Document:

Exhibit
4.1

 

For
Value
Received,                              hereby
sell, assign and transfer unto 

                                                                                                                                                                                                

Units
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
                                               ,
Attorney, 

to
transfer the said Units on the books of the within named Company, with full
power of substitution in the premises.

 

Dated                     ,
20                             

 

In
presence of  

 

 

THE UNITS REPRESENTED BY
THIS CERTIFICATE WERE OFFERED AND SOLD IN RELIANCE ON SECTION 3(a)(l1) AND RULE
147 OF THE SECURITIES ACT COVERING INTRASTATE OFFERS AND SALES OF SECURITIES
AND PURSUANT TO A REGISTRATION STATEMENT IN ACCORDANCE WITH CHAPTER 80A11 OF
MINNESOTA STATUTES. THE UNITS MAY ONLY BE SOLD OR TRANSFERRED TO PERSONS
RESIDENT OF MINNESOTA DURING THE PERIOD IN WHICH THE UNITS ARE PART OF AN ISSUE
BEING OFFERED AND FOR A PERIOD OF NINE MONTHS FROM THE DATE OF THE LAST SALE OF
UNITS IN THE ISSUE. THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS OTHER THAN MINNESOTA, AND ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A SUBSCRIPTION AGREEMENT. THE UNITS MAY NOT BE SOLD, OFFERED
FOR SALE, OR TRANSFERRED IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION
UNDER THE SECURITIES ACT AND UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.

 

THE BOARD OF GOVERNORS (THE
BOARD) OF THE COMPANY IS AUTHORIZED TO DESIGNATE AND ISSUE ONE OR MORE CLASSES
OF UNITS AS PROVIDED IN THE COMPANY’S OPERATING AND MEMBER CONTROL AGREEMENT
(THE “MEMBER CONTROL AGREEMENT”). A COPY OF THE MEMBER CONTROL AGREEMENT
SETTING FORTH SUCH AUTHORIZATION IS KEPT AT THE COMPANY’S PRINCIPAL EXECUTIVE
OFFICE AND WILL BE FURNISHED BY THE COMPANY TO ANY UNIT HOLDER UPON REQUEST AND
WITHOUT CHARGE.

 

THE UNITS REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO FURTHER RESTRICTIONS AS TO THEIR SALE, TRANSFER, HYPOTHECATION, OR
ASSIGNMENT AS SET FORTH IN THE MEMBER CONTROL AGREEMENT. SAID RESTRICTIONS
PROVIDE, AMONG OTHER THINGS, THAT NO VENDEE, TRANSFEREE, ASSIGNEE, OR ENDORSEE
OF A MEMBER SHALL HAVE THE RIGHT TO BECOME A MEMBER WITHOUT THE CONSENT OF THE
COMPANY’S BOARD, WHICH CONSENT MAY BE GIVEN OR WITHHELD IN THE SOLE AND
ABSOLUTE DISCRETION OF THE BOARD.Exhibit 4.2

 

[Sample Legend for Seed Units]

 

For Value Received,                            
hereby sell,  assign and transfer unto
                                                                                                                                                                                                  Units
represented by the within Certificate, and do hereby irrevocably  constitute
and appoint                               ,
Attorney, to  transfer
the said Units on the books of the within named Company, with full power of
substitution in the premises.  

 

Dated                                           , 20           

 

In presence of

 

 

THE UNITS REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED IN THE COMPANY’S SEED CAPITAL ROUND IN CONSIDERATION OF A
CAPITAL CONTRIBUTION OF ONE DOLLAR ($1.00) PER UNIT. ACCORDINGLY, THE UNITS
HAVE DIFFERING ECONOMIC ENTITLEMENTS AND ALLOCATIONS OF TAXABLE GAIN AS
COMPARED TO UNITS ISSUED IN CONSIDERATION OF TWO DOLLARS ($2.00) PER UNIT. EACH
UNIT IS SUBJECT TO THE SPECIAL ALLOCATION OF UP TO ONE DOLLAR ($1.00) OF GAIN
UNDER SECTION 3.3(J)(II) OF THE COMPANY’S MEMBER
CONTROL AGREEMENT, AND IF THE GAIN AVAILABLE FOR ALLOCATION IS LESS THAN ONE
DOLLAR ($ 1.00) PER UNIT, THE LIQUIDATING DISTRIBUTION ENTITLEMENT OF THE
HOLDER OF THESE UNITS WILL BE LESS THAN THE ENTITLEMENTS OF THOSE UNITS THAT
WERE ORIGINALLY ISSUED IN CONSIDERATION OF A CAPITAL CONTRIBUTION OF TWO
DOLLARS ($2.00) PER UNIT. 

 

THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY
STATE SECURITIES LAWS OTHER THAN MINNESOTA. THE UNITS MAY NOT BE SOLD,
OFFERED FOR SALE, OR TRANSFERRED IN THE ABSENCE OF EITHER AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT AND UNDER THE APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS.  

 

THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
AS TO THEIR SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT AS SET FORTH IN THE
COMPANY’S OPERATING AND MEMBER CONTROL AGREEMENT. SAID
RESTRICTIONS PROVIDE, AMONG OTHER THINGS, THAT NO VENDEE, TRANSFEREE, ASSIGNEE,
OR ENDORSEE OF A MEMBER SHALL HAVE THE RIGHT TO BECOME A MEMBER WITHOUT THE
CONSENT OF THE COMPANY’S BOARD, WHICH CONSENT MAY BE GIVEN OR WITHHELD IN
THE SOLE AND ABSOLUTE DISCRETION OF THE BOARD.Exhibit 4.3

 

[Sample Legend for Incentive
Units]

 

For Value Received,                      
hereby sell, assign and transfer unto                                                                                                                                                                                                  Units
represented by the within Certificate, and do hereby irrevocably  constitute
and appoint
                                             , Attorney, to  transfer
the said Units on the books of the within named Company, with full power of
substitution in the premises.  

 

Dated                                            , 20           

 

In presence of

 

 

THE
UNITS REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED PURSUANT TO
SECTION 2.3(F) OF THE COMPANY’S MEMBER CONTROL AGREEMENT FOR WHICH
THE AMOUNT OF THE CAPITAL CONTRIBUTION WAS ZERO. ACCORDINGLY, THE UNITS HAVE
DIFFERING ECONOMIC ENTITLEMENTS AND ALLOCATIONS OF TAXABLE GAIN AS COMPARED TO
UNITS ISSUED IN CONSIDERATION OF TWO DOLLARS ($2.00) PER UNIT. EACH UNIT IS
SUBJECT TO THE SPECIAL ALLOCATION OF UP TO TWO DOLLARS ($2.00) OF GAIN UNDER
SECTION 3.3(J) OF THE COMPANY’S MEMBER CONTROL AGREEMENT, AND IF THE
GAIN AVAILABLE FOR ALLOCATION IS LESS THAN TWO DOLLARS ($2.00) PER UNIT, THE
LIQUIDATING DISTRIBUTION ENTITLEMENT OF THE HOLDER OF THESE UNITS WILL BE LESS
THAN THE ENTITLEMENTS OF THOSE UNITS THAT WERE ORIGINALLY ISSUED IN
CONSIDERATION OF A CAPITAL CONTRIBUTION OF TWO DOLLARS ($2.00) PER UNIT.

 

THE
UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE
SECURITIES LAWS OTHER THAN MINNESOTA. THE UNITS MAY NOT BE SOLD, OFFERED
FOR SALE, OR TRANSFERRED IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION
UNDER THE SECURITIES ACT AND UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.

 

THE
UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS AS TO THEIR
SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT AS SET FORTH IN THE COMPANY’S
OPERATING AND MEMBER CONTROL AGREEMENT. SAID RESTRICTIONS PROVIDE, AMONG OTHER
THINGS, THAT NO VENDEE, TRANSFEREE, ASSIGNEE, OR ENDORSEE OF A MEMBER SHALL
HAVE THE RIGHT TO BECOME A MEMBER WITHOUT THE CONSENT OF THE COMPANY’S BOARD,
WHICH CONSENT MAY BE GIVEN OR WITHHELD IN THE SOLE AND ABSOLUTE DISCRETION
OF THE BOARD.Exhibit
4.4

 

APPENDIX B

 

OTTER TAIL
AG ENTERPRISES, LLC

 

A
Minnesota Limited Liability Company

 

OPERATING
AND MEMBER CONTROL AGREEMENT

 

(Contains
Restrictions On

Transfer Of Interests)

 

Dated
Effective January 20, 2006

 

 

OPERATING
AND MEMBER CONTROL AGREEMENT

OF

OTTER
TAIL AG ENTERPRISES, LLC

 

TABLE OF
CONTENTS

 

	
  OTTER TAIL AG ENTERPRISES, LLC

  	
  1

  
	
   

  	
   

  
	
  SECTION 1 THE LIMITED LIABILITY COMPANY

  	
  1

  
	
   

  	
  1.1

  	
  Formation

  	
  1

  
	
   

  	
  1.2

  	
  Name

  	
  1

  
	
   

  	
  1.3

  	
  Purpose;
  Powers

  	
  1

  
	
   

  	
  1.4

  	
  Principal
  Place of Business

  	
  2

  
	
   

  	
  1.5

  	
  Term

  	
  2

  
	
   

  	
  1.6

  	
  Filings;
  Agent for Service of Process

  	
  2

  
	
   

  	
  1.7

  	
  Title to
  Property

  	
  2

  
	
   

  	
  1.8

  	
  Payments of
  Individual Obligations

  	
  3

  
	
   

  	
  1.9

  	
  Independent
  Activities

  	
  3

  
	
   

  	
  1.10

  	
    Member
  Authority

  	
  3

  
	
   

  	
  1.11

  	
    Access
  to and Confidentiality of Information

  	
  4

  
	
   

  	
  1.12

  	
    Limited
  Liability

  	
  5

  
	
   

  	
  1.13

  	
    Definitions

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 2 CAPITAL AND INTERESTS

  	
  12

  
	
   

  	
  2.1

  	
  Members

  	
  12

  
	
   

  	
  2.2

  	
  Authorized
  Units; Designation of Units

  	
  12

  
	
   

  	
  2.3

  	
  Capital
  Contributions; Issuance of Units

  	
  13

  
	
   

  	
  2.4

  	
  Capital
  Accounts

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 3 ALLOCATIONS

  	
  16

  
	
   

  	
  3.1

  	
  Profits

  	
  16

  
	
   

  	
  3.2

  	
  Losses

  	
  16

  
	
   

  	
  3.3

  	
  Special
  Allocations

  	
  16

  
	
   

  	
  3.4

  	
  Curative
  Allocations

  	
  19

  
	
   

  	
  3.5

  	
  Loss
  Limitation

  	
  19

  
	
   

  	
  3.6

  	
  Other
  Allocation Rules

  	
  20

  
	
   

  	
  3.7

  	
  Tax
  Allocations: Code Section 704(c)

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 4 DISTRIBUTIONS

  	
  21

  
	
   

  	
  4.1

  	
  Net Cash
  Flow

  	
  21

  
	
   

  	
  4.2

  	
  Amounts
  Withheld

  	
  21

  
	
   

  	
  4.3

  	
  Limitations
  on Distributions

  	
  21

  
	
   

  
	
  SECTION 5  MANAGEMENT AND
  OPERATIONS

  	
  22

  
							

 

B-i

 

	
   

  	
  5.1

  	
  Management
  by Board of Governors

  	
  22

  
	
   

  	
  5.2

  	
  Actions by
  Governor; Committees; Reliance on Authority

  	
  25

  
	
   

  	
  5.3

  	
  The Board of
  Governors

  	
  25

  
	
   

  	
  5.4

  	
  Duties and
  Obligations of Governors

  	
  29

  
	
   

  	
  5.5

  	
  Officers

  	
  30

  
	
   

  	
  5.6

  	
  Limitation
  of Liability; Indemnification of Governors and Officers

  	
  32

  
	
   

  	
  5.7

  	
  Member
  Compensation; Expenses; Loans

  	
  33

  
	
   

  	
  5.8

  	
  Contracts
  with Governors, Officers, or their Affiliates

  	
  33

  
	
   

  	
   

  	
   

  
	
  SECTION 6 MEMBERS

  	
  34

  
	
   

  	
  6.1

  	
  Members;
  Rights or Powers Generally

  	
  34

  
	
   

  	
  6.2

  	
  Member
  Classes, Requirements and Voting

  	
  35

  
	
   

  	
  6.3

  	
  Member
  Meetings

  	
  35

  
	
   

  	
  6.4

  	
  Termination
  of Membership

  	
  37

  
	
   

  	
  6.5

  	
  Continuation
  of the Company

  	
  38

  
	
   

  	
  6.6

  	
  No
  Obligation to Purchase Member’s Interest

  	
  38

  
	
   

  	
  6.7

  	
  Waiver of
  Dissenters Rights

  	
  38

  
	
   

  	
   

  	
   

  
	
  SECTION 7 UNIT CERTIFICATES

  	
  38

  
	
   

  	
  7.1

  	
  Certificates
  For Units

  	
  38

  
	
   

  	
  7.2

  	
  Transfer of
  Certificates

  	
  38

  
	
   

  	
  7.3

  	
  Loss or
  Destruction of Certificates

  	
  39

  
	
   

  	
  7.4

  	
  Certificate
  Regulations

  	
  39

  
	
   

  	
  7.5

  	
  Legends

  	
  39

  
	
   

  	
   

  	
   

  
	
  SECTION 8 ACCOUNTING, BOOKS AND RECORDS

  	
  39

  
	
   

  	
  8.1

  	
  Accounting,
  Books and Records

  	
  39

  
	
   

  	
  8.2

  	
  Reports

  	
  40

  
	
   

  	
  8.3

  	
  Tax Matters

  	
  41

  
	
   

  	
  8.4

  	
  Delivery to
  Members and Inspection

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 9 AMENDMENTS

  	
  43

  
	
   

  	
  9.1 

  	
  Amendments

  	
  43

  
	
   

  	
   

  	
   

  
	
  SECTION 10 TRANSFERS

  	
  44

  
	
   

  	
  10.1

  	
  Restrictions
  on Transfers

  	
  44

  
	
   

  	
  10.2

  	
  Permitted
  Transfers

  	
  44

  
	
   

  	
  10.3

  	
  Conditions
  to Permitted Transfers

  	
  44

  
	
   

  	
  10.4

  	
  Prohibited
  Transfers

  	
  45

  
	
   

  	
  10.5

  	
  Rights of
  Unadmitted Assignees

  	
  46

  
	
   

  	
  10.6

  	
  Admission of
  Substituted Members

  	
  46

  
	
   

  	
  10.7

  	
  Representations
  Regarding Transfers; Legend

  	
  47

  
	
   

  	
  10.8

  	
  Distributions
  and Allocations in Respect of Transferred Units

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 11 MERGERS AND OTHER EXTRAORDINARY TRANSACTIONS

  	
  48

  
	
   

  	
  11.1

  	
  Acknowledgement

  	
  48

  
					

 

B-ii

 

	
   

  	
  11.2 

  	
  Sharing of Consideration

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 12  DISSOLUTION
  AND WINDING UP

  	
  49

  
	
   

  	
  12.1

  	
  Dissolution
  Events

  	
  49

  
	
   

  	
  12.2

  	
  Winding Up

  	
  49

  
	
   

  	
  12.3

  	
  Compliance
  With Certain Requirements of Regulations; Deficit Capital Account

  	
  50

  
	
   

  	
  12.4

  	
  Deemed
  Distribution and Recontribution

  	
  50

  
	
   

  	
  12.5

  	
  Rights of
  Unit Holders

  	
  50

  
	
   

  	
  12.6

  	
  Notice of
  Dissolution/Termination

  	
  51

  
	
   

  	
  12.7

  	
  Allocations
  During Period of Liquidation

  	
  51

  
	
   

  	
  12.8

  	
  Character of
  Liquidating Distributions

  	
  51

  
	
   

  	
  12.9

  	
  The
  Liquidator

  	
  51

  
	
   

  	
  12.10

  	
    Form of Liquidating Distributions

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION 13 DISPUTE RESOLUTION

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION 14 MISCELLANEOUS

  	
  53

  
	
   

  	
  14.1

  	
  Notices

  	
  53

  
	
   

  	
  14.2

  	
  Binding
  Effect

  	
  53

  
	
   

  	
  14.3

  	
  Construction

  	
  53

  
	
   

  	
  14.4

  	
  Time

  	
  53

  
	
   

  	
  14.5

  	
  Headings

  	
  53

  
	
   

  	
  14.6

  	
  Severability

  	
  54

  
	
   

  	
  14.7

  	
  Incorporation
  by Reference

  	
  54

  
	
   

  	
  14.8

  	
  Variation of
  Terms

  	
  54

  
	
   

  	
  14.9

  	
  Governing
  Law

  	
  54

  
	
   

  	
  14.10

  	
    Waiver
  of Jury Trial

  	
  54

  
	
   

  	
  14.11

  	
    Counterpart
  Execution

  	
  54

  
	
   

  	
  14.12

  	
    Specific
  Performance

  	
  54

  
	
   

  	
   

  	
   

  
	
  SCHEDULE A

  	
  57

  

 

B-iii

 

OPERATING
AND MEMBER CONTROL AGREEMENT

OF

OTTER
TAIL AG ENTERPRISES, LLC

 

THIS
OPERATING AND MEMBER CONTROL AGREEMENT is hereby
adopted and entered into effective as of the Effective Date (as defined below),
by the Members (as defined below), pursuant to the provisions of the Act (as
defined below), on the terms and conditions set forth herein.

 

This Agreement
constitutes the operating agreement of the Company, under Minn. Stat.
§322B.603, and the member control agreement of the Company, under Minn. Stat. §
322B.37.

 

SECTION 1

THE LIMITED LIABILITY COMPANY

 

1.1  Formation.

 

The organizer
has caused the Company to be formed as a Minnesota limited liability company
pursuant to the provisions of the Act and upon the terms and conditions of this
Agreement. To the extent that the rights or obligations of any Member are
different by reason of any provision of this Agreement than they would be in
the absence of such provisions, this Agreement, to the extent permitted by the
Act, shall control.

 

1.2  Name.

 

The name of
the Company shall be Otter Tail Ag Enterprises, LLC, and all business of the
Company shall be conducted in such name or in any assumed business names that
may be approved by the Board. The name of the Company may be changed from time
to time in accordance with the Act.

 

1.3  Purpose;
Powers.

 

(a)           The
business and purposes of the Company are to develop, construct, own and operate
an ethanol plant(s) and other bio-energy facilities and conduct related
activities, to engage in any other business and investment activity in which a
Minnesota limited liability company organized under the Act may lawfully be
engaged, and to conduct any and all activities related or incidental thereto.

 

(b)           The
Company shall possess and may exercise all the powers and privileges granted to
the Company by the Act, by any other law or by this Agreement, together with
any powers incidental thereto, including without limitation such powers and
privileges as are necessary or convenient to the conduct, promotion or
attainment of the business, purposes or activities of the Company, subject to
any limitations provided in the Articles or in this Agreement.

 

B-1

 

1.4    Principal Place of Business.

 

The principal
office of the Company shall be 1220 N. Tower Road, Suite 201, Fergus
Falls, Minnesota 56537, or at such other place(s) within or without the
State of Minnesota as the Board may determine. The records required by the Act
shall be maintained at the Company’s principal office.

 

1.5    Term.

 

The term of
the Company began on the date the Articles of Organization were filed in the
office of the Secretary of State of the State of Minnesota, and shall continue
until the winding up and liquidation of the Company and its business is
completed following a Dissolution Event as provided in Section 12 of this
Agreement.

 

1.6    Filings; Agent for Service of Process.

 

(a)           The
organizer has caused the Articles to be filed in the office of the Secretary of
State of the State of Minnesota, in accordance with the provisions of the Act.
The Company shall take any and all other actions reasonably necessary to
perfect and maintain the status of the Company as a limited liability company
under the laws of the State of Minnesota. The Board shall cause amendments to
be filed whenever required by the Act.

 

(b)           The
Board shall cause the Company to make such filings and take any and all other
actions as may be reasonably necessary to perfect and maintain the status of
the Company as a limited liability company or similar type of entity under the
laws of any other jurisdictions in which the Company engages in business.

 

(c)           The
name and address of the agent for service of process on the Company in the
State of Minnesota shall be as set forth in the Articles, or such other person
or place as determined by the Board.

 

(d)           In
connection with the dissolution and completion of the winding up of the
Company, the Board shall cause to be executed and filed a notice of dissolution
and articles of termination whenever required by the Act, and make similar
filings under the laws of any other jurisdictions in which the Board deems such
filings necessary or advisable.

 

1.7    Title to Property.

 

All Property
owned by the Company shall be owned by the Company as an entity and no Unit
Holder or Governor shall have any ownership interest in such Property in its
individual name. Each Unit Holder’s interest in the Company shall be personal
property for all purposes. The Company shall hold title to all of its Property
in the name of the Company and not in the name of any Unit Holder or Governor.

 

B-2

 

1.8    Payments of Individual Obligations.

 

The Company’s
credit and assets shall be used solely for the benefit of the Company, and no
asset of the Company shall be Transferred or encumbered for, or in payment of,
any individual obligation of any Unit Holder or Governor.

 

1.9    Independent Activities.

 

(a)           Each Governor shall be required to
devote only such time to the affairs of the Company as may be necessary to
manage the business and affairs of the Company in accordance with Section 5,
and shall be free to serve any other Person or enterprise in any capacity that
the Governor may deem appropriate in his or her discretion.

 

(b)           Neither this Agreement nor any
activity undertaken pursuant hereto shall (i) prevent any Unit Holder,
Governor, or their Affiliates, acting on their own behalf, from engaging in
whatever activities they choose, whether the same are competitive with the
Company or otherwise, and any such activities may be undertaken without having
or incurring any obligation to offer any interest in such activities to the
Company or any other Unit Holder or Governor, or (ii) require any Unit
Holder or Governor to permit the Company or any other Unit Holder, Governor, or
their Affiliates to participate in any such activities, and as a material part
of the consideration for the execution of this Agreement by each Member, each
Member hereby waives, relinquishes, and renounces any such right or claim of
participation.

 

1.10  Member Authority.

 

Each Member represents and warrants to the Company
and to the other Members that:

 

(a)           the
Member, if not an individual, is duly organized, validly existing and in good
standing under the laws of its state of organization and is duly qualified and
in good standing as a foreign organization in the jurisdiction of its principal
place of business if not organized therein;

 

(b)           the
Member has full corporate, limited liability company, partnership, trust or
other applicable power and authority to execute and agree to this Agreement and
to perform its obligations hereunder and all necessary actions by the board of
directors, shareholders, managers, members, partners, trustees, beneficiaries,
or other Persons necessary or appropriate for the due authorization, execution,
delivery and performance of this Agreement by the Member have been taken;

 

(c)           the
Member has duly executed and delivered this Agreement; and

 

(d)           the
Member’s authorization, execution, delivery and performance of this Agreement
does not conflict with any other agreement or arrangement to which the Member
is a party or by which it is bound.

 

B-3

 

1.11 Access to and
Confidentiality of Information.

 

(a)           In
addition to the other rights specifically set forth in this Agreement, each
Member is entitled to all information to which the Member is entitled to have
access pursuant to the Act under the circumstances and subject to the
conditions therein stated, which conditions include but are not limited to such
reasonable standards governing what information and documents are to be
furnished at what time and location and at whose expense as may be set forth
herein or otherwise established by the Board. However, without limiting the
foregoing, the Members agree that, except as otherwise provided by law, the Board
may from time to time determine, due to contractual obligations, business
concerns or other considerations, that certain information regarding the
business, affairs, properties, and financial condition of the Company which
constitutes a trade secret under Minnesota law or the proprietary information
of a third party under license should be kept confidential and not provided to
some or all of the Members or that it is not just or reasonable for some or all
of the Members or their assignees or representatives to examine or copy any
such information. The Members authorize the Board to adopt such policies and
practices concerning access to Company records and information in order to
insure the security and confidentiality of such Company records and information,
and the Members agree that a Member’s access to the Company’s records and
information shall be subject to the terms and conditions of such policies and
practices duly adopted by the Board.

 

(b)           Each
Member acknowledges that from time to time the Member may receive information
from or regarding the Company in the nature of trade secrets or that is
otherwise confidential, the release of which may be damaging to the Company or
Persons with whom it does business. Each Member agrees to hold in strict confidence
any information it receives regarding the Company that is identified as being
confidential (and if such information is provided in writing, is so marked) and
may not disclose such information to any Person, except for disclosures
(i) to another Member having the right to such information,
(ii) compelled by law, provided the Member must promptly notify the Board
of any request or demand for such information, to the extent reasonably
possible, (iii) to advisors or representatives of the Member, or to Persons
(and their advisors or representatives) seeking to acquire all or any portion
of the Member’s Interest through a Transfer in accordance with this Agreement,
but only if in each case such Person has agreed to be bound by the provisions
of this section, or (iv) of information that the Member has also received
from a source independent of the Company that the Member reasonably believes
has the legal right to disclose such information to the Member. Each Member
acknowledges that a breach of the provisions of this section may cause the
Company irreparable harm and injury for which monetary damages are inadequate
or difficult to calculate or both. Accordingly, each Member specifically agrees
that the Company shall be entitled to injunctive relief to enforce the
provisions of this section, that such relief may be granted without the
necessity of proving actual damages, and that such injunctive or equitable
relief shall be in addition to, not in lieu of, the right to recover monetary
damages for any breach of this section by the Member. The obligations referred
to in this section shall survive the termination of a Member’s membership in
the Company.

 

B-4

 

1.12    Limited Liability.

 

Except as
otherwise expressly provided by the Act, this Agreement or agreed to under
another written agreement, 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 Unit Holder, or
Governor of the Company shall be obligated personally for any such debt,
obligation or liability of the Company or any debt, obligation or liability of
any other Unit Holder or Governor of the Company, solely by reason of being a
Unit Holder, Member or acting as a Governor of the Company. The failure of the
Company to observe any formalities or requirements relating to the exercise of
its powers or management of its business or affairs under this Agreement or the
Act shall not be grounds for imposing liability on any Unit Holder or Governor
for any act, debt, obligation or liability of the Company.

 

1.13    Definitions.

 

Capitalized words and phrases used in this
Agreement have the following meanings:

 

“Act”
means the Minnesota Limited Liability Company Act as
set forth in Chapter 322B of the Minnesota Statutes Annotated (commencing with
Section 322B.01), as amended from time to time (or any corresponding
provision or provisions of any succeeding law).

 

“Adjusted Capital
Account Deficit” means, with respect to any Unit
Holder, the deficit balance, if any, in such Unit Holder’s Capital Account as
of the end of the relevant Fiscal Year, after giving effect to the following
adjustments:

 

(i)            Credit
to such Capital Account any amounts which such Unit Holder is deemed to be
obligated to restore pursuant to the next to the last sentences in Sections
1.704-2(g)(l) and 1.704-2(i)(5) of the Regulations; and

 

(ii)           Debit to such Capital Account the
items described in Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.

 

The foregoing definition is intended to
comply with the provisions of Section 1.704-l(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.

 

“Affiliate”
of another Person means (i) any Person directly
or indirectly owning, controlling, or holding with power to vote ten percent or
more of the outstanding voting securities of such other Person, (ii) any
Person ten percent or more of whose outstanding securities are directly or
indirectly owned, controlled, or held, with power to vote, by such other
Person, (iii) any Person directly or indirectly controlling, controlled
by, or under common control with such other Person, (iv) any executive
officer, director, governor, trustee or general partner of such other Person,
or (v) any legal entity on which such Person acts as an executive officer,
director, governor, trustee, or general partner.

 

B-5

 

“Agreement”
means this Operating and Member Control Agreement, as
amended, modified or supplemented from time to time. Words such as “herein,”
“hereinafter,” “hereof,” “hereto” and “hereunder” refer to this Agreement as a
whole, unless the context otherwise requires.

 

“Articles”
means the Articles of Organization filed with the
Secretary of State of the State of Minnesota pursuant to the Act for the
purpose of forming the Company, as amended, restated, modified or supplemented
from time to time.

 

“Assignee”
means a transferee of Units who is not admitted as a
substituted Member pursuant to Section 10.6.

 

“Board”
means collectively the persons who are named as
Governors of the Company in or designated or elected as Governors pursuant to
this Agreement. “Governor” or “Governors” means any such person or
persons.

 

“Capital
Account” means the capital account maintained for each
Unit Holder in accordance with Section 2.4.

 

“Capital
Contributions” means a contribution made to the
Company with respect to any Unit in a form allowed as valid consideration for
Units under the Act. With respect to any Unit Holder, the amount of any Capital
Contribution shall be the sum of (i) the money and the initial Gross Asset
Value of any Property (other than money) contributed to the Company with respect
to the Units in the Company held or purchased by such Unit Holder, plus
(ii) in the case of valid consideration for Units other than money or
other Property, for example, services rendered or to be rendered to or on
behalf of the Company, the amount, if any, determined by the Board of Governors
or as specified in this Agreement or in any agreement with respect to Units
that is authorized by this Agreement.

 

“Class A Member” means
any Person who is described in and who meets the qualifications, requirements
and conditions established by or pursuant to this Agreement (including without
limitation Sections 2.2, 6.1 and 6.2(a) hereof) to owning Class A
Units and to being a Class A Member and who has not ceased to be a
Class A Member pursuant to the terms of this Agreement. “Class A Members” means all such
Class A Members.

 

“Class A Units” means
all Units that are designated as such pursuant to Section 2.2.

 

“Code”
means the United States Internal Revenue Code of 1986,
as amended from time to time.

 

“Company”
means the limited liability company formed pursuant to
this Agreement and the Articles and the limited liability company continuing
the business of this Company in the event of dissolution of the Company as
herein provided.

 

B-6

 

“Company
Minimum Gain” has the meaning given the term
“partnership minimum gain” in Sections 1.704-2(b)(2) and
1.704-2(d) of the Regulations.

 

“Debt”
means (i) any indebtedness for borrowed money or
the deferred purchase price of property as evidenced by a note, bonds, or other
instruments, (ii) obligations as lessee under capital leases,
(iii) obligations secured by any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind existing on any asset owned or held by
the Company whether or not the Company has assumed or become liable for the
obligations secured thereby, (iv) any obligation under any interest rate
swap agreement, (v) accounts payable, and (vi) obligations under direct or
indirect guarantees of (including obligations (contingent or otherwise) to
assure a creditor against loss in respect of) indebtedness or obligations of
the kinds referred to in clauses (i), (ii), (iii), (iv) and (v) above;
provided that Debt shall not include obligations in respect of any accounts
payable that are incurred in the ordinary course of the Company’s business and
are not delinquent or are being contested in good faith by appropriate
proceedings.

 

“Depreciation”
means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such beginning adjusted tax basis; provided, however, that if the
adjusted basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Board.

 

“Dissolution Event” has
the meaning set forth in Section 12.1 hereof.

 

“Effective Date” means
January 20, 2006.

 

“Financial Closing” means
when the Board determines, in its sole discretion, that the Company has closed
on the debt and equity financing necessary to construct the Company’s proposed
ethanol plant and provide a reasonable amount of working capital (as determined
by the Board) at plant start-up.

 

“Fiscal
Year” means, subject to a change in Fiscal Year
pursuant to Section 8.1(b), the fiscal year of the Company, which shall be
the Company’s taxable year as determined under Regulations,
Section 1.441-1 or Section 1.441-2 and the Regulations under
Section 706 of the Code or, if the context requires, any portion of a
fiscal year for which an allocation of Profits, Losses or other allocation
items or a Distribution is to be made; provided that the Board may designate a
different fiscal year for GAAP reporting purposes but that designation shall
not affect the taxable year of the Company or the provisions of this Agreement
relating to Capital Accounts, allocations of Profits, Losses or other
allocation items, or Distributions.

 

B-7

 

“GAAP”
means generally accepted accounting principles in
effect in the United States of America from time to time.

 

“Gross
Asset Value” means with respect to any asset, the
asset’s adjusted basis for federal income tax purposes, except as follows:

 

(i)            The initial Gross Asset Value of any
asset contributed by a Unit Holder to the Company shall be the gross fair
market value of such asset, as determined by the Board;

 

(ii)           The
Gross Asset Values of all Company assets shall be adjusted to equal their
respective gross fair market values (taking Code Section 7701(g) into
account) as determined by the Board as of the following times: (A) the
acquisition of an additional interest in the Company by any new or existing
Unit Holder in exchange for more than a de minimis Capital Contribution;
(B) the distribution by the Company to a Unit Holder of more than a de
minimis amount of Company property as consideration for an interest in the
Company; (C) the liquidation of the Company within the meaning of
Regulations Section 1.704-l(b)(2)(ii)(g); and (D) such other times as
the Regulations may permit; provided that an adjustment described in
clauses (A), (B) or (D) of this subparagraph shall be made only if
necessary to reflect the relative economic interests of the Unit Holders in the
Company, and further provided that the adjustment described in clause
(A) of this subparagraph shall not be made as a result of the issuance of
additional Units prior to or upon Financial Closing.

 

(iii)          The
Gross Asset Value of any item of Company assets distributed to any Unit Holder
shall be adjusted to equal the gross fair market value (taking Code
Section 7701(g) into account) of such asset on the date of
distribution as determined by the Board; and

 

(iv)          The
Gross Asset Values of Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-l(b)(2)(iv)(m) and
subparagraph (vi) of the definition of “Profits” and “Losses” or
Section 3.3(g) hereof; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this subparagraph (iv) to
the extent that an adjustment pursuant to subparagraph (ii) is required in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).

 

If the Gross
Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (ii) or (iv), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset for purposes
of computing Profits and Losses.

 

“Interest” means,
collectively, a Unit Holder’s share of the “Profits” and “Losses” of the
Company, a Unit Holder’s right to receive distributions of the Company’s
assets, and, with respect to a Member, any right of the Member to vote on or
participate in the management of the Company and to receive information
concerning the business and affairs of the Company as provided for in this Agreement.
An Interest is quantified by the unit of measurement referred to herein as
“Units” (as defined below).

 

B-8

 

“Issuance Items” has
the meaning set forth in Section 3.3(h) hereof.

 

“Liquidation Period” has
the meaning set forth in Section 12.7 hereof.

 

“Liquidator” has
the meaning set forth in Section 12.9(a) hereof.

 

“Losses” has
the meaning set forth in the definition of “Profits” and “Losses.”

 

“Majority
in Interest” or a specified percentage in interest of
the Members or of any specified class or classes thereof means Members holding
more than fifty percent (50%) or such specified percentage, respectively, of
the Units then held by all Members, or of the Units of the specified class or
classes of Units then held by all Members.

 

“Member”
means any Person who is described in and meets the
membership requirements established in Sections 6.1 and 6.2(a) hereof and
who has not ceased to be a Member pursuant to the terms of this Agreement, and
includes each class of Member including a Class A Member except where this
Agreement expressly distinguishes a particular class of Member. “Members” means all such Persons.

 

“Net Cash Flow” means
the gross cash proceeds of the Company less the portion thereof used to pay or
establish reserves for all Company expenses, debt payments, obligations and
liabilities, capital improvements, replacements, and contingencies, all as
reasonably determined by the Board. “Net Cash Flow” shall not be reduced by
depreciation, amortization, cost recovery deductions, or similar allowances,
but shall be increased by any reductions of reserves previously established.

 

“Nonrecourse
Deductions” has the meaning set forth in
Section 1.704-2(b)(l) of the Regulations.

 

“Nonrecourse
Liability” has the meaning set forth in
Section 1.704-2(b)(3) of the Regulations.

 

“Permitted Transfer” has
the meaning set forth in Section 10.2 hereof.

 

“Person”
means any individual, partnership (whether general or
limited), limited liability company, corporation, trust, estate, association,
nominee or other entity.

 

“Profits”
and “Losses” mean, for each Fiscal Year, an amount
equal to the Company’s taxable income or loss for such Fiscal Year, determined
in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant
to Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments (without duplication):

 

B-9

 

(i)            Any income of the Company that is
exempt from federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of “Profits” and
“Losses” shall be added to such taxable income or loss;

 

(ii)           Any expenditures of the Company
described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-l(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of “Profits” and
“Losses;”

 

(iii)          In the event the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraphs (ii) or
(iii) of the definition of Gross Asset Value, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
Gross Asset Value of the asset) or an item of loss (if the adjustment decreases
the Gross Asset Value of the asset) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses;

 

(iv)          Gain or loss resulting from any
disposition of Property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of the Property disposed of, notwithstanding that the adjusted tax basis
of such Property differs from its Gross Asset Value;

 

(v)           In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken into account Depreciation
for such Fiscal Year, computed in accordance with the definition of
Depreciation;

 

(vi)          To
the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) is required, pursuant to Regulations
Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Unit Holder’s interest in the Company, the amount of such
adjustment 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) from the
disposition of such asset and shall be taken into account for purposes of
computing Profits or Losses; and

 

(vii)         Notwithstanding any other provision of
this definition, any items which are specially allocated pursuant to
Section 3.3 and Section 3.4 hereof, the amount, if any, included in
the Company’s taxable income pursuant to Section 87 of the Code (the
income add-back in the amount of the small ethanol producer credit) and the
partner level deduction pursuant to Section 199 of the Code (relating to
domestic production activities) shall not be taken into account in computing
Profits or Losses.

 

The amounts of
the items of Company income, gain, loss or deduction available to be specially
allocated pursuant to Sections 3.3 and Section 3.4 hereof shall be
determined by applying rules analogous to those set forth in subparagraphs
(i) through (vi) above.

 

B-10

 

“Property”
means all real and personal property acquired by the
Company, including cash, and any improvements thereto, and shall include both
tangible and intangible property.

 

“Regulations”
means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations are amended from
time to time.

 

“Regulatory
Allocations” has the meaning set forth in
Section 3.4 hereof.

 

“Securities Act” means
the Securities Act of 1933, as amended.

 

“Syndication
Expenses” means all expenditures classified as
syndication expenses pursuant to Section 1.709-2(b) of the Regulations.

 

“Subsidiary”
means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company, association or other
entity in which such Person owns, directly or indirectly, fifty percent (50%)
or more of the outstanding equity securities or interests, the holders of which
are generally entitled to vote for the election of the governing body of such
entity.

 

“Transfer”
means, as a noun, any voluntary or involuntary transfer, sale, pledge or
hypothecation or other disposition, whether by operation of law (e.g., pursuant
to a merger) or otherwise, and, as a verb, voluntarily or involuntarily to
transfer, sell, pledge or hypothecate or otherwise dispose of.

 

“Unit” means
the unit of measurement into which an Interest is divided for purposes of those
provisions of this Agreement that require quantification of the rights,
preferences and obligations represented by an Interest, as authorized and designated
in Section 2.2 and issued pursuant to Section 2.3 hereof, and
includes each class of Unit and each Unit or series of Units within a class
except where this Agreement expressly distinguishes a particular class of Unit
or particular Units or series of Units within a class.

 

“Unit
Holder” means a Person who owns Units, regardless of
whether such Person is a Member. “Unit
Holders” means all Unit Holders. Unit Holders may be designated with
respect to specific types or classes of Units held.

 

“Unit
Holder Nonrecourse Debt” has the same meaning as the
term “partner nonrecourse debt” in Section 1.704-2(b)(4) of the
Regulations.

 

“Unit
Holder Nonrecourse Debt Minimum Gain” means an amount,
with respect to each Unit Holder Nonrecourse Debt, equal to the Company Minimum
Gain that would result if such Unit Holder Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with
Section 1.704-2(i)(3) of the Regulations.

 

B-11

 

“Unit
Holder Nonrecourse Deductions” has the same meaning as
the term “partner nonrecourse deductions” in Sections 1.704-2(i)(l) and
1.704-2(i)(2) of the Regulations.

 

SECTION 2

CAPITAL AND INTERESTS

 

2.1    Members.

 

The Members of
the Company are those Persons described in Section 6.1 and
Section 6.2 hereof, who have not ceased to be Members.

 

2.2    Authorized Units; Designation of Units.

 

(a)           The
Company is authorized to issue up to 80,000,000 Units, which shall remain
undesignated as to class or series until issued by the Board in accordance with
or as authorized pursuant to this Agreement, or except as otherwise provided
herein. Authorized Units shall be issued only in accordance with
Section 2.3.

 

(b)           The
Company is authorized to issue Class A Units and such additional classes
or series of Units as may be authorized pursuant to Section 2.2(c) of
this Agreement, and the Board shall designate Units upon issuance as
Class A or, if applicable, such additional class or series of Units as may
be so authorized. The relative rights, preferences and limitations of Units are
established herein. In general, except where this Agreement expressly
distinguishes a particular class of Unit or particular Units or series of Units
within a class, Units shall participate in the growth and appreciation in value
of the Company as well as the risk of a decline in value of the Company. Any
subdivision or combination of outstanding Units, or declaration of a
distribution payable in Units, shall be effected equally as to all classes or
series of Units.

 

(c)           Authority
is hereby vested in the Board of Governors, upon the consent or approval of a
Majority in Interest of the Members voting separately by class if more than one
class of Units is then outstanding, to establish and authorize one or more than
one additional classes or series of Units, to set forth the designation and
number of authorized Units of any such additional class or series, to fix the
relative rights, preferences and limitations of any such additional class or
series, which relative rights, preferences and limitations may include but not
be limited to voting powers, full or partial or none, of such class or series,
redemption rights or obligations of the Company with respect to such class or
series, entitlements of such class of series to cumulative, partially
cumulative or noncumulative distributions, preference of such class or series
over other classes or series of Units for the payment of distributions of any
or all kinds, conversion rights of such class or series into any other class or
series of Units, and any other relative economic or other rights, preferences
and/or limitations thereof, and any or all of which rights, preferences or
limitations may be senior or superior to, on par with, or junior to those of
one or more of then existing authorized class or classes of Units or series
within a class.

 

(d)           When
the Company desires to issue any Units of any class or series which

 

B-12

 

shall not previously have been so authorized
and designated, any and all rights, preferences and limitations of such
additional class or series as established by the Board of Governors upon the
consent or approval of a Majority in Interest of the Members voting separately
by class shall be set forth in an exhibit that shall be attached hereto and
made a part hereof. When the rights, preferences and limitations if any of any
such additional class or series have been established by the Board of Governors
and set forth in an exhibit hereto, the setting forth of such rights,
preferences and limitations shall have the effect of amending the applicable
provisions of this Agreement and such rights, preferences and limitations may
thereafter only be amended pursuant to the applicable provisions of this
Agreement.

 

(e)           The
Board of Governors shall have the authority and power to establish, authorize
the issuance of, and grant rights, warrants, and options entitling the holders
thereof to purchase from the Company Units of any class or series authorized
hereunder, or bonds, notes, debentures, or other obligations convertible into
Units of any class or series authorized hereunder, subject to all
qualifications, requirements or conditions of holding such class or series
established by or pursuant to this Agreement.

 

2.3 Capital
Contributions; Issuance of Units

 

(a)           Each
Unit issued and outstanding as of the Effective Date is hereby automatically
converted into, designated, and shall hereafter be deemed to be and shall be
one Class A Unit.

 

(b)           No
Member shall be obligated to make any additional Capital Contributions to the
Company or to pay any assessment to the Company, other than the unpaid portion
of such Member’s written agreement to make Capital Contributions, and no Units
shall be subject to any mandatory assessment, requests or demands for capital.

 

(c)           Units
may only be issued in consideration of Capital Contributions. The Board may
accept Capital Contributions from Members or persons seeking to become Members,
may authorize the Company to enter into a written agreement with such Members
or persons make Capital Contributions for the purchase or other acquisition of
Units upon such terms and conditions as are authorized by this Agreement, and
may cause the Company to designate and issue additional Units to such persons
in consideration of Capital Contributions. Capital Contributions and the
designation and issuance of additional Units shall be made at such times and
upon such terms and conditions as are authorized by this Agreement.

 

(d)           Upon
acceptance of Capital Contributions and the issuance of additional Units, the
Board shall cause the books and records of the Company to be adjusted
appropriately.

 

(e)           The
Members shall have no preemptive rights as described in Minn. Stat.§ 322B.33,
as amended, or any similar future statutory provisions, to make Capital
Contributions.

 

(f)            The Board of Governors has the
authority to issue Units under Section 2.3(c) that may constitute or may
become substantially vested profits interests within the

 

B-13

 

meaning of Revenue Procedure 93-27 and
Revenue Procedure 2001-43.

 

(i)            Units issued in the Seed Capital
Round, to the extent of the special allocation to them in Section 3.3(j),
Units, if any, issued in connection with services on or before Financial
Closing, and Units, if any, issued upon exercise of options that are issued in
connection with services on or before Financial Closing are intended to
constitute substantially vested profits interests for federal income tax
purposes. Units issued in the Seed Capital Round shall mean the Units issued
pursuant to the Company’s private placement of Units in September 2005.
The foregoing Units, and Units issued pursuant to
Section 2.3(f)(ii) if the terms of their issuance so provide, are
entitled to a special allocation of gain under Section 3.3(j).

 

(ii)           The Board of Governors may issue
additional Units that may constitute when issued or may become substantially
vested profits interests, under such terms as may be agreed upon in accordance
with this Agreement.

 

(g)           If
the proposed revenue procedure described in Internal Revenue Service Notice
2005-43 is finalized prior to the issuance of all Units described
Section 2.3(f), any such Units that are issued after finalization are
intended to constitute “safe harbor partnership interests” as described in said
Notice, and other Units may be so designated. Accordingly, the Company and all
Unit Holders (including the recipients of such Units), intending to be legally
bound, agree that:

 

(i)            the Company is authorized and
directed to elect the “safe harbor” described in the revenue procedure to be
issued pursuant to said Notice,

 

(ii)           the Company and each of its Unit
Holders (including the recipients of such Units) will comply with all
requirements of said safe harbor with respect to all partnership interests
transferred in connection with the performance of services while the election
remains effective, including reporting in a manner consistent with the safe
harbor on their respective income tax returns, and

 

(iii)          no issuance or transfer of any Unit
subject to the safe harbor election shall be effective unless the Person
acquiring the Unit agrees to be legally bound by the safe harbor election as if
such Person had been a Unit Holder at the time such Units were issued and such
related conditions as the Board of Governors may reasonably impose.

 

The parties
acknowledge that the proposed revenue procedure is subject to change, and agree
that this subparagraph shall be construed in such manner as may be necessary to
implement the intent of the parties as stated above, and that the Board of
Governors shall have the authority, without any further action by the Unit
Holders, to amend this Agreement as may be necessary to implement the stated
intent. Following the issuance of Units subject to the safe harbor election,
the Board of Governors shall have the sole discretion and authority to act on
behalf of the

 

B-14

 

Company and the Unit Holders to terminate the
safe harbor election, and each Unit Holder agrees that it will not take any
action that would terminate the safe harbor election.

 

2.4 Capital Accounts.

 

A Capital
Account shall be maintained for each Unit Holder in accordance with the
following provisions. To facilitate the accounting for acquisitions, ownership
and transfers of more than one class of Units by a Unit Holder, each Unit
Holder’s Capital Account shall be subdivided into separate Capital Accounts for
each class of Unit owned, and the following adjustments to Capital Accounts
shall be made by reference to Units of each class of Unit owned:

 

(a)           To
each Unit Holder’s Capital Account there shall be credited (A) such Unit
Holder’s Capital Contributions, (B) such Unit Holder’s distributive share
of Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 3.3 and Section 3.4, and (C) the
amount of any Company liabilities assumed by such Unit Holder or which are
secured by any Property distributed to such Unit Holder. The principal amount
of a promissory note which is not readily traded on an established securities
market and which is contributed to the Company by the maker of the note (or a
Unit Holder related to the maker of the note within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(c)) shall not be included in the Capital Account
of any Unit Holder until the Company makes a taxable disposition of the note or
until (and to the extent) principal payments are made on the note, all in
accordance with Regulations Section 1.704-l(b)(2)(iv)(d)(2);

 

(b)           To
each Unit Holder’s Capital Account there shall be debited (A) the amount
of money and the Gross Asset Value of any Property distributed to such Unit
Holder pursuant to any provision of this Agreement, (B) such Unit Holder’s
distributive share of Losses and any items in the nature of expenses or losses
which are specially allocated pursuant to Section 3.3 and 3.4 hereof, and
(c) the amount of any liabilities of such Unit Holder assumed by the
Company or which are secured by any Property contributed by such Unit Holder to
the Company;

 

(c)           In
the event Units are Transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the Transferred Units; and

 

(d)           In
determining the amount of any liability for purposes of subparagraphs
(a) and (b) above there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.

 

The foregoing
provisions and the other provisions of this Agreement relating to allocation of
Profits and Loss, nonliquidating distributions, liquidating distributions, and
the maintenance of Capital Accounts, including and subject to
Section 12.3, are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Board shall determine that
it is prudent to modify the manner in which the Capital Accounts, or any debits
or credits thereto (including, without limitation,

 

B-15

 

debits or credits relating
to liabilities which are secured by contributed or distributed property or
which are assumed by the Company or any Unit Holders), are computed in order to
comply with such Regulations, the Board may make such modification, provided
that it is not likely to have a material effect on the amounts distributed to
any Person pursuant to Section 12 hereof upon the dissolution of the
Company. The Board also shall (i) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Unit
Holders and the amount of capital reflected on the Company’s balance sheet, as
computed for book purposes, in accordance with Regulations Section 1.704-l(b)(2)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated
events might otherwise cause this Agreement not to comply with Regulations Section 1.704-l(b).

 

SECTION 3

ALLOCATIONS

 

3.1  Profits.

 

After
giving effect to the special allocations in Section 3.3 and Section 3.4
hereof, and except as otherwise provided in Section 3.5 hereof, Profits
for any Fiscal Year shall be allocated among the Unit Holders ratably in
proportion to Units held.

 

3.2  Losses.

 

After
giving effect to the special allocations in Section 3.3 and 3.4 hereof,
and except as otherwise provided in Section 3.5 hereof, Losses for any
Fiscal Year shall be allocated among the Unit Holders ratably in proportion to
Units held.

 

3.3  Special Allocations.

 

The
following special allocations shall be made in the following order:

 

(a)           Minimum Gain Chargeback. Except as otherwise provided in Section 1.704-2(f) of
the Regulations, notwithstanding any other provision of this Section 3, if
there is a net decrease in Company Minimum Gain during any Fiscal Year, each
Unit Holder shall be specially allocated items of Company income and gain for
such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Unit Holder’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Unit Holder pursuant thereto. The items to be so allocated shall
be determined in accordance with sections 1.704-2(f) (6) and 1.704-2(j) (2) of
the Regulations. This Section 3.3(a) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.

 

(b)           Unit Holder Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i) (4) of the Regulations,
notwithstanding any other provision of this Section 3, 

 

B-16

 

if there is a net decrease
in Unit Holder Nonrecourse Debt Minimum Gain attributable to a Unit Holder
Nonrecourse Debt during any 3 Fiscal Year, each Unit Holder who has a share of
the Unit Holder Nonrecourse Debt Minimum Gain attributable to such Unit Holder
Nonrecourse Debt, determined in accordance with Section 1.704-2(i) (5) of
the Regulations, shall be specially allocated items of Company income and gain
for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Unit Holder’s share of the net decrease in Unit Holder
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i) (4).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Unit Holder pursuant
thereto. The items to be so allocated shall be determined in accordance with
Sections 1.704-2(i) (4) and 1.704-2(j) (2) of the
Regulations. This Section 3.3(b) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i) (4) of
the Regulations and shall be interpreted consistently therewith.

 

(c)           Qualified Income Offset. In the event any Unit Holder
unexpectedly receives any adjustments, allocations, or distributions described
in Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5),
or 1.704-l(b)(2)(ii)(d)(6) of the Regulations, items of
Company income and gain shall be specially allocated to such Unit Holder in an
amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of the Unit Holder as quickly as possible,
provided that an allocation pursuant to this Section 3.3(c) shall be
made only if and to the extent that the Unit Holder would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Section 3
have been tentatively made as if this Section 3.3(c) were not in this
Agreement.

 

(d)           Gross Income Allocation. In the event any Unit Holder has a
deficit Capital Account at the end of any Fiscal Year which is in excess of the
sum of (i) the amount such Unit Holder is obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(l) and
1.704-2(i)(5), each such Unit Holder shall be specially allocated items of
Company income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 3.3(d) shall be
made only if and to the extent that such Unit Holder would have a deficit
Capital Account in excess of such sum after all other allocations provided for
in this Section 3 have been made as if Section 3.3(c) and this Section 3.3(d) were
not in this Agreement.

 

(e)           Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be specially
allocated to the Unit Holders in proportion to Units owned.

 

(f)            Unit Holder Nonrecourse Deductions. Any Unit Holder
Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the
Unit Holder who bears the economic risk of loss with respect to the Unit Holder
Nonrecourse Debt to which such Unit Holder Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704- 2(i)(l).

 

(g)           Section 754
Adjustments. To the extent an adjustment to the adjusted tax basis of any
Company asset, pursuant to Code Section 734(b) or Code Section 743(b) is
required,

 

B-17

 

pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-l(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Unit Holder in complete
liquidation of such Unit Holder’s interest in the Company, the amount of such
adjustment to 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 such gain or loss shall be specially allocated to the
Unit Holders in accordance with their interests in the Company in the event
Regulations Section 1.704-l(b)(2)(iv)(m)(2) applies, or
to the Unit Holder to whom such distribution was made in the event Regulations
Section 1.704-l(b)(2)(iv)(m)(4) applies.

 

(h)           Allocations Relating to
Taxable Issuance of Units. Any income, gain, loss or deduction
realized as a direct or indirect result of the issuance of Units by the Company
to a Unit Holder (the “Issuance Items”) shall
be allocated among the Unit Holders so that, to the extent possible, the net
amount of such Issuance Items, together with all other allocations under this
Agreement to each Unit Holder shall be equal to the net amount that would have
been allocated to each such Unit Holder if the Issuance Items had not been
realized.

 

(i)            Syndication Expenses. Syndication
Expenses for any Fiscal Year shall be specially allocated to the Unit Holders
in proportion to their Units, provided that, if Units are issued pursuant to
Section 2.3 hereof during the Fiscal Year, all Syndication Expenses shall
be divided among the Unit Holders from time to time so that, to the extent
possible, the cumulative Syndication Expenses allocated with respect to each
Unit at any time is the same amount. In the event the Board shall determine
that such result is not likely to be achieved through future allocations of
Syndication Expenses, the Board may allocate other items of income, gain,
deduction, or loss so as to achieve the same effect on the Capital Accounts of
the Unit Holders.

 

(j)            Special Allocation of
Gain. Net gain realized by the Company that otherwise would be
allocable under Section 3.1, excluding gain attributable to Depreciation
recapture, shall be specially allocated to Unit Holders who hold Units
described in Section 2.3(f)(i) in the order and at the time provided
in this Section 3.3(j):

 

(i)            first, with respect to each such
Unit held, the amount, if any, by which One Dollar ($1.00) exceeds the amount
of Capital Contributions made with respect to such Unit, and

 

(ii)           next, with respect to each such Unit
held, the amount, if any, by which One Dollar ($1.00) exceeds the amount, if
any, by which Capital Contributions with respect to such Unit exceeds One
Dollar ($1.00) for such Unit.

 

If the net gain available for allocation
under this Section 3.3(j) is insufficient to satisfy the special
allocation entitlements in this Section 3.3(j), the net gain available for
allocation shall be allocated among Units Holders having a priority under
Section 3.3(j)(i) to the extent of and in proportion to their priority
thereunder, and any remaining gain available for allocation under this
Section 3.3(j) shall be allocated among Unit Holders having a priority
under Section 3.3(j)(ii) to the extent of and in proportion to their
priority thereunder.

 

B-18

 

The intent of this special allocation is
provide an incentive with respect to Units described in
Section 2.3(f)(i) that will be paid only if and to the extent that
aggregate distributions made by the Company during the Liquidation Period (or
out of the proceeds of a refinancing or an extraordinary non-liquidating
disposition of Property) with respect to Units issued on or before Financial
Closing, other than Units described in Section 2.3(f)(i), are at least
$2.00 per Unit. Accordingly, this special allocation generally shall be made
only with respect to gain realized by the Company during the Liquidation
Period; provided, that if Profits are allocated before the Liquidation Period
pursuant to clause (iii) of the definition of “Profits” and “Losses”
(relating to adjustments to Gross Asset Values) or pursuant to such an
extraordinary disposition, the Board of Governors shall determine whether and to
what extent it is appropriate for part or all of this special allocation to be
made as part of those Profit allocations in order to better assure that the
intended incentive will be distributed when the Company later liquidates.

 

If the Company subdivides or combines its
outstanding Units or declares a distribution payable in its Units, the amount
per Unit of this special allocation shall be proportionately increased, in the
case of combination, or decreased, in the case of a subdivision or
distribution.

 

(k)           Equalization of Certain Profits or Loss Allocations. Immediately
following Financial Closing, and subject to Section 3.3(i) hereof,
items of income, loss and deduction shall be specially allocated to the extent
possible among the Units until the cumulative Profits or Losses allocated to
each Unit since the Company’s formation is equal.

 

3.4 
Curative Allocations.

 

The allocations set forth in Sections
3.3(a) through (g) and 3.5 (the “Regulatory
Allocations”) are intended to comply with certain requirements of
the Regulations. 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 3.4. Therefore, notwithstanding
any other provision of this Section 3 (other than the Regulatory
Allocations), the Company shall make such offsetting special allocations of
Company income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Unit
Holder’s Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Unit Holder would have had if the Regulatory
Allocations were not part of the Agreement.

 

3.5 
Loss Limitation.

 

Losses allocated pursuant to Section 3.2
hereof shall not exceed the maximum amount of Losses that can be allocated
without causing any Unit Holder to have an Adjusted Capital Account Deficit at
the end of any Fiscal Year. In the event some but not all of the Unit Holders
would have Adjusted Capital Account Deficits as a consequence of an allocation
of Losses pursuant to Section 3.2 hereof, the limitation set forth in this
Section 3.5 shall be applied on a Unit Holder by Unit Holder basis among
the Units, so as to allocate the maximum permissible Losses to each Unit Holder
under Section 1.704-1(b)(2)(ii)(d) of the Regulations.

 

B-19

 

3.6 
Other Allocation Rules.

 

(a)           For purposes of
determining the Profits, Losses, or any other items allocable to any period,
Profits, Losses, and any such other items shall be determined on a daily,
monthly, or other basis, as determined by the Board using any permissible
method under Code Section 706 and the Regulations thereunder.

 

(b)           Generally, all Profits and Losses allocated to the Unit
Holders or the Holders of specified Units or a specified class thereof shall be
allocated among them in proportion to the Units or specified Units or class
thereof, respectively, held by each. In the event Units are issued pursuant to
Section 2.3 hereof during a Fiscal Year, the Profits (or Losses) allocated
to the Unit Holders for each such Fiscal Year shall be allocated among the Unit
Holders in proportion to the number of Units each holds from time to time
during such Fiscal Year in accordance with Code Section 706, using any
convention permitted by law and selected by the Board.

 

(c)           The Unit Holders are aware of the income tax consequences
of the allocations made by this Section 3 and hereby agree to be bound by
the provisions of this Section 3 in reporting their shares of Company
income and loss for income tax purposes.

 

(d)           Solely for purposes of determining a Unit Holder’s
proportionate share of the “excess nonrecourse liabilities” of the Company
within the meaning of Regulations Section 1.752-3(a) (3), the Unit
Holders’ aggregate interests in Company profits shall be deemed to be as
provided in the capital accounts.

 

To the extent permitted by Section 1.704-2(h) (3) of
the Regulations, the Unit Holders shall endeavor to treat distributions of Net
Cash Flow as having been made from the proceeds of a Nonrecourse Liability or a
Unit Holder Nonrecourse Debt only to the extent that such distributions would
cause or increase an Adjusted Capital Account Deficit for any Unit Holder.

 

3.7  Tax Allocations: Code Section 704(c).

 

(a)           In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss, and deduction with respect to any Property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Unit Holders so as to take account of any variation between
the adjusted basis of such Property to the Company for federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the
definition of Gross Asset Value).

 

(b)           In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset
Value, subsequent allocations of 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 Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations
thereunder.

 

B-20

 

(c)           Allocations pursuant to Section 3.7 shall be made as
required or permitted by Regulations Section 1.704-3 pursuant to such
method provided therein as may reasonably be designated in accordance with
Section 8.3. Any elections or other decisions relating to allocations
under this Section 3.7 will be made in accordance with Section 8.3 in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations under this Section 3.7 are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing, any Unit Holder’s Capital Account or share of Profits or Losses
or distributions under any provision of this Agreement.

 

SECTION 4

DISTRIBUTIONS

 

4.1  Net Cash Flow.

 

Except as otherwise provided in
Section 12 hereof and to the extent necessary to reflect the stated intent
of the special allocation of gain in Section 3.3(j), Net Cash Flow, if
any, shall be distributed to the Unit Holders ratably in proportion to the
Units held.

 

4.2  Amounts Withheld.

 

All amounts withheld pursuant to the Code or
any provision of any state, local or foreign tax law with respect to any
payment, distribution or allocation to the Company or the Unit Holders shall be
treated as amounts paid or distributed, as the case may be, to the Unit Holders
with respect to which such amount was withheld pursuant to this
Section 4.2 for all purposes under this Agreement. The Company is authorized
to withhold from payments and distributions, or with respect to allocations to
the Unit Holders, and to pay over to any federal, state and local government or
any foreign government, any amounts required to be so withheld pursuant to the
Code or any provisions of any other federal, state or local law or any foreign
law, and shall allocate any such amounts to the Unit Holders with respect to
which such amount was withheld.

 

4.3  Limitations on Distributions.

 

(a)           The Company shall make no distributions to the Unit
Holders except (i) as provided in this Section 4 and Section 12
hereof or (ii) distributions payable in Units authorized by the Board.

 

(b)           A Unit Holder may not receive a distribution from the
Company to the extent that, after giving effect to the distribution, all
liabilities of the Company, other than liability to Unit Holders on account of
their Capital Contributions, would exceed the Gross Asset Value of the
Company’s assets.

 

B-21

 

SECTION 5

MANAGEMENT AND OPERATIONS

 

5.1  Management by Board of Governors.

 

(a)           Board of Governors. Except
those matters for which approval of the Members is required by this Agreement
or any nonwaivable provisions of the Act, and subject to the provisions of Section 5.2
hereof, the powers and privileges of the Company shall be exercised by or under
the authority of, and the business and affairs of the Company shall be managed
under the direction of, the Board and not by the Members. No Member, other than
a Member acting in his or her capacity as an officer of the Board or as an
officer of the Company, has the power or authority to act for or on behalf of
the Company, to bind the Company by any act, or to incur any expenditures on
behalf of the Company, except with the prior consent of the Board. Without
limiting the foregoing authority of the Board to manage the business and
affairs of the Company or the actions the Board may take in exercising the
powers and privileges of the Company, the Board shall have the right to make
the following decisions and take the following actions:

 

(i)            To direct and oversee the CEO or management company in his/her
or its implementation of the decisions of the Board;

 

(ii)           To direct the expenditure of the capital and profits of
the Company in furtherance of the purposes of the Company;

 

(iii)          To direct the investment of Company assets in any manner
the Board deems to be in the best interests of the Company;

 

(iv)          To enter into operating agreements, joint participation,
joint ventures, and partnerships with others, containing such terms, provisions
and conditions as the Board shall approve;

 

(v)           To borrow money and issue evidences of indebtedness and in
connection therewith to mortgage, grant a security interest in or hypothecate
any or all of the assets of the Company;

 

(vi)          To sell, dispose, abandon, trade, exchange or encumber
assets of the Company (but not a sale, disposition, abandonment, trade, or
exchange of all or any substantial portion of the Company’s assets), upon such
terms and conditions and for such consideration as the Board of Governors deem
appropriate;

 

(vii)         To institute, prosecute, defend, settle, compromise, and
dismiss lawsuits or other judicial or administrative proceedings brought on or
in behalf of, or against, the Company, the Members or any Governor in
connection with activities arising out of, connected with, or incidental to
this Agreement, and engage counsel or others in connection therewith;

 

(viii)        To enter into agreements and contracts with any Member or an

 

B-22

 

Affiliate of any Member, and to give receipts, releases and discharges
with respect to all of the foregoing and any matters incident thereto as the
Board may deem advisable or appropriate; provided, however, that any such
agreement or contract shall be on terms as favorable to the Company as could be
obtained from any third party;

 

(ix)           To make distributions in accordance with and subject to
the limitations set forth in Section 4 of this Agreement;

 

(x)            Subject to Section 2 hereof, to establish and
designate classes or series of Units and the rights, preferences and
limitations thereof, agree with any Person as to the form and other terms and
conditions of such Person’s Capital Contribution to the Company and cause the
Company to issue Units in consideration of such Capital Contribution.

 

The Board may adopt such policies, rules, and regulations and may take
such actions as it deems advisable in furtherance of the purposes of the
Company, provided that the Board shall not act in a manner contrary to this
Agreement.

 

(b)           The Board shall have authority to cause the Company to
contract with another Person to manage and control the day-to-day operations of
the Company, on terms and conditions as are consistent with this Agreement and
as the Board and such Person may agree. In the event the Company does not hire
a management company to manage and control the day-to-day operations of the
Company, the Board of Governors shall hire a CEO and General Manager to manage
the day-to-day operations of the Company in accordance with
Section 5.4(c) hereof.

 

(i)            Rights and Obligations of the Managing Company. Any
management company hired by the Company shall have the responsibility and
authority, at the Company’s expense, to take all actions necessary or
appropriate to manage and control the Company’s day-to-day operations and to
accomplish the purposes of the Company, as more particularly provided in this
Agreement and any management agreement agreed to by the Company and the
management company, including, without limitation, the power and authority to
implement the decisions of the Board of Governors, to hire, promote, discharge
and supervise the work of the Company’s employees necessary to operate the
Company’s facility, and to use its own personnel to provide services to the
Company, including the Chief Executive Officer (“CEO”) and the Chief Financial
Officer (“CFO”) of the Company. A management company may, but is not required
to be, a Member.

 

(ii)          Compensation; Expenses. Any management
company shall be compensated and reimbursed for expenses in accordance with the
terms of a the management agreement agreed to between the Company and the
management company.

 

(c)           Any other provision of this Agreement notwithstanding (including
without limitation Section 5.1(a)), neither the Board nor any management
company or CEO may take, approve or authorize the following actions,
agreements, instruments or items without the affirmative vote of at least
two-thirds of the Governors in office:

 

B-23

 

(i)            The plans and specifications of the Company’s proposed
ethanol plant and the contract to design and construct the proposed ethanol
plant;

 

(ii)           The amount and terms of the debt financing and all
documents and agreements entered into in connection therewith to construct and
finance the start-up costs of the proposed ethanol plant;

 

(iii)          The Annual Operating and Capital Budgets for each Fiscal
Year;

 

(iv)          Any contract, obligation, liability, disbursement or
lawsuit settlement outside of the ordinary course of business in excess of
$100,000 which is not part of the then current Fiscal Year’s approved Annual
Operating or Capital Budget (provided that necessary expenditures to meet
operational emergencies may be incurred prior to such approval if immediate
action is required for the safety or operation of the ethanol plant);

 

(v)           Any investment in excess of $100,000 that is not part of
the then current Fiscal Year’s approved Annual Capital Budget;

 

(vi)          Subject to Section 2 hereof, the determination of the
designation of classes or series of Units, agreeing with any Person as to the
form and other terms and conditions of such Person’s Capital Contribution to
the Company, and causing the Company to accept additional capital
contributions, issue Units in consideration of such Capital Contribution, or
issue options or warrants to purchase Units;

 

(vii)         The determination of the Gross Asset Values of the Company
Property;

 

(viii)        The sufficiency of any legal opinion required under
Section 10 of this Agreement or the waiver of any such legal opinion;

 

(ix)           Any amendment to the Articles or this Agreement; or

 

(x)            Approve any action or item described in Section 5.1
(d) for submission to the Members.

 

(d)           Any other provision of this Agreement notwithstanding, the
Board and any management company shall not have authority to approve, authorize
or take the following actions with respect to the Company without the approval
or consent of a Sixty-Six and Two-Thirds percent (66 and 2/3%) Majority in
Interest of the Members (Members holding 66 and 2/3 % or more of the Units then
held by all Members must consent or approve): (i) sell, lease, exchange or
otherwise dispose of all or substantially all of the assets of the Company;
(ii) merge or consolidate the Company with another Person;
(iii) materially change the business purpose of the Company; or
(iv) voluntarily dissolve the Company.

 

B-24

 

5.2  Actions
by Governor; Committees; Reliance on Authority.

 

(a)           In managing the business and affairs of the Company and in
exercising the powers and privileges of the Company, the Board shall act
(i) collectively through meetings of the Board held and conducted pursuant
to the provisions of this Agreement or by written action taken pursuant to the
provisions of this Agreement, (ii) through committees established pursuant
to Section 5.2(b), and (iii) through officers of the Board, and
officers of the Company to whom authority and duties have been delegated
pursuant to the provisions of this Agreement.

 

(b)           The
Board, by resolution approved by the affirmative vote of a majority of the
Governors then holding office, may from time to time establish one or more
committees, each of which shall be comprised of one or more natural persons who
may but need not be Governors or Members, provided that a majority of committee
members on each committee must be a Governor or Member, or a representative of
a Member. Any such committee shall have and may exercise only such authority
and duties to the extent provided by the Board in such resolution, subject at
all times to the limitations set forth in the Act, this Agreement and to the
direction and control of the Board. Unless otherwise provided by the Board, the
presence of a majority of the members of any such committee shall constitute a
quorum for the transaction of business at a meeting of the committee, and the
committee shall act by the affirmative vote of a majority of committee members
present at a duly held meeting. In other matters of procedure the provisions of
this Agreement shall apply to committees and the members thereof to the same
extent they apply to the Board and Governors, including, without limitation,
the provisions with respect to meetings and notice thereof, absent members,
written actions, and valid acts. Each committee shall keep regular minutes of
its proceedings and report the same to the Board. The Board may dissolve any
committee at any time.

 

(c)           Any Person dealing with the Company, other than a Member
or a Governor or an Affiliate of a Member or Governor, may rely on the
authority of any officer of the Board or any officer of the Company in taking
any action in the name of the Company without inquiry into the provisions of this
Agreement or compliance herewith, regardless of whether the action is actually
taken in accordance with the provisions of this Agreement; provided that the
Person dealing with the Company does not have actual knowledge that the officer
lacks authority to act or the Act establishes that the officer lacks authority
to act.

 

5.3  The
Board of Governors.

 

(a)           Number,
Qualification and Term of Office. Governors shall be
elected or appointed by the Members at the times, in the manner and for the
terms as prescribed by this Agreement.

 

(i)            Initial Board of Governors. The initial
Governors of the Company comprising the initial Board, who shall serve for such
terms and in such manner as prescribed by this Agreement, are the persons named
in the Articles and such other eligible natural persons designated as an
initial Governor by the initial Board. The number of initial Governors serving

 

B-25

 

the Company shall be established by the initial Board, but shall not be
less than nine (9) or more than seventeen (17).

 

(ii)           Board of Governors
following Financial Closing. Commencing on the next business day
following Financial Closing, the number of Governors serving the Company shall
be eleven (11) Governors, provided that no more than five (5) such
Governors may be Governors subject to appointment by certain Members pursuant
to Section 5.3(a)(iv) below, if any (i.e., not less than six
(6) Governors shall be elected by Members). The Board of Governors following
Financial Closing shall be composed of the initial Governors who are not
subject to appointment by a Member and the Governors subject to appointment by
certain Members pursuant to Section 5.3(a)(iv) below, if any. The
initial Board of Governors shall adopt procedures to reduce their number if
needed to comply with the number of Governor provisions of this Section.

 

(iii)          Election of Governors;
Terms. Beginning at the annual meeting of the Members to be held
following the close of the Fiscal Year in which the Company achieves
substantial completion of its planned ethanol plant near Fergus Falls,
Minnesota (as defined in the design build contract entered into by the Company
to construct the plant), Governors shall be elected by the Members in such
manner and for such terms as prescribed by this Agreement, subject to the right
of certain Members to appoint Governors as provided by
Section 5.3(a)(iv) below. A Member who is entitled to appoint one or
more Governors pursuant to Section 5.3(a)(iv) below and such Member’s
Affiliates shall not be entitled to vote for the election (or removal) of
Governors by the Members, as their right to representation exists in their
right of appointment. Except as otherwise provided herein, all Governors
elected by the Members shall serve three-year terms and until their successors
are duly elected and qualified, or until their earlier death, resignation or
removal. Once the election of Governors begins, no Governor may serve more than
three consecutive full three-year terms. In order to preserve continuity of
governance and the harmonious transition of the initial Board of Governors to
the elected Board of Governors, the terms of the Governors on the initial Board
shall be staggered such that one-third of such Governors (or as nearly as
possible) shall be elected annually by the Members beginning at the annual
meeting where Governors are first elected and continuing each year thereafter.
The Board shall adopt nomination, reporting and other election procedures in
advance of such annual meeting to achieve the desired staggered effect and
election matters prescribed by this Agreement.

 

(iv)          Appointed Governors. Any
Member who, together with such Member’s Affiliates, owns two million
(2,000,000) or more Units at Financial Closing shall be entitled to appoint one
Governor (each, an “Appointed Governor”)  to
the Board for every whole block of 2,000,000 Units held. Units acquired by any
Member or the Member’s affiliate during the Seed Capital Round are excluded and
may not be counted for purposes of determining whether the Member and such
Member’s Affiliates are entitled to appoint one or more Governors under this
Section. This appointment right is only granted based upon ownership as of
Financial Closing. A Member cannot subsequent to Financial Closing acquire
Units to amass Units to obtain an appointment right. Further, if a Member who
was entitled to an appointment right or rights ceases to hold a 2,000,000 Unit
block, such Member will lose the appointment right

 

B-26

 

associated with the block. In determining the appointment rights of
Members and their Affiliates under this Section 5.3(a)(iv), Members and
their Affiliates shall be counted only once, and the right of appointment
accrues only on whole blocks of 2,000,000 Units. For example, a Member who,
together with such Member’s Affiliates, holds 3,000,000 Units outstanding would
be entitled to appoint only one Governor, whereas a Member who together with
such Member’s Affiliates holds 4,000,000 Units would be entitled to appoint two
Governors. Any Member who is entitled to appoint more than one Governor may
choose to appoint only one person to the Board as Governor and cumulate his or
her voting power as more particularly described below in this Section 5.3(a)(iv).
A Member and such Member’s Affiliates shall agree among themselves on how the
appointment rights provided in this Section 5.3(a)(iv) shall be
exercised, and shall notify the Board of such agreement. If any Member has the
right to appoint more than one Governor under this Section 5.3(a)(iv), the
voting power of all Governors such Member has the right to appoint may be
exercised by any one or more such Appointed Governors, as further described in
Section 5.3(i) below, and the number of Governors required by
Section 5.3(a)(ii) shall correspond to such voting power (for
example, one Appointed Governor who has the voting power of two Governors would
count as two for purposes of the Board size). An Appointed Governor shall serve
indefinitely at the pleasure of the Member appointing him or her (so long as
such Member and its Affiliates continue to hold a sufficient number of Units to
maintain the applicable appointment right) until a successor is appointed, or
until the earlier death, resignation or removal of the Appointed Governor. An
Appointed Governor may be removed for any reason by the Member appointing him
or her, upon written notice to an officer of the Board, which notice may
designate and appoint a successor Governor to fill the vacancy, and which notice
may be given at a meeting of the Board attended by the person appointed to fill
the vacancy.

 

(v)           Qualification. The
initial Governors of the Company may but need not be Members, provided that a
majority of the initial Governors must be Members or elected or appointed
representatives of Members that are not natural persons. The participation of
non-member Governors in the management and decisions of the Board prior to the
Effective Date of this Agreement is hereby confirmed and ratified in all
respects. Following the annual meeting at which Governors are first elected,
all Governors subject to election by the Members may but need not be Members,
provided that a majority of the Governors must be Members or elected or
appointed representatives of Members that are not natural persons.

 

(b)           Resignation. Any
Governor may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein or, if no time be specified
then at the time of its receipt by the Chairman or the Secretary of the Board.
The acceptance of a resignation shall not be necessary to make it effective,
unless expressly so provided in the resignation.

 

(c)           Removal. An
initial Governor may be replaced or removed for cause by the affirmative vote
of two-thirds of the remaining initial Governors, as the case may be. Following
the election of a Governor, the Governor may be removed for any reason by the
affirmative vote of a Majority in Interest of Members entitled to elect
Governors, in such manner as prescribed by this Agreement. The notice of a
meeting where the removal of a Governor will

 

B-27

 

be considered shall state that such removal will be discussed and acted
upon at the meeting, and must also be provided to the Governor in question at
least ten (10) days in advance of such meeting. The Governor in question
has a right to be heard at such meeting. The provisions of this section do not
apply to an appointed Governor.

 

(d)           Vacancies.   Any vacancy occurring on the
Board may be filled by appointment through an affirmative vote of a majority of
the remaining Governors subject to election by the Members, though less than a
quorum. A Governor appointed by the Board to fill a vacancy at any time after
the 2008 Annual Meeting shall serve until the next annual meeting of the
Members (or special meeting held for the purpose of electing Governors), at
which time the Members shall elect a new Governor to serve for the remainder of
the original term of the vacated position. The provisions of this section shall
not apply to vacancies of appointed Governors.

 

(e)           Meetings. Regular
meetings of the Board shall be held from time to time as determined by the
Board. Special meetings of the Board shall be held upon the call of the
Chairman of the Board or three (3) or more Governors. Board meetings shall
be held at the principal office of the Company or at such other place, either
within or without the State of Minnesota, as shall be designated by the person
calling the meeting and stated in the notice of the meeting or a duly executed
waiver of notice thereof. Governors may participate in a Board meeting by means
of video or audio conferencing or similar communications equipment whereby all
Governors participating in the meeting can hear each other.

 

(f)            Notice. Oral
or written notice of each meeting of the Board, stating the place, day and hour
of the meeting, shall be given to each Governor at least 3 days before the day
on which the meeting is to be held. The notice or waiver of notice of any
special or regular meeting of the Board does not need to specify the business
to be transacted or the purpose of the meeting.

 

(g)           Waiver. Whenever
any notice is required to be given to a Governor under the provisions of this
Agreement, a waiver thereof in writing signed by the Governor, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Attendance of a Governor at any meeting of the Board shall
constitute waiver of notice of such meeting by the Governor, except where the
Governor attends a meeting for the express purpose of stating his objection to
the transaction of any business because the meeting is not lawfully called or
convened.

 

(h)           Quorum. A
majority of the Governors in office shall constitute a quorum necessary for the
transaction of business at any regular or special meeting of the Board, but
only if at least a majority of such quorum consists of Governors not subject to
appointment rights hereunder, and provided further that the foregoing quorum
requirement shall not eliminate or reduce a quantum of consent required by this
Agreement that is greater than a majority of the Governors in office (e.g.,
Section 5.1(c)). If less than a quorum is present, those Governors present
may adjourn the meeting from time to time until a quorum shall be present. If a
quorum is present when a duly-called or held meeting is convened, the Governors
present may adjourn

 

B-28

 

the meeting or may continue to transact business until adjournment,
even though the withdrawal of a number of the Governors originally present
leaves less than the proportion or number otherwise required for a quorum.

 

(i)            Voting and Act of the
Board. Each Governor shall have one vote. Unless otherwise provided
in this Agreement, the Board shall take action by the affirmative vote of a
majority of the Governors present at a duly held meeting at which a quorum is
present. Except for the quorum requirement above, there is no class voting
requirement by Governors based on elected status or appointed status.

 

(j)            Action Without a
Meeting. Any action required or permitted to be taken at a meeting
of the Board may be taken by written action signed by all of the Governors
comprising the Board. The written action is effective when signed by the
required number of Governors, unless a different effective time is set forth in
the written action.

 

(k)           Absentee Governors. A
Governor of the Company may give advance written consent or opposition to a
proposal to be acted on at a Board meeting. If the Governor is not present at
the meeting, consent or opposition to a proposal does not constitute presence
for purposes of determining the existence of a quorum, but consent or
opposition shall be counted as a vote in favor of or against the proposal and
shall be entered in the minutes or other record of action at the meeting, if
the proposal acted on at the meeting is substantially the same or has
substantially the same effect as the proposal to which the Governor has
consented or objected.

 

(1)           Compensation. The
Board may fix the compensation, if any, of the Governors. Governors shall also
be entitled to reimbursement for actual expenses incurred in attending meetings
of the Board or other business of the Company.

 

(m)          Participation by
Electronic Communications. A Governor may participate in a Board
meeting by any means of communication through which the Governor, other
Governors so participating and all Governors physically present at the meeting
may simultaneously hear each other during the meeting. A Governor so
participating shall be deemed present in person at the meeting.

 

5.4  Duties and Obligations of Governors.

 

(a)           Duties.
The Board shall cause the Company to conduct its
business and operations separate and apart from that of any Member, Governor,
or their Affiliates. The Board shall take all actions which may be necessary or
appropriate (i) for the continuation of the Company’s valid existence as a
limited liability company under the laws of the State of Minnesota and each
other jurisdiction in which such existence is necessary to protect the limited
liability of Members or to enable the Company to conduct the business in which
it is engaged, and (ii) for the accomplishment of the Company’s purposes,
including the acquisition, development, maintenance, preservation, and
operation of Company property in accordance with the provisions of this
Agreement and applicable laws and regulations. Each Governor shall have the
duty to discharge the foregoing duties in good faith, in a manner the Governor
believes to be in the best

 

B-29

 

interests of the Company, and with the care an ordinarily prudent
person in a like position would exercise under similar circumstances. No
Governor shall be under any other duty to the Company or the Members to conduct
the affairs of the Company in a particular manner.

 

(b)           Bonds and Insurance. The
Board may require all officers, agents and employees charged by this Company
with responsibility for the custody of any of its funds or property to give
bonds. Bonds shall be furnished by a responsible bonding company and approved
by the Board, and the cost shall be paid by the Company. The Board shall cause
the Company to provide for insurance of the property of the Company, or
property which may be in the possession of the Company and not otherwise
adequately insured by the owner of the property. In addition, the Board shall
cause the Company to provide for insurance covering liability of the Company to
all employees and the public, in such commercially reasonable amounts as is
customary for businesses similar to the Company.

 

(c)           Employment of CEO and
General Manager. In the event the Company does not have a management
company granted the authority to select a CEO/general manager, the Board shall
select, employ, and fix the compensation of a CEO/General Manager of the
Company. The CEO/General Manager position shall be held by the same person, and
such position shall be officer position of the Company. The CEO shall perform
the functions of and shall also carry the title of Chief Manager of the
Company. The CEO and General Manager may be a member of the Board until
start-up of the Company’s ethanol plant, after which the CEO and General Manager
shall not be a member of the Board but who shall be an ex-officio member of the
Board while employed as the CEO and General Manager of the Company. The CEO and
General Manager shall have responsibility for all administrative and
operational aspects of the Company, shall implement or direct the decision of
the Board, and shall have responsibility for hiring and supervising all
employees, as determined and established by the Board, and shall perform such
other duties that may be assigned by the Board.

 

5.5  Officers.

 

(a)           Number;
Qualification; Election. Officers must be natural
persons, and shall be elected or appointed by the Board on an annual basis. The
officers of the Company shall consist of the officers of the Board and such
other officers of the Company as appointed by the Board. The officers of the
Board shall consist of a President, Vice President, a Secretary and a
Treasurer. The President and the Vice President of the Board may also be
referred to as Chairman and Vice Chairman, respectively. Unless and until the
Company hires a CEO, the President of the Company shall perform the functions
of and shall also carry the title of Chief Manager of the Company. The
Secretary and Treasurer officer position may be held by the same person. The
officers of the Board must be Governors. The Board may appoint such other
officers and assistant officers of the Company as it may deem necessary or
advisable, including a Chief Financial Officer. Except as otherwise provided in
this Agreement, the Board shall fix the powers, duties, and compensation of all
officers of the Board and shall appoint and fix the powers, duties, and
compensation of all other officers of the Company.

 

B-30

 

(b)                                 Term of Office. An officer of the Board
shall hold office for a term of one year and until a successor shall have been
duly elected or appointed, unless prior thereto such officer shall have
resigned or been removed from office as hereinafter provided. All other
officers of the Company shall hold office at the pleasure of the Board and may
be removed at any time by the Board with or without cause, subject to any
contract rights that then may be in existence. The Chief Executive
Officer/General Manager shall hold office at the pleasure of the Board and may
be removed at any time, with or without cause, except as otherwise may be
provided in a written agreement entered into between the Company, acting by and
through the Board, and the Chief Executive Officer/General Manager.

 

(c)                                  Resignation, Removal, and Vacancies. Any
officer elected or appointed by the Board may be removed, with or without
cause, at any time by the Board. Any vacancy in an office of the Board shall be
filled by the Board. An officer may resign at any time by giving written notice
to the Company. The resignation is effective without acceptance when the notice
is given to the Company, unless a later effective date is specified in the
notice.

 

(d)                                 President. Unless provided otherwise by a
resolution adopted by the Board, the President of the Board shall preside at
meetings of the Members and Board; shall see that all orders and resolutions of
the Board are carried into effect; may execute all documents, agreements, and
instruments on behalf of the Company; may maintain records of and certify
proceedings of the Board and Members; and shall perform such other duties as
may from time to time be prescribed by the Board.

 

(e)                                  Vice President. The Vice President shall,
in the absence or disability of the President, perform the duties and exercise
the powers of the President and shall perform such other duties as the Board or
the President may from time to time prescribe.

 

(f)                                    Treasurer. Unless the Board establishes a
separate officer position for the Chief Financial Officer of the Company, the
Treasurer shall be the Chief Financial Officer of the Company and: shall keep
accurate financial records for the Company; shall deposit all monies, drafts,
and checks in the name of and to the credit of the Company in such banks and
depositories as the Board shall designate from time to time; shall endorse for
deposit all notes, checks, and drafts received by the Company as ordered by the
Board, making proper vouchers therefor; shall disburse Company funds and issue
checks and drafts in the name of the Company as ordered by the Board, shall
render to the CEO and the Board, whenever requested, an account of all such
Officer’s transactions as Treasurer and of the financial condition of the
Company, and shall perform such other duties as may be prescribed by the Board
or the President from time to time. If the Board establishes a separate officer
position for the Chief Financial Officer of the Company, the Treasurer and the
Chief Financial Officer shall perform such of the foregoing duties and such other
duties as may be prescribed by the Board or the President from time to time.

 

(g)                                 Secretary. The Secretary shall attend all
meetings of the Board and of the Members and shall maintain records of, and
whenever necessary, certify all proceedings of the Board and of the Members.
The Secretary shall keep the required records of the Company, when so directed
by the Board or other person or persons authorized to call such meetings, shall
give or

 

B-31

 

cause to be given notice of meetings of the Members and of meetings of
the Board, and shall also perform such other duties and have such other powers
as the President or the Board may prescribe from time to time.

 

(h)           Delegation. Unless
prohibited by the Board, an officer appointed by the Board may delegate in
writing some or all of the duties and powers of such person’s management
position to other persons. An officer who delegates the duties or powers of an
office remains subject to the standard of conduct for an officer with respect
to the discharge of all duties and powers so delegated.

 

(i)            Compensation. Officers
of the Board shall receive such compensation as may be determined from time to
time by the Board. All other officers shall receive such compensation as may be
determined from time to time by the Board.

 

5.6  Limitation of Liability; Indemnification of Governors and Officers.

 

(a)           No Governor or officer of the Company shall be personally
liable to this Company or its Members for monetary damages for a breach of
fiduciary duty by such Governor or officer; provided that this provision shall
not eliminate or limit the liability of a Governor or officer to the extent
provided by applicable law (i) for a breach of the Governor’s duty of
loyalty to the Company or its Members; (ii) for acts or omissions that are
not in good faith or involve intentional misconduct or a knowing violation of
law or, with respect to an officer for acts of negligence; (iii) for
knowing violations of securities laws section 80A.23 of Minnesota Statutes or
for illegal distributions; (iv) for a transaction from which the Governor
derived an improper personal benefit; or (v) for an act or omission
occurring prior to the effective date of the corresponding provision of the
Articles. It is the intention of the Members to limit or eliminate the personal
liability of Governors to the greatest extent permitted under Minnesota law. If
amendments to Minnesota Statutes are passed after this provision becomes
effective which authorize limited liability companies to act to further limit
or eliminate the personal liability of governors of a limited liability
company, then the liability of Governors shall be limited or eliminated to the
greatest extent permitted by Minnesota Statutes, as so amended. No amendment to
or repeal of this provision shall apply to or have any effect on the liability
or alleged liability of any Governor for or with respect to any acts or
omissions of such Governor occurring prior to such amendment or repeal.

 

(b)           The Company, its receiver, or its trustee (in the case of
its receiver or trustee, to the extent of Company Property) shall indemnify,
defend, save harmless, and pay all judgments and claims against, and reasonable
expenses of, each present and former Governor, or officer relating to any
liability or damage or reasonable expenses incurred with respect to a
proceeding if the Governor or officer (or former Governor or officer was a
party to the proceeding in the capacity of a Governor or officer of the Company
(which reasonable expenses including reasonable attorneys’ fees may be paid as
incurred). Notwithstanding the foregoing provisions, the Company shall not
indemnify, defend, save harmless, or pay all judgments and claims against, and
reasonable expenses of, a Governor, or officer (or former Governor or officer)
under this provision where such judgments and claims or proceedings arise out
of or are related to matters for which a Governor or officer (or former
Governor or officer is personally

 

B-32

 

liable under Section 5.6(a) hereof.

 

(c)           The Company may purchase and maintain insurance on behalf
of any person in such person’s official capacity against any liability asserted
against and incurred by such person in or arising from that capacity, whether
or not the Company would otherwise be required to indemnify the person against
the liability.

 

5.7  Member
Compensation; Expenses; Loans

 

(a)           Except as otherwise provided in a written agreement
approved by the Board, no Member shall receive any salary, fee, or draw for
services rendered to or on behalf of the Company. Except as otherwise approved
by or pursuant to a policy approved by the Board, no Member shall be reimbursed
for any expenses incurred by such Member on behalf of the Company.

 

(b)           Any Member or Affiliate may, with the consent of the
Board, lend or advance money to the Company. If any Member or Affiliate shall
make any loan or loans to the Company or advance money on its behalf, the
amount of any such loan or advance shall not be treated as a contribution to
the capital of the Company but shall be a debt due from the Company.The amount
of any such loan or advance by a lending Member or Affiliate shall be repayable
out of the Company’s cash and shall bear interest at a rate not in excess of
the prime rate established, from time to time, by any major bank selected by
the Board for loans to its most creditworthy commercial borrowers, plus up to
four percent (4%) per annum as agreed upon by the Board and the Member, and on
such other terms and conditions no less favorable to the Company than if the
lender had been an independent third party. None of the Members or their
Affiliates shall be obligated to make any loan or advance to the Company.

 

5.8  Contracts
with Governors, Officers, or their Affiliates.

 

(a)           No contract or transaction between the Company and a
Governor or officer, or their Affiliate or between the Company and any other
entity in which a Governor or officer or their Affiliate has a material
financial interest shall be void or voidable or require the Governor or officer
to account to the Company and hold as trustee for it any profit or benefit
derived therefrom solely for this reason, or solely because the Governor or
officer is present at or participates in the Board meeting at which the
contract or transaction is authorized, if (i) the material facts as to the
contract or transaction and as to the Governor’s or officer’s material
financial interest are fully disclosed or known to the Board, and (ii) the
Board determines that the terms of the contract or transaction are commercially
reasonable and no less favorable to the Company than could be obtained from an
unaffiliated third party and authorizes, approves or ratifies the contract or
transaction in good faith by a majority vote, but the interested Governor or
Governors are not counted in determining the presence of a quorum (meaning a
majority of the disinterested Governors must be present for a quorum to be
present for the Board to vote on such matter) and must not vote.

 

(b)           No contract or transaction involving the sale or delivery
of corn between

 

B-33

 

the Company and a Governor or officer or their Affiliate or between the
Company and any other entity in which a Governor, officer or their Affiliates
have a material financial interest shall be void or voidable or require the
Governor or officer to account to the Company and hold as trustee for it any
profit or benefit derived therefrom solely for this reason, or solely because
the Governor or officer is present at or participates in the Board meeting at
which or pursuant to which the contract or transaction is authorized or
approved, notwithstanding the fact that the standard of
Section 5.8(a) was not met, provided that the terms of the contract
or transaction are or were commercially reasonable and no less favorable to the
Company than could be or could have been obtained from an unaffiliated third
party.

 

SECTION 6

MEMBERS

 

6.1  Members; Rights or Powers Generally.

 

(a)           As of the Effective Date, the Members of the Company are
the Persons who were members of the Company immediately prior to the Effective
Date as shown on the books and records of the Company. The Board shall cause
the books and records of the Company to be amended from time to time as
Transfers occur or as additional Units are issued and additional Members are
admitted to the Company in accordance with this Agreement.

 

(b)           Additional persons may, upon the approval of the Board,
become Members of the Company: (i) by submitting a completed subscription
agreement to subscribe for Units in the Company upon the terms and conditions
as may be set forth in the subscription agreement, which shall include a
representation and warranty that the representations and warranties required of
all Members in this Agreement are true and correct with respect to such Person,
and the acceptance thereof by the Company, (ii) by meeting any and all
requirements of membership established in or pursuant to this Agreement, (iii) by
submitting an executed counterpart signature agreeing to be bound by this
Agreement, (iv) by submitting payment of the purchase price for the number
of Units subscribed for in the subscription agreement, in accordance with the
terms of the subscription agreement, and (v) upon being admitted as a
Member by the Board; or in any other manner authorized in or pursuant to this
Agreement. The Board may refuse to admit any Person as a Member in its sole
discretion.

 

(c)           Transferees of Units may become Members as provided in
Section 10.6 hereof.

 

(d)           Other than the right to elect Governors to the Board, no
Member, other than a Member acting in his, her or its capacity as an officer of
the Board or as an officer of the Company, has any right or power to take part
in the management or control of the Company or its business and affairs. No
Member other than a Member acting in his, her or its capacity as an officer of
the Board or as an officer of the Company, has the authority or power to act
for or on behalf of the Company, to do any act that would be binding on the
Company, or to incur any expenditures on behalf of the Company, except with the
prior written consent of the Board.

 

B-34

 

(e)            No Member shall have any voting right except with respect
to those matters requiring a Member vote or approval as specifically provided
for in this Agreement or as otherwise required by the Act.

 

6.2  Member
Classes, Requirements and Voting.

 

(a)           Membership.
Only Persons who hold 2,500 or more Units and who meet
the other qualifications, requirements, and conditions established herein or
pursuant hereto are eligible to be or become Members. Each Member of the
Company must own a minimum of 2,500 Units. The failure of any Member to own such
minimum number of Units shall result in the automatic termination of membership
of such Person, without further notice or action by the Company, and such
Person shall become a non-Member Unit Holder, with no rights other than those
financial rights with respect to the Units owned by such Person as provided for
in and subject to this Agreement, as further described in Section 6.4 of
this Agreement.

 

(b)           Voting. Beginning
at the annual meeting of Members following the close of the Fiscal Year in
which the Company reaches substantial completion on its planned ethanol plant
(as defined in its design build agreement for the construction of the plant),
Members shall elect Governors to the Board of Governors as provided in
Section 5.3(a)(iii) of this Agreement. With respect to the election
of Governors and on all other matters to be voted upon by the Members, Members
shall take action by the affirmative vote of the Members holding a majority of
the Units present, either in person, by proxy or by written ballot, at a duly
held meeting of the Members at which a quorum is present for the transaction of
business. Members may also take action in a written vote on any matter this
Agreement specifically authorizes seeking Member approval by a written vote.

 

6.3  Member
Meetings.

 

(a)           Place
and Manner of Meeting. All meetings of Members shall
be held at such time and place, within or without the State of Minnesota, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof. Presence in person, or by proxy or written ballot, shall
constitute participation in a meeting, except where a person participates in
the meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully convened.

 

(b)           Conduct of Meetings. All
meetings of the Members shall be presided over by the Chairman. All meetings of
the Members shall be conducted in general accordance with the most recent
edition of Roberts’ Rules of Order, or such other
rules and procedures as may be determined by the Board in its discretion.

 

(c)           Annual Meeting. The
annual meeting of the Members for the transaction of all business which may
come before the meeting shall be held on a date determined by the Board.
Failure to hold the annual meeting at the designated time shall not be grounds
for dissolution of the Company. If an annual meeting has not been held during
the immediately

 

B-35

 

preceding fifteen (15) months, a Member or Members owning twenty
percent (20%) or more of the Units then held by all Members may demand an
annual meeting of the Members by written demand given to the Chairman or the
Secretary of the Company.

 

(d)           Special Meetings. Special
meetings of the Members may be called at any time by the Board, the Chairman,
or by the Secretary upon the request of Members holding 10% or more of the
Units then held by all Members. Such request shall state the purpose or
purposes of such meeting and the matters to be acted upon at the special
meeting.

 

(e)           Notice. Written
or printed notice stating the place, day and hour of the meeting and, in case
of a special meeting, the purpose or purposes for which the meeting is called,
shall be delivered not less than 15 nor more than 60 days before the date of
the meeting either personally or by mail, by or at the direction of the Board,
Chairman or Secretary calling the meeting, to each Member entitled to vote at
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the Member at the Member’s
address as it appears on the records of the Company, with postage thereon
prepaid. If the purpose of the meeting is to consider any item requiring Member
approval in Section 5.1(c) hereof, removal of a Governor, or an
amendment of this Agreement under Section 9 hereof, then the notice shall
state such purpose, identify such Governor (if applicable), and a summary of
the transaction to be considered or a verbatim statement of the amendment to be
considered must accompany the notice.

 

(f)            Quorum. At
any annual or special meeting of the Members, the holders of twenty-five
percent (25%) of the total number of Units entitled to vote at the meeting,
represented in person or by proxy, and the attendance of at least
thirty-five percent (35%) of the Members at the meeting, provided that this
quorum requirement may not be more than fifty (50) Members, shall constitute a
quorum necessary for the transaction of business (it being intended that both
the voting power and the member attendance requirements shall be met to
constitute a quorum). The Members present at a duly organized meeting at which
a quorum is present may transact business until adjournment, notwithstanding
the departure or withdrawal of Members leaving less than a quorum, subject to
the consent and approval requirements of this Agreement regarding Member
actions. The registration shall be verified by the Secretary and shall be
reported in the minutes of the meeting. If a quorum is present when a
duly-called or held meeting is convened, the Members present adjourn the
meeting or may continue to transact business until adjournment, even though the
withdrawal of Members originally present leaves less than the proportion
otherwise required for a quorum.

 

(g)           Record Date. For
the purpose of determining Members entitled to notice of or to vote at any
meeting of Members or any adjournment thereof or in order to make a
determination of Members for any other proper purpose, the Board may provide
that the record books shall be closed for a stated period not exceeding 15
days. If the record books shall be closed for the purpose of determining
Members entitled to notice of or to vote at a meeting of Members, such books
shall be closed for a period not exceeding 15 days immediately preceding such
meeting. In lieu of closing the record books, the Board may fix in advance a
date as the record date for any such determination of Members, such date in any
case to be not more than 60

 

B-36

 

days and in the case of a
meeting of Members, not less than 15 days prior to the date of which the
particular action requiring such determination of Members is to be taken. If
the record books are not closed and no record date is fixed for the determination
of Members entitled to notice of or to vote at a meeting of Members, the date
on which notice of the meeting is mailed, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof, except
where the determination has been made through the closing of record books and
the stated period of closing has expired.

 

(h)           Proxies. At all meetings of Members, a
Member may vote by proxy executed in writing by the Member or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the Company before or at the time of the meeting. A proxy shall be considered
filed with the Company when received by the Company at its executive offices,
unless later revoked. No proxy shall be valid after eleven months from the date
of its execution, unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Member executing it.

 

(i)            Meetings Held Upon Member
Demand. Within thirty (30)
days after the receipt of a demand from any Member or Members entitled to call
a meeting of the Members, it shall be the duty of the Board to cause a special
or regular meeting of the Members, as the case may be, to be duly called and
held on notice as prescribed by Section 6.3(e) of this Agreement.

 

(j)            Adjournment. Any meeting of the Members may be adjourned
from time to time to another date, time and place. If any meeting of the
Members is so adjourned, no notice as to such adjourned meeting need be given
if the date, time and place at which the meeting will be reconvened are
announced at the time of adjournment.

 

6.4  Termination of
Membership.

 

A
Member may not be expelled, provided that the failure of a Member to comply
with the membership requirements established in, or pursuant to authority
granted by, this Agreement shall result in the termination of membership of
such Person. The membership of a Member in the Company shall terminate upon the
occurrence of events described in this Agreement or as otherwise provided for
in the Act, including resignation and withdrawal. In the event a Person ceases
to be a Member without having transferred all of the Units owned by such
Person, such Person shall lose all voting rights and shall be considered merely
an assignee of the financial rights associated with the Units held by such
Person, having only the rights of an unadmitted assignee. Such Person shall remain
subject to the applicable provisions of this Agreement with respect to such
financial rights. Such Person shall have no right to any information or
accounting of the affairs of the Company, shall not be entitled to inspect the
books or records of the Company, shall not be entitled to vote on any matters
reserved to the Members, and shall not have any of the other rights of a Member
under this Agreement or of a member under the Act. Further, such Person shall
not have the right to Transfer such Person’s Units except by means of a
Permitted Transfer in accordance with the provisions of Section 10 herein.

 

B-37

 

6.5  Continuation
of the Company.

 

The
Company shall not be dissolved upon the occurrence of any event which is deemed
to terminate the continued membership of a Member. The Company’s affairs shall
not be required to be wound up. The Company shall continue without dissolution.

 

6.6  No
Obligation to Purchase Member’s Interest.

 

No
Member whose membership in the Company terminates, nor any transferee of such
Member, shall have any right to demand or receive a return of such terminated
Member’s Capital Contributions or to require the purchase or redemption of the
Units owned by such terminated Member. The other Members and the Company shall
not have any obligation to purchase or redeem the Units or Capital
Contributions of any such terminated Member or transferee of any such
terminated Member. No Member whose membership has terminated shall be entitled
to receive a distribution in complete redemption of the fair value of the Units
or Capital Contributions of such Person (except as provided in Section 12
hereof following a Dissolution Event), notwithstanding any provisions of the
Act or any other provision of law. As a material part of the consideration for
continuing or becoming a Member of the Company, each Member hereby waives any
right, and expressly agrees that it intends for this provision to negate any
entitlement to receive a distribution in complete redemption of the fair value
of Units or Capital Contributions of such Member upon an event that terminates
the membership of such Member which, in the absence of the provisions in this
Agreement, it would otherwise be afforded by the Act.

 

6.7  Waiver of
Dissenters Rights.

 

Except
for those transactions or events for which waiver of dissenters rights is
expressly prohibited by the Act, each Member hereby waives and agrees not to
assert any dissenters’ rights under the Act.

 

SECTION 7

UNIT CERTIFICATES

 

7.1  Certificates
For Units.

 

Certificates
representing Units of the Company shall be in such form as determined by the
Board. The Chairman or Vice Chairman and the Secretary or assistant Secretary
of Board shall sign the certificates. All certificates shall be consecutively
numbered or otherwise identified. The name and address of the person to whom
the certificate has been issued shall be entered on the books of the Company.
All certificates surrendered to the Company for transfer shall be canceled and
no new certificates shall be issued until the former certificate is surrendered
and canceled by the Company.

 

7.2  Transfer of
Certificates.

 

Transfer
of certificates of the Company shall be made pursuant to this Agreement and

 

B-38

 

only by the holder of record
thereof or by the holder’s legal representative, who shall furnish proper
evidence of authority to transfer, or by the holder’s attorney thereunto
authorized by a power of attorney duly executed and filed with the Secretary of
the Company, and upon surrender of the certificate to the Company for
cancellation. The Person in whose name the Certificate appears on the books of
the Company is deemed to be the owner thereof for all purposes.

 

7.3  Loss or
Destruction of Certificates.

 

In
case of loss or destruction of any certificate, another certificate may be
issued in its place upon proof of such loss or destruction, and upon the holder
of the certificate giving a satisfactory bond of indemnity to the Company and
to the transfer agent and registrar, if any, of such certificate, in such
amount as the Board may provide.

 

7.4  Certificate
Regulations.

 

The
Board have the power and authority to make such further rules and
regulations, not inconsistent with this Agreement and the statutes of the State
of Minnesota, as it may deem expedient concerning the issue, transfer,
conversion and registration of certificates of the Company, including the
appointment or designation of one or more transfer agents and one or more registrars.
The Company may act as its own transfer agent and registrar.

 

7.5  Legends.

 

The
Board may place one or more legends on the certificates representing the Units
to indicate restrictions on transfer, registration requirements, or other
restrictions or obligations contained herein.

 

SECTION 8

ACCOUNTING, BOOKS AND RECORDS

 

8.1  Accounting, Books
and Records.

 

(a)           The books and records of the Company shall be
kept, and the financial position and the results of its operations recorded, in
accordance with GAAP, consistently applied; provided, that the financial
provisions in this Agreement relating to Capital Contributions, Profits and
Losses, distributions and Capital Accounts shall be construed and determined in
accordance with this Agreement without regard to whether such provisions are
inconsistent with GAAP. The books and records shall reflect all the Company’s
transactions and shall be appropriate and adequate for the Company’s business.
The books and records of the Company shall include and the Company shall
maintain at its principal executive office all of the following:

 

(i)            A SCHEDULE
A to this Agreement (which SCHEDULE
A is

 

B-39

 

hereby incorporated into
this Agreement), which shall include a current list of the full name and last
known business or residence address of each Unit Holder set forth in
alphabetical order, the Capital Contributions and Units of each Unit Holder
(including the amount of cash and description and statement of the agreed value
of any other property or services relating to such Capital Contributions), the
amount and value of any Capital Contributions which any Member or potential
Member has agreed to make pursuant to a contribution agreement or a
contribution allowance agreement (including the time or times at which or
events the happening of which such Capital Contributions are to be made or, in
the case of a contribution allowance agreement, such right to contribute
lapses). The SCHEDULE A shall be
amended from time to time as Transfers occur or as additional Units are issued
and as additional Members are admitted to the Company in accordance with this
Agreement;

 

(ii)           The full name and business address of each
Governor;

 

(iii)          A copy of the Articles and any and all
amendments thereto together with executed copies of any powers of attorney
pursuant to which the Articles or any amendments thereto have been executed;

 

(iv)          Copies of the Company’s federal, state, and
local income tax or information returns and reports, if any, for the six most
recent taxable years;

 

(v)           A copy of this Agreement and any and all
amendments thereto together with executed copies of any powers of attorney
pursuant to which this Agreement or any amendments thereto have been executed;

 

(vi)          Copies of the financial statements of the
Company, if any, for the six most recent Fiscal Years;

 

(vii)         The Company’s books and records as they
relate to the internal affairs of the Company for at least the current and past
four Fiscal Years; and

 

(viii)        The required records and information required
under the Act, to the extent not included in 

8.1(a)(i)-(vii) above.

 

(b)           The Company shall use the accrual method of
accounting in preparing its financial reports and for tax purposes and shall
keep its books and records accordingly. The Board may, without any further
consent of the Unit Holders (except as specifically required by the Code),
apply for IRS consent to, and otherwise effect a change in, the Company’s
Fiscal Year.

 

8.2  Reports.

 

(a)           In General. The Board shall be responsible for causing
the preparation of financial reports of the Company and the coordination of
financial matters of the Company with the Company’s accountants.

 

B-40

 

(b)           Periodic and Other Reports. The Company shall maintain and provide to
each Member at the Company’s cost the financial statements listed in clauses (i) and
(ii) below, prepared, in each case (other than with respect to Unit Holder’s
Capital Accounts, which shall be prepared in accordance with this Agreement) in
accordance with GAAP consistently applied, and, subject to Section 1.11
hereof, such other reports as any Member may reasonably request from time to
time;

 

(i)            As soon as practicable following the end of
each Fiscal Year (and in any event not later than ninety (90) days after the
end of such Fiscal Year and at such time as distributions are made to the Unit
Holders pursuant to Section 12 hereof following the occurrence of a
Dissolution Event, a balance sheet of the Company as of the end of such Fiscal
Year and the related statements of operations, Unit Holders’ Capital Accounts
and changes therein, and cash flows for such Fiscal Year, together with
appropriate notes to such financial statements and supporting schedules, all of
which shall be audited and certified by the Company’s accountants, and in each
case, to the extent the Company was in existence, setting forth in comparative
form the corresponding figures for the immediately preceding Fiscal Year end
(in the case of the balance sheet) and the two (2) immediately preceding
Fiscal Years (in the case of the statements).

 

(ii)           As soon as practicable following the end of
the first three fiscal quarters of each Fiscal Year (and in any event not later
than forty-five (45) days after the end of such fiscal quarter), an unaudited
balance sheet of the Company as of the end of such fiscal quarter and the
related unaudited statements of operations and cash flows for such fiscal
quarter and for the fiscal year to date, in each case, to the extent the
Company was in existence, setting forth in comparative form the corresponding
figures for the prior Fiscal Year’s fiscal quarter and the fiscal quarter just
completed.

 

8.3  Tax Matters.

 

(a)           Generally. The Board shall have the power and authority
and without any further consent of the Unit Holders being required, to:

 

(i) cause the Company to make or revoke any and all elections for
federal, state, local and foreign tax purposes, including an election pursuant
to Code Section 754,

 

(ii) extend the statute of limitations for assessment of tax
deficiencies against the Unit Holders with respect to adjustments to the
Company’s federal, state, local or foreign tax returns;

 

(iii) to the extent provided in Code Sections 6221 through 6231
and similar provisions of federal, state, local, or foreign law, to represent
the Company and the Unit Holders before taxing authorities or courts of
competent jurisdiction in tax matters affecting the Company or the Unit Holders
in their capacities as Unit Holders, and

 

B-41

 

(iv) file any tax returns and execute any agreements or other
documents relating to or affecting such returns, agreements or documents,
including agreements or other documents that bind the Unit Holders with respect
to tax matters.

 

The
Board of Governors shall designate a Member to act as the tax matters partner
within the meaning of and pursuant to Regulations Sections 301.6231(a)(7)-l and
-2 or any similar provision under state or local law.

 

(b)           Tax Information. Necessary tax information shall be delivered
to each Unit Holder as soon as practicable after the end of each Fiscal Year of
the Company but not later than five (5) months after the end of each
Fiscal Year.

 

8.4  Delivery to
Members and Inspection.

 

(a)           Upon the written
request of any Member for purposes reasonably related to the interest of that
Person as a Member, the Board shall cause the Company to deliver to the
requesting Member, at the expense of the Company, a copy of the Company’s most
recent annual financial statement and its most recent federal, state, and local
income tax returns and reports.

 

(b)           Each Member (or, in
the case of Section 8.4(b)(i) below, his, her or its designated
representative) has the right, upon reasonable written request for purposes
reasonably related to the interest of the Person as a Member and for “proper
purposes” (as defined by the Act), to:

 

(i)            Inspect and copy during normal business hours
any of the Company records described in Sections 8.1(a)(i) through (viii);

 

(ii)           Obtain from the Company true and full
information regarding the current state of the Company’s financial condition,
subject to normal changes or adjustments arising after, or following the end
of, the period covered by such information; and

 

(iii)          Obtain other information regarding the
Company’s affairs or inspect during ordinary business hours other books and
records of the Company as is just and reasonable relating to his, her or its
interest as a Member.

 

(c)           The
rights granted to a Member pursuant to this Section 8.4 are expressly
subject to compliance by such Member with the safety, security and
confidentiality procedures and guidelines of the Company, as such procedures
and guidelines may be established from time to time by the Board, in accordance
with and subject to the provisions of Section 1.11 hereof, to the extent
not inconsistent with the Act. Unadmitted assignees of Units shall not have the
right to information regarding the Company afforded Members hereunder or by the
Act.

 

(d)           Notwithstanding
anything in this Agreement to the contrary, each Member has an absolute right,
upon written demand, to examine and copy, in person or by legal representative,
at any reasonable time, and the Company shall make available within ten days

 

B-42

 

after receipt by an officer
of the Company of the written demand, all documents referred to in Section 322B.373,
subdivision 1 of the Act.

 

SECTION 9

AMENDMENTS

 

9.1  Amendments.

 

(a)           Amendments
to this Agreement may be proposed by the Board, or by the request of Members
holding 10% or more of the Units then held by all Members. Following approval
of any such proposal by the Board, the Board shall submit to the Members a
verbatim statement of any proposed amendment, providing that counsel for the
Company shall have approved of the same in writing as to form, and the Board
shall include in any such submission a recommendation as to the proposed
amendment. The Board shall seek the written vote of the Members on the proposed
amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate, provided that, if the Board authorizes a
written vote on the proposed amendment, such written vote shall not be
considered a written action of the Members hereunder (which action requires
unanimous consent), but rather shall be considered the written ballot of a
Member cast on the amendment as presented at a meeting. A proposed amendment
shall be adopted and be effective as an amendment hereto only if approved by a
Majority in Interest of the Members.

 

(b)           Notwithstanding
Section 9.1(a) hereof:

 

(i)            Except as provided in Section 2.2 for
authorizations and designations of additional classes or series of Units and
changes in numbers of authorized Units, this Agreement shall not be amended
without the approval or consent of each Unit Holder adversely affected if such
amendment would modify the limited liability of a Unit Holder, or the voting
rights of a Unit Holder or his, her or its interest in Profits, Losses, other
items, or any distributions;

 

(ii)           A provision of this Agreement that requires
the approval or consent of a specified percentage in interest of the Members or
any class(es) or series thereof may not be amended without the affirmative vote
of Members holding at least the specified percentage of the Units then held by
all Members, or of the Units of the specified class(es) or series of Units then
held by all Members; and

 

(iii)          This Section 9 shall not be amended
without the consent of all Members.

 

B-43

 

SECTION 10

TRANSFERS

 

10.1  Restrictions
on Transfers.

 

No
Transfer of Units shall be valid except as otherwise specifically permitted by
this Section 10 of this Agreement. It is the intent of this Agreement that
(i) the tax status of the Company be the same as for a partnership, (ii) this
Company preserve its partnership tax status by complying with Section 1.7704-1,
et seq., and any amendments thereto, and (iii) to the extent possible,
this Agreement shall be read and interpreted to prohibit the free
transferability of Units.

 

10.2  Permitted
Transfers.

 

(a)           No
Transfer of Units shall be binding on this Company without the approval of the
Board nor until such Transfer shall have been entered in the books and records
of this Company. The Board may adopt a Unit Transfer Policy to further
implement the provisions of this Section 10. The Board shall not approve,
and the Company shall not recognize for any purpose, any purported Transfer of
Units unless and until the provisions, conditions and restrictions set forth in
this Section 10 (including Section 10.3 hereof) and of any Unit
Transfer Policy adopted by the Board have been satisfied. Any Transfer approved
by the Board and satisfying the provisions, conditions and restrictions set
forth in this Section 10 (including Sections 10.2 and 10.3 hereof) shall
be referred to in this Agreement as a “Permitted
Transfer”. Notwithstanding the foregoing, a Member may pledge or
otherwise encumber all or any portion of its Units as security for the payment
of debt, provided that any subsequent foreclosure or transfer to the secured
party in lieu of foreclosure shall be considered a Transfer for all purposes of
this Agreement.

 

(b)           Following
a Permitted Transfer, the Units held by the transferee shall remain subject to
the Transfer restrictions set forth in this Section 10.

 

10.3  Conditions
to Permitted Transfers.

 

A
Transfer shall not be treated as a Permitted Transfer under Section 10.2
hereof unless and until the following conditions are satisfied:

 

(a)           Except in the case of a Transfer
involuntarily by operation of law, the transferor and transferee shall execute
and deliver to the Company (i) such documents and instruments of
conveyance as may be necessary or appropriate in the opinion of counsel to the
Company to effect such Transfer. In the case of a Transfer of Units
involuntarily by operation of law, the Transfer shall be confirmed by
presentation to the Company of legal evidence of such Transfer, in form and
substance satisfactory to counsel to the Company. In all cases, the Company
shall be reimbursed by the transferor and/or transferee for all costs and
expenses that it reasonably incurs in connection with such Transfer.

 

B-44

 

(b)           The transferor and
transferee shall furnish the Company with the transferee’s taxpayer
identification number, sufficient information to determine the transferee’s
initial tax basis in the Units transferred, and any other information
reasonably necessary to permit the Company to file all required federal and
state tax returns and other legally required information statements or returns.
Without limiting the generality of the foregoing, the Company shall not be required
to make any distribution otherwise provided for in this Agreement with respect
to any transferred Units until it has received such information.

 

(c)           Except in the case
of a Transfer of Units involuntarily by operation of law, either (a) such
Units shall be registered under the Securities Act, and any applicable state
securities laws, or (b) such Transfer is exempt from all applicable
registration requirements and such Transfer will not violate any applicable
laws regulating the Transfer of securities.

 

(d)           Except in the case
of a Transfer of Units involuntarily by operation of law, such Transfer will
not cause the Company to be deemed to be an “investment company” under the
Investment Company Act of 1940.

 

(e)           Except in the case
of a Transfer of Units involuntarily by operation of law, such Transfer will
not cause the Company to be deemed to be a “publicly traded partnership” under
applicable provisions of the Code.

 

(f)            Unless otherwise
approved by the Board, such Transfer of Units shall not result in the
termination of the Company within the meaning of Section 708 of the Code
or cause the application of the rules of Sections 168(g)(1)(B) and
168(h) of the Code or similar rules to apply to the Company. In
determining whether a particular proposed Transfer will result in a termination
of the Company, counsel to the Company shall take into account the existence of
prior written commitments to Transfer made pursuant to this Agreement and such
commitments shall always be given precedence over subsequent proposed
Transfers.

 

(g)           No notice or request
initiating the procedures contemplated by Section 10.3 may be given by any
Member after a Dissolution Event has occurred. No Member may Transfer all or
any portion of its Units after a Dissolution Event has occurred.

 

The
Board shall have the authority to waive any legal opinion or other condition
required in this Section l0.3.

 

10.4  Prohibited
Transfers.

 

(a)           Any purported Transfer of Units that is not a
Permitted Transfer shall be null and void and of no force or effect whatever;
provided that, if the Company is required to recognize a Transfer that is not a
Permitted Transfer (or if the Board, in its sole discretion, elects to
recognize a Transfer that is not a Permitted Transfer), the Units Transferred
shall be strictly limited to the transferor’s rights to allocations and
distributions as provided by this Agreement with respect to the transferred
Units, which allocations and distributions may be applied (without

 

B-45

 

limiting any other legal or
equitable rights of the Company) to satisfy any debts, obligations, or
liabilities for damages that the transferor or transferee of such Units may
have to the Company.

 

(b)           In the case of a Transfer or attempted
Transfer of Units that is not a Permitted Transfer, the parties engaging or
attempting to engage in such Transfer shall be liable to indemnify and hold
harmless the Company and the other Members from all cost, liability, and damage
that any of such indemnified Members may incur (including, without limitation,
incremental tax liabilities, lawyers’ fees and expenses) as a result of such
Transfer or attempted Transfer and efforts to enforce the indemnity granted
hereby.

 

10.5  Rights of
Unadmitted Assignees.

 

Unless
admitted as a substitute Member pursuant to Section 10.6 hereof, a Person
who acquires Units shall only be entitled to allocations and distributions with
respect to such Units in accordance with this Agreement, and shall not have any
right to any information or accounting of the affairs of the Company, and shall
not be entitled to inspect the books or records of the Company, and shall not
have any of the rights of a Member under the Act or this Agreement. In
addition, the Units held by such Person shall continue to be subject to the
restrictions on Transfer provided for in this Section 10.

 

10.6  Admission
of Substituted Members.

 

A
transferee of Units (whether as a result of a Permitted Transfer or otherwise)
may be admitted as a substitute Member only upon satisfaction of each of the
following conditions:

 

(a)           The transferee
acquired its Units by means of a Permitted Transfer;

 

(b)           The transferee meets
all requirements of membership established in or pursuant to this Agreement
(including Section 2.2 and 6.2(a) hereof), and such admission is
approved by the Board which approval may be given or withheld in the sole and
absolute discretion of the Board;

 

(c)           The transferee of
Units (other than, with respect to clauses (i) below, a transferee that
was a Member prior to the Transfer) shall, by written instrument in form and
substance reasonably satisfactory to the Members (and, in the case of clause (ii) below,
the transferor Member), (i) accept and adopt the terms and provisions of
this Agreement, including this Section 10, and (ii) assume the
obligations of the transferor Member under this Agreement with respect to the
transferred Units.

 

(d)           The transferee pays
or reimburses the Company for all reasonable legal, filing, and publication
costs that the Company incurs in connection with the admission of the
transferee as a Member with respect to the Transferred Units; and

 

(e)           Except in the case
of a Transfer involuntarily by operation of law, the transferee (other than a
transferee that was a Member prior to the Transfer) shall deliver to the

 

B-46

 

Company evidence of the
authority of such Person to become a Member and to be bound by all of the terms
and conditions of this Agreement, and the transferee and transferor shall each
execute and deliver such other instruments as the Members reasonably deems
necessary or appropriate to effect, and as a condition to, such Transfer,
including amendments to the Certificate or any other instrument filed with the
State of Minnesota or any other state or governmental authority.

 

10.7  Representations
Regarding Transfers; Legend.

 

(a)           Each Member hereby
covenants and agrees with the Company for the benefit of the Company and all
Members, that (i) it is not currently making a market in Units and will
not in the future make a market in Units, (ii) it will not Transfer its
Units on an established securities market, a secondary market (or the
substantial equivalent thereof) within the meaning of Code Section 7704(b) (and
any Regulations, proposed Regulations, revenue rulings, or other official
pronouncements of the Internal Revenue Service or Treasury Department that may
be promulgated or published thereunder), and (iii) in the event such
Regulations, revenue rulings, or other pronouncements treat any or all
arrangements which facilitate the selling of Company interests and which are
commonly referred to as “matching services” as being a secondary market or
substantial equivalent thereof, it will not Transfer any Units through a
matching service that is not approved in advance by the Company. Each Member
further agrees that it will not Transfer any Units to any Person unless such
Person agrees to be bound by this Section 10.7(a) and to Transfer
such Units only to Persons who agree to be similarly bound.

 

(b)           Each Member hereby
represents and warrants to the Company and the Members that such Member’s
acquisition of Units hereunder is made as principal for such Member’s own
account and not for resale or distribution of such Units. Each Member further
hereby agrees that the Board may placed the appropriate legends under
applicable federal and state securities laws or this Agreement upon any
counterpart of this Agreement, the Certificate, or any other document or
instrument evidencing ownership of Units or membership in this Company,
including the following legend:

 

The Units represented by this document are subject to further
restriction as to their sale, transfer, hypothecation, or assignment as set
forth in the Operating and Member Control Agreement and agreed to by each
Member. Said restriction provides, among other things, that no Units may be
transferred without first obtaining the approval of the Board of Governors, and
that no vendee, transferee, assignee, or endorsee of a Member shall have the right
to become a substituted Member without the consent of the Company’s Board of
Governors, which consent may be given or withheld in the sole and absolute
discretion of the Board of Governors.

 

B-47

 

10.8  Distributions and
Allocations in Respect of Transferred Units.

 

If
any Units are Transferred during any Fiscal Year in compliance with the
provisions of this Section 10, Profits, Losses, each item thereof, and all
other items attributable to the Transferred Units for such Fiscal Year shall be
divided and allocated between the transferor and the transferee by taking into
account their varying interests during the Fiscal Year in accordance with Code Section 706(d),
using any conventions permitted by law and adopted from time to time by the
Board. All distributions on or before the date of such Transfer shall be made
to the transferor, and all distributions thereafter shall be made to the
transferee. Solely for purposes of making such distributions, the Company shall
recognize such Transfer not later than the end of the calendar month during
which it is given notice of such Transfer, provided that, if the Company is
given notice of a Transfer at least ten (10) Business Days prior to the
Transfer, the Company shall recognize such Transfer as of the date of such
Transfer, and provided further that if the Company does not receive a notice
stating the date such Units were transferred and such other information as the
Board may reasonably require within thirty (30) days after the end of the
Fiscal Year during which the Transfer occurs, then all distributions may be
made to the Person who, according to the books and records of the Company, was
the Member of the Units on the last day of such Fiscal Year. Neither the Company
nor any Unit Holder shall incur any liability for making allocations and
distributions in accordance with the provisions of this Section 10.8,
whether or not the Unit Holders or the Company has knowledge of any Transfer of
any Units. The Members acknowledge that the method and convention designated by
the Board constitutes an agreement among the partners within the meaning of
Regulations Section 1.706-1.

 

SECTION 11

MERGERS AND OTHER EXTRAORDINARY TRANSACTIONS

 

11.1  Acknowledgement.

 

The
Unit Holders acknowledge that the financial provisions of this Agreement,
including provisions relating to Capital Contributions, Profit and Loss
Allocations, Distributions and Winding Up collectively represent their desired
sharing of the financial obligations and entitlements with respect to their
Units.

 

11.2  Sharing of
Consideration.

 

If
the terms of a merger or other extraordinary transaction to which the Company
is a party do not provide each Unit Holder with a financial interest in the
surviving entity that is substantially similar to the financial interest of
such Unit Holder in this Company immediately before the transaction, the value
of the consideration received shall be divided among the Unit Holders in the
same manner as a comparable amount of net liquidation proceeds would be
distributed pursuant to Section 12 of this Agreement. This shall not be
construed to prevent issuance of differing forms of consideration to different
groups of Unit Holders to the extent allowed by law.

 

B-48

 

SECTION 12

DISSOLUTION AND WINDING UP

 

12.1  Dissolution
Events.

 

(a)          Dissolution.
The Company
shall dissolve and shall commence winding up and liquidating upon the first to
occur of any of the following (each a “Dissolution
Event”):

 

(i)            The affirmative vote of each Governor and a
Majority in Interest of the Members to dissolve, wind up, and liquidate the
Company; or

 

(ii)           The entry of a decree of judicial dissolution
pursuant to the Act.

 

(b)          The
Members hereby agree that, notwithstanding any provision of the Act, the
Company shall not dissolve prior to the occurrence of a Dissolution Event.

 

12.2  Winding
Up.

 

Upon
the occurrence of a Dissolution Event, the Company shall continue solely for
the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Members, and no Unit
Holder shall take any action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Company’s business and affairs, provided
that all covenants contained in this Agreement and obligations provided for in
this Agreement shall continue to be fully binding upon the Unit Holders until
such time as the Property has been distributed pursuant to this Section 12.2
and the Certificate have been canceled pursuant to the Act. The Liquidator
shall be responsible for overseeing the prompt and orderly winding up and
dissolution of the Company. The Liquidator shall take full account of the
Company’s liabilities and Property and shall cause the Property or the proceeds
from the sale thereof (as determined pursuant to Section 12.10 hereof), to
the extent sufficient therefor, to be applied and distributed, to the maximum
extent permitted by law, in the following order:

 

(a)          First,
to creditors (including Governors and Members who are creditors, to the extent
otherwise permitted by law) in satisfaction of all of the Company’s Debts and
other liabilities (whether by payment or the making of reasonable provision for
payment thereof), other than liabilities for which reasonable provision for
payment has been made; and

 

(b)          Second,
the balance, if any, to the Unit Holders in accordance with the positive
balance in their Capital Accounts, after giving effect to all contributions,
distributions and allocations for all periods.

 

B-49

 

12.3  Compliance
With Certain Requirements of Regulations; Deficit Capital Accounts.

 

In
the event the Company is “liquidated” within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g),
(a) distributions shall be made pursuant to this Section 12 to the
Unit Holders who have positive Capital Accounts in compliance with Regulations Section 1.704-l(b)(2)(ii)(b)(2).
If any Unit Holder has a deficit balance in his Capital Account (after giving
effect to all contributions, distributions and allocations for all Fiscal
Years, including the Fiscal Year during which such liquidation occurs), such
Unit Holder shall have no obligation to make any contribution to the capital of
the Company with respect to such deficit, and such deficit shall not be
considered a debt owed to the Company or to any other Person for any purpose
whatsoever. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the Unit Holders pursuant to this
Section 12 may be:

 

(a)           Distributed to a
trust established for the benefit of the Unit Holders for the purposes of
liquidating Company assets, collecting amounts owed to the Company, and paying
any contingent or unforeseen liabilities or obligations of the Company. The
assets of any such trust shall be distributed to the Unit Holders from time to
time, in the reasonable discretion of the Liquidator, in the same proportions
as the amount distributed to such trust by the Company would otherwise have
been distributed to the Unit Holders pursuant to Section 12.2 hereof; or

 

(b)           Withheld to provide
a reasonable reserve for Company liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Company, provided that such withheld amounts shall be distributed to the Unit
Holders as soon as practicable.

 

12.4  Deemed
Distribution and Recontribution.

 

Notwithstanding
any other provision of this Section 12, in the event the Company is
liquidated within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g) but
no Dissolution Event has occurred, the Property shall not be liquidated, the
Company’s Debts and other liabilities shall not be paid or discharged, and the
Company’s affairs shall not be wound up. Instead, solely for federal income tax
purposes, the Company shall be deemed to have contributed all of its Property
and liabilities to a new limited liability company in exchange for an interest
in such new company, and immediately thereafter, the Company will be deemed to
liquidate by distributing such interest in the new company to the Unit Holders.

 

12.5  Rights of
Unit Holders.

 

Except
as otherwise provided in this Agreement, each Unit Holder shall look solely to the
Property of the Company for the return of its Capital Contribution and has no
right or power to demand or receive Property other than cash from the Company.
If the assets of the Company remaining after payment or discharge of the debts
or liabilities of the Company are insufficient to return such Capital
Contribution, the Unit Holders shall have no recourse against the Company or
any other Unit Holder or Unit Holders.

 

B-50

 

12.6  Notice of
Dissolution/Termination.

 

(a)           Upon the occurrence
of a Dissolution Event, the Board shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Unit Holders, and the Board may
notify its known claimants and/or publish notice as further provided in the
Act.

 

(b)           Upon completion of
the distribution of the Company’s Property as provided in this Section 12,
the Company shall be terminated, and the Liquidator shall cause the filing of a
Certificate of Dissolution in accordance with the Act and shall take all such
other actions as may be necessary to terminate the Company.

 

12.7  Allocations
During Period of Liquidation.

 

During
the period commencing on the first day of the Fiscal Year during which a
Dissolution Event occurs and ending on the date on which all of the assets of
the Company have been distributed to the Unit Holders pursuant to Section 12.2
hereof (the “Liquidation Period”), the
Unit Holders shall continue to share Profits, Losses, gain, loss and other
items of Company income, gain, loss or deduction in the manner provided in Section 3
hereof.

 

12.8  Character
of Liquidating Distributions.

 

All
payments made in liquidation of the interest of a Unit Holder in the Company
shall be made in exchange for the interest of such Unit Holder in Property
pursuant to Section 736(b)(1) of the Code, including the interest of
such Unit Holder in Company goodwill.

 

12.9  The
Liquidator.

 

(a)           Definition. The “Liquidator”
shall mean a Person appointed by the Board to oversee the
liquidation of the Company. The Liquidator may be the Board, or a committee of
three or more Governors appointed by the Board.

 

(b)           Fees.
The Company is authorized to pay a reasonable fee to the Liquidator for its
services performed pursuant to this Section 12 and to reimburse the Liquidator
for its reasonable costs and expenses incurred in performing those services.

 

(c)           Indemnification. The Company shall
indemnify, save harmless, and pay all judgments and claims against such
Liquidator or any officers, directors, agents or employees of the Liquidator
relating to any liability or damage incurred by reason of any act performed or
omitted to be performed by the Liquidator, or any officers, directors, agents
or employees of the Liquidator in connection with the liquidation of the Company,
including reasonable attorneys’ fees incurred by the Liquidator, officer,
director, agent or employee in connection with the defense of any action based
on any such act or omission, which attorneys’ fees may be paid as incurred,
except to the extent such liability or damage is caused by acts or omissions
that are not in good faith or involve negligence, fraud, intentional misconduct
or a knowing violation of law,

 

B-51

 

or for a transaction from
which the Liquidator or its officer, director, agent or employee derived an
improper personal benefit.

 

12.10  Form of
Liquidating Distributions.

 

For
purposes of making distributions required by Section 12.2 hereof, the
Liquidator may determine whether to distribute all or any portion of the
Property in-kind or to sell all or any portion of the Property and distribute
the proceeds therefrom.

 

SECTION 13

DISPUTE RESOLUTION

 

If
a dispute arises out of or relates to this Agreement, or the performance or
breach thereof, the parties agree first to try in good faith to settle the
dispute by mediation under the Commercial Mediation Rules of the American
Arbitration Association, before resorting to arbitration. Thereafter, any
remaining unresolved controversy or claim arising out of or relating to this
Agreement, or the performance or breach thereof, shall be settled by binding
arbitration pursuant to the Commercial Arbitration Rules of the American
Arbitration Association as modified by this Section 13; PROVIDED, that
this Section 13 shall not require use of the American Arbitration
Association (only that such Rules as modified by this Section 13
shall be followed); and PROVIDED FURTHER, that arbitration shall not be
required for allegations involving breach of contract, violations of state or
federal securities laws, breach of fiduciary duty or other misconduct by the
Company. The arbitration shall be conducted in the State of Minnesota, and
shall be heard within sixty (60) days of the selection of the three arbitrators
required by this Section. Any award rendered shall be final and conclusive upon
the parties and a judgment thereon may be entered in any court having competent
jurisdiction. The parties shall (i) agree upon and appoint two
arbitrators, which arbitrators shall then select a third arbitrator, provided
that arbitrators selected or appointed hereunder must be a retired former trial
Judge in Minnesota or such other retired or active attorney-at-law or
non-attorney with substantial experience in the matters in or underlying the
dispute; (ii) direct the arbitrators to follow substantive rules of
law and the Federal Rules of Evidence; (iii) allow for the parties to
conduct discovery pursuant to the rules then in effect under the Federal Rules of
Civil Procedure for a period not to exceed 60 days; (iv) require the
testimony to be transcribed; and (v) require the award to be accompanied
by findings of fact and a statement of reasons for the decision. The cost and
expense of the arbitrators and location costs, together with all other costs
and expenses, including reasonable attorney’s fees and expert’s fees, of all
parties incurred in the dispute which is determined and/or settled by
arbitration pursuant to this Section 13, shall be borne by the
non-prevailing party in the dispute, and the award shall include a requirement
that the non-prevailing party pay for such arbitration costs and reimburse the
prevailing party for such costs and expenses incurred by the prevailing party.
Except where clearly prevented by the area in dispute, both parties agree to
continue performing their respective obligations under this Agreement while the
dispute is being resolved.

 

B-52

 

SECTION 14

MISCELLANEOUS

 

14.1  Notices.

 

Any
notice, payment, demand, or communication required or permitted to be given by
any provision of this Agreement shall be in writing and shall be deemed to have
been delivered, given, and received for all purposes (i) if delivered
personally to the Person or to an officer of the Person to whom the same is
directed, or (ii) when the same is actually received, if sent either by
registered or certified mail, postage and charges prepaid, or by facsimile, if
such facsimile is followed by a hard copy of the facsimile communication sent promptly
thereafter by registered or certified mail, postage and charges prepaid,
addressed as follows, or to such other address as such Person may from time to
time specify by notice to the Company and the Unit Holders:

 

(a)           If to the Company,
to the address determined pursuant to Section 1.4 hereof;

 

(b)           If to the Unit
Holders, to the address set forth on record with the company;

 

14.2  Binding
Effect.

 

Except
as otherwise provided in this Agreement, every covenant, term, and provision of
this Agreement shall be binding upon and inure to the benefit of the Members
and their respective successors, transferees, and assigns.

 

14.3  Construction.

 

Every
covenant, term, and provision of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against any Member.

 

14.4  Time.

 

In
computing any period of time pursuant to this Agreement, the day of the act,
event or default from which the designated period of time begins to run shall
not be included, but the time shall begin to run on the next succeeding day.
The last day of the period so computed shall be included, unless it is a
Saturday, Sunday or legal holiday, in which event the period shall run until
the end of the next day which is not a Saturday, Sunday or legal holiday.

 

14.5  Headings.

 

Section and
other headings contained in this Agreement are for reference purposes only and
are not intended to describe, interpret, define, or limit the scope, extent, or
intent of this Agreement or any provision hereof.

 

B-53

 

14.6  Severability.

 

Except
as otherwise provided in the succeeding sentence, every provision of this
Agreement is intended to be severable, and, if any term or provision of this
Agreement is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the validity or legality of the remainder of this
Agreement. Notwithstanding the foregoing, if such illegality or invalidity
would be to cause any Member to lose the material benefit of its economic
bargain, then the Members agree to negotiate in good-faith to amend this
Agreement in order to restore such lost material benefit.

 

14.7  Incorporation
by Reference.

 

Every
exhibit, schedule, and other appendix attached to this Agreement and referred
to herein is not incorporated in this Agreement by reference unless this
Agreement expressly otherwise provides.

 

14.8  Variation
of Terms.

 

All
terms and any variations thereof shall be deemed to refer to masculine,
feminine, or neuter, singular or plural, as the identity of the Person or
Persons may require.

 

14.9  Governing
Law.

 

The
internal laws of the State of Minnesota shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties arising hereunder, without regard to its choice of law or conflicts
of laws provisions.

 

14.10  Waiver of
Jury Trial.

 

Each
of the Members irrevocably waives to the extent permitted by law, all rights to
trial by jury and all rights to immunity by sovereignty or otherwise in any
action, proceeding or counterclaim arising out of or relating to this
Agreement.

 

14.11  Counterpart
Execution.

 

This
Agreement may be executed in any number of counterparts with the same effect as
if all of the Members had signed the same document. All counterparts shall be
construed together and shall constitute one agreement.

 

14.12  Specific
Performance.

 

Each
Member agrees with the other Members that the other Members would be
irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly, it is agreed
that, in addition to any other remedy to which the nonbreaching Members may be
entitled, at law or in equity, the nonbreaching Members shall be

 

B-54

 

entitled to injunctive
relief to prevent breaches of the provisions of this Agreement and specifically
to enforce the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction thereof.

 

14.13  Company Seal.

 

The
Company shall have no seal.

 

*************************

 

As amended by the members on
February 27, 2006

 

B-55

 

ADDITIONAL
MEMBER SIGNATURE PAGE

 

IN WITNESS WHEREOF, pursuant to Sections 6.1 and/or 10.6 of the Operating and Member
Control Agreement of Otter Tail Ag Enterprises, LLC, of which this signature page is
a part, in consideration of and as a condition to the undersigned’s being
admitted as a Member and acquiring Units in Otter Tail Ag Enterprises, LLC, the
undersigned hereby executes and enters into this Operating and Member Control
Agreement as an additional Member as of the Effective Date (as defined in this
Operating and Member Control Agreement) or, if later, the effective date of the
undersigned’s acquisition of Units and admission as a Member pursuant to this
Operating and Member Control Agreement. By execution of this Additional Member
Signature Page and on such date, the undersigned hereby becomes a party to
this Operating and Member Control Agreement and agrees to be bound in all
respects by the terms and conditions of this Operating and Member Control
Agreement on and after such date.

 

	
  Date
  Signed:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Individuals:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Signature)

  	
  (Signature
  of joint investor)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Print
  name)

  	
  (Print
  name of joint investor)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Entities:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print
  name of entity)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print
  name of authorized signatory)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print
  title of authorized signatory)

  	
   

  
										

 

B-56

 

SCHEDULE A

 

List of Unit Holders

 

	
  Names and Addresses of Unit
  Holder

  	
   

  	
  Form of

  Contribution

  	
   

  	
  Amount

  (Agreed

  Value) of

  Contribution

  	
   

  	
  Date of

  Acceptance of

  Contribution

  	
   

  	
  Number of

  Units

  	
   

  	
  Effective

  Date of

  Issuance of

  Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-57

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