting (except as otherwise provided in clause (iii) above), and
may be given telephonically, via facsimile, personally, by mail, by commercial
delivery service or electronic mail, by or at the direction of the person
calling the meeting, to each Manager and the Board Observer. If given by a means
other than United States mail, such notice will be effective only upon receipt
by the Manager to whom given during normal business hours on a business day,
unless actually received by the Manager during a time other than normal business
hours on a business day or on a day other than a business day, in which case
notice will be deemed given as of the start of the next business day. If sent by
United States mail, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the Manager at his or her last known
address as it appears

 

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on the records of the Company, with postage prepaid. If given telephonically, a
confirmation of the telephone call shall be delivered via mail, facsimile or
electronic mail at the last address, facsimile number or electronic mail address
shown in the records of the Company for the Manager being notified. Attendance
of a Manager at any meeting shall constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.

(vi) A majority of the Managers shall constitute a quorum for the conduct of
business at a meeting of the Board, and a majority of the members of any
committee of the Board shall constitute a quorum for the conduct of business at
a meeting of such committee. Once a quorum is present at the meeting of the
Board or a committee thereof, the subsequent withdrawal from the meeting of any
Manager or committee member, as applicable, prior to adjournment, or the refusal
of any Manager or committee member, as applicable to vote, shall not affect the
presence of a quorum at the meeting. If, however, such quorum shall not be
present at any meeting of the Board or committee thereof, the Managers or
committee members, as applicable, at such meeting shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite number of Managers or committee members shall
be present.

(vii) At any meeting of the Board or a committee thereof at which a quorum is
present, the affirmative vote of a majority of the Managers or committee
members, as applicable, shall be the act of the Board or committee, unless the
vote of a greater number is required by this Agreement. For purposes of voting
of the Board or a committee thereof on each matter to be brought before the
Board or such committee for a vote, each Manager or committee member, as
applicable, shall have one (1) vote. In the event of a Stalemate, the provisions
of Section 5.3 shall apply to resolve the Stalemate.

(viii) Minutes of all meetings of the Board and each committee thereof shall be
kept and distributed to each Manager and the Board Observer as soon as
reasonably practicable following each meeting. If no objection is raised in
writing following receipt of minutes or in any event at the next meeting of the
Board or committee, as applicable, then such minutes shall be deemed to be
accurate and shall be binding on the Managers or members of the committee, as
applicable, and the Company with respect to the matters dealt with therein.

(ix) Any Manager or the Member who elected such Manager may designate in writing
an individual to act as the temporary substitute for such Manager at any meeting
of the Board which such Manager is unable to attend, and attendance at any
meeting of the Board by any such designated individual shall be deemed to
constitute attendance at such meeting by the Manager for whom such individual is
designated. Any such designated individual who attends a meeting of the Board as
a temporary substitute as aforesaid shall have all the powers that the absent
Manager has in respect of that meeting and any matters to be acted upon at such
meeting.

 

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(b) Actions Without a Meeting and Telephone Meetings. Notwithstanding any
provision contained in this Article V, all actions of the Board provided for
herein may be taken by written consent without a meeting, or any meeting thereof
may be held by means of a conference telephone or other method or device
provided that all Managers participating may simultaneously hear each other
during the meeting (and any Manager participating through such means will be
deemed to be present in person at the meeting). Any such action to be taken by
the Board without a meeting shall be effective only if the written consent or
consents are in writing, setting forth the action so taken, and are signed by at
least one ADA Manager, on behalf of the ADA Managers, and at least one NexGen
Manager, on behalf of the NexGen Managers. In the event action is taken by
written consent executed by less than all of the Managers, the Managers who did
not participate in taking the action shall be given written notice of the action
not more than ten (10) days after the taking of the action without a meeting;
provided that the failure to give such notice will not invalidate the action so
taken. The Board Observer shall be given written notice of all action taken by
written consent of the Board not more than five (5) days after the taking of
such action; provided that the failure to give such notice will not invalidate
the action so taken.

(c) Access to Information. Upon request, the Officers shall supply to a Member
or Manager or the Board Observer (i) any information required to be available to
the Members under the Act, and (ii) any other information requested by such
Member or Manager or the Board Observer regarding the Company or its activities,
provided that obtaining the information described in this clause (ii) is not
unduly burdensome to the Company. During ordinary business hours, each Member
and Manager and their authorized representative shall have access to all books,
records and materials in the Company’s offices regarding the Company or its
activities.

(d) Limitation on Actions. Nothing contained herein shall be construed as
permitting any action to be taken by the Managers unless and until any required
approvals of the Members have been obtained pursuant to Section 6.1.

(e) Insurance. The Company shall maintain or cause to be maintained in force at
all times, for the protection of the Company, the Managers and the Members to
the extent of their insurable interests, such insurance as the Board believes is
warranted for the operations being conducted.

5.3 Stalemate. In the event the Managers are unable to agree upon a matter to be
decided by the Board (a “Stalemate”), the Managers agree to engage in
discussions to attempt in good faith to negotiate a resolution of the matter in
question. The meeting to do so shall be held promptly, but in no event later
than ten (10) business days after the determination that a Stalemate on an issue
has occurred (a “Stalemate Determination”). If the Managers are unable to
resolve the Stalemate after reasonable attempts have been made, which shall be
no more than thirty (30) days after the date of the Stalemate Determination
(unless a longer or shorter time is agreed upon by unanimous consent of the
Board), the Board shall utilize the services of the American Arbitration
Association (“AAA”), in Denver, Colorado, to appoint an arbitrator to resolve
the Stalemate. The Board shall immediately contact the AAA and open a proceeding
to appoint a single arbitrator to decide the Stalemate. The arbitrator so
appointed shall be chosen

 

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by the Managers by mutual agreement from a list of proposed arbitrators
designated by the AAA, who have expertise in the area of the Company’s Business,
and to the extent feasible, taking into account the specific matter to be
determined by the arbitrator. If the Managers cannot agree on an arbitrator by
consent within ten (10) business days of receipt of the proposed list of
arbitrators, one shall be appointed by the AAA in accordance with its Commercial
Rules. The Board and the arbitrator shall meet as soon as practicable after the
appointment of the arbitrator, and shall agree on the parameters of the
proceeding to decide the Stalemate, with emphasis on a determination being made
in as expeditious and cost-effective a manner as possible. Each of the Managers
shall be entitled to present relevant information to assist the arbitrator in
reaching a decision. The decision of the arbitrator shall be in writing and
shall be binding on the Board and the Members. No appeal of such decision shall
be taken to a court or other adjudicatory body by any Manager, Member or other
Person. All costs and expenses of the arbitration shall be born by the Company.

5.4 Appointment of Committees and Officers.

(a) In the event the Board determines that it is reasonably necessary or
appropriate for the conduct of the Business of the Company (including, for
example, audit review, compensation recommendations, execution and delivery of
contracts or other documents, federal or applicable state income or other tax
returns), the Board may appoint a committee of the Managers or an officer or
officers (“Officer”) and, if so appointed, such committees and/or Officers shall
have such duties and authority as provided by the Board upon such appointment.
Committee members and Officers shall serve at the discretion of the Board and
may be removed with or without cause upon approval of the Board, subject,
however, to the terms and conditions of any applicable employment agreement. The
salaries or other compensation, if any, of the Officers of the Company shall be
fixed from time to time by the Board. Notwithstanding the foregoing, any
Officers or committees appointed and acting pursuant to this Section 5.4 shall
be subject to the applicable limitations and approval requirements set forth in
Sections 5.6 and 6.1.

(b) No third party dealing with the Company shall be required to ascertain
whether an Officer is acting in accordance with the provisions of this
Agreement. All third parties may rely on a document executed by an Officer as
binding on the Company. This Section 5.4(b) shall not apply to third parties who
are Affiliates of a Member, Manager or Officer.

5.5 Compensation. The Managers shall be entitled to such compensation as shall
be determined by all of the Members from time to time.

5.6 Board Decisions. No Officer, Manager, Member or any other Person shall have
the authority to bind or take any action on behalf of the Company with respect
to any of the following matters unless such matter, in each case and from time
to time, has been approved by the Board:

(a) any Change of Control of the Company, or any sale, lease, license or other
Transfer of all or substantially all of the assets or equity, as applicable, of
any Subsidiary of the Company or any division or business segment of the Company
or any Subsidiary of the Company that would result in proceeds to the Company or
such Subsidiary, as applicable, in excess of the Board Decision Threshhold;

 

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(b) the purchase, lease or other acquisition of real property the cost of which
exceeds the Board Decision Threshold;

(c) the incurrence of any Indebtedness by the Company (including contractual
vendor financing) in any Fiscal Year in an aggregate amount which exceeds the
Board Decision Threshold;

(d) the creation of any Lien on any property or assets of the Company other than
(i) purchase money security interests and other Liens created or existing at the
time of acquisition of an asset, but only to the extent the aggregate
Indebtedness of the Company secured by all such purchase money security
interests and such other Liens does not exceed at any time the Board Decision
Threshold; and (ii) material mans’, mechanics’, contractors’, operators’, tax
and similar Liens or charges arising in the ordinary course of business or by
operation of law with respect to amounts not yet due and payable;

(e) the providing of any guaranty (or other obligation that, in economic effect,
is substantially equivalent to a guaranty) of any amount owed by or any
obligation of any Person, but only to the extent the aggregate amount of such
guaranty or other obligation exceeds the Board Decision Threshold;

(f) the settlement of any claim against the Company for a settlement in excess
of the Board Decision Threshold;

(g) the commencement of any lawsuit, arbitration or other legal action against
any Person; provided that a suit or legal action against a Member does not
require Board approval unless the purpose of such action is to collect amounts
due the Company from the Member or to enforce any right of the Company
hereunder; provided further that any Member shall be entitled to bring a suit on
behalf of itself, or on behalf of the Company as, or in the nature of, a
derivative suit, against another Member;

(h) the Company entering into a business or expanding the business of the
Company outside the scope of the Business;

(i) entering into any futures, swap or other hedging arrangements of any type,
or financial derivative instruments or agreements of any type where the total
potential liability exposure of the Company exceeds the Board Decision
Threshold;

(j) the approval of any contract or transaction between the Company and any
Member or Manager or their respective Affiliates, or any amendment or
modification of any such contract or transaction;

(k) any removal of or designation of a successor to the TMP pursuant to
Section 7.3;

 

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(l) the designation, removal or replacement of any Officer pursuant to
Section 5.4 and the approval of any compensation of any Officer;

(m) the filing by the Company of any petition for relief under Bankruptcy Law or
any other present or future federal or state insolvency, bankruptcy or similar
Law;

(n) making any other decision with respect to the Company that specifically
requires the approval of the Board or Members pursuant to this Agreement;

(o) issuance or grant, or commitment to issue or grant, to any Person of (i) any
additional Units (whether or not as Voting Units) or other security of the
Company, (ii) the right to receive or subscribe for Units, or (iii) any security
convertible into or exchangeable for Units or other securities of the Company
that is not issued and outstanding as of the Effective Date; or

(p) entering into any contract, agreement or other obligation of any nature or
duration in which the aggregate financial obligation of the Company exceeds or
could potentially exceed the Board Decision Threshold.

5.7 Exculpation; Limitation of Liability. Except as otherwise provided herein or
in the other Transaction Documents, and to the maximum extent permitted by the
Act, no present or former Manager or Officer, nor any such Manager’s Affiliates,
employees, agents or representatives, shall be liable to the Company or to any
Member for any good faith act or omission performed or omitted, nor for any
errors of judgment, by such Person in its capacity as a Manager or Officer;
provided that, except as otherwise provided herein, such limitation of liability
shall not apply to the extent the act or omission was attributable to such
Person’s gross negligence or reckless conduct, intentional misconduct or knowing
violation of Law, in each case as determined by a final judgment, order or
decree of an arbitrator or a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected).

5.8 Reliance. In performing his or her duties, each of the Managers and Officers
shall be entitled to rely in good faith on the provisions of this Agreement and
on information, opinions, reports or statements (including financial statements
and information, opinions, reports or statements as to the value or amount of
the assets, liabilities, Profit or Loss of the Company or any facts pertinent to
the existence and amount of assets from which distributions to Members might
properly be paid), of the following other Persons or groups: (i) one or more
other Managers, Officers or employees of the Company, (ii) any attorney,
independent accountant or other Person employed or engaged by the Company, or
(iii) any other Person who has been selected with reasonable care by or on
behalf of the Company, in each case as to matters which such relying Person
reasonably believes to be within such other Person’s professional or expert
competence. No individual who is a Manager or an Officer, or any combination of
the foregoing, shall be personally liable under any judgment of a court, or in
any other manner, for any debt, obligation or liability of the Company, whether
that debt, liability or other obligation arises in contract, tort or otherwise,
solely by reason of being a Manager or an Officer or any combination of the
foregoing.

 

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ARTICLE VI

MEMBERS; TYPES OF UNITS;

ISSUANCE OF UNITS AND OPTIONS TO PURCHASE UNITS

6.1 Authority and Power. Except as expressly provided in this Section 6.1, it is
not intended that the Members will participate in the conduct of the business of
the Company or have any power or authority, by reason of their status as a
Member, to bind or obligate the Company or to take part in the operations,
activities, contracts, decisions or other matters involving the business of the
Company. Notwithstanding anything else herein, the Company and each Member
holding Class A Units hereby agree not to consummate or permit any Change of
Control of the Company to occur prior to *.

(a) General Member Approval. The Company shall not take or permit to be taken
any of the following actions without first having obtained the affirmative vote
or written consent of all of the Members (including both Class A Members and
Class B Members):

(i) effect a Change of Control of the Company; provided, however, that any
Change of Control of the Company effected after December 31, 2012 shall require
only the vote or consent of the Class A Members;

(ii) act in contravention of or in a manner not authorized by this Agreement;

(iii) liquidate, dissolve or wind up the Company;

(iv) file a voluntary petition or otherwise initiate proceedings to have the
Company adjudicated bankrupt or insolvent, or consent to the institution of
Bankruptcy or insolvency proceedings against the Company, or file a petition
seeking or consenting to reorganization or relief of the Company as debtor under
any applicable federal or state Law relating to Bankruptcy, insolvency, or other
relief for debtors with respect to the Company, or seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, liquidator (or other similar official) of the Company or of all or
any substantial part of the properties and assets of the Company, or make any
general assignment for the benefit of creditors of the Company, or admit in
writing the inability of the Company to pay its debts generally as they become
due or declare or effect a moratorium on the Company debt or take any action in
furtherance of any such action;

(v) amend or modify in any way this Agreement or the Articles (other than minor
clarification changes that do not result in any adverse consequences to the
Class B Members);

(vi) change the purposes of the Company from the purposes stated in Section 2.6;

 

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(vii) issue or grant, or commit to issue or grant, to any Person (i) any
additional Units (whether or not as Voting Units) or other securities of the
Company, (ii) the right to receive or subscribe for Units, or (iii) any security
convertible into or exchangeable for Units or other securities of the Company
that is not issued and outstanding as of the Effective Date;

(viii) perform any act that would subject any Member to any liability to which
such Member has not consented; or

(ix) change the Accounting Firm or change the certified public accountant
appointed to audit the annual financial statements of the Company, other than to
one of the big four, in accordance with Section 7.2(c).

(b) GS Approval. In addition to the actions requiring prior Member approval
pursuant to Section 6.1(a), for so long as any Class B Units remain outstanding,
neither the Company nor any Member shall take or permit to be taken any of the
following actions without first having obtained the written consent of all of
the Class B Members:

(i) engage in any transaction or series of related transactions with Affiliates
of the Company; provided, however, that the Company and its Subsidiaries may
continue to perform in accordance with agreements with Affiliates of the Company
that are in existence on the Effective Date and described in Schedule 6.11(a);

(ii) consummate a Liquidation Event (other than a transaction or series of
related transactions that constitutes a Change of Control of the Company, but to
which the Company is not a party) that does not involve payment to the Members
holding Class B Units of the entire remaining amount, if any, of the Unrecovered
Investment Balance after giving effect to such Liquidation Event;

(iii) settle any material civil litigation or settle any criminal proceeding;

(iv) materially change the business of the Company;

(v) acquire equity or assets of another Person in a transaction or transactions
involving, individually or in the aggregate, more than twenty-five percent
(25%) of the Distributable Cash for the year in which such acquisition occurs;

(vi) the Company or any Subsidiary of the Company incurring any Indebtedness,
other than Indebtedness incurred to the Company or a Subsidiary of the Company,
if the Unrecovered Investment Balance at the time of such incurrence (pro forma
for any Distributions made out of such Indebtedness) has not been reduced to
zero (0) and is greater than the Projected Investment Value;

(vii) sell, lease, license or otherwise Transfer (other than a pledge, grant of
security interest, or similar encumbrance in connection with an incurrence of
Indebtedness that does not require the written consent of all Class B Members
pursuant to

 

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clause (vi) above) all or substantially all of the assets or equity, as
applicable, of any Subsidiary of the Company or any division or business segment
of the Company or any Subsidiary of the Company, except in connection with any
monetization transaction in connection with the Business of the Company, and
except for transfers of assets from the Company or any Subsidiary of the Company
to any Subsidiary of the Company or the Company in connection with the
development of Facilities in the ordinary course of the Company’s Business;

(viii) adjust the sharing ratio of any member of any Subsidiary of the Company;

(ix) make, or permit any member of any Subsidiary of the Company to make, a
capital contribution to any Subsidiary of the Company, other than capital
contributions (1) made pro rata in accordance with the capital accounts of the
members of such Subsidiary as of the Effective Date and (2) not in excess of
$5,000 per Subsidiary per year for general corporate purposes or the development
of Facilities in the ordinary course of the Company’s Business in amounts
determined in good faith as reasonably necessary for such development;

(x) amend or modify in any way the operating agreement or articles of
organization of any Subsidiary of the Company, but only if such amendment or
modification has a negative effect on the economic or voting rights of the
Company with respect to such Subsidiary; or

(xi) a NexGen Change of Control on or before December 31, 2012.

(c) Notwithstanding anything else in this Agreement, the Company and its
Subsidiaries shall not be prohibited from incurring Indebtedness if the
Unrecovered Investment Balance at the time of such incurrence (pro forma for any
Distributions to the Members made out of the proceeds of such Indebtedness) has
been reduced to zero (0) or is less than or equal to the Projected Investment
Value.

6.2 Voting; Approval of the Members. Except as otherwise provided herein, each
Member holding Voting Units shall initially be entitled to one vote for each
Voting Unit held by such Member on each matter expressly provided by this
Agreement to be brought before the Members for a vote, approval or consent. At
such time as the Sharing Ratios of the Members holding Voting Units are no
longer directly proportional to the portion of Voting Units held by the Members,
the Members holding Voting Units shall be entitled to cast that number of votes
based on their respective Sharing Ratios, with the total number of votes to be
cast equal to one hundred (100), and each Member casting that number of votes
equal to their respective Sharing Ratios (including fractional votes), expressed
as a percentage.

6.3 Limitation of Liability. Except as otherwise provided in the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Member shall be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a

 

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Member of the Company, other than such Member’s obligation to make Capital
Contributions to the Company pursuant to the terms and conditions hereof. Except
as otherwise provided in this Agreement, a Member’s liability (in its capacity
as a Member) for debts, liabilities and losses of the Company shall be limited
to such Member’s share of the Company’s assets.

6.4 Actions by Members.

(a) Action by Meetings.

(i) All meetings of the Members shall be held at the principal office of the
Company or at such other place within or without the State of Colorado as may be
determined by the Board in accordance with this Article VI and set forth in the
notice or waiver of notice of such meeting. All Members shall be entitled to
attend meetings of the Members.

(ii) The annual meeting of the Members shall be held at such time and date as
shall be designated by the Chairman, from time to time, and stated in the notice
of the meeting. The “Chairman” shall be elected by majority vote of the Members
and shall continue in such capacity until a successor is elected; provided that
the Chairman may be removed and replaced at any time, with or without cause, by
majority vote of the Members. Until otherwise designated, Charlie McNeil shall
serve as Chairman. Such annual meeting shall be called in the same manner as
provided in this Agreement for special meetings of the Members, except that the
purposes of such meeting need be enumerated in the notice of such meeting only
to the extent required by Law in the case of annual meetings.

(iii) Special meetings of the Members may be called by the Chairman, the
Managers (by vote of a majority) or any Member holding at least ten percent
(10%) of the then outstanding Voting Units. Members who own only Non-voting
Units or who own less than ten percent (10%) of the then outstanding Voting
Units shall not be entitled to call a meeting of the Members. Non-voting Units
will not be counted for purposes of determining the ten percent
(10%) requirement. Business transacted at all special meetings shall be confined
to the purposes stated in the notice of such meeting.

(iv) Written or printed notice stating the place, day and hour of the meeting
and, in the case of special meetings, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the date of the meeting, either personally or by mail, by or at
the direction of the person calling the meeting, to each Member. If delivered
personally, such notice shall be deemed to be delivered when actually delivered
to the recipient, and, if mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the Member at his address
as it appears on the transfer records of the Company, with postage prepaid.

(v) Members holding a majority of the outstanding Voting Units of the Company at
the time of the meeting shall constitute a quorum for the purpose of

 

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conducting business at the meetings of the Members, except as otherwise provided
by Law or the Articles. Once a quorum is present at the meeting of the Members,
the subsequent withdrawal from the meeting of any Member prior to adjournment or
the refusal of any Member to vote shall not affect the presence of a quorum at
the meeting. If, however, such quorum shall not be present at any meeting of the
Members, the Members entitled to vote at such meeting shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the holders of the requisite amount of Units shall be present
or represented. Except for any matter for which the affirmative vote of the
holders of a specified portion of the Units entitled to vote is specifically
required by the Act, the Articles or this Agreement, at any meeting of the
Members at which a quorum is present, the vote of the Members owning Voting
Units entitled to cast a majority of the votes entitled to be cast by all Voting
Units represented at the meeting (in person or by proxy) shall be the act of the
Members. Members may vote or appear at a meeting of the Members either in person
or by written proxy held by and appointing another Member as proxy, provided
that the Member holding the proxy is present in person or by telephone. For
avoidance of doubt, except as otherwise specifically provided in this Agreement
or required by the Act, only Members holding Voting Units shall be entitled to
vote on or consent to any item requiring the vote or consent of the Members, and
such Members shall be entitled to vote and/or consent only with respect to the
Voting Units held by such Members and not with respect to any Non-voting Units
held by such Members.

(vi) The Chairman shall make, at least ten (10) days before each meeting of
Members, a complete list of the Members entitled to vote at such meeting, or any
adjournment of such meeting, arranged in alphabetical order, with the address
of, and the Units held by each, Member, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the registered office
of the Company and shall be subject to inspection by any Member at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection of any
Member during the whole time of the meeting. However, failure to comply with the
requirements of this clause (vi) shall not affect the validity of any action
taken at such meeting.

(vii) The Company shall be entitled to treat the holder of record of any Units
as the holder in fact of such Units for all purposes, and accordingly shall not
be bound to recognize any equitable or other claim to or interest in such Units
on the part of any other person, whether or not it shall have express or other
notice of such claim or interest, except as expressly provided by this Agreement
or the laws of the State of Colorado.

(b) Actions Without a Meeting and Telephone Meetings. Notwithstanding any
provision contained in this Article VI, all actions of the Members provided for
herein may be taken by written consent without a meeting, or any meeting of the
Members may be held by means of a conference telephone or other method or device
provided that all Members participating may simultaneously hear each other
during the meeting (and any Member participating through such means will be
deemed to be present in person at the meeting). Any

 

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such action to be taken by the Members without a meeting shall be effective only
if the written consent or consents are in writing, set forth the action so
taken, and are signed by the holder or holders of Units constituting not less
than the minimum votes that would be necessary to take such action at a meeting
at which the holders of all Units entitled to vote on or consent to the action
were present and voted. In the event action is taken by written consent executed
by less than all of the Members entitled to vote on such action, the Members who
did not participate in taking the action shall be given written notice of the
action not more than then (10) days after the taking of the action without a
meeting; provided that the failure to give such notice will not invalidate the
action so taken.

6.5 Authorized Units; Modification of Units; Issuance of Additional Units;
Admission of Additional Members. By amendment to this Agreement, the Members
shall determine, from time to time, the number of authorized Units of the
Company and the attributes of any such authorized Units. On the date of this
Agreement, the Members agree that Exhibit A reflects the number and class of
Units authorized, issued and outstanding. Additional Members may be admitted,
existing Units may be modified, and additional Units may be issued and/or
created only as approved by the Members; provided that the modification of any
existing Units that would be adverse to the holders of such Units shall require
the prior written approval of a majority of the Units so affected; and provided
further that issuance of additional Units is subject to Member approval pursuant
to Section 6.1(a). When any such action is so approved and when an additional
Member (or Members) is admitted, Exhibits A and B shall be updated to reflect
the appropriate information, and as so amended, shall be attached to, and become
a part of, this Agreement. The foregoing notwithstanding, no Person shall become
a Member, by Transfer of Units to such Person, issuance of Units to such Person
or otherwise, until such Person has agreed to be bound by the terms and
conditions of this Agreement by either executing a counterpart hereof or
executing a joinder to this Agreement, in form and substance acceptable to the
Board.

6.6 Preemptive Rights.

(a) Each Member shall have the preemptive right to acquire its pro rata share,
based on the number of Units then held by each such Member as compared to the
aggregate number of Units then held by all Members on a fully diluted membership
interest basis, of any Units or other securities which are proposed to be issued
by the Company from and after the Effective Date, on the same terms and
conditions set by the Board and as notified pursuant to Section 3.2.

(b) If the Company proposes to issue any Units or other securities, it shall
give each Member written notice of its intention to do so, describing the Units
or other securities to be issued, the price of such Units or other securities
and the terms and conditions upon which the Company proposes to issue the same.
Each Member shall have fifteen (15) days from the giving of such notice to agree
to purchase its pro rata share of the Units or other securities for the price
and upon the terms and conditions specified in the notice by giving written
notice to the Company and each other Member and stating therein the quantity of
Units or other securities to be purchased. The purchase price for all Units or
other securities purchased by a Member under this Section 6.6 shall be payable
in cash. Notwithstanding the foregoing, the Company shall not be required to
offer or sell such Units or other securities to any Member who would cause the
Company to be in violation of applicable federal or state securities Laws by
virtue of such offer or sale.

 

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(c) If not all of the Members elect to purchase their pro rata share of the
Units or other securities to be issued by the Company, then the Company shall
promptly notify in writing the Members who do so elect to purchase their pro
rata share and shall offer such Members the right to acquire the unsubscribed
Units or other securities. Each Member to which such offer is made shall have
five (5) days after receipt of such notice to notify the Company of its election
to purchase all or a portion of the unsubscribed Units or other securities. If
the Members fail to exercise in full the preemptive rights provided in this
Section 6.6, the Company shall have ninety (90) days following delivery of the
notice pursuant to Section 6.6(b) to issue and sell the unsubscribed Units or
other securities, at a price and upon terms and conditions not materially more
favorable to the purchasers thereof than specified in the Company’s notice to
the Members pursuant to Section 6.6(b). If the Company has not sold such Units
or other securities within ninety (90) days of delivery of the notice provided
pursuant to Section 6.6(b), the Company shall not thereafter issue or sell any
Units or other securities without first offering such Units or other securities
to the Members as provided in this Section 6.6.

(d) The preemptive rights of each Member under this Section 6.6 may be
transferred only to the Persons, and shall be subject to the same restrictions,
as any Transfer of Units pursuant to Article IX.

6.7 Rights Attributable to Units. Units created or issued pursuant hereto will
have such rights, including voting rights, as approved by the Board. If any
Units issued by the Company in accordance herewith have any characteristics
which are different from previously issued Units (other than voting rights),
such Units shall be described in an amendment or addendum to this Agreement,
which shall be approved by the Board and all of the Members.

6.8 Certificates Representing Units. The Board may, at its election and
discretion, issue or cause the Company to issue to the Members certificates
representing Units. Any certificates representing Units shall bear the following
legend:

“THE UNITS REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
            ,        , HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR UNDER APPLICABLE STATE SECURITIES LAWS (“STATE
ACTS”) AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR STATE
ACTS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE TRANSFER OF THE UNITS
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE
SECOND AMENDED AND RESTATED OPERATING AGREEMENT, AS AMENDED, MODIFIED AND/OR
RESTATED FROM TIME TO TIME, OF CLEAN COAL SOLUTIONS, LLC (THE “COMPANY”), BY AND
AMONG THE COMPANY AND ITS MEMBERS (THE “LLC AGREEMENT”), A COPY OF WHICH SHALL
BE FURNISHED BY THE COMPANY UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

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To the extent applicable, certificates representing Units may also bear a legend
in substantially the following form:

“THE UNITS REPRESENTED BY THIS CERTIFICATE MAY ALSO BE SUBJECT TO CERTAIN
REDEMPTION RIGHTS, FORFEITURE PROVISIONS, RESTRICTIONS ON TRANSFER, DRAG-ALONG
RIGHTS, TAG-ALONG RIGHTS, VOTING AND OTHER TERMS AND CONDITIONS SET FORTH IN THE
LLC AGREEMENT AND/OR A SEPARATE AGREEMENT WITH THE HOLDER, A COPY OF WHICH SHALL
BE FURNISHED BY THE COMPANY UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

If a Member holding Units evidenced by a certificate delivers to the Company an
opinion of counsel, satisfactory in form and substance to the Board (which
opinion requirement may be waived by the Board), that no subsequent Transfer of
such Units will require registration under the Securities Act, the Company will
promptly upon such contemplated Transfer deliver a new certificate evidencing
the Units which does not bear the portion of the restrictive legend relating to
the Securities Act set forth in this Section 6.8.

6.9 Restrictions on Transfer. No Transfer of Units may be made by any Member
except in accordance with and as provided in Article IX and applicable
securities Laws.

6.10 Effect of a Non-payment Election by NexGen. Immediately upon the occurrence
of a Non-payment Election by NexGen, (i) one (1) of the NexGen Managers shall
resign as a Manager and such vacancy shall be filled by ADA, and (ii) NexGen
shall be deemed to have resigned as the Tax Matters Partner. Upon a Non-payment
Election, Exhibit A and Schedule 5.1(c) shall be immediately amended to reflect
the Transfer of Units resulting from the Non-payment Election.

6.11 Compensation and Reimbursement of Members. No Member or Affiliate of a
Member will be entitled to compensation or reimbursement for the involvement of
its officers, employees, contractors or agents in the business and affairs of
the Company except as set forth in this Section 6.11.

(a) Any Member or Affiliate of a Member shall be entitled to reimbursement for
(i) the costs of such Member’s or Affiliate’s officers, employees, contractors
or agents who, with all required Board and Member approval, are deployed on a
dedicated basis (i.e., exclusively or primarily) over a substantial period of
time to the business and affairs of the Company (with such time charged to the
Company pro rata based on the officer’s, employee’s, contractor’s or agent’s
actual compensation and the portion of such Person’s time devoted to the
business and affairs of the Company), and (ii) direct out-of-pocket expenses,
including travel expenses and similar incidental expenses (but excluding the
costs of salary, benefits and other overhead), incurred by such Member or
Affiliate or any officer, employee, contractor or agent

 

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thereof in direct pursuit of the Company’s business objectives. For avoidance of
doubt, and not as a limitation on the right to reimbursement with respect to any
other arrangement, the Members and their Affiliates shall be entitled to
reimbursement under this Section 6.11(a) for those arrangements set forth on
Schedule 6.11(a). All such arrangements contemplated by this Section 6.11(a)
shall be on terms comparable to those that would be expected to be obtained by
the Company for similar services in an arms’ length transaction with a
non-Affiliate of the Company.

(b) Any Member or Affiliate of a Member shall be entitled to recover a
reasonable allocation or charge from the Company, as determined by the Board,
for any administrative services provided by such Member or Affiliate for the
benefit of the Company that are of the type and character of the services set
forth on Schedule 6.11(a). All such arrangements contemplated by this
Section 6.11(b) shall be on terms comparable to those that would be expected to
be obtained by the Company for similar services in an arms’ length transaction
with a non-Affiliate of the Company.

(c) If any Affiliate of a Member is, with all required Board and Member
approval, engaged by the Company to provide services to the Company, then, so
long as such services are provided to the Company on terms at least as favorable
to the Company as those that could reasonably be expected to have been obtained
in an arms’ length transaction with a non-Affiliate, such Affiliate shall be
entitled to receive reasonable and customary fees or other compensation from the
Company as consideration for the services actually provided by such Affiliate,
subject to any terms and conditions of such engagement approved by the Board and
Members, and provided that such services are of the type and character of the
services set forth on Schedule 6.11(a).

6.12 Force Majeure. If any party hereto is prevented or delayed in the
performance of any of its obligations under this Agreement by Force Majeure and
if such party gives written notice thereof to the other parties hereto within
twenty (20) days of the first day of such event specifying the matters
constituting Force Majeure, together with such evidence as it reasonably can
give, then the party so prevented or delayed will be excused from the
performance or punctual performance, as the case may be, as from the date of
such notice for so long as such Force Majeure continues; provided, however, that
Force Majeure shall not relieve any party of the obligation to make any payments
required hereunder unless normal banking transactions are not available.

ARTICLE VII

RECORDS, FINANCIAL STATEMENTS, TAX MATTERS, AND FISCAL YEAR

7.1 Records. The Board shall cause to be kept accurate and complete books of
account of the Company wherein shall be recorded all of the contributions to the
capital of the Company and all of the transactions of the Company. All Company
books and records shall be kept at the principal place of business of the
Company, or at such other place as determined by the Board from time to time,
and each Member and its authorized representatives shall have, at all times
during reasonable business hours, free access to and the right to inspect and
copy such books and records.

 

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7.2 Financial Statements.

(a) Monthly Financial Statements. On or before the thirtieth (30th) day
following the end of each month, the Board (or a designated Officer) shall
prepare or cause the Company’s bookkeeper or accountant to prepare, and deliver
to the Board and the Members, financial statements as of the end of the
preceding month, consisting of the following statements: (i) balance sheet;
(ii) statement of operations (profit and loss); and (iii) statement of cash
flows. The profit and loss and cash flow statements shall include cumulative
figures for the year to date. Such financial statements shall be prepared in
accordance with GAAP, except that such financial statements may not contain all
footnotes required by GAAP and may be subject to normal year-end audit
adjustments. In addition, the Board (or a designated Officer) shall prepare and
provide the Members with a monthly and year-to-date statement showing actual
versus budgeted expenditures by categories, prepared in a manner consistent with
any written budget approved by the Board.

(b) Annual Financial Statements. On or before the forty fifth (45th) day
following the end each Fiscal Year, the Board (or a designated Officer) shall
prepare or cause the Company’s bookkeeper or accountant to prepare, and deliver
annual financial statements (in draft form) to the Members as of the end of the
preceding Fiscal Year and for the entire Fiscal Year then ended, consisting of
the following statements: (i) balance sheet; (ii) statement of operations
(profit and loss); (iii) statement of cash flows; and (iv) statement of Capital
Accounts for each Member. Such balance sheets, statements of operations (profit
and loss) and statements of cash flows shall be prepared in accordance with
GAAP, except that such balance sheets, statements of operations (profit and
loss) and statements of cash flows may be subject to normal year-end audit
adjustments. The Members shall review such draft financial statements and shall
tender any comments thereto to the Board, who shall then finalize the statements
so that they may be submitted for audit.

(c) Audit. The Company shall cause the annual financial statements of the
Company to be audited by Clifton Gunderson LP. The expense of any such audit
shall be borne by the Company.

7.3 Tax Matters.

(a) Tax Returns and Information.

(i) The Board shall engage Clifton Gunderson LP or one of the big four
accounting firms (“Accounting Firm”) to prepare all Tax and information returns,
including a Schedule K-1 for each Member showing the amount of Company income,
gain, loss, deduction or credit allocated or charged to such Member pursuant to
Article IV of this Agreement and the amount of any Distributions made to such
Member during such Fiscal Year, and other Tax filings required to be filed by
the Company with the appropriate taxing authorities. Each Member shall furnish
to the Company within ten (10) days after the date requested all pertinent
information in its possession relating to the Company’s operations that is
necessary to enable the Company’s tax returns to be timely prepared and filed.
Final drafts of all material income tax returns will be provided to GS

 

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for review and comment no later than sixty (60) days prior to the due date for
filing such return (including extensions). GS shall provide comments within
thirty (30) days of receipt of the final draft. Accounting Firm shall file all
Tax returns, provided that all Tax returns and filings subject to GS review
shall not be filed without the prior written consent of GS, such consent not to
be unreasonably withheld or delayed. In the event that GS does not consent to a
Tax return or filing, as soon as reasonably practicable following GS’s notice
thereof to the Board, but in no event more than five (5) days following such
notice, the Board and GS shall designate a nationally recognized accounting firm
(other than the Accounting Firm) mutually agreeable to the Board and GS (“Third
Party Accountant”), and the Board shall provide the Third Party Accountant with
all supporting documentation underlying the subject matter of the dispute. Third
Party Accountant shall, as soon as reasonably practicable but in no event longer
than fifteen (15) days following receipt of such documentation, render a written
report specifying the tax treatment of the disputed matter, which shall be
binding on the parties hereto. In the event a Third Party Accountant is
designated pursuant to this Section 7.3(a)(i), the costs, expenses and fees of
such Third Party Accountant shall be borne and paid solely by GS.

(ii) The Company shall use reasonable efforts to deliver all Tax returns and
schedules to the Members within thirty-five (35) days after audited financial
statements of the Company are available for such Fiscal Year; provided, however,
that draft Schedule K-1, and any similar schedules or other information
requested by GS for the preparation of its Tax returns or financial statements,
including state apportionment information, shall be provided to GS within sixty
(60) days after the end of the Company’s Fiscal Year.

(iii) Each Member will report its distributive share of Company items of income,
gain, loss deduction and credit on its separate Tax returns in a manner
consistent with the reporting of such items to it by the Company.

(iv) The Company shall bear the costs of the preparation and filing of Tax
returns, except for any expenses relating to a Third Party Accountant, which
shall be borne by GS pursuant to Section 7.3(a)(i).

(b) Tax Elections. The Company shall make the following elections on the
appropriate forms or tax returns:

(i) to adopt the Fiscal Year as the Company’s fiscal year;

(ii) to adopt the accrual method of accounting and to keep the Company’s books
and records on the U.S. federal income tax method;

(iii) if there is a distribution of Company property as described in Code
Section 734 or a transfer of Units as described in Code Section 743, upon
request by notice from any Member, to elect, pursuant to Code Section 754, to
adjust the basis of Company property; and

 

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(iv) any other election the Board may deem appropriate and in the best interests
of the Members.

(c) Tax Matters Partner; Audits.

(i) The “Tax Matters Partner” (“TMP”) of the Company pursuant to Code
Section 6231(a)(7) shall be a Member designated from time to time by the
Members. NexGen is hereby designated as the initial TMP. The TMP shall take such
action as may be necessary to cause to the extent possible each other Member to
become a notice partner within the meaning of Code Section 6231(a)(8). The TMP
shall inform each other Member of all significant matters, including any pending
or threatened audit or other proceeding, that may come to its attention in its
capacity as Tax Matters Member by giving notice and a reasonably detailed
account thereof on or before the fifth day after becoming aware thereof and,
within that five-day time period, shall forward to each other Member copies of
all significant written communications it may receive in that capacity. Any
Member owning at least ten percent (10%) of the Units may, at its election and
at its cost and expense, participate in any audit or other proceeding.

(ii) The TMP shall take no action without the authorization of the Board, other
than such action as may be required by Law. The TMP 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 each Member. The TMP shall not
bind any Member to a settlement agreement without obtaining the consent of such
Member. Any Member that enters into a settlement agreement with respect to any
Company item (within the meaning of Code Section 6231(a)(3)) shall notify the
other Members of such settlement agreement and its terms within ninety (90) days
from the date of the settlement.

(iii) Any Member intending to file a petition under Code Sections 6226 or 6228
or other Code section with respect to any item involving the Company shall
notify the other Members of such intention and the nature of the contemplated
proceeding. In the case where the TMP is the Member intending to file such
petition on behalf of the Company, such notice shall be given within a
reasonable period of time to allow the other Members to participate in the
choosing of the forum in which such petition will be filed.

(iv) No Member shall file a notice of inconsistent treatment under Code
Section 6222(b).

(v) In the event the Company has been dissolved and wound up, or is otherwise
unable to fund expenses incurred in a proceeding concerning tax matters, each
Member shall be responsible for its pro-rata share of any and all amounts
reasonably incurred by the Tax Matters Partner in any such proceeding, based on
the number of Units then held by a Member as compared to the aggregate number of
Units then held by all Members on a fully diluted membership interest basis. The
Members (or former members, in the case where the Company has been dissolved and
wound up) shall immediately pay such amounts upon request of the Tax Matters
Partner.

 

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(d) Prohibited Transactions. The Company shall not participate in any
transaction that is substantially similar to a “listed transaction” under
Section 6011 of the Code and the Treasury Regulations thereunder, or any
transaction requiring disclosure under Treasury Regulation Section 1.6011-4.

7.4 Bank Accounts. The Managers shall open and maintain a bank account or
accounts in the name of the Company in a commercial bank or banks, which bank or
banks shall be insured by an agency of the United States government, as
determined by the Board in which shall be deposited all funds of the Company.
The Managers shall designate one or more Persons to have the authority to
disburse funds from such accounts for the Company purposes specified in this
Agreement. There shall not be deposited in any such accounts any funds other
than funds belonging to the Company and no other funds shall in any way be
commingled with such Company funds. The Company may invest such funds, as it
deems appropriate, in short-term certificates of deposit, government obligations
or prime grade commercial paper.

ARTICLE VIII

DISSOLUTION AND LIQUIDATION

8.1 Dissolution.

(a) The Company shall be dissolved upon the earliest to occur of any of the
following events:

(i) the sale or other disposition of all or substantially all of the assets of
the Company, in one transaction or a series of related transactions, and, if any
deferred payment is received in connection with such sale or other disposition,
the receipt of the final installment or other deferred payment from such sale or
other disposition;

(ii) the unanimous consent of the Members;

(iii) the judicial dissolution of the Company pursuant to the Act; or

(iv) the termination, dissolution, death, permanent disability or Bankruptcy of
any of the Members. Upon the occurrence of any event described in this
Section 8.1(a)(iv), the Members holding Voting Units (excluding, for this
purpose, the Units held by the Member with respect to which the event has
occurred) may, within ninety (90) days after such event, elect to continue the
business of the Company. If the business of the Company is continued pursuant to
this Section 8.1(a)(iv), the Member with respect to whom the event occurred
shall retain and be entitled to its share of the profits, losses and
distributions of the Company to the same extent as though held by the Member,
except that the successor to or representative of said Member shall be a
Non-voting Member from and after the occurrence of the event.

 

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8.2 Liquidation.

(a) Except as otherwise provided herein, upon the dissolution of the Company, no
further business shall be conducted by the Company except for the taking of such
action as shall be necessary for the winding up of the affairs of the Company
and the distribution of its assets to the Members pursuant to the provisions of
this Section 8.2. The Members shall appoint a Person (who may, but need not, be
a Member) to act as liquidating trustee who shall have full authority to wind up
the affairs of the Company and to make final distribution of the Company’s
assets as provided herein. The liquidating trustee may sell all of the assets of
the Company, at the best price available, or distribute all or part of the
Company’s assets in kind; provided that, any such sale shall be made only with
ten (10) days advance written notice to the Members. Any gain or loss resulting
from the sale of Company property shall be allocated to the Capital Accounts in
accordance with the provisions of Article IV. Any distributions in kind to the
Members shall be valued at the fair market value thereof, as reasonably
determined by the liquidating trustee, and the Capital Accounts of the Members
shall be adjusted to reflect the income or loss that would be allocated to such
Members in accordance with the provisions of Article IV in the same manner as if
the item(s) of property were sold for an amount equal to the fair market value
as so determined.

(b) Upon the liquidation of the Company, all of the assets of the Company shall
be applied and distributed by the liquidating trustee in the following order:

(i) to the creditors of the Company, other than Members;

(ii) to setting up reserves which the liquidating trustee may deem necessary for
contingent or unforeseen liabilities or obligations of the Company arising out
of or in connection with the operations of the Company or its liquidation;

(iii) to the Members with respect to any loans or advances (including accrued
and unpaid interest thereon) made by the Members to the Company; and

(iv) to the Members in accordance with their positive Capital Account Balances.

(c) The liquidating trustee shall comply with any requirements of the Act and
other applicable Law, except as modified by this Agreement, pertaining to the
winding up of a limited liability company formed under the Act, at which time
the Company shall stand liquidated.

(d) No Member shall be required to pay to the Company, to any other Member or to
any third party any deficit balance which may exist from time to time in the
Member’s Capital Account.

8.3 Compliance with the Act. Upon the dissolution of the Company, the
liquidating trustee shall cause to be prepared and filed, and the Members shall
consent to and execute, where appropriate, such documents as my be necessary or
appropriate to comply with the relevant provisions of the Act, including filing
a statement of dissolution.

 

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ARTICLE IX

TRANSFERS OF UNITS; PURCHASE AND SALE RIGHTS; REDEMPTION

9.1 Permitted Transfers. Except in compliance with this Article IX, no Member
may Transfer any Unit or any portion of a Unit. Any attempted Transfer of a Unit
or Units, or any rights appurtenant thereto or portion thereof, other than in
compliance with this Article IX shall be void and of no effect. The permitted
Transfer (“Permitted Transfer”) by a Member shall mean only the following, and
only a Person to whom a Permitted Transfer is made pursuant hereto shall be a
“Permitted Transferee”: (a) a direct or indirect Transfer of Units by a Member
to a subsidiary or Affiliate of such Member; (b) a Transfer by a Member holding
Class A Units to another Member holding Class A Units (including a Transfer back
to ADA from NexGen under the NexGen Purchase Agreement), or a Transfer by a
Member holding Class B Units to another Member holding Class B Units;
(c) subject to Section 9.3(a), any Transfer by a Member of Units to any other
Person that occurs after December 31, 2012; (d) a Transfer by a Member to any
other Person in connection with a change-of-control transaction to which such
Member is a party; (e) any Transfer by any Member pursuant to a Drag-Along Sale
or a Tag-Along Sale in accordance with this Agreement; or (f) any other direct
or indirect Transfer approved by each of the Members; provided, that, the
Members will not unreasonably withhold, delay or condition their approval for
such a Transfer in the event the Transfer (i) does not change the control of the
Units proposed to be Transferred from the Person designated as a Member on the
Effective Date (if the Transfer is to an entity owned or Controlled by said
Member), (ii) the Transferee of the Transferring Member executes a counterpart
of this Agreement, or a joinder to this Agreement in form and substance
acceptable to the Board, agreeing to be bound by the terms hereof in addition to
any additional restrictions on further Transfers of the Units said new Member
has received, and (iii) the proposed Transfer would not constitute a Change of
Control of the Company.

9.2 Purchase Right Upon Attempted Transfer. In the event a Member or group of
Members (the “Proposed Transferor”) attempts to Transfer any Units other than
pursuant to a Permitted Transfer (including a Transfer to the separate property
of a Person not named as a Member upon a Transfer to a trustee in bankruptcy or
a transfer upon the dissolution of a Member to a Person who is not a Member),
such Units (the “Option Units”) and the Proposed Transferor shall be subject to
this Section 9.2. Notwithstanding anything else in this Section 9.2, if any
Transfer of Units that would otherwise be subject to this Section 9.2 has been
approved by the Members as a Change of Control of the Company pursuant to
Section 6.1(a)(i), such Transfer will not be subject to this Section 9.2.

(a) Company Option to Redeem. The Company shall first have the right to elect to
redeem all or a portion of the Option Units (subject to applicable Law or
restrictions regarding such redemption) during the period (the “Company Option
Period”) beginning on the day on which the Company received actual notice in
writing of the attempted Transfer (the “Transfer Notice”) and ending on the
later of (i) forty-five (45) days after the Transfer Notice and (ii) thirty
(30) days after receipt of the Appraised Value from the Appraiser (as provided
in Section 9.2(d)). If the Company does not elect to redeem any or all of the
Option Units, the

 

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Company shall provide notice of the same to the Members other than the Proposed
Transferor (the “Non-transferring Members”) no later than five (5) days
following the earlier to occur of (x) the Company’s determination that it will
not elect to redeem all or any portion of the Option Units and (y) the end of
the Company Option Period, and such notice shall specify the number of Options
Units not redeemed by the Company.

(b) Member Option to Purchase. In the event the Company elects not to redeem any
or all of the Option Units as provided in Section 9.2(a), the Non-transferring
Members shall have the right to elect to purchase all or any portion of that
portion of the Option Units not redeemed by the Company during the period (the
“Member Option Period”) beginning on the earlier to occur of (i) the date on
which the Company gives the Non-transferring Members written notice that it does
not intend to exercise its option to redeem the Option Units and (ii) the end of
the Company Option Period, and ending sixty (60) days thereafter.
Notwithstanding anything in this Section 9.2, a Member that holds no Class A
Units prior to an attempted Transfer subject to this Section 9.2 shall not have
the option to purchase any Option Units that are Class A Units pursuant to this
Section 9.2(b).

(c) Notice. The option to purchase or redeem provided in this Section 9.2 shall
be exercised by the Company and/or the Non-transferring Members, as the case may
be, by written notice to the Person who owns or controls the Option Units
delivered on or before the end of the Company Option Period or Member Option
Period, as applicable. In the event more than one (1) Non-transferring Member
desires to purchase Option Units entitled to be purchased by the
Non-transferring Members (the “Purchasing Members”), if the Purchasing Members
cannot agree on the number of Option Units each will purchase, each Purchasing
Member shall have the right to purchase the percentage of Option Units to be
purchased by all Purchasing Members pro rata based upon their respective Sharing
Ratios.

(d) Appraised Value; Appraisers. The value per Option Unit shall be determined
by either (i) agreement of the Proposed Transferor and the Company, in the case
of Section 9.2(a), or the Proposed Transferor and the Purchasing Members, in the
case of Section 9.2(b), or (ii) if no agreement can be reached under the
applicable portion of Section 9.2(d)(i), in the case of either Section 9.2(a) or
Section 9.2(b), by an Appraiser determining the Appraised Value. The “Appraised
Value” shall mean the fair market value of the Option Units, taking into account
any lack of liquidity of the Option Units, the financial and business condition
of the Company and such other factors an Appraiser may take into account in
determining fair market value of the Option Units, excluding any lack-of-control
or minority status in determining the value of the Option Units. Any “Appraiser”
shall be appointed upon approval of the Company, the Purchasing Members and the
Proposed Transferor, as applicable, and compensated by such parties and shall be
qualified to appraise the Option Units. The Appraiser shall give written notice
of the Appraised Value to the Proposed Transferor and the Purchasing Members or
the Company, as applicable. The purchase price for each Option Unit shall be as
agreed by the appropriate parties, in the case of Section 9.2(d)(i), or the
Appraised Value per Option Unit, in the case of Section 9.2(d)(ii) (the
“Purchase Price”).

(e) Closing. The closing of the redemption or purchase and sale of the Option
Units, whether pursuant to Section 9.2(a) or Section 9.2(b), shall occur within
thirty (30) days

 

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following the determination of the Purchase Price in accordance with
Section 9.2(d). At such closing the Proposed Transferor shall deliver the Option
Units to the Company and/or the Purchasing Members, as the case may be, free and
clear of any and all Liens (except this Agreement) pursuant to such instrument
or instruments as may be necessary or appropriate for such purpose, and the
Company and/or the Purchasing Members, as applicable, shall pay to the Proposed
Transferor the Purchase Price with respect to the Options Units redeemed or
purchased, as applicable, by such Person.

(f) Unredeemed and Unpurchased Option Units. In the event that this Section 9.2
applies to an attempted Transfer and not all of the Option Units subject thereto
are elected to be redeemed by the Company pursuant to Section 9.2(a) or
purchased by the other Members pursuant to Section 9.2(b), the Proposed
Transferor shall thereafter, without again complying with this Article IX, have
the right to Transfer all (but not less than all) of such unredeemed and
unpurchased Option Units, on the same terms as in the Proposed Transfer, within
sixty (60) days of the end of the Member Option Period, subject to the
requirements of Section 9.3 and/or Section 9.4, if applicable.

9.3 Tag-Along Rights.

(a) Tag-Along Units. In the event (i) Section 9.2 applies to an attempted
Transfer and not all of the Option Units subject thereto are elected to be
redeemed by the Company pursuant to Section 9.2(a) or purchased by the other
Members pursuant to Section 9.2(b), (ii) all such unredeemed and unpurchased
Option Units constitute, in the aggregate, at least fifty (50%) of all Units
then held by all Members, and (iii) all Board and Member approvals or consents
required by this Agreement in connection with such attempted Transfer have been
obtained, all such unredeemed and unpurchased Option Units (the “Tag-Along
Units”) shall be subject to this Section 9.3; provided that, notwithstanding
Section 9.1(c), the Tag-Along Right shall apply to any Transfer of Class A Units
that would otherwise be subject to this Section 9.3 regardless of the time of
such Transfer. In addition, the provisions of this Section 9.3 shall apply to
any Liquidation Event specified in clause (2) of Section 4.5(c)(i), in which
case GS shall be entitled to participate in the Transfer constituting such
Liquidation Event on the terms and conditions set forth in this Section 9.3.

(b) Tag-Along Right. Each Member other than the Proposed Transferor (each, a
“Tag-Along Member”) may elect to exercise the Tag-Along Right set forth in this
Section 9.3 and participate in any attempted Transfer of Tag-Along Units in
accordance with this Section 9.3. As used in this Section 9.3, “Tag-Along
Transferor” means the Proposed Transferor and “Tag-Along Sale” means the
attempted Transfer of Tag-Along Units. Each Tag-Along Member shall have a right
(a “Tag-Along Right”) to sell such Tag-Along Member’s pro rata share of the
Tag-Along Units, which pro rata share shall be based on the number of Units then
held by such Tag-Along Member as compared to the aggregate number of Units then
held by all Tag-Along Members and the Tag-Along Transferor on a fully diluted
membership interest basis; provided, that, with respect to the “Tag-Along Right”
in connection with a Liquidation Event specified in clause (2) of
Section 4.5(c)(i) that occurs prior to January 1, 2013, GS shall have the right
to sell a number of Units equal to the total number of Units being Transferred
in such Liquidation Event (to the extent GS actually holds such number of
Units), and such right will be deemed GS’s Tag-Along Right for purposes of this
Section 9.3.

 

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(c) Notice. In the event a Tag-Along Transferor proposes to make a Tag-Along
Sale, the Tag-Along Transferor shall notify each Tag-Along Member (such notice,
a “Sale Notice”) at least twenty (20) days prior to the date of such Tag-Along
Sale. Each Sale Notice shall set forth (i) a description of the Tag-Along Units
to be Transferred in such Tag-Along Sale, (ii) the identity of the Transferee in
such Tag-Along Sale, and (iii) the proposed amount and form of consideration and
the other material terms and conditions of such Tag-Along Sale being offered by
the Transferee in such Tag-Along Sale, and, if any portion of the consideration
to be paid is other than cash, all material information in the Tag-Along
Transferor’s possession regarding such non-cash consideration (collectively, the
“Third Party Terms”).

(d) Consideration. The Third Party Terms applicable to Class A Units Transferred
by the Tag-Along Member pursuant to this Section 9.3 shall be the same as the
terms and conditions applicable to any Class A Units Transferred by the
Tag-Along Transferor in the Tag-Along Sale, and the Third Party Terms applicable
to Class B Units Transferred by the Tag-Along Member pursuant to this
Section 9.3 shall be the same as the terms and conditions applicable to any
Class B Units Transferred by the Tag-Along Transferor in the Tag-Along Sale;
provided, however, the Third Party Terms with respect to any Class A Units
Transferred in a Tag-Along Sale may differ from the Third Party Terms with
respect to any Class B Units Transferred in such Tag-Along Sale based solely on
differences in the fair market value between the Class A Units and the Class B
Units. The aggregate purchase price paid for the Class A Units or Class B Units,
as applicable, in connection with a Tag-Along Sale will be allocated among
Members Transferring Class A Units or Class B Units, as applicable, in such
Tag-Along Sale pro rata based on the number of Class A Units or Class B Units,
as applicable, being Transferred by a Member as compared to the aggregate number
of Class A Units or Class B Units, as applicable, being Transferred by all
Members in such Tag-Along Sale. Nothing in this Section 9.3 shall affect the
right of GS to receive any Make-Whole Payment to which it becomes entitled
pursuant to Section 4.5(c)(i), and receipt by GS of any such Make-Whole Payment
shall in no way affect the amount of proceeds to which GS is entitled pursuant
to this Section 9.3(d). All proceeds received (and any Make-Whole Payment)
received by a holder of Class B Units in respect of the Class B Units
Transferred by such holder in a Tag-Along Sale shall be treated as a
Distribution to such holder of Class B Units for all purposes of this Agreement
(including reducing the Unrecovered Investment Balance).

(e) Exercise of Right. A Tag-Along Right may be exercised by a Tag-Along Member
by delivery of a written notice to the Tag-Along Transferor (a “Tag-Along
Notice”) within ten (10) days following receipt of the Sale Notice from the
Tag-Along Transferor. The Tag-Along Notice shall state the Class A Units and/or
Class B Units held by the Tag-Along Member that such Tag-Along Member proposes
to include in such Tag-Along Sale and include an offer to sell such Class A
Units and/or Class B Units held by the Tag-Along Member on the terms and
conditions specified in the Sale Notice. In the event that one or more Tag-Along
Members deliver a Tag-Along Notice within such ten (10) day period following
receipt of the Sale Notice, then the Tag-Along Transferor shall be prohibited
from selling any of the Tag-Along Units to the proposed Transferee in such
Tag-Along Sale unless the Tag-Along Transferor

 

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procures that such Transferee (or its designee) also purchases the applicable
Class A Units and/or Class B Units held by the participating Tag-Along Member(s)
on the Third Party Terms applicable to such Units. In the event that no
Tag-Along Member delivers a Tag-Along Notice within such ten (10) day period
following receipt of the Sale Notice, the Tag-Along Transferor shall thereafter,
without again complying with this Article IX, have the right to sell all (but
not less than all) of the Tag-Along Units to the Transferee within sixty
(60) days of the date of the Sale Notice for a purchase price and on other terms
and conditions that, on the whole, are no more favorable to the Tag-Along
Transferor than the Third Party Terms specified in the Sale Notice.

(f) Closing. At the closing of any Tag-Along Sale, the Transferee in such
Tag-Along Sale shall remit to each Tag-Along Member the consideration, not
including any Make-Whole Payment to which GS may be entitled in connection with
such Tag-Along Sale (which shall be the sole responsibility of the Company), for
the Class A Units and/or Class B Units, as applicable, of the Tag-Along Member
Transferred in such Tag-Along Sale (less any such consideration to be escrowed
or otherwise held back in accordance with the Third Party Terms; provided,
however, that such escrow or hold back is pro rata among all Members
Transferring Class A Units and/or Class B Units, as applicable, based on the
proceeds received by the Member as a result of the Tag-Along Sale as compared to
the aggregate proceeds received by all Members as a result of the Tag-Along
Sale) in exchange for the delivery by the Tag-Along Member of certificates (if
any) or other evidence of ownership representing such Class A Units and/or Class
B Units, as applicable, with instruments of transfer as may be reasonably
requested by the Transferee in such Tag-Along Sale, and compliance by the
Tag-Along Member with any other conditions to closing applicable to the
Tag-Along Transferor Transferring Tag-Along Units in such Tag-Along Sale; and
provided, further, that the Tag-Along Member shall not be required to bear more
than its pro rata share of all liabilities of the Members Transferring Class A
Units and/or Class B Units in such Tag-Along Sale (based on the proceeds
received by the Member as a result of the Tag-Along Sale as compared to the
aggregate proceeds received by all Members as a result of the Tag-Along Sale)
for the representations, warranties and other obligations incurred in connection
with the Tag-Along Sale (other than with respect to representations and
warranties relating to the ownership of the Tag-Along Member’s Units, or
otherwise relating solely to the Tag-Along Member). The consideration paid by
the Transferee in a Tag-Along Sale to the Tag-Along Member pursuant to this
Section 9.3 shall be in the same form and have the same rights as the
consideration paid by such Transferee to the Tag-Along Transferor with respect
to Units of the same class. All reasonable fees and expenses incurred by the
Tag-Along Transferor (including in respect of financial advisors, accountants
and counsel to the Tag-Along Transferor) in connection with a Transfer pursuant
to this Section 9.3 shall be shared by the Tag-Along Transferor and the
Tag-Along Members pro rata in proportion to the consideration received by such
Members as a result of the Tag-Along Sale; provided that any Make-Whole Payment
received by GS in connection with such Tag-Along Sale shall not be included for
purposes of calculating such pro rata share.

(g) *

 

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9.4 Drag-Along Rights.

(a) Approval. After receiving any Board and Member approvals required by this
Agreement and complying with Section 9.2, if any Member or group of Members who
hold, in the aggregate, at least fifty percent (50%) of the Units then held by
all Members propose to Transfer all but not less than all of their Units to a
third party that is not an Affiliate of the Company or any Member (including by
way of any consolidation, conversion, merger or other business combination
involving the Company in which equity interests in the Company are exchanged for
or converted into cash, securities of another Person or other property) (any
such Transfer, a “Drag-Along Sale”), each of the Members will take all such
actions with respect to the Drag-Along Sale as shall be reasonably directed by
the Board, including: (i) approving, consenting to and raising no objections to
such Drag-Along Sale, (ii) selling such Member’s Units or other securities in
the Company in such Drag-Along Sale; (iii) making customary representations,
warranties and indemnifications in respect of such Member’s title to any Units
or other securities being Transferred, authority to participate in such
Drag-Along Sale and other matters customarily addressed in similar transactions
by selling Members; and (iv) participating in any escrow arrangements or similar
arrangements, provided, in each case, that each Member is treated the same as
all other Members similarly situated. *.

(b) Notice. In connection with any Drag-Along Sale, the Member or Members
determining to undertake such Drag-Along Sale shall provide the Company and the
other Members with a notice stating that such Member or Members have determined
to undertake a Drag-Along Sale and summarizing in reasonable detail the material
terms upon which the Drag-Along Sale will be made. Such notice shall be
delivered at least twenty (20) days before the Member or Members providing such
notice enter into any definitive agreement regarding such Drag-Along Sale.

(c) Conditions to Drag-Along Sale. Notwithstanding anything herein to the
contrary, the obligations of the Members pursuant to this Section 9.4 are
subject to the satisfaction of the following conditions:

(i) All Members shall be entitled (and required) to participate and sell their
respective Units or other securities of the Company in such Drag-Along Sale on a
ratable basis with all other Members and on the same terms and conditions.

(ii) The Company shall bear the reasonable, documented costs incurred by the
Company and the Members in connection with any Drag-Along Sale unless otherwise
agreed by the Company and the Transferee in such Drag-Along Sale, in which case
no Member shall be obligated to make any out-of-pocket expenditure prior to the
consummation of the Drag-Along Sale (excluding reasonable expenditures for
postage, copies and the like), and no Member shall be obligated to pay more than
its pro rata share (based upon proceeds received in the Drag-Along Sale (the
“Drag-Along Proceeds”)) of reasonable expenses incurred in connection with such
Drag-Along Sale to the extent such costs are incurred for the benefit of all
Members and are not otherwise paid by the Company or the Transferee in such
Drag-Along Sale, it being understood that costs incurred by or on behalf of a
Member for such Member’s sole benefit will not be considered costs of the
Drag-Along Sale under this Section 9.4, and will be paid for solely by such
Member incurring such costs.

 

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(iii) Subject to the allocation and distribution of Drag-Along Proceeds in
accordance with Article IV, no Member shall be liable for any amount in excess
of such Member’s pro rata share of any indemnification obligation (based on
Drag-Along Proceeds or, if not sufficient, total proceeds) in excess of any
amounts placed in escrow, and all liabilities of each Member in excess of any
amounts placed in escrow shall be several liabilities and not joint and several
and be capped at the total proceeds actually received by such Member in the
Drag-Along Sale.

(iv) The Drag-Along Proceeds (inclusive of escrowed amounts, but excluding
amounts that are any portion of the purchase price attributable to the
assumption of any obligations or liabilities of the Company by Transferee in the
Drag-Along Sale) shall be distributed to the Members in accordance with the
relative rights and preferences in respect of Units held by them, as provided in
Article IV and 8.2.

(v) Except for the limited indemnification obligations permitted by this
Section 9.4 in the Drag-Along Sale, no Member is subject to any covenants that
survive the closing of the Drag-Along Sale.

(vi) All Drag-Along Proceeds and other consideration received by a holder of
Class B Units in respect of the Class B Units Transferred by such holder in a
Drag-Along Sale (inclusive of escrowed amounts, but excluding amounts that are
any portion of the purchase price attributable to the assumption of any
obligations or liabilities of the Company by Transferee in the Drag-Along Sale)
shall be treated as a Distribution to such holder of Class B Units for all
purposes of this Agreement (including reducing the Unrecovered Investment
Balance).

(d) Indemnification. Subject to Sections 4.5 and 9.4(c)(iii), each Member shall
be severally obligated to join to the extent of their pro rata share (based on
Drag-Along Proceeds and based on the Distribution thereof in accordance with the
priorities established under Article IV) in any indemnification or other
obligation the Board has approved in connection with such Drag-Along Sale (other
than any such obligations that relate specifically to a particular Member, such
as indemnification with respect to representations and warranties given by a
Member regarding such Member’s title to and ownership of securities being sold);
provided, however, that, any escrow of proceeds of any such transaction shall be
withheld on a pro rata basis among all Members (in proportion to the relative
Drag-Along Proceeds to be received by each Member); and provided further that
such indemnification or other obligation shall be capped at the total proceeds
actually received by such Member in the Drag-Along Sale. Each Member shall enter
into any indemnification or contribution agreement reasonably requested by the
Board to ensure compliance with this Section 9.4(d).

(e) Impact on Excluded Members. Notwithstanding anything to the contrary in this
Section 9.4, if the consideration proposed to be paid to a Member in a
Drag-Along Sale includes securities with respect to which no registration
statement covering the issuance of such

 

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securities has been declared effective under the Securities Act, then each
Excluded Member participating in the Drag-Along Sale may be required, at the
request and election of the Board, to (i) at the cost of Company, appoint a
purchaser representative (as such term is defined in Rule 501 under the
Securities Act) reasonably acceptable to such Excluded Member or (ii) agree to
accept cash in lieu of any securities such Excluded Member would otherwise
receive in an amount equal to the fair market value of such securities, as
determined by the Board in its reasonable judgment.

9.5 Redemption. On or after the earliest to occur of (i) a breach by the Company
of any material provision of the Purchase Agreement or the Organizational
Documents that has not been cured within thirty (30) days of the Company’s
receipt of written notice thereof, or such longer period during which the
Company is diligently working to cure such breach but in no event longer than
forty-five (45) days following the Company’s receipt of such written notice, and
that results in actual damages or loss of value to the Member(s) holding Class B
Units of at least $10,000,000 in the aggregate (without regard to any
limitations on the types of damages for which indemnification is available
pursuant to the Purchase Agreement), and (ii) the ten (10) year anniversary of
the date the last Facility owned by the Company or any Subsidiary is deemed to
be placed in service (but in no event later than December 31, 2021), GS may
elect, in its sole discretion, by written notice to the Company (a “Redemption
Notice”) for the Company to redeem all, but not less than all, of the Class B
Units then held by GS (a “Redemption”). With respect to any Redemption, the
Company shall pay to GS in consideration for the Class B Units so redeemed,
within one hundred eighty (180) days of the Company’s receipt of the Redemption
Notice related to such Redemption, an amount equal to the Unrecovered Investment
Balance as of the date of such Redemption. The redemption rights under this
Section 9.5 may be transferred only to Permitted Transferees in accordance with
Section 9.1, and, for avoidance of doubt, the redemption rights provided under
this Section 9.5 shall terminate and no longer be available to GS on the date
that the Unrecovered Investment Balance is reduced to zero (0).

ARTICLE X

INDEMNIFICATION

10.1 Indemnification by Company.

(a) In General. Subject to the limitations and conditions of the Act and this
Article X, the Company shall indemnify, defend, save and hold harmless each
Person who was or is made a party or is threatened to be made a party to or is
involved in, including as a witness or other participant, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (hereinafter a “Proceeding”), or
any appeal in such a Proceeding or any inquiry or investigation that could lead
to such a Proceeding, by reason of the fact that such Person, or a Person of
whom he, she or it is the legal representative, is or was a Manager, Officer or
Member, or a member, manager, partner, shareholder, officer, employee, agent,
attorney or Affiliate thereof, or is or was serving at the request of the
Company as a manager, officer, partner, venturer, proprietor, trustee, employee,
agent or similar position of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise, against judgments, penalties
(including excise and similar taxes and punitive damages), losses,

 

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claims, liabilities, fines, damages, settlements and reasonable fees and
expenses (including attorneys’ fees) and other amounts (collectively, “Damages”)
actually incurred by such Person in connection with such Proceeding, and
indemnification under this Section 10.1 shall continue as to a Person who has
ceased to serve in the capacity which initially entitled such Person to
indemnity hereunder. The rights granted pursuant to this Section 10.1 shall be
deemed contract rights, and no amendment, modification or repeal of this
Section 10.1 shall have the effect of limiting or denying any such rights with
respect to actions taken, omissions, or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Section 10.1 could involve indemnification for
negligence or strict liability, and except as otherwise specifically provided in
this Article X, no Person that has complied with such Person’s obligations under
Section 5.7 shall be denied indemnification hereunder for failure to comply with
such Person’s duty or care or other duty to the Company or the Members imposed
under the Act. Notwithstanding the foregoing, the Company’s indemnification of a
Manager as to third party claims shall be only with respect to such Damages that
are not otherwise compensated by insurance carried for the benefit of the
Company and shall be limited to the net assets of the Company, and no Member
shall have any personal liability whatsoever on account thereof.

(b) Advance Payment of Expenses. The right to indemnification conferred in this
Section 10.1 shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under this Section 10.1(b) who was, is or is threatened to be made a named
defendant or respondent in a Proceeding in advance of the final disposition of
such Proceeding and without any determination as to the Person’s ultimate
entitlement to indemnification pursuant to this Section 10.1; provided, however,
that the payment of such expenses incurred by any such Person in advance of the
final disposition of a Proceeding shall be made only upon delivery to the
Company of a written affirmation by such Person of such Person’s good faith
belief that such Person has met the standard of conduct necessary for
indemnification under this Section 10.1 and a written undertaking, by or on
behalf of such Person, to repay all amounts so advanced if it shall ultimately
be determined that such indemnified Person is not entitled to be indemnified
under this Section 10.1 or otherwise.

(c) Insurance. Subject to the insurance requirement in Section 5.2(e), the
Company may purchase and maintain insurance, at its expense, to protect itself
and any Person who is or was serving as a Manager, Officer, employee or agent of
the Company or is or was serving at the request of the Company as a manager,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
position of another foreign or domestic limited liability company, corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise against any Damages, whether or not the Company would have the
power to indemnify such Person against such Damages under this Section 10.1.

(d) Report to Managers and Members. The Company shall promptly (but in any case
within twenty (20) days) notify the Managers and Members of any indemnity
payments made pursuant to this Section 10.1.

 

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(e) Future Amendments to the Act; Invalidation. Notwithstanding anything to the
contrary in this Section 10.1 or elsewhere in this Agreement, no amendment to
the Act after the date of this Agreement may reduce or limit in any manner the
indemnification provided for or permitted by this Section 10.1 unless the
reduction or limitation is mandated by the amendment to the Act for limited
liability companies formed prior to the enactment of such amendment. If this
Section 10.1 or any portion hereof shall be invalidated on any ground by any
court of competent jurisdiction, then the Company shall nevertheless indemnify
and hold harmless the Managers and other Persons entitled to indemnification
pursuant to this Section 10.1 to the full extent permitted by any applicable
portion of this Section 10.1 that shall not have been invalidated and to the
fullest extent permitted by applicable Law.

10.2 Indemnification by the Parties. To the maximum extent permitted by Law, and
notwithstanding any other provision relating to the rights of indemnity
hereunder, each party hereto shall indemnify and hold harmless (such party, the
“Indemnitor”) each other party hereto and their respective members, managers,
partners, shareholders, officers, employees, agents, attorneys and Affiliates
(collectively, the “Indemnitee”) from and against any and all Indemnified Losses
related to, arising out of or otherwise in connection with any (i) breach or
violation of any representation or warranty of the Indemnifying Party contained
in this Agreement, (ii) any default by such Indemnifying Party under any
agreement or covenant contained herein, and (iii) any violation by such
Indemnifying Party of any Law, in all cases except to the extent any such
breach, violation or default directly results from the gross negligence or
willful misconduct of the party otherwise entitled to be indemnified hereunder.

(a) Mitigation and Related Matters.

(i) The parties agree that in the event of any breach giving rise to an
indemnification obligation under this Section 10.2, the Indemnitee, at the sole
cost and expense of the Indemnitor, shall and shall cause its Affiliates to
reasonably cooperate with the Indemnitor and to take all reasonable measures,
requested by such Indemnitor or otherwise, to mitigate the consequences of the
related breach.

(ii) The Indemnitee shall, at the expense of the Indemnitor, use its
commercially reasonable efforts to pursue recovery against third parties, under
insurance policies or from collateral sources. In the event any amounts
recovered from any third party or under such insurance policies or other
collateral sources are not received before any claim for indemnification is paid
pursuant to this Section 10.2, then the amount of such subsequent recovery shall
be applied first, to reimburse the Indemnitee for its out-of-pocket expenses
(including reasonable attorney’s fees and expenses) expended in pursuing such
recovery, and second, refund any payments made by the Indemnitor which would not
have been so paid had such recovery been obtained prior to such payment, and
third, any excess to the Indemnitee.

(iii) The Indemnitor shall be subrogated to the rights of the Indemnitee in
respect of any insurance relating to the Damages to the extent of any
indemnification payments made hereunder. Any liability for indemnification
hereunder shall be determined without duplication of recovery by reason of the
state of facts giving rise to such liability constituting a breach of more than
one representation, warranty, covenant or agreement.

 

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(b) Notice and Procedures. In the event that any Actions are instituted by a
third party or any claim or demand is asserted or threatened against or sought
to be collected from an Indemnitee by a third party, in each case for which the
Indemnitor may have liability to any Indemnitee under this Section 10.2 (a
“Third Party Claim”), such Indemnitee shall promptly, but in no event more than
fifteen (15) days, following such Indemnitee’s receipt of a Third Party Claim,
notify the Indemnitor in writing and in reasonable detail, to the extent
available, of such Third Party Claim (a “Claim Notice”). The Indemnitor shall
have thirty (30) days (or such lesser number of days as may be required by court
proceeding in the event of a litigated matter) after receipt of the Claim Notice
(the “Notice Period”) to notify the Indemnitee that it desires to defend the
Indemnitee against such Third Party Claim. The Claim Notice shall (i) state that
the Indemnitee has incurred, or reasonably and in good faith expects to incur,
Indemnified Losses for which such Indemnitee is entitled to indemnification
pursuant to this Agreement; and (ii) specify in reasonable detail, to the extent
available, the nature of such Third Party Claim and an estimate of the amount of
the applicable Indemnified Losses (if reasonably practicable) to which such
Indemnitee reasonably and in good faith believes it may be entitled to
hereunder. Thereafter, the Indemnitee shall deliver to the Indemnitor, promptly
following the Indemnitee’s receipt thereof, copies of all notices and documents
(including court papers and excluding all internally prepared documents or
documents prepared by counsel or other representatives of Indemnitee) received
by the Indemnitee relating to the Third Party Claim.

(c) Defense of Third Party Claims by Indemnitor. In the event that the
Indemnitor notifies the Indemnitee within the Notice Period that it desires to
defend the Indemnitee against a Third Party Claim, (i) the Indemnitor shall have
the right to defend the Indemnitee by appropriate proceedings and shall have the
sole power to direct and control such defense, with counsel of its choosing, at
its expense, (ii) the Indemnitor shall use its commercially reasonable efforts
to defend diligently such Third Party Claim, (iii) the Indemnitee, prior to the
period in which the Indemnitor assumes the defense of such matter, shall take
all reasonable actions to preserve any and all rights with respect to such
matter, without such actions being construed as a waiver of the Indemnitee’s
rights to defense and indemnification pursuant to this Agreement, and (iv) the
Indemnitor shall be deemed to have agreed that it shall indemnify the Indemnitee
for all Indemnified Losses resulting from such Third Party Claim pursuant to and
subject to the conditions of this Section 10.2. Once the Indemnitor has duly
assumed the defense of a Third Party Claim, the Indemnitee shall have the right,
but not the obligation, to participate in any such defense and to employ
separate counsel of its choosing. The Indemnitee shall participate in any such
defense at its expense and shall cooperate in the defense or prosecution of such
Third Party Claim; provided, however, that such Indemnitee shall be entitled to
participate in any such defense with separate counsel at the reasonable expense
of the Indemnitor if, in the reasonable opinion of counsel to the Indemnitee, a
conflict or potential conflict exists between the Indemnitee and the Indemnitor
that would make such separate representation advisable; and provided, further,
that the Indemnitor shall not be required to pay for more than one such counsel
for all Indemnitees in connection with any Third Party Claim.

 

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(d) Defense of Third Party Claims by Indemnitee. Notwithstanding anything in
Section 10.2(c) to the contrary, if a Third Party Claim seeks relief that would
result in the imposition of a consent order, injunction or decree, in any case
that would materially restrict the future activity or conduct of the Indemnitee
or any of its Affiliates, then the Indemnitee shall be entitled to contest and
defend, and subject to Section 10.2(f), compromise and settle such Third Party
Claim in the first instance; provided that if the Indemnitee does not contest,
defend, compromise or settle such Third Party Claim, the Indemnitor shall then
have the right to contest and defend, and subject to Section 10.2(f), settle or
compromise such Third Party Claim. If the Indemnitee has duly assumed the
defense of a Third Party Claim, the Indemnitor shall have the right, but not the
obligation, to participate in any such defense and to employ separate counsel of
its choosing (at the expense of the Indemnitor). If the Indemnitor (i) does not
elect to defend the Indemnitee against a Third Party Claim, whether by not
giving the Indemnitee timely notice of its desire to so defend or otherwise or
(ii) after assuming the defense of a Third Party Claim, fails to take
commercially reasonable steps necessary to defend diligently such Third Party
Claim within thirty (30) days (or such lesser number of days as may be required
by court proceeding in the event of a litigated matter) after receiving written
notice from the Indemnitee to the effect that the Indemnitor has so failed, the
Indemnitee shall have the right but not the obligation to assume such defense
and shall have the sole power to direct and control such defense, with counsel
of its choosing, at the expense of the Indemnitor.

(e) Cooperation. The Indemnitee and the Indemnitor shall cooperate in the
conduct of the defense of a Third Party Claim, including by retaining records
and information that are reasonably relevant to such Third Party Claim and
providing reasonable access to each other’s relevant business records and other
documents, and employees. The Indemnitee and the Indemnitor shall use
commercially reasonable efforts to avoid production of confidential information
(consistent with applicable Law), and to cause all communications among
employees, counsel and others representing any party to a Third Party Claim to
be made so as to preserve any applicable attorney-client or work-product
privileges.

(f) Settlement of Third Party Claims. The Indemnitor shall not, without the
prior written consent of the Indemnitee, not to be unreasonably withheld or
delayed, settle, compromise or offer to settle or compromise any Third Party
Claim. Whether or not the Indemnitor assumes the defense of a Third Party Claim,
the Indemnitee shall not, without the prior written consent of the Indemnitor,
not to be unreasonably withheld or delayed, settle, compromise or offer to
settle or compromise any Third Party Claim.

(g) Direct Claims. In the event any Indemnitee has a claim against any
Indemnitor that does not involve, or no longer involves, a Third Party Claim,
the Indemnitee shall deliver a notice of such claim (a “Direct Claim Notice”)
and the amount of the applicable Indemnified Losses or an estimate of the amount
of the applicable Indemnified Losses (if reasonably practicable) with reasonable
promptness to the Indemnitor. If the Indemnitor notifies the Indemnitee that it
does not dispute the claim described in such notice or fails to notify the
Indemnitee, within thirty (30) days after delivery of such notice by the
Indemnitee whether the Indemnitor disputes the claim described in such notice,
the Indemnified Losses in the amount specified in the Indemnitee’s notice will
be conclusively deemed a liability of the Indemnitor and the Indemnitee shall be
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Indemnitor in accordance with the terms and conditions of this Section 10.2. If
the Indemnitor has timely disputed its liability with respect to such claim, the
Indemnitor and the Indemnitee will proceed in good faith to negotiate a
resolution of such dispute, and the Indemnitor shall not be obligated to make
any payment with respect to such claim until such claim has been so resolved by
the Indemnitor and the Indemnitee or has been determined in favor of the
Indemnitee by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected).

ARTICLE XI

MISCELLANEOUS PROVISIONS

11.1 Notices. All notices and other required communications hereunder shall be
in writing, addressed as follows:

If to the Company:

Clean Coal Solutions, LLC

8100 SouthPark Drive, Unit B

Littleton, CO 80120

Attn: Mark McKinnies

Fax: (303) 734-0330

Email address: markm@adaes.com

With a copy to, which shall not constitute notice:

Hogan Lovells US LLP

One Tabor Center, Suite 1500

1200 Seventeenth Street

Denver, CO 80202

Attention: Tyler Harvey

Facsimile No.: (303) 454-2436

E-mail address: tyler.harvey@hoganlovells.com

If to NexGen:

NexGen Refined Coal, LLC

3300 South Parker Road, Suite 310

Aurora, CO 80014

Attn: Charles S. McNeil, President

Fax: (303) 751-9210

Email address: cmcneil@nexgen-group.com

 

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With a copy to, which shall not constitute notice:

Republic Financial Corporation

3300 South Parker Road, Suite 500

Aurora, CO 80014

Attn: Legal Department

Fax: (303) 751-4777

Email address: rdietrich@republic-financial.com and
lcohen@republic-financial.com

If to ADA:

ADA-ES, Inc.

8100 SouthPark Drive, Unit B

Littleton, CO 80120

Attn: Dr. Michael Durham

Fax: (303) 734-0330

Email address: miked@adaes.com

If to GS:

GSFS Investments I Corp.

200 West Street

New York, New York 10282

Attn: Michael Feldman

Fax: (212) 428-3868

Email address: Michael.Feldman@gs.com

With a copy to, which shall not constitute notice:

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002-6760

Attn: F. B Cochran III

Fax: (713) 615-5368

Email address: fcochran@velaw.com

Notices shall be given (a) by personal delivery to the other party, (b) by
facsimile or e-mail, with confirmation sent by registered or certified mail,
return receipt requested, or (c) by registered or certified mail, return receipt
requested. All notices shall be effective and deemed delivered (i) if by
personal delivery, on the date of delivery if during business hours, otherwise
the next business day, (ii) if by facsimile or e-mail, on the date the facsimile
or e-mail is received if received during business hours, otherwise the next
business day and (iii) if solely by mail, upon receipt by the addressee, which
receipt shall be deemed to have occurred at such time as the party is provided
with notice from the postal authorities that a registered or certified letter is
awaiting delivery to the party. A party may change its address by notice to the
other parties.

 

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11.2 Application of Colorado Law. This Agreement and the application and
interpretation hereof shall be governed exclusively by the laws of the State of
Colorado, and specifically the Act, without regard to any conflict or law
provisions of any jurisdiction.

11.3 No Action for Partition. No Member shall have any right to maintain any
action for partition with respect to the property of the Company.

11.4 Amendment of Articles or this Agreement. Except as otherwise expressly set
forth in this Agreement, the Articles or this Agreement may be amended,
supplemented or restated only upon the unanimous written consent or approval, as
the case may be, of the Members; provided, however, that consent or approval of
the Class B Members shall not be required for minor clarification changes to the
Articles or this Agreement that do not result in any adverse consequences to the
Class B Members. Upon obtaining the approval of any amendment to the Articles,
the Members shall cause Articles of Amendment in accordance with the Act to be
prepared, and such Articles of Amendment shall be executed by a Manager or
Member or Members (if so required) and shall be filed in accordance with the
Act.

11.5 Binding Effect. Except as herein otherwise provided to the contrary, this
Agreement shall be binding upon and inure to the benefit of the Company and the
Members, their distributees, legal representatives, executors, administrators,
successors and assigns.

11.6 Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original and shall be binding upon the Company
and the Member(s) who executed the same, but all of such counterparts shall
constitute the same Agreement.

11.7 Dates. If the date of any required action or notice under this Agreement
falls on a Saturday, Sunday or legal holiday, the date of such required action
or notice shall be extended to the next business day.

11.8 Confidentiality.

(a) As used herein, the term “Confidential Information” means information which
is of a non-public, proprietary or confidential nature of the disclosing party
or another Person providing information to the Company under an agreement
pursuant to which such information is required to be kept confidential (whether
such Confidential Information is marked or identified as confidential or has
been or is disclosed in circumstances that would lead a reasonable person to
believe such information is confidential) disclosed to the receiving Person by
the disclosing Person or its officers, directors, agents or representatives,
including information disclosed in any conversations and discussions between or
among the parties, or any of their officers, directors, agents or
representatives (including information disclosed prior to the Effective Date),
including all materials, documentation, know-how, potential strategic
relationships, reports and analyses, technical and economic data, studies,
forecasts, trade secrets, research or business strategies or methods, business
structures, monetization strategies, marketing information and strategies,
procedures, business, financial or contractual information or other written or
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or the Business. Confidential Information may be in any form whatsoever,
including oral communications, writings, computer programs, logic diagrams,
component specifications, drawings, diagrams or other media. All such
information, howsoever disclosed, including by inspection or otherwise, shall be
deemed Confidential Information unless otherwise expressly agreed in writing by
the party or Person disclosing such information.

(b) Notwithstanding the provisions of Section 11.8(a), the term “Confidential
Information” shall not include, and no party hereto shall be under any
obligation to maintain in confidence or not use, any information (or any portion
thereof) disclosed to it by the another party to the extent that such
information:

(i) is in the public domain at the time of disclosure; or

(ii) following disclosure, becomes generally known or publicly available through
no act or omission on the part of the receiving party; or

(iii) is known, or becomes known, to the receiving party from a source other
than the disclosing party or its Representatives, provided that disclosure by
such source is not in breach of a confidentiality agreement with the disclosing
party; or

(iv) is independently developed by the receiving party without violating any of
its obligations under this Agreement and without the use of or reference to any
Confidential Information of another party.

(c) If a receiving party is served with any legal process or in any civil action
or criminal action is subject to any motion or order requiring the receiving
party to disclose to a third-party any Confidential Information of a disclosing
party, the receiving party will promptly notify the disclosing party, and unless
the disclosing party timely obtains, at its own instigation and cost, an
appropriate court order nullifying such process, motion, or order or restraining
the receiving party from such disclosure, the receiving party may disclose such
Confidential Information as and to the extent required by such legal process,
motion, or order. The receiving party will promptly and fully cooperate with all
efforts of the disclosing party to obtain such order.

(d) The parties hereby further agree that the Confidential Information (i) may
only be used by the receiving party in connection with or in furtherance of the
Business, and (ii) will be kept confidential at all times hereunder and not
disclosed by the receiving party to any other Person, except that Confidential
Information may be disclosed to any of the receiving party’s Affiliates,
directors, officers, employees, attorneys, accountants, consultants, advisors or
agents, or representatives of any of the foregoing (collectively, its
“Representatives”), any potential Transferee of Units in accordance with this
Agreement and to financing sources and customers who require access to such
information in connection with the Business. Each of the parties agrees that any
of its Representatives to whom Confidential Information is disclosed will be
informed of the confidential or proprietary nature thereof and of the receiving
party’s obligations under this Agreement, and that each party shall be
responsible for any use or disclosure of Confidential Information by any of its
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shall not be reproduced in any form except as required to accomplish the intent
of this Agreement or in furtherance of the Business. Any reproduction of any
Confidential Information shall remain the property of the disclosing party and
shall contain all confidential or proprietary notices or legends that appear on
the original, unless otherwise authorized in writing by the disclosing party.
Notwithstanding the foregoing, Confidential Information incorporated in the
ordinary course into any party’s written board materials or minutes shall not be
subject to the obligations set forth in this paragraph as long as such materials
or minutes are held consistent with the procedures normally used by such party
to safeguard proprietary information. Such Confidential Information shall
continue to be subject to the other terms and conditions of this Agreement.

(e) The Parties agree that: (i) all rights to Confidential Information disclosed
pursuant to this Agreement are reserved to the disclosing party; (ii) except as
otherwise prohibited by this Agreement, nothing in this Section 11.8 shall
diminish or restrict in any way the rights that each party has to conduct its
business or to disclose its own Confidential Information to third parties; and
(iii) except as specifically set forth in another Transaction Agreement, no
license or conveyance or any rights, including intellectual property rights,
relating to the Confidential Information is granted or implied by any party to
the another party.

(f) The provisions of this Section 11.8 shall become effective as of the
Effective Date, shall survive termination of this Agreement, and shall continue
until such Confidential Information ceases to be Confidential Information in
accordance with the provisions of Section 11.8(b), provided, however, that in
the event of a dissolution of the Company resulting in the parties ceasing to
engage in the Business as members of the Company, the party who owns any such
Confidential Information may use such information for any purpose whatsoever.

(g) Upon a disclosing party’s request, the receiving party shall at its option
either destroy or return to the disclosing party as promptly as practicable, but
in any event within thirty (30) days of such request, all Confidential
Information received from the disclosing party in the possession of the
receiving party or its Representatives, including all copies of such
Confidential Information, all notes or other documents with respect to or
reflecting such Confidential Information, and of materials derived from such
Confidential Information. Upon completing the foregoing, the receiving party
shall give the disclosing party a certificate confirming its compliance with
this Section 11.8(g).

(h) Each party further agrees that all files, records, documents, drawings,
specifications, equipment and similar items relating to the Business and which
are prepared by the Company in the course of conducting the Business, whether
prepared by a Member or others, are and shall remain exclusively the property of
the Company and that they shall be removed from the premises of the Company only
with the express prior written consent of the Company.

(i) Prior to appointment of any Person who is not also a Member as a Manager or
a Board Observer, such Person will be required to execute and deliver to the
Company a confidentiality agreement covering essentially the same items as
covered hereby.

 

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(j) The receiving party of any Confidential Information acknowledges and agrees
that due to the unique nature of the Confidential Information, there may be no
adequate remedy at law for any breach of a receiving party’s obligations under
this Section 11.8, that any such breach or any unauthorized use or release of
any Confidential Information by a receiving party may allow such receiving party
or third parties to unfairly compete with the disclosing party, resulting in
irreparable harm to the disclosing party, that upon any such breach or any
threat thereof the disclosing party shall be entitled to appropriate equitable
relief in addition to whatever remedies that the disclosing party might have at
law, and the disclosing party shall be entitled to be indemnified by the
receiving party from any loss or harm, including reasonable attorney’s fees, in
connection with any breach or enforcement of the receiving party’s obligations
under this Section 11.8 or the unauthorized use or release of any such
Confidential Information.

(k) Notwithstanding anything else in this Section 11.8, the parties hereto may
disclose to any Person, without limitation of any kind, the United States
federal and state income tax treatment and tax structure of the business
relationship and transactions contemplated by this Agreement and the other
Transaction Agreements, including tax opinions and other tax analysis provided
to the parties.

11.9 Covenant Not to Compete; Business Opportunities.

(a) Each Member other than GS agrees that, unless approved in writing by all of
the Members, it will not, and it will cause its Affiliates not to, compete,
directly or indirectly and for their own account or otherwise, with the Business
of the Company while such party is a Member and for a period of three (3) years
following the date that such party is no longer a Member. For this purpose, the
term “compete” shall mean the ownership, operation, management or control of,
or, after the date hereof, acquisition of any financial interest in, any Person,
business or enterprise that carries on a business that is substantially the same
as the Business carried on by the Company. In addition, during the term of this
Agreement, each Member other than GS shall present to the Company for its
consideration any business or investment opportunity that is substantially the
same as the ongoing Business of the Company (a “Business Opportunity”),
regardless of whether the Member obtained knowledge of such Business Opportunity
in its capacity as a Member and/or Manager or otherwise. If the Company elects
not to participate in any such Business Opportunity, the Member shall be
entitled to pursue such Business Opportunity free of any rights of the Company
therein. The Members agree that prior to the appointment of any Person who is
not also a Member as a Manager or Board Observer, such Person will be required
to execute and deliver to the Company a non-competition agreement containing
terms and conditions substantially the same as this Section 11.9.

(b) Other than expressly set forth in this Section 11.9 or elsewhere in this
Agreement, each Member may, independently or with its Affiliates and others,
engage in or have an interest in other business ventures of any kind, and each
Member and its Affiliates may make any investment in, or acquire and own all or
any part of, any other business or Person, or engage in any transaction outside
of the Company, and neither the Company nor any other Member or Affiliate
thereof shall have any rights in or to those ventures, and such Member or its
Affiliates shall not have any obligation to offer to the Company or any other
Member the opportunity to make or participate in that investment or acquisition.
Other than Business Opportunities with

 

75

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respect to the Members other than GS, no Member or any Affiliate thereof shall
have any obligation to present or offer any opportunity to the Company prior to
such Member’s or Affiliate’s independent pursuit of such opportunity outside of
the Company.

(c) *.

11.10 Limitation on Liability. Notwithstanding anything in this Agreement to the
contrary or any Law, under no circumstances shall any party be liable to another
party for special, consequential, exemplary or punitive damages with respect to
any breach of this Agreement, other than the payment of attorneys’ fees as is
specifically provided for in this Agreement.

11.11 Invalidity of Provisions. Should any provision or part of any provision of
this Agreement be held to be invalid or unenforceable by a court of competent
jurisdiction, such provision shall be deemed modified and amended to the extent
(but only to the extent) necessary to make such provision valid and enforceable,
and so amended, such provision shall be enforced. In the event such a court
finds that it cannot so modify or amend any such provision, such provision shall
be stricken from this Agreement and the remaining provisions of this Agreement
shall remain valid and enforceable to the fullest extent possible, excluding
such invalid provision.

11.12 Representations and Warranties.

(a) Each Member represents and warrants, severally and not jointly, to the other
Members and the Company as follows:

(i) it is the type of legal entity specified in the first paragraph of this
Agreement, duly organized and in good standing under the Laws of the
jurisdiction of its organization and is qualified to do business and is in good
standing in those jurisdictions where necessary to carry out the purposes of
this Agreement;

(ii) the execution, delivery and performance by it of this Agreement and all
transactions contemplated herein are within its entity powers and have been duly
authorized by all necessary entity actions;

(iii) this Agreement constitutes a valid and binding obligation of such Member,
enforceable against it in accordance with its terms, except as enforcement may
be limited by Bankruptcy, insolvency, moratorium and similar Laws affecting the
enforcement of creditors’ rights generally and by general principles of equity;
and

(iv) the execution, delivery and performance by it of this Agreement will not
conflict with, result in a breach of or constitute a default under any of the
terms, conditions or provisions of (x) any applicable Law, (y) its governing
documents, or (z) any agreement or arrangement to which it or any of its
Affiliates is a party or which is binding upon it or any of its Affiliates or
any of its or their assets.

(b) Each Member recognizes that (i) the Units have not been registered under the
Securities Act or qualified under any state securities laws, and covenants not
to sell, offer for

 

76

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sale or otherwise Transfer all or any part of its Units in the absence of an
effective registration statement covering such interest under the Securities Act
and qualification under applicable state securities laws unless such sale, offer
of sale, or other Transfer is exempt therefrom; (ii) the Company has no
obligation to register or qualify any Member’s Units for sale or other Transfer,
or to assist in establishing an exemption from registration or qualification for
any proposed sale or other Transfer and may, in conjunction with any proposed
sale or Transfer, require the Transferring owner to provide the Company with an
opinion of counsel as to the legality of such sale or other Transfer under
applicable Laws; and (iii) the restrictions on Transfer contained in this
Agreement, under the Securities Act and under applicable state securities Laws
may severely affect the liquidity of a Member’s investment in the Units. This
Agreement and any certificates representing Units may include a legend
reflecting the restrictions on Transfer set forth in Section 6.8 or elsewhere in
this Agreement.

(c) Each Member further represents and warrants, severally and not jointly, to
the other Members and the Company as follows:

(i) such Member has been advised (x) that a conflict of interest exists among
the Members’ individual interests, (y) that this Agreement has tax consequences,
and (z) that it should seek independent counsel in connection with the execution
of this Agreement;

(ii) such Member has had the opportunity to seek independent counsel and
independent tax advice prior to the execution of this Agreement and no Person
has made any representation of any kind to it regarding the tax consequences of
this Agreement; and

(iii) this Agreement and the language used in this Agreement are the product of
all parties’ efforts, and each party hereby irrevocably waives the benefit of
any rule of contract construction that disfavors the drafter of an agreement.

(d) The representations and warranties set forth in Section 11.12(a), 11.12(b)
and 11.12(c) above shall survive the execution and delivery of this Agreement
and any documents of Transfer provided under this Agreement.

11.13 Expenses. Except as otherwise specifically provided in this Agreement and
the Purchase Agreement, NexGen, ADA and GS will each pay all costs and expenses
incurred by each of them on their own behalf in connection with this Agreement
and the transactions contemplated hereby, including fees and expenses of their
own financial consultants, accountants and counsel.

11.14 Public Announcements. No public announcement may be made by any Person
with regard to the transactions contemplated by this Agreement without the prior
consent of NexGen, ADA and GS, provided that any party may make such disclosure
if advised by counsel that it is required to do so by applicable Law or
regulation of any governmental agency or stock exchange upon which securities of
such party are registered. NexGen, ADA and GS will discuss any public
announcements or disclosures concerning the transactions contemplated by this
Agreement with the other parties prior to making such announcements or
disclosures.

 

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11.15 Entire Agreement. This Agreement and the other Transaction Agreements,
together with all respective exhibits and schedules hereto and thereto,
collectively constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all representations,
warranties, understandings, terms or conditions on such subjects that are not
set forth specifically herein or therein, including the terms and conditions
contained in the Term Sheet.

11.16 Additional Agreements with GS.

(a) The Company shall keep GS informed, on a current basis, of any events,
discussions, notices, or changes with respect to any tax, criminal, or
regulatory investigation or action involving the Company or any of its
Subsidiaries, and shall reasonably cooperate with GS, its members, and its
Affiliates in an effort to avoid or mitigate any cost or regulatory consequences
to them that might arise from such investigation or action (including by
reviewing written submissions in advance, attending meetings with authorities,
and coordinating and providing assistance in meeting with regulators).

(b) Notwithstanding anything to the contrary contained in this Agreement,
neither GS nor any of its Affiliates shall be required to *.

(c) The Company and the Members acknowledge and agrees that nothing in the
Transaction Agreements shall create a fiduciary duty of GS or its Affiliates
(including Goldman, Sachs & Co. and its Affiliates) to the Company or the
Members. Notwithstanding anything to the contrary in the Transaction Agreements,
or any actions or omissions by representatives of GS or its Affiliates
(including Goldman, Sachs & Co. and its Affiliates) in whatever capacity,
including as the Board Observer, it is understood that neither GS nor its
Affiliates (including Goldman, Sachs & Co. and its Affiliates) is acting as a
financial advisor, agent, or underwriter to the Company or any of its
Subsidiaries or otherwise on behalf of the Company or any of its Subsidiaries
unless retained to provide such services pursuant to a separate written
agreement.

(d) The Company and the Members acknowledge that GS is in the business of
venture capital investing and therefore reviews the business plans and related
proprietary information of many enterprises, including enterprises that may have
products or services that compete directly or indirectly with those of the
Company or its Subsidiaries. Except for the obligations set forth in
Section 11.9(c), nothing in this Agreement shall preclude or in any way restrict
GS from investing or participating in any particular enterprise whether or not
such enterprise has products or services that compete with those of the Company
or its Subsidiaries.

11.17 Operation and Distributions of Subsidiaries of the Company. The Company,
ADA and NexGen hereby agree to operate each Subsidiary of the Company only in
accordance with such Subsidiary’s operating agreement and articles of
organization and to cause each such Subsidiary to make distributions to the
Company, ADA and NexGen only in accordance with the

 

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operating agreement of such Subsidiary. The Company, ADA and NexGen hereby
acknowledge that the operating agreement of any Subsidiary of the Company may be
amended or modified only in accordance with the terms thereof and only after the
written consent of GS in accordance with Section 6.1(b)(viii), if applicable.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective
as of May     , 2011.

 

COMPANY: Clean Coal Solutions, LLC By:  

/s/ Charles S. McNeil

Name:  

Charles S. McNeil

Title:  

Manager

MEMBERS: ADA-ES, Inc. By:  

/s/ Michael D. Durham

Name:  

Michael D. Durham

Title:  

President & CEO

NexGen Refined Coal, LLC By:   NexGen Refined Coal Holdings, LLC, its manager
By:   NexGen Synfuel Management, Inc., its manager By:  

/s/ Thomas A. Ostlund

Name:   Thomas A. Ostlund Title:   President GSFS Investments I Corp. By:  

/s/ Albert Dombrowski

Name:  

Albert Dombrowski

Title:  

Authorized Signatory

SIGNATURE PAGE TO

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

--------------------------------------------------------------------------------

INDEX OF EXHIBITS AND SCHEDULES

TO

OPERATING AGREEMENT OF

CLEAN COAL SOLUTIONS, LLC

 

EXHIBIT

  

DESCRIPTION

A

   Unit Ownership and Sharing Ratios

B

   Addresses of Members

C

   Chemicals and Additives

D

   Technical Engineering Services

 

SCHEDULE

  

DESCRIPTION

4.5(a)

   Pre-Closing Cash Calculation

4.5(b)

   Calculation of Projected Distributable Value

5.1(c)

   Managers

  6.11(a)

   Arrangements with Affiliates

--------------------------------------------------------------------------------

EXHIBIT A

TO

OPERATING AGREEMENT

OF

Clean Coal Solutions, LLC

Unit Ownership and Sharing Ratios

 

Member

  

Class A Units*

  

Class B Units**

  

Sharing Ratios

 

ADA-ES Inc.

   42 2/19    0      42 2/19 % 

NexGen Refined Coal, LLC

   42 2/19    0      42 2/19 % 

GSFS Investments I Corp.

   0    15 15/19      15 15/19 % 

 

* All Voting Units

** All Non-voting Units

--------------------------------------------------------------------------------

EXHIBIT B

TO

OPERATING AGREEMENT

OF

Clean Coal Solutions, LLC

Addresses

 

Member

  

Address

ADA-ES, Inc.   

8100 SouthPark Way, Unit B

Littleton, CO 80120

NexGen Refined Coal, LLC   

3300 South Parker Road, Suite 310

Aurora, CO 80014

GSFS Investments I Corp.   

200 West Street

New York, New York 10282

--------------------------------------------------------------------------------

EXHIBIT C

TO

OPERATING AGREEMENT

OF

Clean Coal Solutions, LLC

Chemicals and Additives

 

  •  

Mercury control halogen additive required in connection with the Chemicals
Business

 

  •  

Iron mineralizer additive

 

  •  

Other chemicals or additives that may be required for coal treatment in
connection with the Chemicals Business

--------------------------------------------------------------------------------

EXHIBIT D

TO

OPERATING AGREEMENT

OF

Clean Coal Solutions, LLC

Technical Engineering Services

Scope of Work:

ADA will provide the Technical Engineering Services specified by the Company
from time to time on a properly tendered and accepted order document, consisting
of a purchase order (or similar document) in form acceptable to ADA, which has
been completed to specify with particularity at least the following (i) the
Chemicals and Additives, equipment and/or Technical Engineering Services
requested, (ii) the quantities required, (iii) the time and place for delivery,
(iv) the prices to be paid therefor, and (v) any insurance and/or delivery
arrangements requested to be provided by ADA.

Prices for Technical Engineering Services:

Technical Engineering Services will be charged to the Company at ADA’s published
commercial rates, which as of May 24, 2011, are as follows:

(Effective as of May 24, 2011, subject to change on prior notice)

 

Category

   Rate ($/hour)  

Executive Management

   $ 250   

Principal

   $ 170   

Project Manager

   $ 145   

Senior Engineer

   $ 135   

Engineer

   $ 110   

Technician

   $ 85   

Administrative Support

   $ 70   

Materials Fee: 10% mark-up on all direct materials aside from Chemicals and
Additives specified above, subcontracts, consultants, leases, and other direct
costs.

--------------------------------------------------------------------------------

SCHEDULE 4.5(a)

Pre-Closing Cash Calculation

*

--------------------------------------------------------------------------------

SCHEDULE 4.5(b)

Calculation of Projected Distributable Value

*

--------------------------------------------------------------------------------

SCHEDULE 5.1(c)

Managers

ADA Managers: Dr. Michael Durham, Dr. Nina Bergan French, Mark McKinnies

NexGen Managers: Charles S. McNeil, Brian C. Humphrey, W. Randall Dietrich

--------------------------------------------------------------------------------

SCHEDULE 6.11(a)

Arrangements with Affiliates

Employees and contractors of ADA (collectively, “ADA Personnel”) and employees
and contractors of the ultimate owners of NexGen (collectively, “NexGen
Personnel”) have provided certain services to the Company on an ongoing basis
since the Company’s inception. These services are billed to the Company on terms
comparable to those that would be expected to be obtained by the Company for
similar services in an arms’ length transaction with a non-Affiliate of the
Company.

The services provided by ADA Personnel to the Company include current and future
services for refined coal production equipment design, construction,
installation and testing, ongoing research and development in respect of
improvements to the CyClean technology, and services related to the
“redetermination” process for the refined coal production facilities as required
by the Code and the written guidance issued by the IRS in respect of Section 45
refined coal thereunder. The time spent by ADA Personnel on these services has
been, and will continue to be, billed to the Company on a monthly basis, based
upon the rate sheet set forth below. The services provided by NexGen Personnel
to the Company include current and future services for legal, insurance,
accounting, human resources, book-keeping, tax, finance, administrative and
related matters. The time spent by NexGen Personnel on these services has been,
and will continue to be, billed to the Company on a monthly basis, based upon
the rate sheet set forth in the immediately following page:

--------------------------------------------------------------------------------

NexGen Personnel

 

Name

  

Duties Services

   Hourly Rate  

*

   Legal support, services and counsel    $ *   

*

   Legal support, services and counsel    $ *   

*

   Legal support, services and counsel    $ *   

*

   Tax reporting, services and support    $ *   

*

   Risk management reporting, implementation, support and related services    $
*   

*

   Accounting reporting, support, and related services    $ *   

*

   Legal services and support    $ *   

*

   Risk management reporting, implementation, support and related services    $
*   

*

   Human resources support and services    $ *   

or comparable personnel or replacement of such person

     

ADA Personnel

 

Position

   Hourly Rate  

Executive Management

   $ *   

Principal

   $ *   

Project Manager

   $ *   

Senior Engineer

   $ *   

Engineer II

   $ *   

Engineer I

   $ *   

Technician II

   $ *   

Technician I

   $ *   

Administrative Assistant II

   $ *   

Administrative Assistant I

   $ *   

In addition to the foregoing, the Company has engaged Clean Coal Solutions
Services, LLC (“CCSS”) to assist it in the installation and testing of new
refined coal production facilities. These services are billed to the Company on
terms comparable to those that would be expected to be obtained by the Company
for similar services in an arms’ length transaction. As of the Effective Date,
the Company has issued five (5) purchase orders to CCSS for services related to

--------------------------------------------------------------------------------

the installation and testing of the first five anticipated refined coal
production facilities. Copies of these purchase orders are included in
Section 4.21 of the disclosure schedules to the Purchase Agreement and are
incorporated herein by this reference. The Company expects to engage CCSS
personnel to assist it in a similar capacity for any additional refined coal
production facilities on substantially similar terms.

Aaron Prince, Matt Holley, and Janet McGinty are employees of ADA and have been
seconded to the Company. Under the terms of their respective employment
agreements with ADA, Mr. Prince receives an annual salary of $*, Mr. Holley
receives an annual salary of $*, and Ms. McGinty receives an annual salary of
$*. The Company reimburses ADA monthly for the costs of these salaries, plus a
labor burden of *% and an overhead burden of *% on the salary and labor burden
costs. The Company expects to continue this arrangement until such time as it
determines, in good faith, that the services of any one or all of these
individuals are no longer needed by the Company. The Company may enter into
similar arrangements with ADA employees as determined by the Company, in good
faith, as may be necessary to further the business interests of the Company.

Mike Allen is an employee of ADA and has been seconded to the Company. ADA bills
the Company for the time Mr. Allen spends on engineering projects for the
Company at the rate of $* per hour. The Company expects to continue this
arrangement until such time as it determines, in good faith, that the services
of this individual are no longer needed by the Company.

On May 31, 2001, it is expected that James Weed will begin working for ADA as an
employee and will be seconded to the Company as a project manager. ADA will bill
the Company for the time Mr. Weed will be spending as a project manager for the
Company at the rate of $* per hour. The Company would expect to continue this
arrangement until such time as it determines, in good faith, that the services
of this individual are no longer needed by the Company.

Dr. Nina Bergan French is an independent contractor to ADA. Under the terms of
her independent contractor agreement with ADA, ADA pays Dr. French $* per month.
ADA then bills this amount to the Company each month as reimbursement for
Dr. French’s services. Given the important role Dr. French currently plays, and
is expected to continue to play, in the Company in connection with the ongoing
efforts to implement CyClean in utility power plants, the Company expects to
continue this arrangement with Dr. French, or may alternatively hire Dr. French
as an employee of the Company. The Company also reimburses Dr. French for the
cost of an administrative assistant in the amount of $* per month.

NexGen bills the Company * per month for corporate management services performed
by employees of the ultimate owners of NexGen. The Company would expect to
continue this arrangement until such time as it determines, in good faith, that
the services of this personnel is no longer needed by the Company.