EXHIBIT 10

ADVANCED BIOENERGY, LLC
INVESTOR RIGHTS AGREEMENT

(SDWG)

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

 

 

1.

 

Definitions

 

1

 

 

 

 

 

 

 

 

 

2.

 

Registration Rights

 

 

 

 

 

 

 

 

 

 

 

2.1

 

Demand Registration

 

4

 

 

 

2.2

 

Company Registration

 

5

 

 

 

2.3

 

Underwriting Requirements

 

6

 

 

 

2.4

 

Obligations of the Company

 

7

 

 

 

2.5

 

Furnish Information

 

9

 

 

 

2.6

 

Expenses of Registration

 

9

 

 

 

2.7

 

Indemnification

 

9

 

 

 

2.8

 

Reports Under Exchange Act

 

12

 

 

 

2.9

 

Limitations on Subsequent Registration Rights

 

12

 

 

 

2.10

 

“Market Stand-off” Agreement

 

13

 

 

 

2.11

 

Restrictions on Transfer

 

13

 

 

 

2.12

 

Termination of Registration Rights

 

16

 

 

 

 

 

 

 

 

 

3.

 

Board Rights

 

16

 

 

 

 

 

 

 

 

 

3.1

 

Board Rights

 

16

 

 

 

3.2

 

Observer Rights

 

16

 

 

 

3.3

 

Termination of Board Rights

 

16

 

 

 

3.4

 

Termination of Observer Rights

 

16

 

 

 

3.5

 

Confidentiality

 

17

 

 

 

 

 

 

 

 

 

4.

 

Additional Covenants

 

17

 

 

 

 

 

 

 

 

 

4.1

 

Extraordinary Transactions

 

17

 

 

 

4.2

 

Meetings of the Board

 

17

 

 

 

4.3

 

Successor Liability

 

17

 

 

 

4.4

 

Board Expenses

 

18

 

 

 

 

 

 

 

 

 

5.

 

Miscellaneous

 

18

 

 

 

 

 

 

 

 

 

5.1

 

Successors and Assigns

 

18

 

 

 

5.2

 

Governing Law

 

18

 

 

 

5.3

 

Counterparts; Facsimile

 

19

 

 

 

5.4

 

Titles and Subtitles

 

19

 

 

 

5.5

 

Notices

 

19

 

 

 

5.6

 

Amendments and Waivers

 

19

 

 

 

5.7

 

Severability

 

20

 

 

 

5.8

 

Aggregation of Securities

 

20

 

 

 

5.9

 

Entire Agreement

 

20

 

 

 

5.10

 

Delays or Omissions

 

20

 

 

Schedule A - Schedule of Holders

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ADVANCED BIOENERGY, LLC
INVESTOR RIGHTS AGREEMENT

This Investor Rights Agreement (this “Agreement”) is made as of the     day of
November, 2006, by and between Advanced BioEnergy, LLC, a Delaware limited
liability company (the “Company”), and South Dakota Wheat Growers Association, a
South Dakota cooperative (“SDWG”).

Background

A.            The Company, HGF Acquisition, LLC, a wholly owned subsidiary of
the Company (“Acquisition Sub”), Heartland Grain Fuels, L.P., a Delaware limited
partnership (“HGF”), Heartland Producers, LLC, a South Dakota limited liability
company (“HP”), SDWG and Dakota Fuels, Inc., a Delaware corporation (“DF”), have
entered into a Partnership Interest and Stock Purchase Agreement dated November
7, 2006 (the “Purchase Agreement”), which provides for the acquisition by
Acquisition Sub of the limited partnership interests of HGF and the common
shares of DF owned by SDWG and HP, in a two-step transaction described therein.

B.            In order to induce SDWG to exchange its limited partnership
interests in HGF and common shares of DF for Units (as defined below) and cash
pursuant to the Purchase Agreement, SDWG and the Company hereby agree that this
Agreement shall govern the rights of SDWG to cause the Company to register
Units, to receive certain information from the Company, and shall govern certain
other matters as set forth in this Agreement.

C.            The parties hereby agree as follows.

Agreement

1.             DEFINITIONS.  FOR PURPOSES OF THIS AGREEMENT:

1.1           “Additional Financing” means the sale by the Company of additional
Units as contemplated by the registration statement on Form SB-2 filed by the
Company with the SEC on September 13, 2006, as amended from time to time
thereafter.

1.1           “Affiliate” means, with respect to any specified Person, any other
Person who or which, directly or indirectly, controls, is controlled by, or is
under common control with such specified Person, including without limitation
any general partner, officer, director or manager of such Person.

1.3           “Damages” means any loss, damage, or liability to which a party
hereto may become subject under the Securities Act, the Exchange Act, or other
federal or state law, insofar as such loss, damage, or liability (or any action
in respect thereof) arises out of or is based upon (a) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement of the Company, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (b) an
omission or

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alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading; or (c) any violation
or alleged violation by the indemnifying party (or any of its agents or
Affiliates) of the Securities Act, the Exchange Act, any state securities law,
or any rule or regulation promulgated under the Securities Act, the Exchange
Act, or any state securities law.

1.4          “Derivative Securities” means any securities or rights convertible
into, or exercisable or exchangeable for (in each case, directly or indirectly),
Units, including options and warrants.

1.5          “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

1.6          “Excluded Registration” means (a) a registration of Units in
connection with the Additional Financing so long as such registration is
declared effective by the SEC no later than February 28, 2007; (b) a
registration relatingto the sale of securities to employees of the Company or a
subsidiary pursuant to a stock option, stock purchase, or similar plan; or (c) a
registration relating to an SEC Rule 145 transaction.

1.7          “Form S-1” means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC.

1.8          “Form S-2” means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC.

1.9           “Form S-3” means such form under the Securities Act as in effect
on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC that permits incorporation of substantial
information by reference to other documents filed by the Company with the SEC.

1.10         “GAAP” means generally accepted accounting principles in the United
States.

1.11         “Holder” means any holder of Registrable Securities who is a party
to this Agreement, including permitted transferees that agree in writing to be
bound by and subject to the terms and conditions of this Agreement.

1.12         “IMMEDIATE FAMILY MEMBER” MEANS A CHILD, STEPCHILD, GRANDCHILD,
PARENT, STEPPARENT, GRANDPARENT, SPOUSE, SIBLING, MOTHER-IN-LAW, FATHER-IN-LAW,
SON-IN-LAW, DAUGHTER-IN-LAW, BROTHER-IN-LAW, OR SISTER-IN-LAW, INCLUDING
ADOPTIVE RELATIONSHIPS, OF A NATURAL PERSON REFERRED TO HEREIN.

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1.13         “INITIATING HOLDERS” MEANS, COLLECTIVELY, HOLDERS WHO PROPERLY
INITIATE A REGISTRATION REQUEST UNDER THIS AGREEMENT.

1.14         “IPO” MEANS THE COMPANY’S FIRST UNDERWRITTEN PUBLIC OFFERING OF ITS
UNITS OR OTHER EQUITY SECURITIES UNDER THE SECURITIES ACT.

1.15         “OPERATING AGREEMENT” MEANS THAT CERTAIN THIRD AMENDED AND RESTATED
OPERATING AGREEMENT OF THE COMPANY DATED AS OF FEBRUARY 1, 2006.

1.16         “PERSON” MEANS ANY INDIVIDUAL, CORPORATION, PARTNERSHIP, TRUST,
LIMITED LIABILITY COMPANY, ASSOCIATION OR OTHER ENTITY.

1.17         “REGISTRABLE SECURITIES” MEANS (A) THE UNITS ISSUED TO SDWG, AND
ANY UNITS ACQUIRED BY SDWG AFTER THE DATE HEREOF; AND (B) ANY UNITS ISSUED AS
(OR ISSUABLE UPON THE CONVERSION OR EXERCISE OF ANY WARRANT, RIGHT, OR OTHER
SECURITY THAT IS ISSUED AS) A DIVIDEND OR OTHER DISTRIBUTION WITH RESPECT TO, OR
IN EXCHANGE FOR OR IN REPLACEMENT OF, THE UNITS REFERENCED IN CLAUSE (A) ABOVE;
EXCLUDING IN ALL CASES, HOWEVER, ANY REGISTRABLE SECURITIES SOLD BY A PERSON IN
A TRANSACTION IN WHICH THE APPLICABLE RIGHTS UNDER THIS AGREEMENT ARE NOT
ASSIGNED PURSUANT TO SECTION 5.1, AND EXCLUDING FOR PURPOSES OF SECTION 2 ANY
UNITS FOR WHICH REGISTRATION RIGHTS HAVE TERMINATED PURSUANT TO SECTION 2.12 OF
THIS AGREEMENT.

1.18         “RESTRICTED SECURITIES” MEANS THE SECURITIES OF THE COMPANY
REQUIRED TO BEAR THE LEGEND SET FORTH IN SECTION 2.11(B) HEREOF.

1.19         “SEC” MEANS THE SECURITIES AND EXCHANGE COMMISSION.

1.20         “SEC RULE 144” MEANS RULE 144 PROMULGATED BY THE SEC UNDER THE
SECURITIES ACT.

1.21         “SEC RULE 144(K)” MEANS RULE 144(K) PROMULGATED BY THE SEC UNDER
THE SECURITIES ACT.

1.22         “SEC RULE 145” MEANS RULE 145 PROMULGATED BY THE SEC UNDER THE
SECURITIES ACT.

1.23         “SECURITIES ACT” MEANS THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

1.24         “SELLING EXPENSES” MEANS ALL UNDERWRITING DISCOUNTS, SELLING
COMMISSIONS, AND STOCK TRANSFER TAXES APPLICABLE TO THE SALE OF REGISTRABLE
SECURITIES, AND FEES AND DISBURSEMENTS OF COUNSEL FOR ANY HOLDER, EXCEPT FOR THE
FEES AND DISBURSEMENTS OF THE SELLING HOLDER COUNSEL BORNE AND PAID BY THE
COMPANY AS PROVIDED IN SECTION 2.6.

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1.25         “UNITS” MEANS UNITS OF MEMBERSHIP INTERESTS IN THE COMPANY, OR
SHARES OR OTHER EQUITY INTERESTS OF THE COMPANY ISSUED IN EXCHANGE FOR OR
OTHERWISE IN CONNECTION WITH ANY TRANSACTION AS DESCRIBED IN SECTION 4.1.

2.             REGISTRATION RIGHTS.  THE COMPANY COVENANTS AND AGREES AS
FOLLOWS:

2.1           DEMAND REGISTRATION.

(A)           FORM S-1 DEMAND.  IF AT ANY TIME AFTER THE EARLIER OF (I) ONE YEAR
AFTER THE DATE OF THIS AGREEMENT OR (II) NINETY (90) DAYS AFTER THE EFFECTIVE
DATE OF THE REGISTRATION STATEMENT FOR THE IPO OR SUCH LONGER PERIOD AFTER THE
IPO IF THE HOLDERS CANNOT SELL THEIR SECURITIES AS A RESULT OF EXECUTING A
“MARKET STAND-OFF” AGREEMENT CONTEMPLATED BY SECTION 2.10 HEREOF, THE COMPANY
RECEIVES A REQUEST FROM HOLDERS OF AT LEAST TWENTY-FIVE PERCENT (25%) OF THE
REGISTRABLE SECURITIES THAT THE COMPANY FILE A FORM S-1 REGISTRATION STATEMENT
WITH RESPECT TO AT LEAST TWENTY PERCENT (20%) OF THE REGISTRABLE SECURITIES (OR
A LESSER PERCENTAGE IF THE ANTICIPATED AGGREGATE OFFERING PRICE, NET OF SELLING
EXPENSES, WOULD EXCEED $15 MILLION), THEN THE COMPANY SHALL (X) WITHIN TEN (10)
DAYS AFTER THE DATE SUCH REQUEST IS GIVEN, GIVE NOTICE THEREOF (THE “DEMAND
NOTICE”) TO ALL HOLDERS OTHER THAN THE INITIATING HOLDERS; AND (Y) AS SOON AS
PRACTICABLE, AND IN ANY EVENT WITHIN FORTY-FIVE (45) DAYS AFTER THE DATE SUCH
REQUEST IS GIVEN BY THE INITIATING HOLDERS, FILE A FORM S-1 REGISTRATION
STATEMENT UNDER THE SECURITIES ACT COVERING ALL REGISTRABLE SECURITIES THAT THE
INITIATING HOLDERS REQUESTED TO BE REGISTERED AND ANY ADDITIONAL REGISTRABLE
SECURITIES REQUESTED TO BE INCLUDED IN SUCH REGISTRATION BY ANY OTHER HOLDERS,
AS SPECIFIED BY NOTICE GIVEN BY EACH SUCH HOLDER TO THE COMPANY WITHIN TWENTY
(20) DAYS OF THE DATE THE DEMAND NOTICE IS GIVEN, AND IN EACH CASE, SUBJECT TO
THE LIMITATIONS OF SECTION 2.1(C) AND SECTION 2.3.

(B)           FORM S-3 DEMAND.  IF AT ANY TIME WHEN IT IS ELIGIBLE TO USE A
FORM S-3 REGISTRATION STATEMENT, THE COMPANY RECEIVES A REQUEST FROM HOLDERS OF
AT LEAST TWENTY-FIVE PERCENT (25%) OF THE REGISTRABLE SECURITIES THAT THE
COMPANY FILE A FORM S-3 REGISTRATION STATEMENT WITH RESPECT TO AT LEAST TWENTY
PERCENT (20%) OF THE REGISTRABLE SECURITIES (OR A LESSER PERCENTAGE IF THE
ANTICIPATED AGGREGATE OFFERING PRICE, NET OF SELLING EXPENSES, WOULD EXCEED
$15 MILLION), THEN THE COMPANY SHALL (I) WITHIN TEN (10) DAYS AFTER THE DATE
SUCH REQUEST IS GIVEN, GIVE A DEMAND NOTICE TO ALL HOLDERS OTHER THAN THE
INITIATING HOLDERS; AND (II) AS SOON AS PRACTICABLE, AND IN ANY EVENT WITHIN
FORTY-FIVE (45) DAYS AFTER THE DATE SUCH REQUEST IS GIVEN BY THE INITIATING
HOLDERS, FILE A FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT
COVERING ALL REGISTRABLE SECURITIES REQUESTED TO BE INCLUDED IN SUCH
REGISTRATION BY ANY OTHER HOLDERS, AS SPECIFIED BY NOTICE GIVEN BY EACH SUCH
HOLDER TO THE COMPANY WITHIN TWENTY (20) DAYS OF THE DATE THE DEMAND NOTICE IS
GIVEN, AND IN EACH CASE, SUBJECT TO THE LIMITATIONS OF SECTION 2.1(C) AND
SECTION 2.3.

(C)           NOTWITHSTANDING THE FOREGOING OBLIGATIONS, IF THE COMPANY
FURNISHES TO HOLDERS REQUESTING A REGISTRATION PURSUANT TO SECTION 2.1(A) OR
SECTION 2.1(B) A CERTIFICATE SIGNED BY THE COMPANY’S CHIEF EXECUTIVE OFFICER
STATING THAT IN THE GOOD FAITH JUDGMENT OF THE BOARD IT WOULD BE MATERIALLY
DETRIMENTAL TO THE COMPANY AND ITS MEMBERS FOR

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SUCH REGISTRATION STATEMENT TO EITHER BECOME EFFECTIVE OR REMAIN EFFECTIVE FOR
AS LONG AS SUCH REGISTRATION STATEMENT OTHERWISE WOULD BE REQUIRED TO REMAIN
EFFECTIVE, BECAUSE SUCH ACTION WOULD (I) MATERIALLY INTERFERE WITH A SIGNIFICANT
ACQUISITION, CORPORATE REORGANIZATION, OR OTHER SIMILAR TRANSACTION INVOLVING
THE COMPANY; OR (II) REQUIRE PREMATURE DISCLOSURE OF MATERIAL INFORMATION THAT
THE COMPANY HAS A BONA FIDE BUSINESS PURPOSE FOR PRESERVING AS CONFIDENTIAL; AND
IT IS THEREFORE NECESSARY TO DEFER THE FILING OF SUCH REGISTRATION STATEMENT,
THEN THE COMPANY SHALL HAVE THE RIGHT TO DEFER TAKING ACTION WITH RESPECT TO
SUCH FILING, AND ANY TIME PERIODS WITH RESPECT TO FILING OR EFFECTIVENESS
THEREOF SHALL BE TOLLED CORRESPONDINGLY, FOR A PERIOD OF NOT MORE THAN THIRTY
(30) DAYS AFTER THE REQUEST OF THE INITIATING HOLDERS IS GIVEN; PROVIDED,
HOWEVER, THAT THE COMPANY MAY NOT INVOKE THIS RIGHT MORE THAN ONCE IN ANY TWELVE
(12) MONTH PERIOD; AND PROVIDED FURTHER THAT THE COMPANY SHALL NOT REGISTER ANY
SECURITIES FOR ITS OWN ACCOUNT OR THAT OF ANY OTHER MEMBER DURING SUCH THIRTY
(30) DAY PERIOD OTHER THAN AN EXCLUDED REGISTRATION.

(D)           THE COMPANY SHALL NOT BE OBLIGATED TO EFFECT, OR TO TAKE ANY
ACTION TO EFFECT, ANY REGISTRATION PURSUANT TO SECTION 2.1(A)(I) DURING THE
PERIOD THAT IS THIRTY (30) DAYS BEFORE THE COMPANY’S GOOD FAITH ESTIMATE OF THE
DATE OF FILING OF, AND ENDING ON A DATE THAT IS NINETY (90) DAYS AFTER THE
EFFECTIVE DATE OF, A COMPANY-INITIATED REGISTRATION, PROVIDED, THAT THE COMPANY
IS ACTIVELY EMPLOYING IN GOOD FAITH COMMERCIALLY REASONABLE EFFORTS TO CAUSE
SUCH REGISTRATION STATEMENT TO BECOME EFFECTIVE; (II) AFTER THE COMPANY HAS
EFFECTED TWO REGISTRATIONS PURSUANT TO SECTION 2.1(A); OR (III) IF THE
INITIATING HOLDERS PROPOSE TO DISPOSE OF SHARES OF REGISTRABLE SECURITIES THAT
MAY BE IMMEDIATELY REGISTERED ON FORM S-3 PURSUANT TO A REQUEST MADE PURSUANT TO
SECTION 2.1(B).  THE COMPANY SHALL NOT BE OBLIGATED TO EFFECT, OR TO TAKE ANY
ACTION TO EFFECT, ANY REGISTRATION PURSUANT TO SECTION 2.1(B) (X) DURING THE
PERIOD THAT IS THIRTY (30) DAYS BEFORE THE COMPANY’S GOOD FAITH ESTIMATE OF THE
DATE OF FILING OF, AND ENDING ON A DATE THAT IS NINETY (90) DAYS AFTER THE
EFFECTIVE DATE OF, A COMPANY-INITIATED REGISTRATION, PROVIDED, THAT THE COMPANY
IS ACTIVELY EMPLOYING IN GOOD FAITH COMMERCIALLY REASONABLE EFFORTS TO CAUSE
SUCH REGISTRATION STATEMENT TO BECOME EFFECTIVE; OR (Y) IF THE COMPANY HAS
EFFECTED TWO REGISTRATIONS PURSUANT TO SECTION 2.1(B) WITHIN THE TWELVE (12)
MONTH PERIOD IMMEDIATELY PRECEDING THE DATE OF SUCH REQUEST.  A REGISTRATION
SHALL NOT BE COUNTED AS “EFFECTED” FOR PURPOSES OF THIS SECTION 2.1(D) UNTIL
SUCH TIME AS THE APPLICABLE REGISTRATION STATEMENT HAS BEEN DECLARED EFFECTIVE
BY THE SEC, UNLESS THE INITIATING HOLDERS WITHDRAW THEIR REQUEST FOR SUCH
REGISTRATION, ELECT NOT TO PAY THE REGISTRATION EXPENSES THEREFOR, AND FORFEIT
THEIR RIGHT TO ONE DEMAND REGISTRATION STATEMENT PURSUANT TO SECTION 2.6, IN
WHICH CASE SUCH WITHDRAWN REGISTRATION STATEMENT SHALL BE COUNTED AS “EFFECTED”
FOR PURPOSES OF THIS SECTION 2.1(D).

2.2           COMPANY REGISTRATION.  IF THE COMPANY PROPOSES TO REGISTER
(INCLUDING, FOR THIS PURPOSE, A REGISTRATION EFFECTED BY THE COMPANY FOR EQUITY
HOLDERS OTHER THAN THE HOLDERS) ANY OF ITS SECURITIES UNDER THE SECURITIES ACT
IN CONNECTION WITH THE PUBLIC OFFERING OF SUCH SECURITIES SOLELY FOR CASH (OTHER
THAN IN AN EXCLUDED REGISTRATION), THE COMPANY SHALL, AT SUCH TIME, PROMPTLY
GIVE EACH HOLDER NOTICE OF SUCH REGISTRATION.  UPON THE REQUEST OF EACH HOLDER
GIVEN WITHIN TWENTY (20) DAYS AFTER SUCH NOTICE IS GIVEN BY THE COMPANY, THE
COMPANY SHALL, SUBJECT TO THE PROVISIONS OF SECTION 2.3, CAUSE TO BE REGISTERED
ALL OF THE REGISTRABLE SECURITIES THAT EACH SUCH HOLDER HAS REQUESTED TO BE
INCLUDED IN SUCH REGISTRATION.  THE COMPANY

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SHALL HAVE THE RIGHT TO TERMINATE OR WITHDRAW ANY REGISTRATION INITIATED BY IT
UNDER THIS SECTION 2.2 BEFORE THE EFFECTIVE DATE OF SUCH REGISTRATION, WHETHER
OR NOT ANY HOLDER HAS ELECTED TO INCLUDE REGISTRABLE SECURITIES IN SUCH
REGISTRATION.  THE EXPENSES (OTHER THAN SELLING EXPENSES) OF SUCH WITHDRAWN
REGISTRATION SHALL BE BORNE BY THE COMPANY IN ACCORDANCE WITH SECTION 2.6.

2.3           UNDERWRITING REQUIREMENTS.

(A)           IF, PURSUANT TO SECTION 2.1, THE INITIATING HOLDERS INTEND TO
DISTRIBUTE THE REGISTRABLE SECURITIES COVERED BY THEIR REQUEST BY MEANS OF AN
UNDERWRITING, THEY SHALL SO ADVISE THE COMPANY AS A PART OF THEIR REQUEST MADE
PURSUANT TO SECTION 2.1, AND THE COMPANY SHALL INCLUDE SUCH INFORMATION IN THE
DEMAND NOTICE.  THE UNDERWRITER(S) WILL BE SELECTED BY THE COMPANY AND SHALL BE
REASONABLY ACCEPTABLE TO A MAJORITY IN INTEREST OF THE INITIATING HOLDERS.  IN
SUCH EVENT, THE RIGHT OF ANY HOLDER TO INCLUDE SUCH HOLDER’S REGISTRABLE
SECURITIES IN SUCH REGISTRATION SHALL BE CONDITIONED UPON SUCH HOLDER’S
PARTICIPATION IN SUCH UNDERWRITING AND THE INCLUSION OF SUCH HOLDER’S
REGISTRABLE SECURITIES IN THE UNDERWRITING TO THE EXTENT PROVIDED HEREIN.  ALL
HOLDERS PROPOSING TO DISTRIBUTE THEIR SECURITIES THROUGH SUCH UNDERWRITING SHALL
(TOGETHER WITH THE COMPANY AS PROVIDED IN SECTION 2.4(E)) ENTER INTO AN
UNDERWRITING AGREEMENT IN CUSTOMARY FORM WITH THE UNDERWRITER(S) SELECTED FOR
SUCH UNDERWRITING.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION 2.3, IF
THE UNDERWRITER(S) ADVISE(S) THE INITIATING HOLDERS IN WRITING THAT MARKETING
FACTORS REQUIRE A LIMITATION ON THE NUMBER OF SHARES TO BE UNDERWRITTEN, THEN
THE INITIATING HOLDERS SHALL SO ADVISE ALL HOLDERS OF REGISTRABLE SECURITIES
THAT OTHERWISE WOULD BE UNDERWRITTEN PURSUANT HERETO, AND THE NUMBER OF
REGISTRABLE SECURITIES THAT MAY BE INCLUDED IN THE UNDERWRITING SHALL BE
ALLOCATED AMONG SUCH HOLDERS OF REGISTRABLE SECURITIES, INCLUDING THE INITIATING
HOLDERS, IN PROPORTION (AS NEARLY AS PRACTICABLE) TO THE NUMBER OF REGISTRABLE
SECURITIES OWNED BY EACH HOLDER OR IN SUCH OTHER PROPORTION AS SHALL MUTUALLY BE
AGREED TO BY ALL SUCH SELLING HOLDERS; PROVIDED, HOWEVER, THAT THE NUMBER OF
REGISTRABLE SECURITIES HELD BY THE HOLDERS TO BE INCLUDED IN SUCH UNDERWRITING
SHALL NOT BE REDUCED UNLESS ALL OTHER SECURITIES ARE FIRST ENTIRELY EXCLUDED
FROM THE UNDERWRITING.

(B)           IN CONNECTION WITH ANY OFFERING INVOLVING AN UNDERWRITING OF THE
COMPANY’S SECURITIES PURSUANT TO SECTION 2.2, THE COMPANY SHALL NOT BE REQUIRED
TO INCLUDE ANY OF THE HOLDERS’ REGISTRABLE SECURITIES IN SUCH UNDERWRITING
UNLESS THE HOLDERS ACCEPT THE TERMS OF THE UNDERWRITING AGREEMENT AS AGREED UPON
BETWEEN THE COMPANY AND ITS UNDERWRITERS (WHICH UNDERWRITING AGREEMENT SHALL
CONTAIN CUSTOMARY TERMS AND CONDITIONS), AND THEN ONLY IN SUCH QUANTITY AS THE
UNDERWRITERS IN THEIR REASONABLE DISCRETION DETERMINE WILL NOT JEOPARDIZE THE
SUCCESS OF THE OFFERING BY THE COMPANY.  IF THE TOTAL NUMBER OF SECURITIES,
INCLUDING REGISTRABLE SECURITIES, REQUESTED BY SECURITY HOLDERS OF THE COMPANY
TO BE INCLUDED IN SUCH OFFERING EXCEEDS THE NUMBER OF SECURITIES TO BE SOLD
(OTHER THAN BY THE COMPANY) THAT THE UNDERWRITERS IN THEIR REASONABLE DISCRETION
DETERMINE IS COMPATIBLE WITH THE SUCCESS OF THE OFFERING, THEN THE COMPANY SHALL
BE REQUIRED TO INCLUDE IN THE OFFERING ONLY THAT NUMBER OF SUCH SECURITIES,
INCLUDING REGISTRABLE SECURITIES, WHICH THE UNDERWRITERS IN THEIR REASONABLE
DISCRETION DETERMINE WILL NOT JEOPARDIZE THE SUCCESS OF THE OFFERING.  IF THE
UNDERWRITERS DETERMINE THAT LESS THAN ALL OF THE REGISTRABLE SECURITIES
REQUESTED TO BE REGISTERED CAN BE INCLUDED IN SUCH OFFERING, THEN THE

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REGISTRABLE SECURITIES THAT ARE INCLUDED IN SUCH OFFERING SHALL BE ALLOCATED
AMONG THE SELLING HOLDERS IN PROPORTION (AS NEARLY AS PRACTICABLE TO) THE NUMBER
OF REGISTRABLE SECURITIES OWNED BY EACH SELLING HOLDER OR IN SUCH OTHER
PROPORTIONS AS SHALL MUTUALLY BE AGREED TO BY ALL SUCH SELLING HOLDERS. 
NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL (I) THE NUMBER OF REGISTRABLE
SECURITIES INCLUDED IN THE OFFERING BE REDUCED UNLESS ALL OTHER SECURITIES
(OTHER THAN SECURITIES TO BE SOLD BY THE COMPANY) ARE FIRST ENTIRELY EXCLUDED
FROM THE OFFERING, OR (II) THE NUMBER OF REGISTRABLE SECURITIES INCLUDED IN THE
OFFERING BE REDUCED BELOW THIRTY PERCENT (30%) OF THE TOTAL NUMBER OF SECURITIES
INCLUDED IN SUCH OFFERING, UNLESS SUCH OFFERING IS THE IPO, IN WHICH CASE THE
SELLING HOLDERS MAY BE EXCLUDED FURTHER IF THE UNDERWRITERS MAKE THE
DETERMINATION DESCRIBED ABOVE AND NO OTHER MEMBER’S SECURITIES ARE INCLUDED IN
SUCH OFFERING.  FOR PURPOSES OF THE PROVISION IN THIS SECTION 2.3(B) CONCERNING
APPORTIONMENT, FOR ANY SELLING HOLDER THAT IS A PARTNERSHIP, LIMITED LIABILITY
COMPANY, OR CORPORATION, THE PARTNERS, MEMBERS, RETIRED PARTNERS, RETIRED
MEMBERS, STOCKHOLDERS, AND AFFILIATES OF SUCH HOLDER, OR THE ESTATES AND
IMMEDIATE FAMILY MEMBERS OF ANY SUCH PARTNERS, RETIRED PARTNERS, MEMBERS, AND
RETIRED MEMBERS AND ANY TRUSTS FOR THE BENEFIT OF ANY OF THE FOREGOING PERSONS,
SHALL BE DEEMED TO BE A SINGLE “SELLING HOLDER,” AND ANY PRO RATA REDUCTION WITH
RESPECT TO SUCH “SELLING HOLDER” SHALL BE BASED UPON THE AGGREGATE NUMBER OF
REGISTRABLE SECURITIES OWNED BY ALL PERSONS INCLUDED IN SUCH “SELLING HOLDER” AS
DEFINED IN THIS SENTENCE.

(C)           FOR PURPOSES OF SECTION 2.1, A REGISTRATION SHALL NOT BE COUNTED
AS “EFFECTED” IF, AS A RESULT OF AN EXERCISE OF THE UNDERWRITER’S CUTBACK
PROVISIONS IN SECTION 2.3, FEWER THAN FIFTY PERCENT (50%) OF THE TOTAL NUMBER OF
REGISTRABLE SECURITIES THAT HOLDERS HAVE REQUESTED TO BE INCLUDED IN SUCH
REGISTRATION STATEMENT ARE ACTUALLY INCLUDED.

2.4           OBLIGATIONS OF THE COMPANY.  WHENEVER REQUIRED UNDER THIS
SECTION 2 TO EFFECT THE REGISTRATION OF ANY REGISTRABLE SECURITIES, THE COMPANY
SHALL, AS EXPEDITIOUSLY AS REASONABLY POSSIBLE:

(A)           PREPARE AND FILE WITH THE SEC A REGISTRATION STATEMENT WITH
RESPECT TO SUCH REGISTRABLE SECURITIES AND USE ITS COMMERCIALLY REASONABLE
EFFORTS TO CAUSE SUCH REGISTRATION STATEMENT TO BECOME EFFECTIVE AND, UPON THE
REQUEST OF THE HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES REGISTERED
THEREUNDER, KEEP SUCH REGISTRATION STATEMENT EFFECTIVE FOR A PERIOD OF UP TO ONE
HUNDRED EIGHTY (180) DAYS OR, IF EARLIER, UNTIL THE DISTRIBUTION CONTEMPLATED IN
THE REGISTRATION STATEMENT HAS BEEN COMPLETED; PROVIDED, HOWEVER, THAT (I) SUCH
ONE HUNDRED EIGHTY (180) DAY PERIOD SHALL BE EXTENDED FOR A PERIOD OF TIME EQUAL
TO THE PERIOD THE HOLDER REFRAINS, AT THE REQUEST OF THE COMPANY OR AN
UNDERWRITER OF UNITS (OR OTHER SECURITIES) OF THE COMPANY, FROM SELLING ANY
SECURITIES INCLUDED IN SUCH REGISTRATION, AND (II) IN THE CASE OF ANY
REGISTRATION OF REGISTRABLE SECURITIES ON FORM S-3 THAT ARE INTENDED TO BE
OFFERED ON A CONTINUOUS OR DELAYED BASIS, SUBJECT TO COMPLIANCE WITH APPLICABLE
SEC RULES, SUCH ONE HUNDRED EIGHTY (180) DAY PERIOD SHALL BE EXTENDED FOR UP TO
TWO HUNDRED FORTY (240) DAYS, IF NECESSARY, TO KEEP THE REGISTRATION STATEMENT
EFFECTIVE UNTIL ALL SUCH REGISTRABLE SECURITIES ARE SOLD;

(B)           PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS AND SUPPLEMENTS TO
SUCH REGISTRATION STATEMENT, AND THE PROSPECTUS USED IN CONNECTION WITH SUCH
REGISTRATION

7

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STATEMENT, AS MAY BE NECESSARY TO COMPLY WITH THE SECURITIES ACT IN ORDER TO
ENABLE THE DISPOSITION OF ALL SECURITIES COVERED BY SUCH REGISTRATION STATEMENT;

(C)           FURNISH TO THE SELLING HOLDERS SUCH NUMBERS OF COPIES OF A
PROSPECTUS, INCLUDING A PRELIMINARY PROSPECTUS, AS REQUIRED BY THE SECURITIES
ACT, AND SUCH OTHER DOCUMENTS AS THE HOLDERS MAY REASONABLY REQUEST IN ORDER TO
FACILITATE THEIR DISPOSITION OF THEIR REGISTRABLE SECURITIES;

(D)           USE ITS COMMERCIALLY REASONABLE EFFORTS TO REGISTER AND QUALIFY
THE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT UNDER SUCH OTHER
SECURITIES OR BLUE-SKY LAWS OF SUCH JURISDICTIONS AS SHALL BE REASONABLY
REQUESTED BY THE SELLING HOLDERS; PROVIDED THAT THE COMPANY SHALL NOT BE
REQUIRED TO QUALIFY TO DO BUSINESS OR TO FILE A GENERAL CONSENT TO SERVICE OF
PROCESS IN ANY SUCH STATES OR JURISDICTIONS, UNLESS THE COMPANY IS ALREADY
SUBJECT TO SERVICE IN SUCH JURISDICTION AND EXCEPT AS MAY BE REQUIRED BY THE
SECURITIES ACT;

(E)           IN THE EVENT OF ANY UNDERWRITTEN PUBLIC OFFERING, ENTER INTO AND
PERFORM ITS OBLIGATIONS UNDER AN UNDERWRITING AGREEMENT, IN USUAL AND CUSTOMARY
FORM, WITH THE UNDERWRITER(S) OF SUCH OFFERING;

(F)            USE ITS COMMERCIALLY REASONABLE EFFORTS TO CAUSE ALL SUCH
REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT TO BE LISTED ON A
NATIONAL SECURITIES EXCHANGE OR TRADING SYSTEM AND EACH SECURITIES EXCHANGE AND
TRADING SYSTEM (IF ANY) ON WHICH SIMILAR SECURITIES ISSUED BY THE COMPANY ARE
THEN LISTED;

(G)           PROVIDE A TRANSFER AGENT AND REGISTRAR FOR ALL REGISTRABLE
SECURITIES REGISTERED PURSUANT TO THIS AGREEMENT AND PROVIDE A CUSIP NUMBER FOR
ALL SUCH REGISTRABLE SECURITIES, IN EACH CASE NOT LATER THAN THE EFFECTIVE DATE
OF SUCH REGISTRATION;

(H)           PROMPTLY MAKE AVAILABLE FOR INSPECTION BY THE SELLING HOLDERS, ANY
UNDERWRITER(S) PARTICIPATING IN ANY DISPOSITION PURSUANT TO SUCH REGISTRATION
STATEMENT, AND ANY ATTORNEY OR ACCOUNTANT OR OTHER AGENT RETAINED BY ANY SUCH
UNDERWRITER OR SELECTED BY THE SELLING HOLDERS, ALL FINANCIAL AND OTHER RECORDS,
PERTINENT CORPORATE DOCUMENTS, AND PROPERTIES OF THE COMPANY, AND CAUSE THE
COMPANY’S OFFICERS, DIRECTORS, EMPLOYEES, AND INDEPENDENT ACCOUNTANTS TO SUPPLY
ALL INFORMATION REASONABLY REQUESTED BY ANY SUCH SELLER, UNDERWRITER, ATTORNEY,
ACCOUNTANT, OR AGENT, IN EACH CASE, AS NECESSARY OR ADVISABLE TO VERIFY THE
ACCURACY OF THE INFORMATION IN SUCH REGISTRATION STATEMENT AND TO CONDUCT
APPROPRIATE DUE DILIGENCE IN CONNECTION THEREWITH;

(I)            NOTIFY EACH SELLING HOLDER, PROMPTLY AFTER THE COMPANY RECEIVES
NOTICE THEREOF, OF THE TIME WHEN SUCH REGISTRATION STATEMENT HAS BEEN DECLARED
EFFECTIVE OR A SUPPLEMENT TO ANY PROSPECTUS FORMING A PART OF SUCH REGISTRATION
STATEMENT HAS BEEN FILED; AND

8

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(J)            AFTER SUCH REGISTRATION STATEMENT BECOMES EFFECTIVE, NOTIFY EACH
SELLING HOLDER OF ANY REQUEST BY THE SEC THAT THE COMPANY AMEND OR SUPPLEMENT
SUCH REGISTRATION STATEMENT OR PROSPECTUS.

2.5           FURNISH INFORMATION.  IT SHALL BE A CONDITION PRECEDENT TO THE
OBLIGATIONS OF THE COMPANY TO TAKE ANY ACTION PURSUANT TO SECTION 2 WITH RESPECT
TO THE REGISTRABLE SECURITIES OF ANY SELLING HOLDER THAT SUCH HOLDER SHALL
FURNISH TO THE COMPANY SUCH INFORMATION REGARDING ITSELF, THE REGISTRABLE
SECURITIES HELD BY IT, AND THE INTENDED METHOD OF DISPOSITION OF SUCH SECURITIES
AS IS REASONABLY REQUIRED TO EFFECT THE REGISTRATION OF SUCH HOLDER’S
REGISTRABLE SECURITIES.

2.6           EXPENSES OF REGISTRATION.  ALL EXPENSES (OTHER THAN SELLING
EXPENSES) INCURRED IN CONNECTION WITH REGISTRATIONS, FILINGS, OR QUALIFICATIONS
PURSUANT TO SECTION 2, INCLUDING ALL REGISTRATION, FILING, AND QUALIFICATION
FEES; PRINTERS’ AND ACCOUNTING FEES; FEES AND DISBURSEMENTS OF COUNSEL FOR THE
COMPANY; AND THE REASONABLE FEES AND DISBURSEMENTS OF ONE COUNSEL FOR THE
SELLING HOLDERS (“SELLING HOLDER COUNSEL”), SHALL BE BORNE AND PAID BY THE
COMPANY; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE REQUIRED TO PAY FOR
ANY EXPENSES OF ANY REGISTRATION PROCEEDING BEGUN PURSUANT TO SECTION 2.1(A) OR
SECTION 2.1(B) IF THE REGISTRATION REQUEST IS SUBSEQUENTLY WITHDRAWN AT THE
REQUEST OF THE HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES TO BE
REGISTERED (IN WHICH CASE ALL SELLING HOLDERS SHALL BEAR SUCH EXPENSES PRO RATA
BASED UPON THE NUMBER OF REGISTRABLE SECURITIES THAT WERE TO BE INCLUDED IN THE
WITHDRAWN REGISTRATION), UNLESS THE HOLDERS OF A MAJORITY OF THE REGISTRABLE
SECURITIES AGREE TO FORFEIT THEIR RIGHT TO ONE REGISTRATION PURSUANT TO
SECTION 2.1(A) OR SECTION 2.1(B), AS THE CASE MAY BE; PROVIDED FURTHER THAT IF,
AT THE TIME OF SUCH WITHDRAWAL, THE HOLDERS HAVE LEARNED OF A MATERIAL ADVERSE
CHANGE IN THE CONDITION, BUSINESS, OR PROSPECTS OF THE COMPANY FROM THAT KNOWN
TO THE HOLDERS AT THE TIME OF THEIR REQUEST AND HAVE WITHDRAWN THE REQUEST WITH
REASONABLE PROMPTNESS AFTER LEARNING OF SUCH INFORMATION, THEN THE HOLDERS SHALL
NOT BE REQUIRED TO PAY ANY OF SUCH EXPENSES AND SHALL NOT FORFEIT THEIR RIGHT TO
ONE REGISTRATION PURSUANT TO SECTION 2.1(A) OR SECTION 2.1(B).  ALL SELLING
EXPENSES RELATING TO REGISTRABLE SECURITIES REGISTERED PURSUANT TO SECTION 2
SHALL BE BORNE AND PAID BY THE HOLDERS PRO RATA ON THE BASIS OF THE NUMBER OF
REGISTRABLE SECURITIES REGISTERED ON THEIR BEHALF.

2.7           INDEMNIFICATION.  IF ANY REGISTRABLE SECURITIES ARE INCLUDED IN A
REGISTRATION STATEMENT UNDER THIS SECTION 2:

(A)           TO THE EXTENT PERMITTED BY LAW, THE COMPANY WILL INDEMNIFY AND
HOLD HARMLESS EACH SELLING HOLDER, AND THE PARTNERS, MEMBERS, OFFICERS,
DIRECTORS, AND STOCKHOLDERS OF EACH SUCH HOLDER; LEGAL COUNSEL AND ACCOUNTANTS
FOR EACH SUCH HOLDER; ANY UNDERWRITER (AS DEFINED IN THE SECURITIES ACT) FOR
EACH SUCH HOLDER; AND EACH PERSON, IF ANY, WHO CONTROLS SUCH HOLDER OR
UNDERWRITER WITHIN THE MEANING OF THE SECURITIES ACT OR THE EXCHANGE ACT,
AGAINST ANY DAMAGES, AND THE COMPANY WILL PAY TO EACH SUCH HOLDER, UNDERWRITER,
CONTROLLING PERSON, OR OTHER AFOREMENTIONED PERSON ANY LEGAL OR OTHER EXPENSES
REASONABLY INCURRED THEREBY IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY
CLAIM OR PROCEEDING FROM WHICH DAMAGES MAY RESULT, AS SUCH EXPENSES ARE
INCURRED; PROVIDED, HOWEVER, THAT THE INDEMNITY

9

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AGREEMENT CONTAINED IN THIS SECTION 2.7(A) SHALL NOT APPLY TO AMOUNTS PAID IN
SETTLEMENT OF ANY SUCH CLAIM OR PROCEEDING IF SUCH SETTLEMENT IS EFFECTED
WITHOUT THE CONSENT OF THE COMPANY, WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD, NOR SHALL THE COMPANY BE LIABLE FOR ANY DAMAGES TO THE EXTENT THAT
THEY ARISE OUT OF OR ARE BASED UPON ACTIONS OR OMISSIONS MADE IN RELIANCE UPON
AND IN CONFORMITY WITH WRITTEN INFORMATION FURNISHED BY OR ON BEHALF OF ANY SUCH
HOLDER, UNDERWRITER, CONTROLLING PERSON, OR OTHER AFOREMENTIONED PERSON
EXPRESSLY FOR USE IN CONNECTION WITH SUCH REGISTRATION.

(B)           TO THE EXTENT PERMITTED BY LAW, EACH SELLING HOLDER, SEVERALLY AND
NOT JOINTLY, WILL INDEMNIFY AND HOLD HARMLESS THE COMPANY, AND EACH OF ITS
DIRECTORS, EACH OF ITS OFFICERS WHO HAS SIGNED THE REGISTRATION STATEMENT, EACH
PERSON (IF ANY), WHO CONTROLS THE COMPANY WITHIN THE MEANING OF THE SECURITIES
ACT, LEGAL COUNSEL AND ACCOUNTANTS FOR THE COMPANY, ANY UNDERWRITER (AS DEFINED
IN THE SECURITIES ACT), ANY OTHER HOLDER SELLING SECURITIES IN SUCH REGISTRATION
STATEMENT, AND ANY CONTROLLING PERSON OF ANY SUCH UNDERWRITER OR OTHER HOLDER,
AGAINST ANY DAMAGES, IN EACH CASE ONLY TO THE EXTENT THAT SUCH DAMAGES ARISE OUT
OF OR ARE BASED UPON ACTIONS OR OMISSIONS MADE IN RELIANCE UPON AND IN
CONFORMITY WITH WRITTEN INFORMATION FURNISHED BY OR ON BEHALF OF SUCH SELLING
HOLDER EXPRESSLY FOR USE IN CONNECTION WITH SUCH REGISTRATION; AND EACH SUCH
SELLING HOLDER WILL PAY, SEVERALLY AND NOT JOINTLY, TO THE COMPANY AND EACH
OTHER AFOREMENTIONED PERSON ANY LEGAL OR OTHER EXPENSES REASONABLY INCURRED
THEREBY IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY CLAIM OR PROCEEDING
FROM WHICH DAMAGES MAY RESULT, AS SUCH EXPENSES ARE INCURRED; PROVIDED, HOWEVER,
THAT THE INDEMNITY AGREEMENT CONTAINED IN THIS SECTION 2.7(B) SHALL NOT APPLY TO
AMOUNTS PAID IN SETTLEMENT OF ANY SUCH CLAIM OR PROCEEDING IF SUCH SETTLEMENT IS
EFFECTED WITHOUT THE CONSENT OF THE HOLDER, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD; AND PROVIDED FURTHER THAT IN NO EVENT SHALL ANY INDEMNITY
UNDER THIS SECTION 2.7(B) EXCEED THE PROCEEDS FROM THE OFFERING RECEIVED BY SUCH
HOLDER, EXCEPT IN THE CASE OF COMMON LAW FRAUD OR WILLFUL MISCONDUCT BY SUCH
HOLDER.

(C)           PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PARTY UNDER THIS
SECTION 2.7 OF NOTICE OF THE COMMENCEMENT OF ANY ACTION (INCLUDING ANY
GOVERNMENTAL ACTION) FOR WHICH A PARTY MAY BE ENTITLED TO INDEMNIFICATION
HEREUNDER, SUCH INDEMNIFIED PARTY WILL, IF A CLAIM IN RESPECT THEREOF IS TO BE
MADE AGAINST ANY INDEMNIFYING PARTY UNDER THIS SECTION 2.7, GIVE THE
INDEMNIFYING PARTY NOTICE OF THE COMMENCEMENT THEREOF.  THE INDEMNIFYING PARTY
SHALL HAVE THE RIGHT TO PARTICIPATE IN SUCH ACTION AND, TO THE EXTENT THE
INDEMNIFYING PARTY SO DESIRES, PARTICIPATE JOINTLY WITH ANY OTHER INDEMNIFYING
PARTY TO WHICH NOTICE HAS BEEN GIVEN, AND TO ASSUME THE DEFENSE THEREOF WITH
COUNSEL MUTUALLY SATISFACTORY TO THE PARTIES; PROVIDED, HOWEVER, THAT AN
INDEMNIFIED PARTY (TOGETHER WITH ALL OTHER INDEMNIFIED PARTIES THAT MAY BE
REPRESENTED WITHOUT CONFLICT BY ONE COUNSEL) SHALL HAVE THE RIGHT TO RETAIN ONE
SEPARATE COUNSEL, WITH THE FEES AND EXPENSES TO BE PAID BY THE INDEMNIFYING
PARTY, IF REPRESENTATION OF SUCH INDEMNIFIED PARTY BY THE COUNSEL RETAINED BY
THE INDEMNIFYING PARTY WOULD BE INAPPROPRIATE DUE TO ACTUAL OR POTENTIAL
CONFLICTING INTERESTS BETWEEN SUCH INDEMNIFIED PARTY AND ANY OTHER PARTY
REPRESENTED BY SUCH COUNSEL IN SUCH ACTION.  THE FAILURE TO GIVE NOTICE TO THE
INDEMNIFYING PARTY WITHIN A REASONABLE TIME OF THE COMMENCEMENT OF ANY SUCH
ACTION SHALL NOT RELIEVE SUCH INDEMNIFYING PARTY OF ANY

10

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LIABILITY TO THE INDEMNIFIED PARTY UNDER THIS SECTION 2.7, UNLESS SUCH FAILURE
ACTUALLY AND MATERIALLY PREJUDICES THE INDEMNIFYING PARTY’S ABILITY TO DEFEND
SUCH ACTION.

(D)           NOTWITHSTANDING ANYTHING ELSE HEREIN TO THE CONTRARY, THE
FOREGOING INDEMNITY AGREEMENTS OF THE COMPANY AND THE SELLING HOLDERS ARE
SUBJECT TO THE CONDITION THAT, INSOFAR AS THEY RELATE TO ANY DAMAGES ARISING
FROM ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT
CONTAINED IN, OR OMISSION OR ALLEGED OMISSION OF A MATERIAL FACT FROM, A
PRELIMINARY PROSPECTUS (OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT
MISLEADING) THAT HAS BEEN CORRECTED IN THE FORM OF PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT AT THE TIME IT BECOMES EFFECTIVE, OR ANY AMENDMENT OR
SUPPLEMENT THERETO FILED WITH THE SEC PURSUANT TO RULE 424(B) UNDER THE
SECURITIES ACT (THE “FINAL PROSPECTUS”), SUCH INDEMNITY AGREEMENT SHALL NOT
INURE TO THE BENEFIT OF ANY PERSON IF A COPY OF THE FINAL PROSPECTUS WAS
FURNISHED TO THE INDEMNIFIED PARTY AND SUCH INDEMNIFIED PARTY FAILED TO DELIVER,
AT OR BEFORE THE CONFIRMATION OF THE SALE OF THE SHARES REGISTERED IN SUCH
OFFERING, A COPY OF THE FINAL PROSPECTUS TO THE PERSON ASSERTING THE LOSS,
LIABILITY, CLAIM, OR DAMAGE IN ANY CASE IN WHICH SUCH DELIVERY WAS REQUIRED BY
THE SECURITIES ACT.

(E)           TO PROVIDE FOR JUST AND EQUITABLE CONTRIBUTION TO JOINT LIABILITY
UNDER THE SECURITIES ACT IN ANY CASE IN WHICH EITHER (I) ANY PARTY OTHERWISE
ENTITLED TO INDEMNIFICATION HEREUNDER MAKES A CLAIM FOR INDEMNIFICATION PURSUANT
TO THIS SECTION 2.7 BUT IT IS JUDICIALLY DETERMINED (BY THE ENTRY OF A FINAL
JUDGMENT OR DECREE BY A COURT OF COMPETENT JURISDICTION AND THE EXPIRATION OF
TIME TO APPEAL OR THE DENIAL OF THE LAST RIGHT OF APPEAL) THAT SUCH
INDEMNIFICATION MAY NOT BE ENFORCED IN SUCH CASE, NOTWITHSTANDING THE FACT THAT
THIS SECTION 2.7 PROVIDES FOR INDEMNIFICATION IN SUCH CASE, OR (II) CONTRIBUTION
UNDER THE SECURITIES ACT MAY BE REQUIRED ON THE PART OF ANY PARTY HERETO FOR
WHICH INDEMNIFICATION IS PROVIDED UNDER THIS SECTION 2.7, THEN, AND IN EACH SUCH
CASE, SUCH PARTIES WILL CONTRIBUTE TO THE AGGREGATE LOSSES, CLAIMS, DAMAGES,
LIABILITIES, OR EXPENSES TO WHICH THEY MAY BE SUBJECT (AFTER CONTRIBUTION FROM
OTHERS) IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE FAULT OF
EACH OF THE INDEMNIFYING PARTY AND THE INDEMNIFIED PARTY IN CONNECTION WITH THE
STATEMENTS, OMISSIONS, OR OTHER ACTIONS THAT RESULTED IN SUCH LOSS, CLAIM,
DAMAGE, LIABILITY, OR EXPENSE, AS WELL AS TO REFLECT ANY OTHER RELEVANT
EQUITABLE CONSIDERATIONS.  THE RELATIVE FAULT OF THE INDEMNIFYING PARTY AND OF
THE INDEMNIFIED PARTY SHALL BE DETERMINED BY REFERENCE TO, AMONG OTHER THINGS,
WHETHER THE UNTRUE OR ALLEGEDLY UNTRUE STATEMENT OF A MATERIAL FACT, OR THE
OMISSION OR ALLEGED OMISSION OF A MATERIAL FACT, RELATES TO INFORMATION SUPPLIED
BY THE INDEMNIFYING PARTY OR BY THE INDEMNIFIED PARTY AND THE PARTIES’ RELATIVE
INTENT, KNOWLEDGE, ACCESS TO INFORMATION, AND OPPORTUNITY TO CORRECT OR PREVENT
SUCH STATEMENT OR OMISSION; PROVIDED, HOWEVER, THAT, IN ANY SUCH CASE, (X) NO
HOLDER WILL BE REQUIRED TO CONTRIBUTE ANY AMOUNT IN EXCESS OF THE PUBLIC
OFFERING PRICE OF ALL SUCH REGISTRABLE SECURITIES OFFERED AND SOLD BY SUCH
HOLDER PURSUANT TO SUCH REGISTRATION STATEMENT, AND (Y) NO PERSON GUILTY OF
FRAUDULENT MISREPRESENTATION (WITHIN THE MEANING OF SECTION 11(F) OF THE
SECURITIES ACT) WILL BE ENTITLED TO CONTRIBUTION FROM ANY PERSON WHO WAS NOT
GUILTY OF SUCH FRAUDULENT MISREPRESENTATION; AND PROVIDED FURTHER THAT IN NO
EVENT SHALL A HOLDER’S LIABILITY PURSUANT TO THIS SECTION 2.7(E), WHEN COMBINED
WITH THE AMOUNTS PAID OR PAYABLE BY SUCH HOLDER PURSUANT TO SECTION 2.7(B),
EXCEED THE PROCEEDS FROM THE OFFERING RECEIVED BY SUCH HOLDER (NET OF

11

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ANY SELLING EXPENSES) PAID BY SUCH HOLDER), EXCEPT IN THE CASE OF WILLFUL
MISCONDUCT OR COMMON LAW FRAUD BY SUCH HOLDER.

(F)            NOTWITHSTANDING THE FOREGOING, TO THE EXTENT THAT THE PROVISIONS
ON INDEMNIFICATION AND CONTRIBUTION CONTAINED IN THE UNDERWRITING AGREEMENT
ENTERED INTO IN CONNECTION WITH THE UNDERWRITTEN PUBLIC OFFERING ARE IN CONFLICT
WITH THE FOREGOING PROVISIONS, THE PROVISIONS IN THE UNDERWRITING AGREEMENT
SHALL CONTROL; PROVIDED, HOWEVER, THAT THE PROVISIONS ON INDEMNIFICATION AND
CONTRIBUTION CONTAINED IN THE UNDERWRITING AGREEMENT SHALL NOT CONTAIN
PROVISIONS WHICH EXPOSE THE HOLDERS TO GREATER LIABILITY THAN THE TERMS
CONTAINED HEREIN.

(G)           UNLESS OTHERWISE SUPERSEDED BY AN UNDERWRITING AGREEMENT ENTERED
INTO IN CONNECTION WITH THE UNDERWRITTEN PUBLIC OFFERING, THE OBLIGATIONS OF THE
COMPANY AND HOLDERS UNDER THIS SECTION 2.7 SHALL SURVIVE THE COMPLETION OF ANY
OFFERING OF REGISTRABLE SECURITIES IN A REGISTRATION UNDER SECTION 2, AND
OTHERWISE SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

2.8           REPORTS UNDER EXCHANGE ACT.  WITH A VIEW TO MAKING AVAILABLE TO
THE HOLDERS THE BENEFITS OF SEC RULE 144 AND ANY OTHER RULE OR REGULATION OF THE
SEC THAT MAY AT ANY TIME PERMIT A HOLDER TO SELL SECURITIES OF THE COMPANY TO
THE PUBLIC WITHOUT REGISTRATION OR PURSUANT TO A REGISTRATION ON FORM S-3, THE
COMPANY SHALL:

(A)           MAKE AND KEEP AVAILABLE ADEQUATE CURRENT PUBLIC INFORMATION, AS
THOSE TERMS ARE UNDERSTOOD AND DEFINED IN SEC RULE 144, AT ALL TIMES;

(B)           USE COMMERCIALLY REASONABLE EFFORTS TO FILE WITH THE SEC IN A
TIMELY MANNER ALL REPORTS AND OTHER DOCUMENTS REQUIRED OF THE COMPANY UNDER THE
SECURITIES ACT AND THE EXCHANGE ACT ; AND

(C)           FURNISH TO ANY HOLDER, SO LONG AS THE HOLDER OWNS ANY REGISTRABLE
SECURITIES, UPON REQUEST (I) TO THE EXTENT ACCURATE, A WRITTEN STATEMENT BY THE
COMPANY THAT IT HAS COMPLIED WITH THE REPORTING REQUIREMENTS OF SEC RULE 144,
THE SECURITIES ACT, AND THE EXCHANGE ACT, OR THAT IT QUALIFIES AS A REGISTRANT
WHOSE SECURITIES MAY BE RESOLD PURSUANT TO FORM S-3 (AT ANY TIME AFTER THE
COMPANY SO QUALIFIES); (II) A COPY OF THE MOST RECENT ANNUAL OR QUARTERLY REPORT
OF THE COMPANY AND SUCH OTHER REPORTS AND DOCUMENTS SO FILED BY THE COMPANY; AND
(III) SUCH OTHER INFORMATION AS MAY BE REASONABLY REQUESTED IN AVAILING ANY
HOLDER OF ANY RULE OR REGULATION OF THE SEC THAT PERMITS THE SELLING OF ANY SUCH
SECURITIES WITHOUT REGISTRATION OR PURSUANT TO FORM S-3 (AT ANY TIME AFTER THE
COMPANY SO QUALIFIES TO USE SUCH FORM).

2.9           LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.  FROM AND AFTER THE
DATE OF THIS AGREEMENT, THE COMPANY SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES, ENTER INTO ANY
AGREEMENT WITH ANY HOLDER OR PROSPECTIVE HOLDER OF ANY SECURITIES OF THE COMPANY
THAT WOULD ALLOW SUCH HOLDER OR PROSPECTIVE HOLDER (A) TO INCLUDE SUCH
SECURITIES IN ANY COMPANY REGISTRATION UNLESS, UNDER THE TERMS OF SUCH
AGREEMENT, SUCH HOLDER OR PROSPECTIVE HOLDER MAY INCLUDE SUCH SECURITIES IN ANY
SUCH REGISTRATION

12

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ONLY TO THE EXTENT THAT THE INCLUSION OF SUCH SECURITIES WILL NOT REDUCE THE
NUMBER OF THE REGISTRABLE SECURITIES OF THE HOLDERS THAT ARE INCLUDED OR (B) TO
DEMAND REGISTRATION OF ANY SECURITIES HELD BY SUCH HOLDER OR PROSPECTIVE HOLDER.

2.10         “MARKET STAND-OFF” AGREEMENT.  EACH HOLDER HEREBY AGREES THAT IT
WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE MANAGING UNDERWRITER, DURING
THE PERIOD COMMENCING ON THE DATE OF THE FINAL PROSPECTUS RELATING TO THE IPO OR
OTHER REGISTRATION BY THE COMPANY FOR ITS OWN BEHALF OF UNITS OR ANY OTHER
EQUITY SECURITIES UNDER THE SECURITIES ACT ON A REGISTRATION STATEMENT ON FORM
S-1, FORM S-2, OR FORM S-3, AND ENDING ON THE DATE SPECIFIED BY THE COMPANY AND
THE MANAGING UNDERWRITER (SUCH PERIOD NOT TO EXCEED (A) ONE HUNDRED EIGHTY (180)
DAYS IN THE CASE OF THE IPO, WHICH PERIOD MAY BE EXTENDED UPON THE REQUEST OF
THE MANAGING UNDERWRITER FOR AN ADDITIONAL PERIOD OF UP TO FIFTEEN (15) DAYS IF
THE COMPANY ISSUES OR PROPOSES TO ISSUE AN EARNINGS OR OTHER PUBLIC RELEASE
WITHIN FIFTEEN (15) DAYS OF THE EXPIRATION OF THE 180-DAY LOCKUP PERIOD, OR
(B) NINETY (90) DAYS IN THE CASE OF ANY REGISTRATION OTHER THAN THE IPO, WHICH
PERIOD MAY BE EXTENDED UPON THE REQUEST OF THE MANAGING UNDERWRITER FOR AN
ADDITIONAL PERIOD OF UP TO FIFTEEN (15) DAYS IF THE COMPANY ISSUES OR PROPOSES
TO ISSUE AN EARNINGS OR OTHER PUBLIC RELEASE WITHIN FIFTEEN (15) DAYS OF THE
EXPIRATION OF THE 90-DAY LOCKUP PERIOD), (I) LEND; OFFER; PLEDGE; SELL; CONTRACT
TO SELL; SELL ANY OPTION OR CONTRACT TO PURCHASE; PURCHASE ANY OPTION OR
CONTRACT TO SELL; GRANT ANY OPTION, RIGHT, OR WARRANT TO PURCHASE; OR OTHERWISE
TRANSFER OR DISPOSE OF, DIRECTLY OR INDIRECTLY, ANY UNITS OR ANY SECURITIES
CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE (DIRECTLY OR INDIRECTLY) FOR
UNITS HELD IMMEDIATELY BEFORE THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
FOR SUCH OFFERING OR (II) ENTER INTO ANY SWAP OR OTHER ARRANGEMENT THAT
TRANSFERS TO ANOTHER, IN WHOLE OR IN PART, ANY OF THE ECONOMIC CONSEQUENCES OF
OWNERSHIP OF SUCH SECURITIES, WHETHER ANY SUCH TRANSACTION DESCRIBED IN CLAUSE
(I) OR (II) ABOVE IS TO BE SETTLED BY DELIVERY OF UNITS OR OTHER SECURITIES, IN
CASH, OR OTHERWISE.  THE FOREGOING PROVISIONS OF THIS SECTION 2.10 SHALL APPLY
ONLY TO THE IPO, SHALL NOT APPLY TO THE SALE OF ANY SHARES TO AN UNDERWRITER
PURSUANT TO AN UNDERWRITING AGREEMENT, AND SHALL BE APPLICABLE TO THE HOLDERS
ONLY IF ALL OFFICERS, DIRECTORS, AND MEMBERS INDIVIDUALLY OWNING MORE THAN FIVE
PERCENT (5%) OF THE COMPANY’S OUTSTANDING UNITS (OR OTHER VOTING EQUITY
SECURITIES) ARE SUBJECT TO THE SAME RESTRICTIONS.  EACH HOLDER FURTHER AGREES TO
EXECUTE SUCH AGREEMENTS AS MAY BE REASONABLY REQUESTED BY THE UNDERWRITERS IN
CONNECTION WITH SUCH REGISTRATION THAT ARE CONSISTENT WITH THIS SECTION 2.10 OR
THAT ARE NECESSARY TO GIVE FURTHER EFFECT THERETO.

2.11         RESTRICTIONS ON TRANSFER.

(A)           THE REGISTRABLE SECURITIES SHALL NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED, AND THE COMPANY SHALL NOT RECOGNIZE ANY SUCH SALE,
PLEDGE, OR TRANSFER, EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS AGREEMENT AND
SECTION 9 OF THE OPERATING AGREEMENT, WHICH CONDITIONS ARE INTENDED TO ENSURE
COMPLIANCE WITH THE PROVISIONS OF THE SECURITIES ACT.  A TRANSFERRING HOLDER
WILL CAUSE ANY PROPOSED PURCHASER, PLEDGEE, OR TRANSFEREE OF THE REGISTRABLE
SECURITIES HELD BY SUCH HOLDER TO AGREE TO TAKE AND HOLD SUCH SECURITIES SUBJECT
TO THE PROVISIONS AND UPON THE CONDITIONS SPECIFIED IN THIS AGREEMENT AND THE
OPERATING AGREEMENT.

 

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(B)           IN ADDITION TO ANY LEGEND REQUIREMENTS SET FORTH IN THE OPERATING
AGREEMENT, EACH CERTIFICATE OR INSTRUMENT REPRESENTING THE REGISTRABLE
SECURITIES SHALL (UNLESS OTHERWISE PERMITTED BY THE PROVISIONS OF
SECTION 2.11(C)) BE STAMPED OR OTHERWISE IMPRINTED WITH A LEGEND SUBSTANTIALLY
IN THE FOLLOWING FORM:

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH SECURITIES MAY NOT BE
SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID
EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
ACT.

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
TERMS OF THAT CERTAIN INVESTOR RIGHTS AGREEMENT BETWEEN THE COMPANY AND CERTAIN
HOLDERS OF ITS SECURITIES, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

The Holders consent to the Company making a notation in its records and giving
instructions to any transfer agent of the Restricted Securities in order to
implement the restrictions on transfer set forth in this Section 2.11

(C)           THE HOLDER OF EACH CERTIFICATE REPRESENTING RESTRICTED SECURITIES,
BY ACCEPTANCE THEREOF, AGREES TO COMPLY IN ALL RESPECTS WITH THE PROVISIONS OF
THIS SECTION 2.  BEFORE ANY PROPOSED SALE, PLEDGE, OR TRANSFER OF ANY RESTRICTED
SECURITIES, UNLESS THERE IS IN EFFECT A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT COVERING THE PROPOSED TRANSACTION, THE HOLDER THEREOF SHALL GIVE
NOTICE TO THE COMPANY OF SUCH HOLDER’S INTENTION TO EFFECT SUCH SALE, PLEDGE, OR
TRANSFER.  EACH SUCH NOTICE SHALL DESCRIBE THE MANNER AND CIRCUMSTANCES OF THE
PROPOSED SALE, PLEDGE, OR TRANSFER IN SUFFICIENT DETAIL AND, IF REASONABLY
REQUESTED BY THE COMPANY, SHALL BE ACCOMPANIED AT SUCH HOLDER’S EXPENSE BY
EITHER (I) A WRITTEN OPINION OF LEGAL COUNSEL WHO SHALL, AND WHOSE LEGAL OPINION
SHALL, BE REASONABLY SATISFACTORY TO THE COMPANY, ADDRESSED TO THE COMPANY, TO
THE EFFECT THAT THE PROPOSED TRANSACTION MAY BE EFFECTED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT; (II) A “NO ACTION” LETTER FROM THE SEC TO THE EFFECT
THAT THE PROPOSED  SALE, PLEDGE, OR TRANSFER OF SUCH RESTRICTED SECURITIES
WITHOUT REGISTRATION WILL NOT RESULT IN A RECOMMENDATION BY THE STAFF OF THE SEC
THAT ACTION BE TAKEN WITH RESPECT THERETO; OR (III) ANY OTHER EVIDENCE
REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY TO THE EFFECT THAT THE
PROPOSED SALE, PLEDGE, OR TRANSFER OF THE RESTRICTED SECURITIES MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT, WHEREUPON THE HOLDER OF SUCH
RESTRICTED SECURITIES SHALL BE ENTITLED TO SELL, PLEDGE, OR TRANSFER SUCH
RESTRICTED SECURITIES IN ACCORDANCE WITH THE TERMS OF THE NOTICE GIVEN BY THE
HOLDER TO THE COMPANY.  THE COMPANY WILL NOT REQUIRE SUCH A LEGAL OPINION OR “NO
ACTION” LETTER (X) IN ANY TRANSACTION IN COMPLIANCE WITH SEC RULE 144 OR (Y) IN
ANY TRANSACTION IN WHICH SUCH HOLDER DISTRIBUTES RESTRICTED SECURITIES TO AN
AFFILIATE OF SUCH HOLDER FOR NO CONSIDERATION; PROVIDED THAT IN THE CASE OF A
TRANSFER TO AN AFFILIATE EACH TRANSFEREE AGREES IN WRITING TO BE SUBJECT TO THE
TERMS OF THIS SECTION 2.11. EACH CERTIFICATE OR INSTRUMENT EVIDENCING THE
RESTRICTED

14

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Securities transferred as above provided shall bear, except if such transfer is
made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in
Section 2.11(b), except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such Holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.

(D)           IN THE EVENT THAT SDWG INTENDS TO SELL THE UNITS IT RECEIVED
PURSUANT TO THE PURCHASE AGREEMENT PRIOR TO BEING ABLE TO DISPOSE OF THEM IN
ACCORDANCE WITH SEC RULE 144 IN A TRANSACTION NOT COVERED BY A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IT SHALL GIVE THE COMPANY WRITTEN NOTICE OF
SUCH SALE, INCLUDING THE TERMS OF SUCH SALE (THE “SALE NOTICE”).  THE COMPANY
MAY ELECT TO PURCHASE ALL OF THE UNITS INTENDED TO BE SOLD BY SDWG ON THE SAME
TERMS AND CONDITIONS AS SET FORTH IN THE SALE NOTICE BY DELIVERING WRITTEN
NOTICE TO SDWG (THE “PURCHASE NOTICE”) WITHIN TEN (10) BUSINESS DAYS OF
RECEIVING THE SALE NOTICE.  THE COMPANY SHALL CONSUMMATE THE PURCHASE OF THE
UNITS SUBJECT TO THE SALE NOTICE WITHIN THIRTY (30) DAYS OF ITS ELECTION TO
PURCHASE.  NOTWITHSTANDING THE TERMS AND CONDITIONS OF SECTION 9 OF THE
OPERATING AGREEMENT, TO THE EXTENT THE COMPANY FAILS TO DELIVER SDWG A PURCHASE
NOTICE WITHIN TEN (10) BUSINESS DAYS OF RECEIVING THE SALE NOTICE OR FAILS TO
CONSUMMATE THE PURCHASE OF THE UNITS WITHIN THIRTY (30) DAYS OF ITS ELECTION TO
PURCHASE SUCH UNITS, SDWG SHALL BE PERMITTED TO SELL THE UNITS COVERED BY THE
SALE NOTICE WITHOUT RESTRICTION UNDER THIS SECTION 2.11(D) AND THE OPERATING
AGREEMENT; PROVIDED, THAT THE FOLLOWING CONDITIONS HAVE BEEN SATISFIED:

(1)                                SDWG SHALL FURNISH THE COMPANY WITH ITS
TAXPAYER IDENTIFICATION NUMBER AND SDWG’S INITIAL TAX BASIS IN THE UNITS
TRANSFERRED; AND

(2)                                SDWG SHALL PROVIDE TO THE COMPANY AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY FROM A REGIONAL OR NATIONAL
LAW FIRM TO THE EFFECT THAT:

(A)                            THE SALE IS EITHER REGISTERED UNDER THE
SECURITIES ACT OR IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS;

(B)                              THE SALE WILL NOT CAUSE THE COMPANY TO BE
DEEMED TO BE AN “INVESTMENT COMPANY” UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED; AND

(C)                              THE SALE WILL NOT (I) RESULT IN THE TERMINATION
OF THE COMPANY WITHIN THE MEANING OF SECTION 708 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE “CODE”), (II) CAUSE THE APPLICATION OF
SECTIONS 168(G)(1)(B) AND 168(H) OF THE CODE OR SIMILAR RULES TO APPLY TO THE
COMPANY, AND (III) CAUSE THE COMPANY TO BE TREATED AS A “PUBLICLY TRADED
PARTNERSHIP” WITHIN THE MEANING OF SECTION 7704(B) OF THE CODE.

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2.12         TERMINATION OF REGISTRATION RIGHTS.  THE RIGHT OF ANY HOLDER TO
REQUEST REGISTRATION OR INCLUSION OF REGISTRABLE SECURITIES IN ANY REGISTRATION
PURSUANT TO SECTION 2.1 OR SECTION 2.2 SHALL TERMINATE UPON THE EARLIEST TO
OCCUR OF (A) THE CLOSING OF A TRANSACTION RESULTING IN A “DISSOLUTION EVENT” AS
SUCH TERM IS DEFINED IN THE OPERATING AGREEMENT AND (B) THE DATE ON WHICH SUCH
HOLDER IS ENTITLED TO SELL ALL OF THE UNITS OWNED BY IT IN COMPLIANCE WITH SEC
RULE 144(K).

3.             BOARD RIGHTS.

3.1           BOARD RIGHTS.  ON THE DATE HEREOF THE BOARD OF DIRECTORS OF THE
COMPANY (THE “BOARD”) WILL APPOINT DALE LOCKEN TO THE BOARD.  SO LONG AS SDWG
OWNS AT LEAST 50% OF THE UNITS ISSUED TO IT UNDER THE PURCHASE AGREEMENT, THE
COMPANY WILL REQUIRE EACH OF ITS BOARD MEMBERS AND EXECUTIVE OFFICERS TO
(A) RECOMMEND TO THE MEMBERS (OR OTHER SECURITY HOLDERS) OF THE COMPANY AT ANY
MEETING OF THE MEMBERS (OR OTHER SECURITY HOLDERS) AT WHICH DIRECTORS ARE
ELECTED THE ELECTION OF ONE NOMINEE OF SDWG (THE “SDWG BOARD MEMBER”) TO THE
BOARD (FOR SUCH CLASS OF DIRECTORS AS THE BOARD SHALL REASONABLY DETERMINE),
(B) VOTE THE UNITS (OR OTHER VOTING EQUITY SECURITIES OF THE COMPANY) THEY OWN
OR CONTROL AT ANY TIME TO ELECT THE SDWG BOARD MEMBER TO THE BOARD, AND (C) NOT
TAKE ANY ACTION, INCLUDING ACTIONS OTHERWISE REQUIRED UNDER SECTION 5.3(A) OF
THE OPERATING AGREEMENT, THAT WOULD RESULT IN (AND TAKE ANY ACTION NECESSARY TO
PREVENT) THE REMOVAL OF THE SDWG BOARD MEMBER FROM THE BOARD.

3.2           OBSERVER RIGHTS.  THE COMPANY WILL INVITE A REPRESENTATIVE OF THE
MEMBERS OF HP (THE “HP OBSERVER”) AND, TO THE EXTENT THE SDWG BOARD MEMBER DOES
NOT OCCUPY A SEAT ON THE BOARD, A REPRESENTATIVE OF SDWG, TO ATTEND ALL MEETINGS
OF THE BOARD IN A NONVOTING OBSERVER CAPACITY AND, IN THIS RESPECT, WILL GIVE
EACH SUCH REPRESENTATIVE COPIES OF ALL NOTICES, MINUTES, CONSENTS, AND OTHER
MATERIALS THAT IT PROVIDES TO ITS DIRECTORS; PROVIDED, HOWEVER, THAT EACH SUCH
REPRESENTATIVE SHALL AGREE TO HOLD IN CONFIDENCE AND TRUST AND TO ACT IN A
FIDUCIARY MANNER WITH RESPECT TO ALL INFORMATION SO PROVIDED, INCLUDING
MAINTAINING SUCH INFORMATION IN CONFIDENCE; AND PROVIDED FURTHER, THAT THE
COMPANY RESERVES THE RIGHT TO WITHHOLD ANY INFORMATION AND TO EXCLUDE EACH SUCH
REPRESENTATIVE FROM ANY MEETING OR PORTION THEREOF IF ACCESS TO SUCH INFORMATION
OR ATTENDANCE AT SUCH MEETING COULD ADVERSELY AFFECT THE ATTORNEY-CLIENT
PRIVILEGE BETWEEN THE COMPANY AND ITS COUNSEL.  THE INITIAL HP OBSERVER SHALL BE
CRAIG SCHAUNAMAN.  IF MR. SCHAUNAMAN IS UNABLE OR UNWILLING TO SERVE AS THE HP
OBSERVER, SDWG SHALL, IN ITS SOLE DISCRETION AND FOR THE BENEFIT OF THE MEMBERS
OF HP, DESIGNATE ANOTHER INDIVIDUAL TO SERVE AS THE HP OBSERVER.

3.3           TERMINATION OF BOARD RIGHTS.  UNLESS TERMINATED EARLIER BY REASON
OF FAILURE TO MAINTAIN THE OWNERSHIP PERCENTAGE SET FORTH IN SECTION 3.1, THE
COVENANTS SET FORTH IN SECTION 3.1 SHALL TERMINATE AND BE OF NO FURTHER FORCE OR
EFFECT ON THE EARLIER TO OCCUR OF (A) THE THIRD ANNIVERSARY OF THE DATE OF THIS
AGREEMENT OR (B) IMMEDIATELY BEFORE THE CONSUMMATION OF THE IPO.

3.4           TERMINATION OF OBSERVER RIGHTS.  THE COVENANTS SET FORTH IN
SECTION 3.2 SHALL TERMINATE AND BE OF NO FURTHER FORCE OR EFFECT ON THE EARLIER
TO OCCUR OF (A) THE THIRD

16

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anniversary of the date of this Agreement, (b) immediately before the
consummation of the IPO, or (c) the termination of any obligations to effect the
Second Closing (as defined in the Purchase Agreement) pursuant to Section 10.4
of the Purchase Agreement.

3.5           CONFIDENTIALITY.  EACH HOLDER AGREES THAT SUCH HOLDER WILL KEEP
CONFIDENTIAL AND WILL NOT DISCLOSE, DIVULGE, OR USE FOR ANY PURPOSE (OTHER THAN
TO MONITOR ITS INVESTMENT IN THE COMPANY) ANY CONFIDENTIAL INFORMATION OBTAINED
FROM THE COMPANY PURSUANT TO THE TERMS OF THIS AGREEMENT (INCLUDING NOTICE OF
THE COMPANY’S INTENTION TO FILE A REGISTRATION STATEMENT), UNLESS SUCH
CONFIDENTIAL INFORMATION (A) IS KNOWN OR BECOMES KNOWN TO THE PUBLIC IN GENERAL
(OTHER THAN AS A RESULT OF A BREACH OF THIS SECTION 3.5 BY SUCH HOLDER), (B) IS
OR HAS BEEN INDEPENDENTLY DEVELOPED OR CONCEIVED BY THE HOLDER WITHOUT USE OF
THE COMPANY’S CONFIDENTIAL INFORMATION, OR (C) IS OR HAS BEEN MADE KNOWN OR
DISCLOSED TO THE HOLDER BY A THIRD PARTY WITHOUT KNOWLEDGE BY THE HOLDER OF A
BREACH OF ANY OBLIGATION OF CONFIDENTIALITY SUCH THIRD PARTY MAY HAVE TO THE
COMPANY; PROVIDED, HOWEVER, THAT AN HOLDER MAY DISCLOSE CONFIDENTIAL INFORMATION
(I) TO ITS ATTORNEYS, ACCOUNTANTS, CONSULTANTS, AND OTHER PROFESSIONALS TO THE
EXTENT NECESSARY TO OBTAIN THEIR SERVICES IN CONNECTION WITH MONITORING ITS
INVESTMENT IN THE COMPANY; (II) TO ANY PROSPECTIVE PURCHASER OF ANY REGISTRABLE
SECURITIES FROM SUCH HOLDER, IF SUCH PROSPECTIVE PURCHASER AGREES TO BE BOUND BY
THE PROVISIONS OF THIS SECTION 3.5; (III) TO ANY EXISTING AFFILIATE, PARTNER,
MEMBER, STOCKHOLDER, OR WHOLLY OWNED SUBSIDIARY OF SUCH HOLDER IN THE ORDINARY
COURSE OF BUSINESS, PROVIDED THAT SUCH HOLDER INFORMS SUCH PERSON THAT SUCH
INFORMATION IS CONFIDENTIAL AND DIRECTS SUCH PERSON TO MAINTAIN THE
CONFIDENTIALITY OF SUCH INFORMATION; OR (IV) AS MAY OTHERWISE BE REQUIRED BY
LAW, PROVIDED THAT THE HOLDER PROMPTLY NOTIFIES THE COMPANY OF SUCH DISCLOSURE
AND TAKES REASONABLE STEPS TO MINIMIZE THE EXTENT OF ANY SUCH REQUIRED
DISCLOSURE.

4.             ADDITIONAL COVENANTS.

4.1           EXTRAORDINARY TRANSACTIONS.  IN THE EVENT OF ANY REORGANIZATION,
MERGER, CONSOLIDATION, RECAPITALIZATION, LIQUIDATION, RECLASSIFICATION, UNIT
DIVIDEND, UNIT SPLIT, COMBINATION OF UNITS, RIGHTS OFFERING, OR EXTRAORDINARY
DIVIDEND OR DIVESTITURE (INCLUDING A SPIN-OFF), OR ANY OTHER CHANGE IN THE
CAPITAL STRUCTURE OR UNITS OF THE COMPANY, THE BOARD MAY, WITH THE PRIOR WRITTEN
CONSENT OF HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES, MAKE SUCH
ADJUSTMENT AS IT DETERMINES IN ITS REASONABLE DISCRETION TO BE APPROPRIATE AS TO
THE NUMBER AND KIND OF SECURITIES SUBJECT TO AND RESERVED UNDER THIS AGREEMENT
AND, IN ORDER TO PREVENT DILUTION OR ENLARGEMENT OF RIGHTS OF THE HOLDERS, THE
NUMBER AND KIND OF SECURITIES ISSUABLE UPON ANY EXCHANGE OR CONVERSION OF THE
UNITS.

4.2           MEETINGS OF THE BOARD.  UNLESS OTHERWISE DETERMINED BY THE VOTE OF
A MAJORITY OF THE DIRECTORS THEN IN OFFICE, THE BOARD SHALL MEET AT LEAST
QUARTERLY IN ACCORDANCE WITH AN AGREED-UPON SCHEDULE.

4.3           Successor Liability.  If the Company or any of its successors or
assignees consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity of such consolidation or merger,
then to the extent necessary, proper provision shall be made so that the
successors and assignees of the Company assume the

17

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obligations of the Company hereunder, including but not limited to obligations
with respect to registration of Registrable Securities, nomination of board
members and indemnification of members of the Board, as in effect immediately
before such transaction, whether such obligations are contained in the Operating
Agreement or elsewhere, as the case may be.

4.4          Board Expenses.  The Company shall reimburse the SDWG Board Member
and board observers for all reasonable out-of-pocket travel expenses incurred
(consistent with the Company’s travel policy) in connection with attending
meetings of the Board.

5.             MISCELLANEOUS.

5.1           SUCCESSORS AND ASSIGNS.  THE RIGHTS UNDER THIS AGREEMENT MAY BE
ASSIGNED (BUT ONLY WITH ALL RELATED OBLIGATIONS) BY A HOLDER TO A TRANSFEREE OF
REGISTRABLE SECURITIES THAT (A) IS AN AFFILIATE, PARTNER, MEMBER, LIMITED
PARTNER, RETIRED PARTNER, RETIRED MEMBER, OR STOCKHOLDER OF A HOLDER; (B) IS A
HOLDER’S IMMEDIATE FAMILY MEMBER OR TRUST FOR THE BENEFIT OF AN INDIVIDUAL
HOLDER OR ONE OR MORE OF SUCH HOLDER’S IMMEDIATE FAMILY MEMBERS; OR (C) AFTER
SUCH TRANSFER, HOLDS AT LEAST 50,000 REGISTRABLE SECURITIES (SUBJECT TO
APPROPRIATE ADJUSTMENT FOR SPLITS, DIVIDENDS, COMBINATIONS, AND OTHER
RECAPITALIZATIONS); OR (D)  IS A TRANSFEREE OF SDWG PURSUANT TO A TRANSACTION
CONTEMPLATED BY SECTION 2.11(D) HEREOF PROVIDED THAT (I) THE COMPANY IS, WITHIN
A REASONABLE TIME AFTER SUCH TRANSFER, FURNISHED WITH WRITTEN NOTICE OF THE NAME
AND ADDRESS OF SUCH TRANSFEREE AND THE REGISTRABLE SECURITIES WITH RESPECT TO
WHICH SUCH RIGHTS ARE BEING TRANSFERRED; AND (II) SUCH TRANSFEREE AGREES IN A
WRITTEN INSTRUMENT DELIVERED TO THE COMPANY TO BE BOUND BY AND SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING THE PROVISIONS OF SECTION
2.10.  FOR THE PURPOSES OF DETERMINING THE NUMBER OF REGISTRABLE SECURITIES HELD
BY A TRANSFEREE PURSUANT TO CLAUSE (C) ABOVE, THE HOLDINGS OF A TRANSFEREE
(1) THAT IS AN AFFILIATE, LIMITED PARTNER, RETIRED PARTNER, MEMBER, RETIRED
MEMBER, OR STOCKHOLDER OF A HOLDER; (2) WHO IS A HOLDER’S IMMEDIATE FAMILY
MEMBER; OR (3) THAT IS A TRUST FOR THE BENEFIT OF AN INDIVIDUAL HOLDER OR SUCH
HOLDER’S IMMEDIATE FAMILY MEMBER SHALL BE AGGREGATED TOGETHER AND WITH THOSE OF
THE TRANSFERRING HOLDER.  THE TERMS AND CONDITIONS OF THIS AGREEMENT INURE TO
THE BENEFIT OF AND ARE BINDING UPON THE RESPECTIVE SUCCESSORS AND PERMITTED
ASSIGNEES OF THE PARTIES.  NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED, IS
INTENDED TO CONFER UPON ANY PARTY OTHER THAN THE PARTIES HERETO OR THEIR
RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNEES ANY RIGHTS, REMEDIES, OBLIGATIONS
OR LIABILITIES UNDER OR BY REASON OF THIS AGREEMENT, EXCEPT AS EXPRESSLY
PROVIDED HEREIN.

5.2           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD TO ANY
APPLICABLE CONFLICTS OF LAW.  IN ANY ACTION BETWEEN THE PARTIES ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT:  (A) EACH OF THE PARTIES IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY
JURY; AND (B) EACH OF THE PARTIES IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY
FIRST CLASS CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO THE
ADDRESS AT WHICH SUCH PARTY IS TO RECEIVE NOTICE IN ACCORDANCE WITH SECTION 5.5.

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5.3           COUNTERPARTS; FACSIMILE.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR
MORE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.  THIS AGREEMENT MAY ALSO
BE EXECUTED AND DELIVERED BY FACSIMILE SIGNATURE AND IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

5.4           TITLES AND SUBTITLES.  THE TITLES AND SUBTITLES USED IN THIS
AGREEMENT ARE FOR CONVENIENCE ONLY AND ARE NOT TO BE CONSIDERED IN CONSTRUING OR
INTERPRETING THIS AGREEMENT.

5.5           NOTICES.  ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL BE
IN WRITING AND SHALL BE DEEMED GIVEN IF DELIVERED PERSONALLY, TELECOPIED (WHICH
IS CONFIRMED), ONE BUSINESS DAY AFTER BEING DEPOSITED WITH A NATIONALLY
RECOGNIZED OVERNIGHT COURIER, OR TWO BUSINESS DAYS AFTER BEING MAILED BY
REGISTERED OR CERTIFIED MAIL (RETURN RECEIPT REQUESTED) TO THE PARTIES AT THE
FOLLOWING ADDRESSES (OR AT SUCH OTHER ADDRESS FOR A PARTY AS SHALL BE SPECIFIED
BY LIKE NOTICE):

(a) if to the Company:

 

with a copy to (that will not constitute notice:

 

 

 

Advanced BioEnergy
10251 Wayzata Boulevard
Suite 240
Minneapolis, MN 55305
Attention: CEO
Facsimile No: (763) 226-2725

 

Faegre & Benson LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Attention: Peter J. Ekberg
Facsimile No: (612) 766-1600

 

 

 

(b) If to a Holder:

 

with a copy to (that will not constitute notice):

 

 

 

at the address set forth on Schedule A

 

Blackwell Sanders Peper Martin LLP
4801 Main Street
Suite 1000
Kansas City, MO 64112
Attention: Jason A. Reschly
Facsimile No: (816) 983-8080

 

5.6           AMENDMENTS AND WAIVERS.  ANY TERM OF THIS AGREEMENT MAY BE AMENDED
AND THE OBSERVANCE OF ANY TERM OF THIS AGREEMENT MAY BE WAIVED (EITHER GENERALLY
OR IN A PARTICULAR INSTANCE, AND EITHER RETROACTIVELY OR PROSPECTIVELY) ONLY
WITH THE WRITTEN CONSENT OF THE COMPANY AND THE HOLDERS OF A MAJORITY OF THE
REGISTRABLE SECURITIES; PROVIDED, THAT THE COMPANY MAY IN ITS SOLE DISCRETION
WAIVE COMPLIANCE WITH SECTION 2.11(C) (AND THE COMPANY’S FAILURE TO OBJECT
PROMPTLY IN WRITING AFTER NOTIFICATION OF A PROPOSED ASSIGNMENT ALLEGEDLY IN

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violation of Section 2.11(c) shall be deemed to be a waiver); and provided
further, that any provision hereof may be waived by any waiving party on such
party’s own behalf, without the consent of any other party; provided further,
however, this Agreement may not be amended or terminated and the observance of
any term hereof may not be waived with respect to any Holder without the written
consent of such Holder, unless such amendment, termination, or waiver applies to
all Holders in the same fashion (it being agreed that a waiver of the provisions
of Section 4 with respect to a particular transaction shall be deemed to apply
to all Holders in the same fashion.  The Company shall give prompt notice of any
amendment or termination hereof or waiver hereunder to any party hereto that did
not consent in writing to such amendment, termination, or waiver.  Any
amendment, termination, or waiver effected in accordance with this Section 5.6
shall be binding on all parties hereto, regardless of whether any such party has
consented thereto.  No waivers of or exceptions to any term, condition, or
provision of this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such term, condition, or
provision.

5.7          Severability.  If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or regulation,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.

5.8          Aggregation of Securities.  All shares of Registrable Securities
held or acquired by Affiliates of a Holder shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement of
such Holder.

5.9          Entire Agreement.  This Agreement (including any Schedules and
Exhibits hereto) constitutes the full and entire understanding and agreement
among the parties with respect to the subject matter hereof, and any other
written or oral agreement relating to the subject matter hereof existing between
the parties is expressly canceled.

5.10        Delays or Omissions.  No delay or omission to exercise any right,
power, or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power, or remedy of such nonbreaching or nondefaulting party, nor shall it be
construed to be a waiver of or acquiescence to any such breach or default, or to
any similar breach or default thereafter occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.  All remedies, whether under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not
alternative.

20

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

ADVANCED BIOENERGY, LLC

 

 

 

By:

 

/s/ Revis L. Stephenson III

Name:

 

Revis L. Stephenson III

Title:

 

Chief Executive Officer

 

 

 

 

 

 

 

 

SOUTH DAKOTA WHEAT GROWERS ASSOCIATION

 

 

 

By:

 

/s/ Rory Troske

Name:

 

Rory Troske

Title:

 

Vice President

 

21

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SCHEDULE A

Holders

South Dakota Wheat Growers Association
110 6th Avenue SE
Aberdeen, South Dakota  57402
Attention:  CEO
Facsimile No.:  (605) 225-0859

 

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