Document:

Exhibit

Exhibit 10.1

RPX CORPORATION 
ONE MARKET PLAZA, STEUART TOWER, SUITE 800
SAN FRANCISCO, CA  94105
 
January 21, 2016
Trevor Campion
 

Dear Trevor:

As you are aware, RPX Corporation (the “Company”) is in the process of acquiring Inventus Solutions, Inc. (“Inventus”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) between Inventus, the Company and certain other parties (the “Transaction”).  The Company is pleased to offer you employment on the following terms, which offer and our agreement to its terms shall be effective upon, and subject to the occurrence of, the closing of the Transaction (the “Closing”):

1.Position.  Your title will be Chief Executive Officer of the Company’s wholly-owned subsidiary Inventus, you will have such duties and responsibilities as are commensurate and consistent with such role as Chief Executive Officer, you will report to John Amster, President & Chief Executive Officer, and be part of the Company’s executive management team.  This is a full-time, exempt position.  Notwithstanding the foregoing, you may engage in charitable and educational activities, serve on corporate and non-profit boards, and manage your personal and family investments, in each case subject to the Company’s Code of Business Conduct and so long as such activities do not materially interfere with your obligations to the Company.  Your primary place of business will be Chicago, Illinois.  
2.    Cash Compensation.  The Company will pay you a starting salary at the rate of $500,000 per year, payable in accordance with Inventus’s standard payroll schedule.  Your base salary, bonus opportunity and equity compensation level will be reviewed on an annual basis by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) and may be increased (but not decreased) from time to time, in the discretion of the Compensation Committee.  References herein to “base salary” shall mean the base salary as increased.
3.    Annual Bonus Opportunity.  You will also be eligible to receive an annual cash bonus payment each calendar year.  Your annual bonus target will be 100% of your base salary.  Annual bonuses are discretionary, although the Compensation Committee will consider both achievements of the Company, the business unit, and individual performance in determining bonus amount, in a manner consistent with other senior executives of the Company.  The bonus in respect of a particular year will be paid after the end of the year 

and after the Board of Directors approves our year-end financial statements when bonuses are paid to other senior executives of the Company.  Except as provided below, no bonus payment will be paid unless you are an employee of the Company (or its subsidiaries) on the last day of the bonus year.  Please note that your eligibility for an annual bonus does not constitute a contract of employment or alter the “at will” status of your employment.  
4.    Additional Incentive Compensation.  You will receive a cash payment in the amount of up to $1,500,000 if Inventus meets or exceeds certain performance targets for fiscal years 2016 and 2017 to be approved by the Compensation Committee based on recommendations from Mr. Amster in consultation with you.  The additional incentive compensation will be paid at the same time annual bonuses are paid for 2017 provided you are an employee of the Company on the last day of 2017.  In the event that the Company terminates your employment without Cause or if you incur a Resignation for Good Reason, or if you die or have a Disability, provided you have executed and you have not timely revoked a Release of Claims (as defined in Section 10(b)), the unpaid additional incentive compensation will be immediately vested and paid in full, in cash, within fifteen (15) days following such termination (or if later, within fifteen (15) days following the effective date of such Release of Claims but in no event later than March 15th of the year following such event).  
5.    Equity Compensation.  We will recommend to the Compensation Committee at the first meeting thereof following the Transaction that you receive, and you will receive, a grant of 350,000 restricted stock units (the “RSUs”).  This grant is subject to approval by the Compensation Committee or Board and will vest 25% upon the first quarterly vesting date following the completion of your first year of employment, with the remaining 75% vesting in equal quarterly installments over the next three years of employment.  For administrative reasons, vesting of the RSUs will occur only on the Company’s established quarterly vesting dates rather than on the anniversary of your vesting commencement date.    
In addition, we will recommend to the Compensation Committee at the first meeting thereof following the Transaction that you receive, and you will receive, a grant of 100,000 restricted stock units (the “Additional RSUs”).  This grant is subject to approval by the Compensation Committee or Board and will vest 33.3% upon the first quarterly vesting date following the completion of your second year of employment, with the remaining 66.7% vesting in equal quarterly installments over the next two years of employment.  For administrative reasons, vesting of the RSUs will occur only on the Company’s established quarterly vesting dates rather than on the anniversary of your vesting commencement date.  

The RSUs and Additional RSUs (and any equity compensation afforded hereafter) will have such terms as are consistent with other senior executives of the Company, including, as applicable, dividend equivalents and share withholding.  

If before the one year anniversary of the date of Closing (a) the Company is subject to a Change in Control, (b) the Inventus business is sold or otherwise disposed (whether by merger or otherwise) or (c) you are subject to an Involuntary Termination and you have 

executed and you have not timely revoked a Release of Claims (as defined in Section 10(b)), then your vested percentage of your RSUs and Additional RSUs will be 40%.  Without limiting the foregoing, if the Company is subject to a Change in Control or the Inventus business is sold or otherwise disposed (whether by merger or otherwise) before your employment terminates and you are subject to an Involuntary Termination in connection with or within twelve months after the Change in Control or sale or disposition of the Inventus business, then you will become vested in all of the then-unvested RSUs and Additional RSUs.  Further, if you die or if the Company terminates your employment because of your Disability, in either case prior to the Cliff Vesting Date, then you will vest in the first 25% of the RSUs and Additional RSUs.   

 “Involuntary Termination” shall mean (i) a Separation as a result of the termination of your employment by the Company for reasons other than Cause or death or Disability; or (ii) your Resignation for Good Reason.
“Resignation for Good Reason” shall mean a Separation as a result of your voluntary resignation within 12 months after one of the following conditions has come into existence (or if later, your actual knowledge of such condition) without your consent: (i) (A) a reduction in your title or position; or (B) a material reduction in your authority or responsibility; (ii) a change in your reporting relationship such that you no longer directly report to the Company’s Chief Executive Officer; (iii) a reduction in your base salary; (iv) a requirement that you relocate your principal place of employment by more than 35 miles; (v) a material breach by the Company or its affiliates of any agreement with you to which it is a party or any obligation it has to you; (vi) the Company’s or its affiliates’ failure to pay amounts or provide benefits to you when due; (vii) a reduction in bonus opportunity or any material employee benefit in a manner inconsistent with other senior executives; or (viii) failure to approve the RSUs or the Additional RSUs.  A Resignation for Good Reason will not be deemed to have occurred unless you give the Company written notice of the condition within ninety (90) days after the condition comes into existence (or if later, your actual knowledge of such condition) and the Company fails to remedy the condition within thirty (30) days after receiving your written notice.
“Cause” shall mean, so long as notice is given within ninety (90) days of the initial occurrence of the grounds purporting to constitute Cause (or if later, within ninety (90) days of the Company’s actual knowledge of such grounds) (i) your intentional and unauthorized use or disclosure of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company; (ii) your material breach of any agreement between you and the Company; (iii) your material failure to comply with the Company’s material written policies or rules that are applicable to you and that have been made available to you; (iv) your conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State thereof; (v) your gross negligence or willful misconduct relating to the Company that causes harm to the Company; (vi) your continuing failure to substantially perform reasonably assigned duties after receiving written notification of such failure from the Board of Directors (provided that poor results shall not constitute grounds for Cause termination); or (vii) your failure to cooperate in good faith with a governmental 

or internal investigation of the Company or its directors, officers or employees, if the Company has reasonably requested your cooperation.  To the extent you commit an act that would constitute Cause pursuant to (ii), (iii), (vi) or (vii), you will be given notice and an opportunity to cure within thirty (30) days of receiving notice and, if you reasonably cure such act as determined by the Audit Committee of the Company’s Board of Directors, it will not constitute Cause.  “Change in Control” shall have the meaning assigned to such term in Section 14.6 of the Company’s 2011 Equity Incentive Plan.  
“Disability” shall mean your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that results in death or lasts for a continuous period of not less than six months.
“Separation” means a “separation from service,” as defined in the regulations under Section 409A of the Internal Revenue Code of 1986, as amended.
Both the RSUs and the Additional RSUs will be subject to the terms and conditions applicable to awards granted under the Company’s 2011 Equity Incentive Plan, as described in that Plan and the applicable award agreements. 
6.    Employee Benefits.  As a senior executive employee of Inventus, and a senior executive of the Company, you will be eligible to participate in a number of Company-sponsored benefits in a manner consistent with eligibility afforded other senior executives of Inventus.  In addition, you will be entitled to paid time off in accordance with the Inventus PTO policy, as in effect from time to time.           
7.    Proprietary Information and Inventions Agreement.  Like all Company employees, you will be required, as a condition of your employment with the Company, to sign the Company’s standard Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.
8.    Noncompetition Agreement.  You will be required, as a condition of your employment with the Company, to sign a Noncompetition Agreement, a copy of which is attached hereto as Exhibit B.
9.    Employment Relationship.  Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without Cause.  Any contrary representations that may have been made to you are superseded by this letter agreement.  This is the full and complete agreement between you and the Company on this term.  The “at will” nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Company (other than you).  Except as permitted above, while you render services to the Company, you will not engage in any other employment, consulting, or other business activity (whether full‐time or part-time) that would create a conflict of interest with the Company.  By signing this letter of agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

10.    Severance.  
(a)    Regardless of whether you enter into a binding release of claims in favor of the Company (as described below), upon any termination of employment with the Company, for any or no reason, the Company will pay you: (i) any earned but unpaid base salary and bonus (including, without limitation, any earned additional incentive compensation) pursuant to the terms of any arrangement governing same; (ii) any unreimbursed expenses you incurred on or prior to the termination date that are consistent with the Company’s policies in effect at the time; (iii) accrued but unused vacation and paid time off; and (iv) accrued and vested benefits under the terms of the plan, program or agreement governing such benefits.  Any such payments will be paid to you at the time or times set forth in the applicable Company plan, program, agreement or policy or if none, within fifteen (15) days following termination.  
(b)    In the event the Company terminates your employment without Cause or if you incur a Resignation for Good Reason (as such terms are defined in Section 5 above) then, in addition to the effects of such termination on the additional incentive compensation and equity awards as set forth in this letter agreement, provided you have executed and you have not timely revoked, a binding mutually acceptable release of claims that you may have against the Company (with customary carve outs, inter alia, for your vested equity rights, rights to indemnification and exculpation, coverage under any applicable directors and officers insurance, vested benefits and rights to enforce post-termination obligations, and without obligations of you greater than those set forth herein or in the Proprietary Information and Inventions Agreement or Noncompetition Agreement to which you are a party)(a “Release of Claims”), the Company will provide to you within sixty (60) days following the date your employment terminates: (i) an amount equal to twelve (12) months of your then-current base salary; and (ii) an amount which after the payment of any taxes thereon is equal to the full monthly COBRA premium to continue your health (medical, dental, and vision) insurance under the Company’s, Inventus’s or their successor’s health plans for twelve (12) months, whether or not elected.  
(c)    The payments described in subsection (b) are collectively referred to herein as the “Severance Payments” and shall be paid in installments in accordance with Inventus’s normal payroll policies and procedures and subject to required withholding of such amounts, if any, relating to tax and other payroll deductions.  Notwithstanding the foregoing, if the date of your termination of employment occurs on or after November 1 of any calendar year, then you will commence receiving the Severance Payments in the calendar year following the calendar year in which your termination of employment occurs only to the extent it is reasonably determined to avoid a violation of Section 409A of the Internal Revenue Code of 1986, as amended.  Additionally, within thirty (30) days following termination of employment under Section 10(b) or in the event of your death or Disability, the Company will determine the extent to which you attained the performance goals applicable to you under the Company’s bonus plan in effect for the applicable calendar year in which termination occurred and will pay you a prorated bonus for the partial year in which such termination occurs, in a lump sum no later than March 15th following the year of 

termination.  The amount of any Severance Payments due hereunder will not be reduced by any compensation you earn from a subsequent employer and will not otherwise be subject to offset or any obligation to mitigate.
(a)    Amounts calculated under this Section 10 will be calculated without giving effect to any reduction by the Company of base salary that constitutes “Good Reason”.
11.    Tax Matters.
(a)    Withholding.  All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.    
(b)    Tax Advice.  You are encouraged to obtain your own tax advice regarding your compensation from the Company.  You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board of Directors related to tax liabilities arising from your compensation absent their gross negligence, misconduct or bad faith.  
12.    Interpretation, Amendment and Enforcement.  This letter agreement and Exhibits constitute the complete agreement between you and the Company, contain all of the terms of your employment with the Company and supersede any prior agreements, representations or understandings (whether written, oral or implied) between you and the Company.  This letter agreement may not be amended or modified, except by an express written agreement signed by both you and a duly authorized officer of the Company.  The terms of this letter agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this letter agreement or arising out of, related to, or in any way connected with, this letter agreement, your employment with the Company or any other relationship between you and the Company (the “Disputes”) will be governed by Illinois law, excluding laws relating to conflicts or choice of law.  You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in Chicago, Illinois, in connection with any Dispute or any claim related to any Dispute.  This letter agreement shall be binding upon and inure to the benefit of you and your successors and the Company’s successors and assigns, provided that neither you nor the Company may assign or pledge this agreement or any rights arising under it, except that the Company may assign this agreement to an unrelated third-party purchaser of all or substantially all of the Company’s assets or to an affiliate (so long as, in connection with an assignment to an affiliate, the Company remains secondarily liable for the obligations hereunder).  All determinations required or necessary to be made hereunder or with respect to compensation described herein will be made in good faith in a manner reasonably consistent with those made for other senior executives of the Company (although such requirement will not obligate the Company to afford you additional compensation or vesting and payment terms that are afforded to other senior executives and that are not provided for in this letter agreement).  

13.    Section 409A.  It is intended that the payments and benefits under this letter agreement be exempt from, or comply with, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and accordingly, to the maximum extent permitted, this letter agreement shall be interpreted and administered to be in accordance with this intent.  Each payment under this letter shall be construed as a separate identified payment for purposes of Section 409A of the Code, and any payments described in this letter that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise.  Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, (i) you will not be considered to have terminated employment for purposes of this letter and no payments will be due to you under this letter that are payable upon your termination of employment until you would be considered to have incurred a “separation from service” within the meaning of Section 409A of the Code and (ii) amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this letter during the six-month period immediately following your separation from service will instead be paid on the first business day after the date that is six months following your separation from service (or, if earlier, your death).
14.    Indemnification Agreement.  You will be offered the opportunity to enter into the Company’s standard indemnification agreement for officers.
* * * * *
As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States.    
You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Proprietary Information and Inventions Agreement and returning them to me.

This offer shall remain in effect through 5:00 pm on January 22, 2016 after which time it shall become void.  In addition, as noted above, this offer will be effective upon and subject to the occurrence of the Closing.  In the event the Closing does not occur, this offer and all terms hereunder will be null and void and without legal effect. 
Very truly yours,
RPX CORPORATION
By:  John A. Amster
Title:  President & Chief Executive Officer

I have read and accept this employment offer:

 
    Signature of Employee

Dated:      

Attachments
Exhibit A:  Proprietary Information and Inventions Agreement
Exhibit B:  Noncompetition Agreementexhibit101thirdamendment

Execution Version   THIRD AMENDED AND RESTATED   LIMITED LIABILITY COMPANY AGREEMENT   RCM6, LLC   Dated effective as of January 1, 2016   4080228.4    

 

TABLE OF CONTENTS   Pages   ARTICLE I DEFINITIONS .........................................................................................................2   Section 1.1 Definitions .......................:...................................................................................2   Section 1.2 Construction of Certain Terms and Phrases ......................................................15   ARTICLE II FORMATION; OFFICES; TERM .....................................................................16   Section 2.1 Formation and Continuation of the Company ..................................................16   Section 2.2 Name, Office and Registered A~ ................................................................16   Section 2.3 Purpose ..............................................................................................................16   Section 2.4 Term ..................................................................................................................16   Section 2.5 Organizational and Fictitious Name Filings; Protection of Limited   Liabilitv.............................................................................................................16   Section 2.6 No Partnership Intended ....................................................................................17   ARTICLE III RIGHTS AND OBLIGATIONS OF THE MEMBERS ..................................17   Section 3.1 Members; Membership Interest ........................................................................17   Section 3.2 Meetin~s ............................................................................................................17   Section 3.3 Management Ri~hts• .........................................................................................18   Section 3.4 Other Activities .................................................................................................18   Section 3.5 No Right to Withdraw .......................................................................................19   Section 3.6 Limitation of Liability of Members ..................................................................19   Section 3.7 No Deficit Restoration Obli at~ion ....................................................................19   Section 3.8 Company Property; Membership Interests ........................................................19   Section 3.9 Retirement Resignation, Expulsion, Bankruptcy or Dissolution of a   Member.............................................................................................................19   Section 3.10 Covenant Re a~ rding Sales to Related Persons ..................................................20   Section 3.11 Covenant Re ag rding TEFRA ............................................................................20   Section 3.12 Involuntary Transfer ..........................................................................................21   Section 3.13 Seller Desi i~ee ..................................................................................................22   Section 3.14 Covenant Re a~ rding Tax-Exempt Use Property ...............................................22   Section 3.15 Right to Observe and Inspect and Consult with Company Professionals   and Contractors . ................................................................................................22   Section 3.16 Limited Withdrawal Ri~ ..............................................................................23   ARTICLE IV CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS ..............................23   Section 4.1 Capital Contributions ........................................................................................23   Section 4.2 Capital Contribution Schedule ..........................................................................27   Section 4.3 Capital Accounts ...............................................................................................27   Section 4.4 Defaulted Capital Contributions .......................................................................28   Section 4.5 No Third Party Beneficiary ...............................................................................29    

 

Pages   ARTICLE V ALLOCATIONS ...................................................................................................29   Section 5.1 Allocations ........................................................................................................29   Section 5.2 Allocations Following Condemnation, Casualty, etc ........................................29   Section 5.3 Special Allocations ............................................................................................29   Section 5.4 Tax Allocations .................................................................................................30   Section 5.5 Transfer or Change in Company Interest ..........................................................31   ARTICLE VI DISTRIBUTIONS ...............................................................................................31   Section 6.1 Distributions ......................................................................................................31   Section 6.2 Withdrawal of Capital .......................................................................................31   Section 6.3 Withholding Taxes ............................................................................................31   Section 6.4 Distributions Following Condemnation, Casualty etc .....................................31   Section 6.5 Limitation Upon Distributions ..........................................................................32   ARTICLE VII ACCOUNTING AND RECORDS ...................................................................32   Section 7.1 Fiscal Year . .......................................................................................................32   Section 7.2 Books and Records and Ins~ection ...................................................................32   Section 7.3 Bank Accounts, Notes and Drafts .....................................................................33   Section 7.4 Financial Reports ..............................................................................................34   Section 7.5 Partnership Status and Tax Elections ................................................................35   Section 7.6 Company Tax Returns .......................................................................................35   Section 7.7 Tax Audits .........................................................................................................36   Section 7.8 Other Reports and Information .........................................................................37   ARTICLE VIII MANAGEMENT .............................................................................................39   Section 8.1 Manager .............................................................................................................39   Section 8.2 Tax Event ..........................................................................................................42   Section 8.3 Exercise of Termination Right ..........................................................................43   Section 8.4 Management Fee; Expenses of the Company ...................................................43   Section 8.5 Removal or Resignation of the Manager ..........................................................43   Section 8.6 Third Party Reliance . ........................................................................................43   Section 8.7 Officers.'...........................................................................................................43   Section 8.8 Contracts with Affiliates ...................................................................................44   Section 8.9 Operating Protocols ...........................................................................................44   Section 8.10 Insurance ...........................................................................................................44   Section 8.11 Duties, Liabilities and Exculpation ...................................................................45   Section 8.12 Company Indemnification .................................................................................46   Section 8.13 Enforcement of Compan~Ri~hts ......................................................................46   Section 8.14 Operatingand Maintenance A~reement ............................................................47   ARTICLE IX APPROVED BUDGETS ....................................................................................47   Section 9.1 Pre~aration ........................................................................................................47   Section 9.2 Amendments and Supplements .........................................................................48   ii    

 

Pales   ARTICLE X TRANSFERS; DUTY OF FIRST OFFER .........................................................48   Section 10.1 Prohibited Transfers ..........................................................................................48   Section 10.2 Conditions to Transfer by Members .................................................................48   Section 10.3 Right of First Offer ............................................................................................49   Section 10.4 Admission .........................................................................................................50   ARTICLE XI DISSOLUTION AND WINDING-UP ...............................................................50   Section 11.1 Events of Dissolution ........................................................................................50   Section 11.2 Purchase of Membership Interest ......................................................................51   Section 11.3 Purchase of Facility ...........................................................................................52   Section 11.4 Fair Market Value .............................................................................................52   Section 11.5 Distribution of Assets ........................................................................................53   Section 11.6 In-Kind Distributions ........................................................................................54   Section 11.7 Statement of Dissolution ...................................................................................54   ARTICLE XII MISCELLANEOUS ..........................................................................................54   Section 12.1 Notices ...............................................................................................................54   Section 12.2 Amendment .......................................................................................................54   Section 12.3 Partition .............................................................................................................55   Section 12.4 Waivers and Modifications ...............................................................................55   Section 12.5 Severability . .............................................................................:........................55   Section 12.6 Successors• No Third-Party Beneficiaries ........................................................55   Section 12.7 Entire Agreement ..............................................................................................55   Section 12.8 Public Statements ..............................................................................................55   Section 12.9 Applicable Law .................................................................................................56   Section 12.10 Further Assurances ............................................................................................56   Section 12.11 Counterparts ......................................................................................................56   Section 12.12 Confidentialitv ...................................................................................................57   Section 12.13 Joint Efforts ......................................................................................................:57   Section 12.14 Waiver of Jury Trial ..........................................................................................58   Section 12.15 ~ecific Performance ........................................................................................58   Section 12.16 No Duplication ..................................................................................................58   Section 12.17 Survival; Limitation on Liability ......................................................................58   Section 12.18 Enforcement Costs ............................................................................................58   iii    

 

SCHEDULES   Schedule 8.10 Insurance   EXHIBITS   Exhibit A   Exhibit B   Exhibit C   Exhibit D   Exhibit E   Exhibit F   Diagram of the Facility   Members, Initial Capital Account Balances and Membership Interests   Operating Protocols   Site   Reconveyance Representations and Warranties   Form of Seller Designee Agreement   iv    

 

THIRD AMENDED AND RESTATED   LIMITED LIABILITY COMPANY AGREEMENT   OF   RCM6, LLC   THIS THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY   AGREEMENT (this "A~reement") of RCM6, LLC, a Colorado limited liability company   (the "Company"), is made and entered into effective as of January 1, 2016 (the "Effective   Date"), by and among CCS-AE, LLC, a Colorado limited liability company ("CCS-AE"),   Liberty Clean Fuels 2, LLC, a Delaware limited liability company ("Liberty Investor"), ADA-   RCM6 LLC, a Colorado limited liability company ("ADA Investor"), and Charles S. McNeil, an   individual ("McNeil Investor"). CCS-AE, Liberty Investor, ADA Investor, and McNeil Investor,   are referred to herein individually as a "Current Member" and collectively as the "Current   Members."   RECITALS   A. The Company was formed by OE-TO, LLC, a Colorado limited liability company   ("Seller"), pursuant to the filing of Articles of Organization with the Secretary of State of the   State of Colorado on August 12, 2013 and is amanager-managed limited liability company.   B. The Company owns and operates the Facility (as defined below).   C. Pursuant to the Agreement for Purchase of Membership Interests by and between   the Seller and Liberty Investor (as amended, the "Liberty Purchase Agreement"), dated as of   February 10, 2014 (the "Acquisition Date"), Seller sold a 49.9 percent Membership Interest to   Liberty Investor.   D. Pursuant to the Agreement for Purchase of Membership Interests by and between   the Seller and ADA Investor, dated as of the Acquisition Date (as amended, the "ADA Purchase   Agreement"), Seller sold a 24.95000 percent Membership Interest to ADA Investor.   E. Pursuant to the Agreement for Purchase of Membership Interests by and between   the Seller and McNeil Investor, dated as of the Acquisition Date (as amended, the "McNeil   Purchase Agreement"), Seller sold a 17.09197 percent Membership Interest to McNeil Investor.   F. Pursuant to the Agreement for Purchase of Membership Interests by and between   the Seller and Republic Financial Corporation, a Colorado corporation ("Republic Investor"),   dated as of the Acquisition Date (as amended, the "Republic Purchase Agreement"), Seller sold a   4.15833 percent Membership Interest to Republic Investor.   G. On July 14, 2014, the Republic Investor transferred its 4.15833 percent   Membership Interest to McNeil Investor (with McNeil Investor assuming the obligations of the    

 

Republic Investor under the Republic Purchase Agreement), and the Republic Investor ceased to   be a Member of the Company.   H. Pursuant to the Agreement for Purchase of Membership Interests by and between   the Seller and James H. Possehl, an individual ("Possehl Investor"), dated as of the Acquisition   Date (as amended, the "Possehl Purchase Agreement"), Seller sold a 2.59896 percent   Membership Interest to Possehl Investor.   I. On July 14, 2014, the Possehl Investor transferred its 2.59896 percent   Membership Interest to McNeil Investor (with McNeil Investor assuming the obligations of the   Possehl Investor under the Possehl Purchase Agreement), and the Possehl Investor ceased to be a   Member of the Company.   J. Pursuant to the Agreement for Purchase of Membership Interests by and between   the Seller and W. Randall Dietrich, an individual ("Dietrich Investor"), dated as of the   Acquisition Date (the "Dietrich Purchase Agreement"), Seller sold a 1.10074 percent   Membership Interest to Dietrich Investor.   K. On October 1, 2014, the Dietrich Investor transferred its 1.10074 percent   Membership Interest to McNeil Investor (with McNeil Investor assuming the obligations of the   Dietrich Investor under the Dietrich Purchase Agreement), and the Dietrich Investor ceased to be   a Member of the Company.   L. On the Acquisition Date, Seller also contributed a 0.2 percent Membership   Interest to CCS-AE.   M. CCS-AE, Liberty Investor, ADA Investor, Republic Investor, McNeil Investor,   Possehl Investor, and Dietrich Investor entered into the First A&R LLC Agreement (as defined   below) as of the Acquisition Date and subsequently entered into the Second A&R LLC   Agreement (as defined below);   N. The Current Members desire to amend and restate, in its entirety, the terms of the   Second A&R LLC Agreement (as defined below) by entering into this Agreement, pursuant to   which the rights and obligations of the Members and certain other constituencies of the Company   shall be set forth and agreed upon as of the date hereof.   AGREEMENT   In consideration of the mutual covenants and agreements contained herein and other good   and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the   parties hereto agree to amend, restate and replace the Second A&R LLC Agreement in its   entirety and to continue the Company as a limited liability company under the Act upon the   following terms and conditions:    

 

ARTICLE I   DEFINITIONS   Section 1.1 Definitions. Unless otherwise defined herein, capitalized terms used   throughout this Agreement shall have the respective meanings set forth below:   "Accounting Firm" means an independent firm of certified public accountants selected by   the Manager with the prior written approval of Members holding not less than 51 percent of the   outstanding Membership Interests, or, in the case of a dispute pursuant to Section 4.1(fl, the   certified public accountant selected pursuant to the terms of Section 4.1(fl.   "Act" means the Colorado Limited Liability Company Act and any successor statute, as   the same maybe amended from time to time, and the Colorado Corporations and Associations   Act and any successor statute, as the same maybe amended from time to time.   "ADA Investor" has the meaning set forth in the introductory paragraph hereof.   "ADA Purchase Agreement" has the meaning set forth in Recital D.   "Adversely Affected Member" means a Member as to which an Individual Member Tax   Event has occurred.   "Affiliate" of a specified Person means any Person that directly or indirectly through one   or more intermediaries controls, is controlled by, or is under common control with, such   specified Person. As used. in this definition of Affiliate, the term "control" of a specified Person   including, with correlative meanings, the terms, "controlled by" and "under common control   with," means (a) the ownership, directly or indirectly, of 50 percent or more of the equity   interests in a Person or (b) the power to direct or cause the direction of the management and   policies of a Person, whether through ownership of voting securities, by contract or otherwise;   provided, however, that notwithstanding the foregoing, for purposes of this Agreement, the   Company will be deemed not to be an Affiliate of any Member or the Manager and none of the   Members or the Manager will be deemed to be an Affiliate of the Company.   "Agreement" has the meaning set forth in the introductory paragraph hereof, as the same   maybe amended, modified or supplemented from time to time.   "Applicable Month" has the meaning set forth in Section 4.1(b).   "Appraisal Notice" has the meaning set forth in Section 11.4.   "Approved Budget" means, as to any Fiscal Year, the operating budget for the Company   approved or deemed approved by the Members as provided in Article IX, including the Annual   Budget (as defined in the Operating and Maintenance Agreement) for such Fiscal Year.   "Audited Member" has the meaning set forth in Section 7.7(a).   3    

 

"Available Cash" means all amounts available to the Company from all sources less   (a) any amounts necessary to pay the Company's current expenses and liabilities and (b) any   reserves established by the Manager to fund future expenses, liabilities or contingencies of the   Company, as reasonably determined by the Manager consistent with the Approved Budget.   "Bankruptcy" of a Person means the occurrence of any of the following events (a) the   filing by such Person of a voluntary case or the seeking of relief under any chapter of Title 11 of   the United States Bankruptcy Code, as now constituted or hereafter amended (the "Bankruptcy   Code"), (b) the making by such Person of a general assignment for the benefit of its creditors,   (c) the admission in writing by such Person of its inability to pay its debts as they mature, (d) the   filing by such Person of an application for, or consent to, the appointment of any receiver or a   permanent or interim trustee of such Person or of all or any portion of its property, including the   appointment or authorization of a trustee, receiver or agent under applicable Law or under a   contract to take charge of its property for the purposes of enforcing a lien against such property   or for the purpose of general administration of such property for the benefit of its creditors,   (e) the filing by such Person of a petition seeking a reorganization of its financial affairs or to   take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt or liquidation   Law, or an answer admitting the material allegations of a petition filed against it in any   proceeding under any such Law, (~ an involuntary case is commenced against such Person by   the filing of a petition under any chapter of Title 11 of the Bankruptcy Code and within 60 days   after the filing thereof either the petition is not dismissed or the order for relief is not stayed or   dismissed, (g) an order, judgment or decree is entered appointing a receiver or a permanent or   interim trustee of such Person or of all or any portion of its property, including the entry of an   order, judgment or decree appointing or authorizing a trustee, receiver or agent to take charge of   the property of such Person for the purpose of enforcing a lien against such property or for the   purpose of general administration of such property for the benefit of the creditors of such Person,   and such order, judgment or decree shall continue unstayed and in effect for a period of 60 days,   or (h) an order, judgment or decree is entered, without the approval or consent of such Person,   approving or authorizing the reorganization, insolvency, readjustment of debt or liquidation of   such Person under any such Law, and such order, judgment or decree shall continue unstayed   and in effect for a period of 60 days. The foregoing definition of "Bankruptcy" is intended to   replace and shall supersede the definition of "Bankruptcy" set forth in Sections 7-80-102(2) of   the Act.   "Business Dav" means any day other than Saturday, Sunday and any day that is a legal   holiday or a day on which banking institutions in Denver, Colorado or New York, New York are   authorized by Law or governmental action to close.   "Capital Account" has the meaning set forth in Section 4.3(a).   "Capital Contribution" means, with respect to any Member, the amount of money and the   initial Gross Asset Value of any property contributed to the Company with respect to the   Membership Interest in the Company held by such Member.   "Capital Contribution Schedule" has the meaning set forth in Section 4. lib).    

 

"CCS-AE" has the meaning given to such term in the introductory paragraph hereof.   "CCS Affiliated Member" means any Member who (a) is CCS-AE or an Affiliate of   CCS-AE, or (b) holds a direct or indirect ownership interest in Clean Coal Solutions, LLC or   (c) is an Affiliate of a Person who holds a direct or indirect ownership interest in Clean Coal   Solutions, LLC, it being agreed that all of the Current Members other than the Liberty Investor   are CCS Affiliated Members.   "Coal Yard Services Agreement" means the Coal Yard Services Agreement, dated   February 10, 2014, by and between the Company and the Utility.   "Code" means the Internal Revenue Code of 1986, as amended from time to time.   "Company" has the meaning set forth in the introductory paragraph hereof.   "Company Audited Items" has the meaning set forth in Section 7.7(a).   "Company Business" has the meaning set forth in each Purchase Agreement.   "Company Tax Returns" has the meaning set forth in Section 7.6.   "Confidential Information" has the meaning set forth in Section 12.12.   "Consultation" or "Consult" means to confer with in good faith and on a time frame that   is reasonable under the circumstances and reasonably consider and take into account the   reasonable suggestions, comments or opinions of another Person.   "Current Members" has the meaning given to such term in the introductory paragraph   hereof.   "Defaulting Member" has the meaning set forth in Section 4.4(a).   "Depreciation" means for each Fiscal Year or part thereof, an amount equal to the   depreciation, amortization, or other cost recovery deduction allowable for United States federal   income tax purposes with respect to an asset for such Fiscal Year or part thereof, except that if   the Gross Asset Value of an asset differs from its adjusted basis for United States federal income   tax purposes anytime during such Fiscal Year, the depreciation, amortization, or other cost   recovery deduction for such Fiscal Year or part thereof shall be an amount which bears the same   ratio to such Gross Asset Value as the United States federal income tax depreciation,   amortization, or other cost recovery deduction for such Fiscal Year or part thereof bears to such   adjusted tax basis. If such asset has a zero adjusted tax basis, the depreciation, amortization, or   other cost recovery deduction for each taxable year shall be determined under a method   reasonably selected by the Manager.   "Dietrich Investor" has the meaning set forth in the introductory paragraph hereof.   "Dietrich Purchase Agreement" has the meaning set forth in Recital H.   5    

 

"Dispute Notice" has the meaning set forth in Section 11.4.   "Effective Date" has the meaning given to such term in the introductory paragraph   hereof.   `Blectin~ Member" has the meaning set forth in Section 11.2.   "Encumbrance" means any charge, claim, community property interest, condition,   equitable interest, lien, option, pledge, mortgage, security interest, right of first refusal or   restriction of any kind, including any restriction on use, voting, transfer, receipt of income or   exercise of any other attribute of ownership.   "Estimated Monthly Tonnage Amount" means, with respect to any Month and with   respect to a given Member, the product of (a) the product of (i) the Per Ton Amount multiplied   by (ii) the number of Tons of Refined Coal estimated to be produced and sold by the Company   from the Facility to Unrelated Persons during such Month, multiplied by (b) a Member's   percentage Membership Interest (expressed as a percentage rounded to five decimal places),   which amount shall be included with the Capital Contribution Schedule for such Month, as   specified in Section 4.2.   "Event of Default" has the meaning set forth in Section 4.4(a).   "Excess Capital Contribution Amount" has the meaning set forth in Section 4.1(b).   "Excess Insurance Proceeds" has the meaning set forth in Section 6.4.   "Facility" means the M45-06 Unit together with all components of any ancillary   equipment associated with such M45-06 Unit that are owned by the Company and located at the   Site, as further described on Exhibit A.   "Fair Market Value" means the price that a willing buyer would pay, and a willing seller   would accept, in an arm's length transaction for property of the same character and quality.   "Federal Tax Rule" means any regulation, rule, order, decree, ruling, proclamation,   resolution, judgment, decision, declaration, or interpretative or advisory opinion or letter by any   Governmental Body with respect to federal tax matters, including (a) regulations of the United   States Treasury Department, (b) IRS or United States Treasury Department materials such as   Revenue Rulings, Revenue Procedures, Treasury Decisions, private letter rulings, determination   letters, technical memoranda, technical advice memoranda, Chief Counsel's Advice, Field   Service Advice, General Counsel Memoranda, Office Memoranda, Technical Information   Releases, Delegation Orders, Executive Orders, Treasury Department Orders, Notices,   Announcements and News Releases, and (c) judgments and decisions of the United States Tax   Court, the United_ States Board of Tax Appeals and any other court of the United States in   connection with its exercise of original, trial or appellate jurisdiction over any case involving   federal tax matters.   6    

 

"Feedstock Coal Purchase Agreement" means the Feedstock Coal    Purchase Agreement,   dated February 10, 2014, by and between the Company and the Utility   .   "First A&R LLC Agreement" means the Amended and Restated Limited    Liability   Company Agreement of the Company, dated as of the Acquisition   Date, as amended.   "Fiscal Year".has the meaning set forth in Section 7.1.   "Fixed Payment" has the meaning set forth in the Purchase Agreement   .   "GAAP" means United States generally accepted accounting principles,    as promulgated   by the Financial Accounting Standards Board and as in effect from    time to time, consistently   applied throughout the specified period.   "GDP Inflation Index" means the GDP implicit price deflator, as published    (with   revisions) by the United States Department of Commerce Bureau of Economic    Analysis on or   before April 1 of each calendar year.   "Governmental Body" means the federal government of the United States,    any state of   the United States or political subdivision thereof, and any entity exercising    executive, legislative,   judicial, regulatory or administrative functions of or pertaining to government and    any other   governmental entity, instrumentality, agency, authority or commission   .   "Gross Asset Value" means, with respect to any asset, the asset's   adjusted Tax basis for   federal income Tax purposes, except as follows:.   (a) the initial Gross Asset Value of any asset contributed by a Member    to the   Company shall be the gross Fair Market Value of such asset as of the    date of contribution, with   Fair Market Value as used in this definition of Gross Asset Value meaning    Fair Market Value as   reasonably determined by the Manager in Consultation with the Members   ;   (b) the Gross Asset Values of all Company assets shall be adjusted to equal   their respective Fair Market Values (taking Code Section 7701(g) into account)    as of the   following times: (i) the acquisition of an additional Membership Interest in   the Company by any   new ar existing Member in exchange for more than a de ininimis Capital    Contribution; (ii) the   distribution by the Company to a Member of more than a de minimis    amount of money or   Company property as consideration for a Membership Interest in the    Company; and (iii) the   liquidation of the Company within the meaning of Treasury Regulations    Section 1.704-   1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (i) and (ii) shall    be made   only if the Manager reasonably determines that such adjustments are necessary or appropriate    to   reflect the relative economic interests of the Members in the Company   ;   (c) the Gross. Asset Value of any item of Company assets distributed to    any   Member shall be adjusted to equal,the gross Fair Market Value of such asset on    the date of   distribution;    

 

(d) the Gross Asset Values of all Company assets shall be adjusted to reflect   any adjustments to the adjusted Tax basis of such assets pursuant to Sections 734(b) or 743(b) of   the Code, but only to the extent that such adjustments are required to be taken into account in   determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m);   provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d)   to the extent that an adjustment pursuant to subsection (b) above is made in connection with a   transaction that would otherwise result in an adjustment pursuant to this subsection (d); and   (e) if the Gross Asset Value of an asset has been determined or adjusted   pursuant to subsection (a), (b) or (d) above, such Gross Asset Value shall thereafter be adjusted   by the Depreciation taken into account with respect to such asset.   "Independent Appraiser" means an independent appraiser, appraisal firm or investment   banking firm having expertise in the valuation of property or assets of the same or similar type as   those to be appraised.   "Individual Member Tax Event" means the occurrence of a Tax Event of the type   described in clause (i) of the definition of Tax Event or of the type described in clause (k) of   such definition to the extent such Tax Event also involves the type of Tax Event described in   clause (i) of such definition.   "Initial Coal Inventory Amount" means $1,000,000.   "Initial Operator" means Clean Coal Solutions Services, LLC, a Colorado limited   liability company.   "Initial Payment Amortization," for each Investor, has the meaning given to such term in   the respective Purchase Agreement of such Investor.   "Initial Quarterly Capital Contributions" means the capital contributions made by the   Members on the Acquisition Date pursuant to Section 4.1(b).   "Initial Workin~Capital Reserve" means $1,599,000.   "Investor Guarantee" means a Guarantee made by an Investor Guarantor in favor of   Seller and the Company.   "Investor Guarantor" means with respect to a given Investor, the Person providing an   Investor Guarantee on behalf of such Investor, if any.   "Investors" means all Members other than CCS-AE.   "Involuntary Transfer" means the involuntary transfer of all or part of a Member's   Membership Interest to the Seller Designee upon the exercise by the Manager of its rights under   Section 3.10, Section 3.11, or Section 4.4(b), or by the Seller of its rights under Section 9.1 of   the applicable Purchase Agreement.    

 

"IRS" means the Internal Revenue Service or any successor agency thereto.   "Law" means any law (including common law), statute, act, decree, ordinance, rule,   directive (to the extent having the force of law), order, writ, injunction, judgment, treaty, code or   regulation (including any of the foregoing relating to health and safety matters) or any   interpretation (to the extent having the force of law) of any of the foregoing, as enacted, issued or   promulgated by any Governmental Body, including all amendments, modifications, extensions,   replacements or re-enactments thereof and all rules and regulations promulgated thereunder.   "Libert_y Investor" has the meaning set forth in the introductory paragraph hereof.   "Liberty Purchase Agreement" has the meaning set forth in Recital C.   "Low Volume Member Termination Notice" has the meaning specified in Section 8.3.   "M45-06 Unit" means the refined coal production facility (as such term is defined in   Section 45(d)(8) of the Code) owned by the Company identified by Serial Number M45-06.   "Management Fee" has the meaning specified in Section 8.4.   "Manager" means such Person that is appointed pursuant to and in accordance with the   terms of this Agreement to manage and run the day-to-day operations of the Company, the   Manager being a "manager" of the Company within the meaning of the Act. The initial Manager   of the Company shall be CCS-AE.   "Manager Affiliated Member" means any (a) Member who is the Manager or an Affiliate   of the Manager, or (b) so long as CCS-AE or an Affiliate of CCS-AE is serving as the Manager,   any Member who (i) holds a direct or indirect ownership interest in Clean Coal Solutions, LLC   or (ii) is an Affiliate of a Person who holds a direct or indirect ownership interest in Clean Coal   Solutions, LLC. For the avoidance of doubt, so long as CCS-AE or an Affiliate of CCS-AE is   serving as the Manager, all of the Current Members other than the Liberty Investor are Manager   Affiliated Members.   "Material Adverse Effect" means a material adverse effect on the condition (financial or   otherwise), properties, assets, liabilities, business or operations of the Company, the Company   Business or the Facility.   "McNeil Investor" has the meaning set forth in the introductory paragraph hereof.   "McNeil Purchase Agreement" has the meaning set forth in Recital F.   "Member" or "Members" means the "Current Members" (as such term is defined in the   introductory paragraph hereo f in their capacity as members of the Company within the meaning   of the Act, and airy other Person that has been admitted as a member of the Company pursuant to   and in accordance with the terms hereof.   9    

 

"Membership Interest" means the membership interest of a Member in the Company,   which shall be expressed as a percentage and set forth in Exhibit B (as amended from time to   time), including a Member's share of income, gain, credits, deductions and losses of the   Company and a Member's right to receive distributions (in liquidation or otherwise) and   allocations according to such Membership Interest and a Capital Account, and which interest   entitles such Member to receive information and to consent to or approve such actions or   omissions of the Company or another Member with respect to which the consent or approval of   such Member is permitted or expressly required hereunder or required under the Act, and all   other rights and obligations of such Member.   "Month" means any calendar month of any year, and, as to the final month during which   the Company is in existence, the applicable portion of such calendar month.   "Monthly Capital Contribution" means with respect to any Member, the Monthly Capital   Contribution to be made by such Member as provided in Section 4.1(b), and, in the case of the   Investors, as limited by Section 4.1(e) and Section 4.1(x).   "Monthly Payment Date" means, for each Month, the later of (i) the date that is 20 days   after the beginning of such Month, and (ii) the tenth day after delivery to the Members of the   Capital Contribution Schedule referred to in Section 4.2 (or, if any such day in (i) or (ii) is not a   Business Day, on the next succeeding Business Day).   "Net Worth" means the excess of total assets over total liabilities, in each case as   determined in accordance with United States generally accepted accounting principles.   "Notice" has the meaning set forth in Section 12.1.   "Notifying Member" has the meaning set forth in Section 11.3.   "Offer Notice" has the meaning set forth in Section 10.3.   "Officers" has the meaning set forth in Section 8.7.   "Operating Protocols" means those certain Operating Protocols set forth as Exhibit C, as   maybe amended or modified from time to time in accordance with Section 8.1(c) or Section 8.9.   "Operating and Maintenance Agreement" means that certain Amended and Restated   Operating and Maintenance Agreement (Centralia}, dated February 10, 2014, by and between the   Operator and the Company.   "Operations Report" has the meaning set forth in each Purchase Agreement.   "Operator" means the Initial Operator, or the Person then serving as operator under the   Operating and Maintenance Agreement.   "Option Notice" means a Notice delivered by CCS-AE (or an Affiliate or designee   thereo f to an Electing Member indicating its election to purchase or designate a purchaser for   10    

 

such Electing Member's Membership Interest as provided in Section 11.2, or to the Manager and   the Members indicatii7g its election to purchase the Facility as provided in Section 11.3, and   reflecting CCS-AE's (or an Affiliate or designee thereo f proposed Fair Market Value purchase   price for such Electing Member's Membership Interest, or for the Facility, as the case maybe,   taking into account the factors specified in Section 11.2 or Section 11.3, as applicable.   "Overpaid Month" has the meaning set forth in Section 4.1(b).   "Per Ton Amount" means (a) for 20.14, $6.7877 multiplied by the sum of one plus the   percentage increase or decrease, if any, in the GDP Inflation Index for December 2013 as   compared to the GDP Inflation Index for December 2012; and (b) for each Fiscal Year following   2014, $6.7877 multiplied by the sum of one plus the percentage increase or decrease, if any, in   the GDP Inflation Index for such Fiscal Year as compared to the GDP Inflation Index for   December 2012.   "Permitted Investments" means: (a) domestic or eurodollar time deposits, money market   instruments or certificates of deposit with banks rated at least "A" by Standard & Poor's Ratings   Services or Moody's Investors Services, Inc.; (b) direct obligations of, or obligations   unconditionally guaranteed by, the United States of America or an agency or instrumentality   thereof and backed by the full faith and credit of the United States of America; or (c) mutual   funds that invest primarily in the securities described in (a) and (b) above.   "Person" means any corporation, limited liability company, any form of partnership, any   joint venture, trust, estate, Governmental Body or other legal or commercial entity or any natural   person.   "Possehl Investor" has the meaning set forth in the introductory paragraph hereof.   "Possehl Purchase Agreement" has the meaning set forth in Recital G.   "Power Plant" means the coal-fired, steam power electric generating plant known as the   Big Hanaford Power Plant, together with related facilities, located at the Site.   "Private Letter Rulings" means the private letter rulings obtained in the name of certain   Members and former members from the IRS dated on or about August 13, 2014 in accordance   with Section 7.5 of each Purchase Agreement.   "Producer Suspension Event" has the meaning given such term in the Refined Coal Sale   Agreement.   "Producer Suspension Event Notice" has the meaning given such term in the Refined   Coal Sale Agreement.   "Producer Suspension Remedial Actions" has the meaning set forth in Section 8.2(b).   "Proiect Documents" means (a) the Refined Coal Sale Agreement, (b) the Coal Yard   Services Agreement, (c) the Feedstock Coal Purchase Agreement, (d) the Site License   11    

 

Agreement, (e) the Operating and Maintenance Agreement, (~ the Technology Sublicense   Agreement, (g) the Amended and Restated Chemical Additives Supply Agreement dated as of   February 10, 2014 between the Company and the Operator and (h) any other Ancillary   Documents (as defined in any of the Project Documents).   "Prudent Operating Standards" means those standards, methods and acts which (a) when   engaged in, constitute lawful, safe, reliable, expeditious, efficient, prudent, and commonly used   practices with respect to the maintenance and operations of refined coal production facilities and   associated mechanical and handling facilities and equipment or (b) in the exercise of reasonable   judgment considering the facts known when engaged in, could have been expected to achieve,   consistent with lawful, safe, reliable, expeditious, efficient, prudent, and commonly used   practices, the desired result.   "Purchase Agreements" means the Liberty Purchase Agreement, the ADA Purchase   Agreement, the Republic Purchase Agreement, the McNeil Purchase Agreement, the Possehl   Purchase Agreement, and the Dietrich Purchase Agreement, collectively.   "Qualified Person" means an entity taxed as a "C corporation" for federal income tax   purposes, including a limited liability company that has elected to be taxed as a "C corporation,"   or an individual or the estate of a deceased individual Member.   " uarter" means any period of three consecutive Months beginning on January 1, April   1, July 1 or October 1 of any year, and, as to the Quarter which included the Acquisition Date   and the final Quarter during which the Company is in existence, the applicable portion of such   three-Month period.   "Reconveyance Representations and Warranties" means the representations and   warranties set forth in Exhibit E attached hereto.   "Refined Coal" means the refined coal product produced by the Company that qualifies   for Tax Credits.   "Refined Coal Sale Agreement" means the Refined Coal Sale Agreement, dated February   10, 2014, by and between the Company and the Utility.   "Related Person" has the meaning set forth in Section 3.10.   "Representatives" means, with respect to any Person, the managing member(s),   managers, officers, directors, employees, representatives or agents (including investment   bankers, financial advisors, attorneys, accountants, brokers and other advisors) of such Person to   the extent that such managing member, manager, officer, director, employee, representative, or   agent of such Person is acting in his or her capacity as a managing member, manager, officer,   director, employee, representative or agent of such Person.   "Republic Investor" has the meaning set forth in the introductory paragraph hereof.   "Republic Purchase Agreement" has the meaning set forth in Recital E.   12    

 

"Second A&R LLC Agreement" means the Second Amended and Restated Limited   Liability Company Agreement of the Company, dated as of April 1, 2015.   "Secondary Seller Designee" means CCS-AE2, LLC, a Colorado limited liability   company.   "Section 4.1(e) Electing Investor" has the meaning set forth in Section 4.1(e)(v).   "Seller" has the meaning set forth in Recital A.   "Seller Designee" shall mean a Qualified Person designated by the Seller to act as the   transferee of the Membership Interests pursuant to Section 3.13.   "Seller Desi n~ ee Agreement" has the meaning set forth in Section 3.13(a).   "Significant Company Action" has the meaning set forth in Section 11.2.   "Site" means that certain property located in Centralia, Washington, on which the Power   Plant is located, with the portion of such property licensed pursuant to the Site License   Agreement being more particularly described on Exhibit D.   "Site License Agreement" means the Production Facility and Coal Yard Site License   dated February 10, 2014 among the Company, the Utility and TransAlta Centralia Mining LLC,   a Washington limited liability company.   "Succeeding Capital Contribution" has the meaning set forth in Section 4.1(fl.   "Target Capital Contribution" has the meaning set forth in the Purchase Agreements.   "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means:   (a) any federal, state, local or foreign net income, gross income, gross   receipts, windfall, profit, severance, property, production, sales, use, license, occupation, excise,   franchise, net worth, employment, payroll, unemployment insurance, social security, welfare,   disability, worker's compensation, withholding, alternative or add-on minimum, ad valorem,   transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other   like assessment or charge of any kind whatsoever, together with any interest or penalty, addition   to tax or additional amount imposed by any Governmental Body; and   (b) any liability for the payment of amounts with respect to payment of a type   described in clause (a), including as a result of being a member of an affiliated, consolidated,   combined or unitary group, as a result of succeeding to such liability as a result of merger,   conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or   tax indemnity agreement.   "Tax Credits" means the credits against federal income Tax available under Section 45 of   the Code or any successor provision with respect to sales of Refined Coal to Unrelated Persons,   13    

 

taking into account any limitations imposed under Section 45(e)(8)(B) and (C) of the Code with   respect to the calculation of such credits.   "Tax Event" means, subject to the proviso below, any one of the following:   (a) any repeal of the Code or any amendment or partial or complete repeal of   Section 45 of the Code,   (b) a statement by the chairperson of the House Ways and Means Committee   or Senate Finance Committee, Speaker of the House, House Majority Leader, Senate Majority   Leader or President of the United States of America (including senior staff of the executive   office of the President speaking for the President) proposing to deny, reduce or repeal. Tax   Credits for refined coal,   (c) the passage by the House Ways and Means Committee, the Senate Finance   Committee, the House of Representatives or the Senate of a bill that, if enacted, would deny,   reduce or repeal Tax Credits for refined coal,   (d) the revelation in connection with any request for a private letter ruling,   determination letter or pre-filing agreement that the IRS does not believe (i) the Refined Coal   qualifies for Tax Credits, or (ii) the Company is entitled to such Tax Credits,   (e) the revocation of any Private Letter Ruling, provided that the revocation is   no longer eligible for appeal, review or modification through administrative proceedings or   otherwise,   (~ the Refined Coal fails to continue to qualify as "refined coal" pursuant to   Section 45 of the Code or the IRS Guidance as then in effect,   (g) the announcement by the Treasury Department or IRS during any year that   there will be a phase-out of Tax Credits pursuant to Section 45(e)(8)(B) of the Code for such   year,   (h) the adoption of a, or the issuance of any proposed, Federal Tax Rule the   effect of which is (or, upon adoption, would be) the disallowance of Tax Credits (or the   carryback or carryforward rules in respect thereof ,   (i) the issuance by the IRS of any (i) Notice of Proposed Adjustment (Form   5701), (ii) 30- or 60-day letter containing an examination report, or (iii) other written document,   in the case of (i), (ii) or (iii) that reduces ar proposes the reduction of the Tax Credits on the   Refined Coal allocated to the Member receiving such document,   (j) the beginning of the first taxable period in which the maximum rate of   federal income Tax payable by corporations is reduced, or   (k) any combination of the foregoing;   14    

 

provided that the effect of the events described in (g), (h), (i), (j) or (k) reduces or proposes the   reduction of the value of the Tax Credits allocated to any Member (as to the events described in   (g), (h), (j) or (k)) or the Member receiving such document (as to the events described in (i)) by   more than 20 percent, where the value of the Tax Credits is the maximum rate of federal income   Tax payable by corporations multiplied by the Tax Credits allocated to such Member and the   reference value for calculation of such 20 percent is determined based on the maximum rate of   federal income Tax payable by corporations on the Acquisition Date. As an example and not in   limitation of the foregoing, if the maximum rate of federal income Tax payable by corporations   is reduced from 35 percent (as of the Acquisition Date) to 31.5 percent and a Notice of Proposed   Adjustment (Form 5701) proposes to reduce the Tax Credits on the Refined Coal allocated to the   receiving Member by 11.25 percent, a Tax Event will have occurred because the combination of   the event described in (j) and (i) has resulted in a reduction of the value of the Tax Credits on the   Refined Coal by more than 20 percent.   "Tax Event Member Termination Notice" has the meaning specified in Section 8.2(c).   "Tax Matters Partner" has the meaning set forth in Section 7.7(b).   "Tax Proceeding" has the meaning set forth in Section 7.7(b).   "Tax Return" means any return, report or similar statement required to be filed with   respect to any Taxes (including any attached schedules) for any Taxable period ending on or   after the Acquisition Date, including any information return, claim for refund, amended return or   declaration of estimated Tax.   "Technology License Agreement" means the Technology License Agreement dated as of   July 27, 2012 between the Technology Licensor and the Technology Sublicensor.   "Technology Licensor" means ADA-ES Inc., a Colorado corporation.   "Technology Sublicense A rem ement" means the Technology Sublicense Agreement dated   December 2, 2013 between the Technology Sublicensor and the Company.   "Technology Sublicensor" means Clean Coal Solutions, LLC, a Colorado limited liability   company.   "TEFRA" has the meaning set forth in Section 3.11.   "Ton" means 2,000 pounds avoirdupois weight.   "Tonnage Amount" means, with respect to any Quarter and with respect to a given   Member, the product of (a) the product of (i) the Per Ton Amount multiplied by (ii) the number   of Tons of Refined Coal produced and sold by the Company from the Facility to Unrelated   Persons during such Quarter, multiplied by (b) a Member's percentage Membership Interest   (expressed as a percentage rounded to five decimal places).   "Transfer" has the meaning set forth in Section 10.1.   15    

 

"Treasury Regulations" or "Treas. Rey." means the regulations promulgated under the   Code.   "Unrelated Person" means any Person that is not a Related Person.   "Unrefined Coal" has the meaning given to such term in the Refined Coal Sale   Agreement.   "Utility" means TransAlta Centralia Generation LLC, a Washington limited liability   company.   "Utility Suspension Event" has the meaning given such term in the Refined Coal Sale   Agreement.   "Variable Costs" means all liabilities, costs and expenses of the Company other than   labor costs (including employee benefits and payroll taxes) and insurance costs.   "Variable Cost Per Ton" means the Variable Costs incurred by the Company during such   Fiscal Year, divided by the number of Tons of Refined Coal produced and sold by the Company   from the Facility to Unrelated Persons during a given Fiscal Year.   "Variable Cost Per Ton Estimate" means the Variable Costs anticipated to be incurred by   the Company during such Fiscal Year, divided by the number of Tons of Refined Coal   anticipated to be produced and sold by the Company from the Facility to Unrelated Persons   during a given Fiscal Year.   "Variable Cost Per Ton Target" means $2.60, as adjusted for inflation for each Fiscal   Year after 2016 using the annual percentage change for the previous Fiscal Year in the   Consumer Price Index published by the Bureau of Labor Statistics.   "Variable Payment" has the meaning set forth in the Purchase Agreements.   "Working Capital Needs" means amounts required to fund all expenses incurred by the   Company in the operation, management and maintenance of the Facility in order to produce   refined coal, including the costs of labor, permits, insurance, "redetermination" compliance, the   proprietary chemical additives, payments under the Project Documents, the Management Fee,   applicable state and local taxes, and the costs associated with any decommissioning or relocation   of the Facility.   Section 1.2 Construction of Certain Terms and Phrases. Unless the context of this   Agreement otherwise requires: (a) words of either gender include the other gender; (b) words   using the singular or plural also include the plural or singular, respectively; (c) the terms   "hereof," "herein," "hereby," "hereto" and similar words refer to this entire Agreement and not   any particular Article, Section, Clause, Exhibit, Appendix or Schedule or any other subdivision   of this Agreement; (d) references to "Article," "Section," "Clause," "Exhibit," "Appendix" or   "Schedule" are to the Articles, Sections, Clauses, Exhibits, Appendices and Schedules,   respectively, of this Agreement; (e) the words "include" or "including" shall be deemed to be   16    

 

followed by "without limitation" or "but not limited to" whether or not they are followed by such   phrases or words of like import; (~ the word "or" is not exclusive; and (g) references to "this   Agreement" or any other agreement or document shall be construed as a reference to such   agreement or document, including any Exhibits, Appendices, Attachments and Schedules   thereto, as amended, modified or supplemented and in effect from time to time. Whenever this   Agreement refers to a number of days, such number shall refer to calendar days unless Business   Days are specified. If any action under this Agreement is required to be taken on a day that is   not a Business Day, the time for performance of such action shall be extended until the next   succeeding Business Day. All references to a time of day in this Agreement refer to such time of   day in Denver, Colorado. All accounting terms used herein and not expressly defined herein   shall have the meanings given to them under GAAP as in effect on the Acquisition Date.   ARTICLE II   FORMATION; OFFICES; TERM   Section 2.1 Formation and Continuation of the Company. The Company was formed   on August 12, 2013, by virtue of the filing of its Articles of Organization with the Secretary of   State of the State of Colorado. The Members hereby acknowledge the continuation of the   Company as a limited liability company pursuant to the Act. This Agreement is effective as of   the Effective Date and supersedes and replaces entirely any and all prior agreements governing   the operations of the Company and the rights and obligations of its Members, including the   Second A&R LLC Agreement. The rights and obligations of the Members shall be as provided   in the Act, except as otherwise provided herein.   Section 2.2 Name Office and Registered Agent•   (a) The name of the Company shall be "RCM6, LLC" or such other name or   names as maybe agreed to by the Members from time to time. The initial principal office of the   Company is located at 5251 DTC Parkway, Suite 825, Greenwood Village, CO 80111. The   Manager may at any time change the location of such office to another location, provided that   the Manager gives prompt Notice of any such change to all Members and the registered agent of   the Company.   (b) The registered agent address of the Company in the State of Colorado is   located at 5251 DTC Parkway, Suite 825, Greenwood Village, CO 80111. The registered agent   of the Company for service of process at such address is James Zerefos. The registered agent   address and registered agent may be changed by the Manager at any time in accordance with the   Act, provided that the Manager gives prompt Notice of any such change to all Members. The   registered agent's primary duty as such is to forward to the Company at its principal office and   place of business any notice that is served on it as registered agent. The Manager will instruct   the registered agent to provide copies of all such notices to each Member.   Section 2.3 Purpose. The sole purpose of the Company is to (a) own, operate,   maintain, finance, dispose of and otherwise deal with the Facility, and (b) produce and sell   Refined Coal to Unrelated Persons and procure necessary feedstock, other raw materials and   related services and products pursuant to the Project Documeizts. The Company may engage in   17    

 

any kind of activity and perform and carry out contracts of any kind necessary to, or in   connection with or convenient or incidental to, the accomplishment of such purpose, so long as   such activities and contracts may be lawfully carried on or performed by a limited liability   company under the laws of the State of Colorado.   Section 2.4 Term. The term of the Company commenced on August 12, 2013, and   shall continue until December 31, 2022, unless earlier terminated in accordance with   ~ectinn 1 1 _1   Section 2.5 Organizational and Fictitious Name Filings; Protection of Limited   Liability. The Manager shall cause the Company to register as a foreign limited liability   company and file such fictitious or trade names, statements or certificates in such jurisdictions   and offices as necessary or appropriate for the conduct of the Company's operation of its   business. The Manager may take any and all other actions as maybe reasonably necessary or   appropriate to perfect and maintain the status of the Company as a limited liability company   under the laws of Colorado and any other state or jurisdiction other than Colorado in which the   Company engages in business and continue the Company as a limited liability company and to   protect the limited liability of the Members as contemplated by the Act.   Section 2.6 No Partnership Intended. Other than for purposes of determining the   status of the Company under the Code and the applicable Treasury Regulations and under any   applicable state, municipal or other income Tax Law or regulation, the Members intend that the   Company not be a partnership, limited partnership or joint venture and this Agreement shall not   be construed to suggest otherwise.   ARTICLE III   RIGHTS AND OBLIGATIONS OF THE MEMBERS   Section 3.1 Members; Membership Interest. The Company shall have as Members   only those Persons who are Qualified Persons and as may be properly admitted as Members   pursuant to and in accordance with the terms hereof. Each of the Current Members represents   and warrants to the Company that it is a Qualified Person as of the Effective Date. The name,   address, and percentage Membership Interest that each Member's Membership Interest   represents as of the Effective Date shall each be as shown on Exhibit B. The Manager, without   the consent of any other Person, is hereby authorized to, and shall, update Exhibit B from time to   time as necessary to reflect accurately the information therein. Any reference in this Agreement   to Exhibit B shall be deemed to be a reference to Exhibit B as amended and in effect from time   to time. If a Member transfers all of its Membership Interest to another Person pursuant to and   in accordance with the terms hereof, the transferor shall automatically cease to be a Member.   The Membership Interests are not certificated.   Section 3.2 Meetings.   (a) Except as otherwise permitted by this Agreement, all actions of the   Members shall be taken at meetings of the Members which (i) may be called by the Manager for   any reason and at any tin7e, and (ii) shall be called by the Manager within ten Business Days   18    

 

following the written request of a Member or Members holding at least 40 percent of the   outstanding Membership Interests. A meeting of Members shall be held each year within ten   Business Days after the proposed operating budget for the following Fiscal Year is delivered to   the Members pursuant to Section 9.1. The Members may conduct at such meeting any Company   business that is permitted under the Act or this Agreement. Meetings shall be at a reasonable   time and place. Accurate minutes of any meeting shall be taken and filed with the minute books   of the Company. Following each meeting, the minutes of the meeting shall be sent to the   Manager and each Member.   (b) With respect to meetings of the Members, the presence in person or by   proxy of (i) Members owning at least 51 percent of the aggregate Membership Interests   (excluding the Membership Interests of any Member that is then a Defaulting Member   hereunder) shall constitute a quorum for purposes of transacting business at any meeting of the   Members. Except with respect to those matters for which a different Member voting or approval   percentage is provided for in this Agreement, with respect to any matters required or permitted to   be voted upon by the Members, the affirmative vote of a Member or Members holding at least 51   percent of the outstanding Membership Interests (excluding the Membership Interests of any   Member that is then a Defaulting Member hereunder) shall be required to approve any such   matter, in addition to any other approval required by the Act. Members may participate in a   meeting of the Members by means of conference telephone or similar communications   equipment so that all persons participating in the meeting can hear each other or by any other   means permitted by Law. Such participation shall constitute presence in person at such meeting.   (c) Notice stating the place, day and hour of the meeting of the Members, and   the purpose or purposes for which the meeting is called, shall be delivered either personally, via   facsimile or by mail, by or at the direction of the Manager, to each Member of record entitled to   vote at such meeting not less than five Business Days nor more than 30 days prior to the   meeting. Notwithstanding the foregoing, meetings of the Members maybe held without Notice   so long as all the Members are present in person or by proxy.   (d) Any action may be taken by the Members without a meeting if such action   is authorized or approved by the written consent of the Members holding not less than the   minimum number of Membership Interests that would be necessary to authorize or take such   action at a meeting of the Members. In no instance where action is authorized by written consent   pursuant to this Section 3.2 need a meeting of Members be called or noticed, however, Notice of   the action taken by written consent must be sent promptly to those Members who have not   consented in writing. Any action taken pursuant to such written consent of the Members shall   have the same force and effect as if taken by the Members at a meeting thereof and all actions by   written consent shall be filed with the minute books of the Company.   Section 3.3 Management Ri lg Its. Except as otherwise provided herein, and for the   avoidance of doubt, except when acting in its capacity as the Manager pursuant hereto, no   Member shall have any right, power or authority to take part in the management or control of the   business of, or transact any business for, the Company, to sign for or on behalf of the Company   or to bind the Company in any manner whatsoever. No Member shall hold out or represent to   any third party that any Member-, except the Manager acting in its capacity as such pursuant   l9    

 

hereto, has any such power or right or that any Member is anything other than a member in the   Company. A Member shall not be deemed to be participating in the control of the business of   the Company by virtue of its possessing or exercising any rights set forth in this Agreement or   the Act or any other agreement relating.to the Company.   Section 3.4 Other Activities. Notwithstanding any duty otherwise existing at Law or   in equity, any Member or Manager and their respective Affiliates may engage in or possess an   interest in or manage or otherwise participate in, other business ventures of every nature and   description, independently or with others, even if such activities compete directly with the   business of the Company, and (a) neither the Company nor any of the Members shall have any   rights by virtue of this Agreement in and to such other business ventures or the profits derived   from them and (b) no Manager or Member shall be liable to the Company, for breach of any duty   (contractual or otherwise), including without limitation fiduciary duties, by reason of any such   activities or of such Person's participation therein. In the event the Manager or any Member   acquires knowledge of a potential transaction or matter that may be a corporate opportunity for   the Company, no Manager or Member shall have any duty (contractual or otherwise), including   without limitation fiduciary duties, to communicate, present or offer such corporate opportunity   to the Company and shall not be liable to the Company for breach of any duty (contractual or   otherwise), including without limitation fiduciary duties, by reason of the fact that such Manager   or Member or any of their Affiliates directly or indirectly pursues or acquires such opportunity   for itself or directs such opportunity to another Person, even though such corporate opportunity   maybe of a character that, if presented to the Company, could be taken by the Company. The   Company hereby renounces any interest, right, or expectancy in any such opportunity not offered   to it by the Manager or any Member to the fullest extent permitted by law, and the Company and   each Member hereby waives any claim against the Manager and each other Member based on the   corporate opportunity doctrine, any alleged unfairness to the Company or such Member or   otherwise that would require any Manager or Member to offer any opportunity relating thereto to   the Company. Notwithstanding the foregoing, nothing in this Section 3.4 shall exculpate the   Manager or any Member from any willful misconduct, willful misuse of information that is   proprietary to the Company or breach of its obligation to maintain as confidential or proprietary   any information that is confidential or proprietary to the Company.   Section 3.5 No Right to Withdraw. Except as otherwise provided in this Agreement,   no Member shall have any right to voluntarily resign or otherwise withdraw from the Company   without the prior written consent of all remaining Members of the Company, in their sole and   absolute discretion.   Section 3.6 Limitation of Liability of Members. Each Member's liability shall be   limited as set forth in the Act and other applicable Law. Except as otherwise required by the   Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or   otherwise, shall be the debts, obligations and liabilities solely of the Company, and the Members   shall not be obligated personally for any of such debts, obligations or liabilities solely by reason   of being a Member of the Company.   Section 3.7 No Deficit Restoration Obli atg ion. Except to the extent otherwise   provided by Law with respect to third party creditors of the Company, none of the Members   20    

 

shall be liable to the Company, to the other Members, to the creditors of the Company or to any   other Person for or on account of any deficit in its Capital Account, and any such deficits shall   not constitute or be deemed assets or property of the Company.   Section 3.8 Company Property; Membership Interests. All property owned by the   Company, whether real or personal, tangible or intangible and wherever located, shall be deemed   to be owned by the Company and no Member, individually, shall have any ownership of such   property. The Membership Interests shall constitute personal property.   Section 3.9 Retirement Resignation Expulsion, Bankruptcy or Dissolution of a   Member. The retirement, resignation, expulsion, Bankruptcy or dissolution of a Member shall   not, in and of itself, dissolve the Company. The personal representative of the bankrupt Member   shall, for the purpose of settling the estate, have all of the rights of such Member, including the   same rights and subject to the same limitations that such Member would have had under the   provisions of this Agreement to Transfer its Membership Interest. The personal representative of   a Member shall not become a substituted Member except as provided in this Agreement.   Notwithstanding the foregoing, any assignee of a Membership Interest in accordance with an   Involuntary Transfer shall become a Member with respect to the transferred Membership Interest   as of the effective time of such Involuntary Transfer as specified in this Agreement or the   Purchase Agreement, as applicable.   Section 3.10 Covenant Re ag rdin~ Sales to Related Persons. The Manager will give   Notice to each Member prior to the Company selling Refined Coal to any Person other than the   Utility. In order to ensure that the Company will not sell Refined Coal to any "related person,"   for purposes of Section 45(e)(4) of the Code (a "Related Person"), each Member, on behalf of   itself and its Affiliates, covenants that it and they will not (i) buy Refined Coal, (ii) hold an   ownership interest in the Company or (iii) hold an ownership interest in any Person to which the   Company sells Refined Coal (provided that with respect to clause (iii) and in the case of the   Investors, the Manager shall have, prior thereto, given the Investors Notice that sales are being   made to such Person as provided in the first sentence of this Section 3.10), if its or their actions   under clause (i), (ii) or (iii) would cause the Company to sell Refined Coal to a Related Person.   If a Member, or one of its Affiliates, breaches the covenant in the preceding sentence, the   Manager may, and at the election of a Member or Members holding at least 40 percent of the   outstanding Membership Interests, shall (in addition to and without limiting rights and other   remedies of the Members and the Company hereunder or at Law or in equity) elect to cause the   breaching Member to transfer such Member's Membership Interest in the Company to the Seller   Designee so that such Member's Membership Interest in the Company is reduced to the extent   necessary so that the Company will not be deemed to have sold Refined Coal to a Related   Person. Any such transfer will be effective upon the Manager's Notice of Involuntary Transfer   to the breaching Member without any further action on the part of such Member. Each Member   hereby constitutes and appoints the Seller and the Manager, as his, her or its true and lawful   agent and attorney-in-fact, to amend Exhibit B to this Agreement and to execute and deliver an   assignment or other instrument or conveyance on behalf of such Member as the Seller or the   Manager may reasonably deem to be necessary or appropriate in order to effectuate the   provisions of the preceding sentence of this Section 3.10. The foregoing power of attorney is   2l    

 

irrevocable and coupled with an interest, and shall survive the death, disability, incapacity,   dissolution, Bankruptcy or termination of any Member and the Involuntary Transfer of all or any   portion of his, her or its Membership Interests and shall extend to such holder's heirs, successors,   assigns and personal representatives.   Section 3.11 Covenant Re~ardin~ TEFRA. In order to ensure that the Company will   not be treated as a partnership to which the provisions of Sections 6221 through 6234 of the   Code, inclusive ("TEFRA"), apply, each Member covenants that it will not take any action that   would cause the Company to be treated as a partnership to which TEFRA applies, including (if   such Member is a limited liability company) filing any election to be treated as a partnership or a   disregarded entity for federal tax purposes or converting from a corporation to another form of   Person unless, in such conversion, the Member elects to be treated as an association taxable as a   corporation for federal tax purposes. If a Member breaches, or one of its Affiliates causes such   Member to breach, the covenant in the preceding sentence, the Manager shall (in addition to and   without limiting rights and other remedies of the Members and the Company hereunder or at   Law or in equity) automatically, without the need of the Manager or such breaching Member to   take any further action, be deemed to have elected to cause the breaching Member to transfer   such breaching Member's Membership Interest in the Company to the Seller Designee so that   such Member is no longer a Member of the Company. Any such transfer will be effective as of   the time the breach of this Section 3.11 occurs, without any further action on the part of such   Member and without any requirement of advance Notice by the Manager. Each Member hereby   constitutes and appoints the Seller and the Manager, as his, her or its true and lawful agent and   attorney-in-fact, to amend Exhibit B to this Agreement and to execute and deliver an assignment   or other instrument or conveyance on behalf of such Member as the Seller or the Manager may   reasonably deem to be necessary or appropriate in order to effectuate the provisions of the   preceding sentence of this Section 3.11. The foregoing power of attorney is irrevocable and   coupled with an interest, and shall survive the death, disability, incapacity, dissolution,   Bankruptcy or termination of any Member and the Involuntary Transfer of all or any portion of   his, her or its Membership Interests and shall extend to such holder's heirs, successors, assigns   and personal representatives.   Section 3.12 Involuntary Transfer. Notwithstanding anything herein to the contrary, at   the effective time of the Involuntary Transfer of a breaching Member's or Defaulting Member's   Membership Interest, (i) such breaching Member or Defaulting Member will cease to be a   Member and will have no further obligations under this Agreement, including such Member's   obligations to make Capital Contributions under this Agreement (and the obligations of such   breaching Member's or Defaulting Member's Investor Guarantor with respect to Capital   Contributions under its Investor Guarantee will cease), except for those obligations and liabilities   accrued through the effective date of the Involuntary Transfer or relating to any Fiscal Year or   portion thereof prior to such date, (ii) the breaching Member or Defaulting Member shall be   deemed to have made the Reconveyance Representations and Warranties to the Seller Designee   and the Company and (iii) the breaching Member or Defaulting Member shall take all such   further actions and execute, acknowledge and deliver all such further documents that are   reasonably necessary or useful as reasonably requested by the Manager or the Seller Designee to   effectuate the transfer of the breaching Member's or Defaulting Member's Membership Interest   22    

 

and applicable Purchase Agreements. Each Member hereby constitutes and appoints the Seller   and the Manager, with full power of substitution, as his, her or its true and lawful agent and   attorney-in-fact, with full power and authority in his, her or its name, place and stead, to execute   and deliver (i) an assignment or other instrument of conveyance on behalf of such Member and   (ii) all such certificates and other instruments and all amendments thereof on behalf of such   Member as the Seller and the Manager may reasonably deem to be necessary or appropriate in   order to effectuate an Involuntary Transfer. The foregoing power of attorney is irrevocable and   coupled with an interest, and shall survive the death, disability, incapacity, dissolution,   Bankruptcy, or termination of any Member and the Transfer of all or any portion of his, her or its   Membership Interests and shall extend to such holder's heirs, successors, assigns and personal   representatives. For the avoidance of doubt, an Involuntary Transfer will be effective at the time   specified in Section 3.10, Section 3.11 or Section 4.4(b), or in Section 9.1 of the Purchase   Agreement, as applicable, whether or not any of the additional documents contemplated by this   Section 3.12 or by such other Sections are executed by a Member or by the Seller or the Manager   pursuant to a power of attorney granted to them.   Section 3.13 Seller Designee.   (a) During the term of this Agreement, the Seller shall be required,.pursuant   to the terms of each Purchase Agreement, to designate a Qualified Person (the "Seller   Designee") to act as the transferee of any Membership Interests transferred by a Member in   connection with an Involuntary Transfer. The Seller Designee shall initially be CCS-AE;   provided, that if it is the Membership Interest of CCS-AE that is subject to an Involuntary   Transfer, the Seller Designee for such Membership Interest shall be the Secondary Seller   Designee. Each of CCS-AE and the Secondary Seller Designee has executed and delivered to   the Company and each Member, a Seller Designee Agreement in the form of Exhibit F to this   Agreement (a "Seller Desi _ ee Agreement"). If at any time the Person then designated as the   Seller Designee ceases to be a Qualified Person, the Secondary Seller Designee shall   automatically become the Seller Designee.   (b) CCS-AE shall be permitted to name a new Seller Designee that is a   Qualified Person upon written Notice to the Manager, provided, however, that before the   nomination of any new Seller Designee shall be effective, the new Seller Designee must execute   and deliver to the Company and each Member a Seller Designee Agreement.   Section 3.14 Covenant Re aiding Tax-Exempt Use Property. Each of the Members.   represents and warrants that its participation as a Member of the Company will not cause any   part of the assets of the Company to be characterized as "tax-exempt use property" within the   meaning of Section 168(h) of the Code.   Section 3.15 Right to Observe and Inspect and Consult with Company Professionals   and Contractors. Each Member shall have the right during normal business hours to have its   agents and employees present to observe the operation of the Facility in order to confirm   compliance with the Operating Protocols. In addition, each Member (a) shall be provided 24/7   access to any online resources that may be set up to track information regarding the Facility,   including the operation and performance of the Facility and (b) shall be e-mailed a daily report   23    

 

from the Company specifying the estimated number of Tons of Refined Coal and Unrefined Coal   produced in the 24 hour period preceding the time of such report and such other operational   information as the Company prepares on a daily basis. Such daily reports shall be e-mailed to   each Member at the e-snail addresses specified on Exhibit B for such Member. The Company   shall initially retain Sargent &Lundy, LLC (which maybe replaced only with an independent   engineering firm acceptable to the Manager and approved in writing by a Member or Members   holding at least 51 percent of the outstanding Membership Interests), which firm shall (i) review   and report to the Members on the installation of the Facility at the Power Plant, and (ii)   periodically (but not less than every six months) inspect and report to the Members on the   operations of the Facility). Each Member and its Representatives shall have the right to be   present at any inspections by such engineering firm. The Manager shall direct Sargent &Lundy,   LLC to include in such reports such information as maybe reasonably requested by any   Member. In addition, the Manager shall authorize the Energy &Environmental Research   Center, Sargent &Lundy, LLC and the Accounting Firm (as well as such other Company   professionals as a Member shall hereafter reasonably request) to meet with and speak directly   with a Member and its Representatives and to provide directly to any Member and its   Representatives such information as they shall reasonably request regarding the Company, the   Facility, and the Company Business. A Member shall notify the Manager in advance regarding   any meetings or telephone calls scheduled by such Member with Company professionals as   contemplated by this Section 3.15 and the Manager may elect to participate in any such   scheduled meetings or calls. Each Member shall provide the Manager with copies of all written   communications and information received by such Member pursuant to the exercise of its rights   under this Section 3.15.   Section 3.16 Limited Withdrawal Rights• A Member (other than CCS-AE) may elect to   withdraw from the Company, by giving written Notice to the Manager to such effect, and   abandon its Membership Interest at any time after January 1, 2022 to the extent that the   Company continues to operate after December 31, 2021. Any such withdrawal shall be effective   as of the date such Notice is given. Any Member so electing shall remain responsible for its   share of the costs of the Company attributable to the production of Refined Coal resulting in the   allocation of Tax Credits to such Member through the effective date of such withdrawal. Upon   the withdrawal of a Member, such Member's percentage interests in income, gain, deduction,   loss and credits of the Company and Capital Account shall automatically transfer to the other   Members pro rata in accordance with their Membership Interests; provided, however, that any   remaining Member may decline to have its percentage interest. in income, gain, deduction, loss   and credits of the Company and Capital Account increased, in which event, such percentage   increase and Capital Account shall be allocated and transferred to the Seller Designee. In the   event of any such withdrawal, Exhibit B shall be adjusted accordingly.   ARTICLE IV   CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS   Section 4.1 Capital Contributions.   (a) Reserved.   24    

 

(b) Subject to Sections 4.1(e), 4.1 ,and 4.1 ,the Members acknowledge   and agree that the continuing operation of the Facility will require Monthly Capital   Contributions. On the Acquisition Date, the Members made the Initial Quarterly Capital   Contributions to the Company in an aggregate amount equal to the sum of (i) the estimated   Working Capital Needs of the Company to be incurred during the first Quarter of Fiscal Year   2014 on and after the Acquisition Date, (ii) the Initial Coal Inventory Amount and (iii) the Initial   Working Capital Reserve, on a pro rata basis in accordance with their respective Membership   Interests. The Manager will submit to each Member, no later than the tenth day of each Month,   beginning with April 2015, a written schedule (the "Capital Contribution Schedule") setting forth   the Monthly Capital Contributions for each Member equal to its pro rata share (determined in   accordance with the last sentence of this Section 4.1(b)) of the amount required to satisfy the   estimated Working Capital Needs of the Company to be incurred during such Month in   accordance with the Approved Budget, increased or decreased, as applicable, by an amount equal   to the difference between the actual Working Capital Needs of the Company for the preceding   Month and the estimated Working Capital Needs of the Company for the preceding Month on   which the Monthly Capital Contributions with respect to such Month were based; provided, that   the adjustment to the Monthly Capital Contribution for April 2015 wi11 instead be made in   accordance with the next sentence. The Capital Contribution Schedule will also identify any   amounts that are being requested to fund liabilities, costs or expenses not contemplated by the   Approved Budget as then in effect (including any amendments to the Approved Budget made in   accordance with Article IX). With respect to April 2015, the Monthly Capital Contribution will   be increased or decreased, as applicable, by an amount equal to the difference between the actual   Working Capital Needs of the Company for the preceding Quarter and the estimated Working   Capital Needs of the Company for the preceding Quarter on which the Capital Contributions   with respect to such Quarter were based. Each Capital Contribution Schedule shall take into   account (i) any scheduled plant outages, (ii) any Producer Suspension Event or Utility   Suspension Event ongoing at the time such Capital Contribution Schedule is delivered (and shall   assume such event will continue for the applicable Month except to the extent it is known that   production will resume during such Month), and (iii) any Monthly Capital Contributions   received by the Company with respect to a Month during which production was suspended after   such Monthly Capital Contributions were requested by the Company. If (x) any event described   in clauses (i), (ii) or (iii) of the preceding sentence occurs with respect to a Month (the "Overlaid   Month"), (y) the estimated Working Capital Needs of the Company for the Overpaid Month on   which the Monthly Capital Contributions with respect to the Overpaid Month were based were   greater than the actual Working Capital Needs of the Company for the Overpaid Month (the   amount by which such estimated Working Capital Needs exceeded such actual Working Capital   Needs being referred to as the "Excess Capital Contribution Amount"), and (z) the Excess   Capital Contribution Amount is greater than the estimated Working Capital Needs specified in   the Capital Contribution Schedule for the Month succeeding the Overpaid Month (the   "A~plicable Month"), then the Manager shall return to the Members an amount equal to the   Excess Capital Contribution Amount minus such estimated Working Capital Needs for the   Applicable Month, which amount shall be paid to the Members in proportion to their percentage   Membership Interests for the Overpaid Month contemporaneously with the submission of the   Capital Contribution Schedule for the Applicable Month. Subject to Sections 4.1(e), 4.1 and   25    

 

4.1(~}, each Member shall pay its pro rata share of the called Capital Contributions based on its   percentage Membership Interest.   (c) Subject to Sections 4.1(e), 4.1 and 4.1 , on or before each Monthly   Payment Date, each Member shall contribute to the capital of the Company an amount in   immediately available funds equal to such Member's Monthly Capital Contribution as set forth   in the Capital Contribution Schedule pursuant to Section 4.1(b).   (d) [Intentionally Omitted]   (e) (i) As of the first Business Day following delivery of a Tax Event   Member Termination Notice, no Members shall have any obligation to make Monthly Capital   Contributions until the earlier of such time, if any, as the Company is authorized by the Members   to resume production of Refined Coal in accordance with Section 8.2(b) hereof or, if the   Company delivers an Option Notice pursuant to Section 11.2 in respect of such Tax Event   Member Termination Notice, such time as the Company has completed the purchase of all   Electing Members' Membership Interests in accordance with Section 11.2.   (ii) If a Low Volume Member Termination Notice is delivered, then as   of the 90 h` day following delivery of such Low Volume Member Termination Notice, no   Members shall have any obligation to make Monthly Capital Contributions until, if the Company   delivers an Option Notice pursuant to Section 11.2 in respect of such Low Volume Member   Termination Notice, such time as the Company has completed the purchase of all Electing   Members' Membership Interests in accordance with Section 11.2.   (iii) If the Company's Working Capital Needs for a given Month   exceed the sum of one-third of the Fixed Payments for the Quarter that includes such Month and   the Monthly Capital Contributions for such Month and the Manager has not provided assurances   reasonably satisfactory to the Members that the Company is capable of reducing the Company's   Working Capital Needs during the succeeding Month to an amount that is not in excess of such   sum, then on or before the next Monthly Payment Date following the end of the Month during   which such event occurred, a Member or Members holding not less than 40 percent of the   outstanding Membership Interests may give the Manager Notice of its or their election not to   make its Monthly Capital Contribution otherwise due on such next Monthly Payment Date and   upon delivery of such Notice, no Members shall be required to make a Monthly Capital   Contribution on such next Monthly Payment Date.   (iv) Notwithstanding any other provision of this Agreement to the   contrary, in no event is any Member required to make Monthly Capital Contributions with   respect to liabilities, costs or expenses that are not contemplated by the Approved Budget as then   in effect (including any amendments to the Approved Budget made in accordance with Article   IX). If a Member elects not to make all or a portion of a Monthly Capital Contribution on such   basis, it will deliver Notice to the Manager of such election on or before the Monthly Payment   Date for such Monthly Capital Contribution.   26    

 

(v) As to any Month for which the Members pursuant to Section   4.1(e)(iL(ii), (iii or (ivy have no obligation to make Monthly Capital Contributions, then with   respect to each Investor who elects not to make all or a portion of its Monthly Capital.   Contribution (each such Investor, a "Section 4.1(,e~ Electing Investor"), CCS-AE shall have the   option (but not the obligation) to make the Monthly Capital Contribution or portion thereof that   would have been made by the Section 4.1(e) Electing Investors for such Month but for such   election, and, to the extent so made by CCS-AE (and notwithstanding anything in this   Agreement to the contrary), the Section 4.1(e) Electing Investors' allocable share of all   distributions and allocations of items of Company income, gain, credits (including Tax Credits),   deductions and losses for such Month for the portion of the 1Vlonthly Capital Contribution made   by CCS-AE will be distributed and allocated to CCS-AE. As to any Month for which CCS-AE   does not exercise its option to make Monthly Capital Contributions pursuant to the preceding   sentence, any other Member shall have the option (but not the obligation) to make the Monthly   Capital Contributions that would have been made by the Section 4.1(e) Electing Investors for   such Month but for such election, and, to the extent so made by such other Member (and   notwithstanding anything in this Agreement to the contrary), the Section 4.1(e) Electing   Investors' allocable share of all distributions and allocations of items of Company income, gain,   credits (including Tax Credits), deductions and losses for such Month will be distributed and   allocated to the Members making the Monthly Capital Contributions that would have been made   by the Section 4.1(e) Electing Investors for such Month. As to any Month for which neither   CCS-AE nor any other Member or Members exercises the option to make Monthly Capital   Contributions pursuant to the preceding provisions of this Section 4.1(e)(v), the Manager shall   reduce, curtail or stop production if so requested by a Section 4.1(e) Electing Investor.   (vi) Notwithstanding any other provision of this Agreement to the   contrary, upon the occurrence of an event of dissolution of the Company pursuant to Section   11.1, no Member shall have any obligation to make additional Capital Contributions to the   Company, except for any obligation to make additional Capital Contributions accrued through   the date of occurrence of such event of dissolution (subject, for the avoidance of doubt, to any   other applicable limitations in this Section 4.1 or elsewhere in this Agreement).   (~ If an Investor, in good faith, disputes the amount of any Monthly Capital   Contribution required to be made hereunder, then such Investor shall notify the Manager and the   other Members, and in such event, the Manager and the disputing Investor shall consider the   issues raised or in dispute and discuss such issues with each other and attempt to reach a   mutually satisfactory agreement. If the dispute is not resolved within ten Business Days of   notification of the dispute, the disputing Investor shall pay, on or before the Monthly Payment   Date, the full amount of any Monthly Capital Contribution. Thereafter, in the case of any   disputes regarding calculations, the Manager and the disputing Investors shall mutually select   and instruct an Accounting Firm to calculate the amount of such Monthly Capital Contribution   required; provided, however, that if the Manager and the disputing Investors are unable to agree   on the Accounting Firm to be selected for such purpose, then the Manager and the disputing   Investors holding at least 51 percent of the outstanding Membership Interests as compared to all   other disputing Investors shall name an accounting Firm within five Business Days thereafter   and instruct those named accounting firms to name an independent firm of certified public   27    

 

accountants within five Business Days after they are named. In the case of any disputes   regarding operational or other matters, the Manager and the disputing Investors shall instruct an   independent expert, mutually agreed upon by them, to resolve such dispute. In the case of a   dispute subject to resolution by an independent expert, if the Manager and the disputing   Investors do not mutually agree on an expert to resolve the dispute within ten Business Days,   then the Manager and the disputing Investors holding at least 51 percent of the outstanding   Membership Interests as compared to all other disputing Investors shall name an independent   expert within five Business Days thereafter and instruct those named experts to name a Person to   serve as the expert for purposes of resolving the dispute within five Business Days after they are   named. If a Person entitled to name an accounting firm or expert within the time period   specified above does not timely do so, then the accounting arm or expert named by the other   Person or Persons entitled to name an accounting firm or expert shall either name the accounting   firm or expert for purposes of resolving such dispute or if there is only one Person remaining   who is entitled to name such accounting firm or expert, the Person named by such remaining   Person shall be the Accounting Firm or expert for purposes of resolving such dispute. The   determination of the Accounting Firm or independent expert selected as described in this   Section 4.1(fl shall be binding on the Company, the Manager and the Members, absent manifest   error. Within five Business Days following final resolution of any such dispute, the Company   shall pay to the disputing Investor and the other Members any amount that is determined to be   owed to such Investor or other Members pursuant to the preceding sentence. Notwithstanding   the foregoing, if any dispute regarding a Monthly Capital Contribution remains unresolved as of   any Monthly Payment Date following the Monthly Payment Date for the contribution in dispute   (collectively, the "Succeeding Capital Contribution"), then the disputing Investor shall be   entitled to withhold from the Succeeding Capital Contribution the amount in dispute and any   amount of any Succeeding Capital Contribution in dispute that relates to the same issue or matter   that was in such dispute. In such case, within five Business Days following final resolution of   any such dispute, the disputing Investor shall pay to the Company any amount that is determined   to be owed by such Investor pursuant to the determination of the Accounting Firm or   independent expert selected as described in this Section 4.1(x.   (g) In the event that the Company has or incurs or suffers any expenses, losses   or liabilities related to or attributable to periods prior to the Acquisition Date for which the Seller   is required to indemnify each Investor under the terms of Section 8.4 of each Purchase   Agreement, no Investor shall have an obligation to make any Capital Contributions to fund any   such expense, loss or liability (and no Capital Contributions made by any Investor shall be used   to pay any such expense, loss or liability) unless and to the extent such Investor is indemnified   for the amount of its Capital Contribution relating to such costs, expenses and liabilities by the   Seller pursuant to Section 8.4 of each Purchase Agreement. For the avoidance of doubt, this   Section 4.1(g) shall not apply to normal operating items, such as expenses relating to chemical   additives, coal, or other inventory and supplies owned by the Company on the Acquisition Date   or to any accounts payable relating thereto.   (h) Except as provided in Sections 4.1 and 4~4, no other Capital Contributions   or Monthly Capital Contributions shall be required or permitted from any Member unless all of   the Members consent thereto in writing.   28    

 

Section 4.2 Capital Contribution Schedule. Each Capital Contribution Schedule   issued pursuant to Section 4.1 shall be accompanied by a report that shall contain the following   information:   (a) The total amount of Monthly Capital Contributions requested from all   Members including the true-up of the actual Working Capital Needs of the Company for the   preceding Month to the Monthly Capital Contributions made by the Members for the preceding   Month or, in the case of the Monthly Capital Contributions for April 2015, the true-up described   in Section 4.1(b);   (b) The Estimated Monthly Tonnage Amount for such Month; and   (c) The amount of the Monthly Capital Contribution requested from the   Member to whom the request is addressed, in accordance with Section 4.1 (as limited by   Sections 4.1(e), 4.1 ,and 4.1 ).   Section 4.3 Capital Accounts.   (a) There shall be established and maintained throughout the full term of the   Company in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv) for each Member, a   capital account (a "Capital Account") which shall be credited with (i) such Member's Capital   Contributions (net of liabilities that the Company is considered to assume or take subject to), (ii)   allocations of income and gain to such Member pursuant to this Agreement and (iii) without   duplication, the amount of any Company liabilities considered to be assumed by such Member.   Each Member's Capital Account shall be debited with (i) the amount of cash and the Gross Asset   Value of other property distributed to such Member (net of liabilities that such Member is   considered to assume or take subject to), (ii) allocations of deductions and losses to such   Member pursuant to this Agreement and (iii) without duplication, the amount of any liabilities of   such Member considered to be assumed by the Company.   (b) If all or a portion of a Membership Interest is 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 Membership Interest so Transferred.   (c) The provisions of this Agreement relating to maintenance of Capital   Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and shall be   interpreted and applied in a manner consistent with such Treasury Regulation.   Section 4.4 Defaulted Capital Contributions.   (a) If a Member shall fail to pay its required portion of any Monthly Capital   Contributions when due and such failure to pay continues for 20 days after receipt of Notice of   such failure from the Manager or another Member, such failure to pay shall constitute an event   of default (an "Event of Default") and such Member shall thereafter until such default is cured be   referred to as a "Defaulting Member"; provided, however, that for the avoidance of doubt, the   exercise by a Member of its rights under Sections 4.1(e), 4.1 , or 4.1 shall not constitute an   29    

 

Event of Default or cause the Member to be a Defaulting Member under this Section 4.4. For so   long as the Defaulting Member shall have failed to pay its portion of such Capital Contribution   as and when required pursuant to Section 4.1, and this Section 4.4(a) (including the applicable   cure period), the Defaulting Member's right to vote on matters put before the Members shall be   suspended.   (b) The Manager shall have~the right (and upon the written request of a   Member or Members holding at least 40 percent of the outstanding Membership Interests, the   Manager shall exercise such right), upon the occurrence and during the continuation of an Event   of Default, to exercise one or more of the following remedies (which remedies shall, in addition   to the rights specified in Section 12.15 and Section 12.18, be the sole and exclusive remedies of   the Manager, any Member or the Company in respect of an Event of Default):   (i) cause the Company to (A) withhold any distributions otherwise   payable to such Defaulting Member and use such amounts to offset the amounts due in respect of   the defaulted Monthly Capital Contribution obligation (it being acknowledged that a Defaulting   Member shall have no further Monthly Capital Contribution obligations with respect to the   period following the Involuntary Transfer of its Membership Interest pursuant to Section   4.4 b ii below), with any such amounts deemed to have been distributed to the Defaulting   Member and then paid by the Defaulting Member to the Company; and/or (B) sue for the amount   due (taking into account amounts received under clause (A) above), in which case the Company   shall be entitled to collect reasonable attorneys' fees and all other costs of collection, plus   interest on any unpaid Monthly Capital Contributions (taking into account amounts received   under clause (A) above) at a rate equal to the short term applicable federal rate compounded   Monthly from the date on which the Monthly Capital Contribution was first due until such   unpaid amount is paid to the Company; or   (ii) elect by providing Notice to the Defaulting Member to cause the   Defaulting Member to Involuntarily Transfer all of such Member's Membership Interest in the   Company to the Seller Designee, and upon the consummation of such Involuntary Transfer, (1)   the Defaulting Member will cease to be a Member and shall have no further rights as a member   of the Company; and (2) the Defaulting Member shall have no obligation thereafter to make any   Capital Contributions to the Company, except, as to those obligations and liabilities accrued   through the date of the Involuntary Transfer. An Involuntary Transfer pursuant to this Section   4.4 will be effective as of the date Notice of the Involuntary Transfer is given by the Manager.   Section 4.5 No Third Party Beneficiary. To the full extent permitted by Law, no   creditor or other third party having dealings with the Company shall have the right to enforce the   right or obligation of any Member to make Capital Contributions or loans or to pursue any other   right or remedy hereunder or at Law or in equity, it being understood and agreed that the   provisions of this Agreement (other than the provisions of Section 8.12) shall be solely for the   benefit of, and may be enforced solely by, the parties hereto and their respective successors and   permitted assigns. None of the rights or obligations of the Members herein set forth to make   Capital Contributions or loans to the Company shall be deemed an asset of the Company for any   purpose by any creditor (other than an Investor in its capacity as a creditor) or other third party,   nor may such rights or obligations be sold, transferred or assigned by the Company or pledged or   30    

 

encumbered by the Company to secure any debt or other obligation of the Company or of any of   the Members.   ARTICLE V   ALLOCATIONS   Section 5.1 Allocations. For purposes of maintaining Capital Accounts, after giving   effect to the special allocations set forth in Sections 5.2 and Si3, all items of Company income   (including gross income and receipts from the sale of Refined Coal), gain, loss, deduction and   credits (including Tax Credits), for each Fiscal Year shall be allocated to the Members pro rata in   proportion to their respective Membership Interests.   Section 5.2 Allocations Followin~Condemnation, Casualtyetc• All income   attributable to Excess Insurance Proceeds shall be allocated to the Members pro rata in   accordance with their respective Membership Interests or to CCS-AE to the extent of the amount   distributable to the Members or to CCS-AE in accordance with Section 6.4.   Section 5.3 Special Allocations. Any allocation pursuant to Section 5.1 or Section 5.2   shall be subject to any adjustment required to satisfy the safe harbor established by Treasury   Regulation Section 1.704-1(b). Accordingly, a "qualified income offset" provision as described   in Treasury Regulation Section 1.704-1(b)(2)(ii)(d), and a "minimum gain chargeback" and a   "partner nonrecourse debt minimum gain chargeback" as described in Treasury Regulation   Section 1.704-2 are incorporated herein by reference and shall be given effect. Notwithstanding   the foregoing, this Agreement shall not have a "deficit restoration obligation" provision   described in Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(3) incorporated herein. Items of   Company deduction or loss shall not be allocated to a Member to the extent that such allocation   would cause a deficit in such Member's Capital Account (after reduction to reflect the items   described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the   amount such Member is obligated to contribute to the capital of the Company or is deemed to be   obligated to contribute to the Company pursuant to the penultimate sentences of Treasury   Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5). Any nonrecourse deductions (within the   meaning of Treasury Regulation Section 1.704-2(b)(1)) shall be allocated to the Members in   proportion to their respective Membership Interests, and any partner nonrecourse deductions   (within the meaning of Treasury Regulation Section 1.704-2(i)) shall be allocated to the Member   that is considered to bear the economic risk of loss with respect to the debt to which such   deductions are allocable. Any special allocations of items pursuant to this Section 5.3 shall be   taken into account, to the extent permitted by the Treasury Regulations, in computing current and   subsequent allocations of income, gain, deductions or losses pursuant to Section 5.1 so that the   net amount of any items so allocated and all other items allocated to each Member shall, to the   extent possible, be equal to the amount that would have been allocated to each Member pursuant   to Section 5.1 had such special allocations under this, Section 5.3 not occurred.   Section 5.4 Tax Allocations.   (a) Except as otherwise provided in this Section 5.4, all allocations of Tax   items of Company income (including gross income and receipts from the sale of Refined Coal),   31    

 

gain, deductions and losses for each Fiscal Year shall be allocated in the same manner as the   corresponding allocations of book items of Company income (including gross income and   receipts from the sale of Refined Coal), gain, deductions and losses were made for such Fiscal   Year pursuant to Sections 5.1, 5_2 and 5_3. Tax Credits shall be allocated to the Members in   accordance with the allocations of Company gross income and receipts from the sale of Refined   Coal as provided in Treasury Regulations Section 1.704-1(b)(4)(ii).   (b) If, as a result of contributions of property by a Member to the Company or   an adjustment to the Gross Asset Value of Company assets pursuant to this Agreement, there   exists a variation between the adjusted Tax basis of an item of Company property for federal   income Tax purposes and as determined under the definition of Gross Asset Value, allocations of   income, gain, loss, and deduction shall, solely for income Tax purposes, be allocated among the   Members so as to take into account any variation between the adjusted Tax 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) using the method selected by   the Manager, in Consultation with the other Members.   (c) Any elections or other decisions relating to Capital Accounts and Tax   allocations shall be made by the Manager, in Consultation with the other Members, in any   manner that reasonably reflects the purpose and intention of this Agreement. Allocations   pursuant to this Section 5.4 are solely for purposes of federal, state and local income Taxes and   shall not affect, or in any way be taken into account in computing, any Member's Capital   Account or any Member's share of distributions pursuant to any provision of this Agreement.   (d) Notwithstanding anything in this Agreement to the contrary, to the extent   that an adjustment to the adjusted Tax basis of any Company asset is made pursuant to   Section 743(b) of the Code as the result of a purchase of an interest in the Company, any   adjustment to the depreciation, amortization, gain or loss resulting from such adjustment shall be   allocated for income Tax purposes to the transferee only and shall not affect the Capital Account   of the transferor or transferee. In such case, the transferee shall provide to the Company (i) the   allocation of any step-up or step-down in basis to the Company's assets and (ii) .the depreciation   or amortization method for any adjustment in basis to the Company's assets.   Section 5.5 Transfer or Change in Company Interest. If the respective Membership   Interests of the existing Members in the Company change or if a Membership Interest is   Transferred in compliance with this Agreement to any other Person, then, for the Fiscal Year in   which the Transfer occurs, all income, gains, losses, deductions, Tax Credits and other Tax   incidents resulting from the operations of the Company shall be allocated, as between transferor   and transferee, by taking into account their varying interests using the interim closing of the   books method to the extent permitted by Section 706 of the Code, unless otherwise agreed by all   the Members.   32    

 

ARTICLE VI   DISTRIBUTIONS   Section 6.1 Distributions. Except as provided in Sections 4.4(b)(i), 6_4 or 11.4,   distributions to the Members shall be made pro rata in accordance with their respective   Membership Interests. Distributions of Available Cash, if any, shall be made on the twentieth   day of each Quarter and maybe made at such other times and from time to time in such amounts   as the Manager shall determine. There shall be no distributions of the assets of the Company in   kind without the prior written consent of all of the Members. ,   Section 6.2 Withdrawal of Capital. No Member shall have the right to withdraw   capital from the Company or to receive or demand distributions or return of its Capital   Contributions until the Company is dissolved in accordance with this Agreement and applicable   provisions of the Act. No Member shall be entitled to demand or receive any interest on its   Capital Contributions.   Section 6.3 Withholding Taxes. If the Company is required to withhold Taxes with   respect to any allocation or distribution to any Member pursuant to any applicable Law, the   Company may, after first notifying the Member and permitting the Member, if legally permitted,   to contest the applicability of such Taxes, withhold such amounts and make such payments to   taxing authorities as are necessary to ensure compliance with such Tax Laws. Any funds   withheld by reason of this Section 6.3 shall nonetheless be deemed distributed to the Member in   question for all purposes under this Agreement. If the Company did not withhold from actual   distributions any amounts it was required to withhold, the Company may, at its option,   (a) require the Member to which the withholding was credited to reimburse the Company for   such withholding or (b) reduce any subsequent distributions by the amount of such withholding.   This obligation of a Member to reimburse the Company for Taxes that were required to be   withheld shall continue after such Member transfers or liquidates its Membership Interest in the   Company or withdraws from the Company. Each Member agrees to furnish the Company with   any representations and forms as shall reasonably be requested by the Company to assist it in   determining the extent of, and in fulfilling, any withholding obligations it may have.   Section 6.4 Distributions Following Condemnation, Casualty, etc. Notwithstanding   Section 6.1, all proceeds received by the Company upon a condemnation or following a casualty   to the Facility from insurance policies or otherwise that are not used to restore or repair the   Facility (but only if the Refined Coal produced will continue to be eligible for Tax Credits   notwithstanding such restoration or repair) ("Excess Insurance Proceeds") shall be distributed to   the Investors pro rata in accordance with their respective Membership Interests to the extent that   the aggregate dollar amount of the Tonnage Amoui7t for all Investors allocated to the Investors   through the date of receipt of suchproceeds is less than the sum of (x) the Initial Payment (as   such term is defined in the Purchase Agreements) and (y) all Capital Contributions and Variable   Payments made by the Investors through the date of such payment, and thereafter to CCS-AE.   Section 6.5 Limitation Upon Distributions. Notwithstanding the provisions of this   Agreement, including the foregoing provisions of this Article VI to the contrary, no distribution   shall be made if such distribution would violate the Act.   33    

 

ARTICLE VII   ACCOUNTING AND RECORDS   Section 7.1 Fiscal Year. The fiscal year of the Company for both income Tax and   financial reporting purposes shall be the calendar year, unless otherwise required by the Code   (the "Fiscal Year").   Section 7.2 Books and Records and Inspection.   (a) The Manager shall keep, or cause to be kept by the Company, full and   accurate books of account, financial records and supporting documents, which shall reflect,   completely, accurately and in reasonable detail, each transaction of the Company and such other   matters as are usually entered into the records or maintained by Persons engaged in a business of   like character or as are required by Law, and all other documents and writings of the Company.   The books of account, financial records, and supporting documents and the other documents and   writings of the Company shall be kept and maintained at the principal office of the Company.   The financial records and reports of the Company (not including Tax records and reports or   records and reports kept for Capital Account purposes) shall be kept in accordance with GAAP   and on an accrual basis.   (b) In addition to and without limiting the generality of Section 7.2(a), the   Manager shall keep, or cause to be kept by the Company, at its principal office:   (i) true and full information regarding the status of the business and   financial condition of the Company, including financial statements for the five most recent years;   (ii) promptly after becoming available, a copy of the Company's   federal, state, and local income Tax Returns for each year;   (iii) a current list of the name and last known business, residence or   mailing address of each Member and the Manager;   (iv) a copy of this Agreement and the Company's Articles of   Organization, and all amendments thereto, together with executed copies of any written powers   of attorney pursuant to which this Agreement and such Articles of Organization and all   amendments thereto have been executed;   (v) true and full information regarding the amount of cash and a   description and statement of the agreed value of any other property and services contributed by   each Member and which each Member has agreed to contribute in the future, and the date upon   which each became a Member;   (vi) copies of records that would enable a Member to determine the   Member's relative shares of the Company's distributions and the Member's relative voting   rights; and   34    

 

(vii) all records related to the production and sale of Refined Coal and   the qualification of such fuel for Tax Credits pursuant to Section 45 of the Code, applicable   Treasury Regulations, IRS revenue procedures, notices, announcements or other pronouncements   by the IRS, whether currently existing or promulgated in the future, all correspondence with the   IRS in respect thereof and the Private Letter Rulings.   (c) All books and records of the Company shall be open to inspection and   copying by any of the Members or their authorized Representatives during business hours and at   such Member's expense, for any purpose reasonably related to such Member's interest in the   Company, and the Company and/or the Manager shall maintain the books and records of the   Company for a period of five years following the dissolution of the Company. In addition, the   Company shall provide Notice to the Members at least 30 days in advance if the Company   intends to destroy any books and records of the Company to permit any Member to make copies   of such books and records prior to destruction thereof. The rights of the Members or their   authorized Representatives under this Section 7.2(c) shall continue despite termination or   expiration of this Agreement.   Section 7.3 Bank Accounts, Notes and Drafts.   (a) All funds not required for the immediate needs of the Company shall be   placed in Permitted Investments, which investments shall have a maturity appropriate for the   anticipated cash flows needs of the Company. All Company funds shall be deposited and held in   accounts which are separate from all other accounts maintained by the Manager and the   Members, and the Company's funds shall not be commingled with any other funds of any other   Person, including any Manager, any Member or any Affiliate of a Manager or a Member.   (b) The Members acknowledge that the Manager may maintain Company   funds in accounts, money market funds, certificates of deposit, other liquid assets in excess of the   insurance provided by the Federal Deposit Insurance Corporation, or other depository insurance   institutions and that the Manager shall not be accountable or liable for any loss of such funds   resulting from failure or insolvency of the depository institution.   (c) Checks, notes, drafts and other orders for the payment of money shall be   signed by such persons as the Manager from time to time may authorize. When the Manager so   authorizes, the signature of any such person may be a facsimile.   Section 7.4 Financial Reports.   (a) Within ten days after the end. of each Month, the Manager shall furnish to   each Member a summary statement showing the number of Tons of Refined Coal produced and   sold by the Company to Unrelated Persons during such Month and the estimated Tax Credits   resulting from such sales, the number of Tons of Unrefined Coal sold during such Month, as well   as the number of Tons of coal purchased by the Company during such Month; and within 15   days after the end of each Month, the Manager shall furnish to each Member a comparison of   such Monthly results to the Approved Budget then in effect.   35    

 

(b) Within 25 days after the end of each Quarter, the Manager shall furnish to   each Member (i) unaudited GAAP-basis financial statements with respect to such Quarter of the   Company, consisting of (A) a balance sheet showing the Company's financial position as of the   end of such Quarter, (B) profit and loss statements for such Quarter, and (C) a statement of   changes in Members' equity, certified by a responsible officer of the Manager as true, complete   and correct in all material respects, (ii) a comparison of such quarterly results to the Approved   Budget for such Quarter and (iii) a summary of the Tax Credits generated by the Company   during such' Quarter.   (c) Within 40 days after the end of each Fiscal Year, the Manager shall   furnish to each Member (i) unaudited GAAP-basis financial statements with respect to such   Fiscal Year, consisting of (A) a balance sheet showing the Company's financial position as of the   end of such Fiscal Year, (B) profit and loss statements for such Fiscal Year, (C) a statement of   changes in Members' equity, and (D) a statement of cash flows for such Fiscal Year, (ii) a   statement of each Member's closing Capital Account balance as of the end of such Fiscal Year,   (iii) a statement of the Tax Credits generated by the Company during each Quarter during the   Fiscal Year, and (iv) the Variable Cost Per Ton for such Fiscal Year and the Variable Cost Per   Ton Estimate for the next Fiscal Year (i.e., the Fiscal Year during which such report is   delivered).   (d) Within 120 days after the end of each Fiscal Year, the Manager shall   furnish to each Member (i) audited GAAP-basis financial statements with respect to such Fiscal   Year by the Accounting Firm, consisting of (A) a balance sheet showing the Company's   financial position as of the end of such Fiscal Year, (B) profit and loss statements for such Fiscal   Year, (C) a statement of cash flows for such Fiscal Year, (ii) a statement of each Member's   closing Capital Account balance as of the end of such Fiscal Year and (iii) a statement of the Tax   Credits generated by the Company during each Quarter during the Fiscal Year.   (e) Within 30 days after filing United States federal income Tax Returns for   the Company, the Manager shall furnish to each Member (i) an unaudited Tax-basis balance   sheet with respect to such Fiscal Year, (ii) a statement of each Member's closing Capital   Account balance as of the end of such Fiscal Year and (iii) a summary of the Tax Credits   generated by the Company during each Quarter during the Fiscal Year.   (~ The Manager shall prepare and furnish to the Investors the Operations   Reports when and as contemplated by Section 2.3(b) of the Purchase Agreements.   (g) If the Manager fails to deliver any report or Tax information required to be   delivered pursuant to this Section 7.4 or Section 7.6 by the due date for such report or   information specified in such Section, then the Manager shall pay to the Members, pro rata in   respect to their Membership Interests, the sum of $500 per day for each day after the due date   that any report or Tax infornlation required to be delivered pursuant to this Section 7.4 or Section   7.6 is not furnished to the Members.   36    

 

Section 7.5 Partnership Status and Tax Elections.   (a) It is the intent of the Members that the Company be taxed as a partnership   for United States federal, state and local income Tax purposes. The Members hereby agree not to   elect to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Code   or any similar state statute and agree not to elect for the Company to be treated as a corporation,   or an association Taxable as a corporation, under the Code or any similar state statute.   (b) The Company shall make the following elections and take the following   positions under United States income Tax Laws and regulations and any similar state statutes:   (i) adopt the Fiscal Year as the annual accounting period;   (ii) adopt the accrual method of accounting; and   (iii) adopt the weighted moving average method of inventory   accounting.   (c) Upon the request of a Member or Members holding more than 40 percent   of the outstanding Membership Interests, the Company shall file an election under Section 754 of   the Code and the Treasury Regulations thereunder to adjust the basis of the Company assets   under Section 734(b) of the Code or Section 743(b) of the Code and any corresponding elections   under the applicable sections of state and local Law.   (d) The Company shall not make any election under Section 6231(a)(1)(B)(ii)   of the Code or the Treasury Regulations thereunder to treat the Company as a partnership to   which the provisions of Sections 6221 through 6234 of the Code, inclusive, apply.   Section '~.6 Company Tax Returns. The United States federal income Tax Returns for   the Company and all other Tax Returns of the Company (the "CompanYTax Returns") shall be   prepared as directed by the Manager in Consultation with the other Members. The Manager, in   Consultation with the other Members, may extend the time for filing any such Company Tax   Returns as provided for under applicable Law. At the Company's expense, the Manager shall   cause the Company to retain an Accounting Firm to prepare or review the necessary federal and   state income Company Tax Returns and information returns for the Company. Each Member   shall provide such information, if any, as may be reasonably needed by the Company for   purposes of preparing such Company Tax Returns, provided that such information is readily   available from regularly maintained accounting records. Within 120 days after the end of each   year and at least 30 days prior to filing the federal and state income Company Tax Returns and   information returns, the Manager shall deliver to the other Members for their review a copy of   the Company's federal and state income Company Tax Returns and information returns proposed   to be filed for each Fiscal Year, and shall incorporate all reasonable changes or comments to   such proposed Company Tax Returns and information returns requested by the other Members at   least ten days prior to the filing date for such returns. After taking into account any such   requested changes, and receiving the approval of the Members (which approval shall not be   unreasonably withheld and which approval will be deemed to have been given by the Members if   37    

 

the Members do not notify the Company that they are withholding approval or otherwise not   giving approval within five Business Days of having received the final version of the applicable   Tax Return), the Manager shall cause the Company to timely file, taking into account any   applicable extensions, such Company Tax Returns within 150 days after the end of each Fiscal   Year. Within five days after filing such federal and state income Company Tax Returns and   information returns, the Manager shall cause the Company to deliver to each Member a copy of   the Company's federal and state income Tax Returns and information returns as filed for each   Fiscal Year, together with any additional Tax-related information in the possession of the   Company that such Member may reasonably and timely request in order to properly prepare its   own income Tax Returns.   Section 7.7 Tax Audits.   (a) If the IRS commences any audit or proceeding (including under the   Compliance Assurance Program) with respect to any Member with respect to any items of   income, gain, loss, deduction or credit (including Tax Credits) allocated to such Member by the   Company (the "CompanyAudited Items"), then such Member shall promptly advise the   Manager of the same. The Member subject to such audit or proceeding (the "Audited Member")   shall promptly provide the Manager with copies of all notices, communications, reports and   other writings received from the IRS that relate to the Company Audited Items. For the   avoidance of doubt, the Audited Member shall make all final determinations as to the strategies   to be employed in defense of the Company Audited Items and all correspondence or filings to be   submitted by the Audited Member to the IRS relating to the Company Audited Items. To the   extent practical under the circumstances, the Audited Member will provide the Manager with   Notice reasonably in advance of any meetings or conferences with the IRS with respect to the   Company Audited Items. The Manager shall provide the other Members with a copy of any   written information received by it from the Audited Member pursuant to this Section 7.7(a),   which information shall be Confidential Information subject to Section 12.12.   (b) CCS-AE shall act as the "tax matters partner" under Section 6231(a)(7) of   the Code (the "Tax Matters Partner"). The Members shall take such action as is required by   Treasury Regulations under Section 6231(a)(7)(A) of the Code to designate CCS-AE as the Tax   Matters Partner. The Tax Matters Partner shall promptly notify the Members if any Tax Return   or report of the Company is audited or if any adjustments are proposed by any Governmental   Body. In addition, the Tax Matters Partner shall promptly furnish to the Members all notices   concerning administrative or judicial proceedings relating to federal income tax items of the   Company (a "Tax Proceeding") as required under the Code. During the pendency of any Tax   Proceeding, the Tax Matters Partner shall furnish to the Members periodic reports, not less often   than Monthly, concerning the status of any Tax Proceeding. In addition, the Tax Matters Partner   shall promptly (i) provide the other Members with a draft copy of any correspondence or filing to   be submitted by the Tax Matters Partner relating to a Tax Proceeding reasonably in advance of   such submission, (ii) incorporate all reasonable changes or comments to such correspondence or   filing requested by the other Members, (iii) provide the other Members with a final copy of   correspondence or filing, and (iv) advise the other Members of all developments with respect to   the Tax Proceeding; provided, however, that the other Members shall provide any comments or    

 

suggestions on the foregoing as promptly as possible and in any event within ten Business    Days   of request. To the extent practical under the circumstances, the Tax Matters Partner will    provide   each Member with Notice reasonably in advance of any meetings or conferences with   the IRS   with respect to a Tax Proceeding and each Member shall have the right to participate in   any such   meetings or conferences. Each Member shall participate in a Tax Proceeding at its sole   cost and   expense. The Company shall indemnify and hold harmless the Tax Matters Partner for    any and   all liabilities, costs and expenses (including reasonable attorneys' fees and accountants' fees) tha   t   the Tax Matters Partner may incur in its capacity as Tax Matters Partner, acting in complianc   e   with its obligations under this Agreement. THE PROVISIONS OF THIS SECTION   7.7(b)   SHALL ONLY APPLY IF THE COMPANY IS REQUIRED BY APPLICABLE LAW   FOR ANY PARTICULAR PERIOD TO BE SUBJECT TO THE TEFRA   AUDIT   PROCEDURES, AND ONLY AS TO SUCH PERIODS.   (c) Notwithstanding anything contained in this Agreement to the contrary, the   provisions of this Section 7.7 shall survive the expiration of the term of the Company    (as   described in Section 2.1) and shall remain in full force and effect until the expiration of the   applicable statute of limitations for any audits of a Member's Tax Returns that contain any    items   of income, gain, loss, deduction or credit (including Tax Credits) allocated to such Member by   the Company or any income Tax Return filed by the Company.   Section 7.8 Other Reports and Information.   (a) The Manager shall prepare and deliver, or cause to be prepared and   delivered, the Operations Report to the Members when and as provided in each Purchas   e   Agreement.   (b) The Manager shall deliver to the Members promptly following the   Company's receipt thereof, a copy of all projections that the Company receives from the Utility   pursuant to Section 3.1 of the Refined Coal Sale Agreement regarding the Utility's anticipate   d   needs with respect to the purchase of Refined Coal or Unrefined Coal pursuant to such   agreement, including each Fiscal Year Projection (as defined in the Refined Coal Sale   Agreement).   (c) Promptly upon the Manager becoming aware of any such event or   circumstance, the Manager shall deliver Notice to the Members of (i) any material civil or   criminal litigation pending or, to the knowledge of the Manager, threatened against o   r   concerning the Company, or if such could have a Material Adverse Effect, against the Manage   r   or the Operator, (ii) any material dispute with a Governmental Body or any material   noncompliance or violation of any Law concerning the Company, its assets, business ar   operations, (iii) any default, whether by the Company or the Operator or any other party, under   any Project Document which default could be reasonably likely to result in a Material Adverse   Effect (with a copy of any written notice related thereto), or any notice or claim of a material   default whether by the Company, the Operator or any other party under any Project Document   (with a copy of any such written notice), (iv) any material condemnation, casualty or loss   concernit7g the Company, or its assets, business or operations or any other event or circumstanc   e   that could be reasonably likely to have a Material Adverse Effect, (v) any notice of non-renewal   39    

 

or cancellation or any written claim by the applicable insurance company that any    insurance   policy required to be maintained by the Company under Section 8.10 (including under any   Project Document) is not in effect, (vi) any notice of an environmental, health or safety violation   by the Company or related to or affecting in any manner the Facility or the Production    Facility   Site (as defined in the Site License Agreement) issued by any Governmental Body or othe   r   Person, (vii) any release of Hazardous Materials (as defined in the Purchase Agreements}    by the   Company, (viii) any assignment by a counterparty to a Project Document or other material   Company contract where consent of the Company is not required for such assignment,    (ix) any   claim by the Technology Licensor of infringement or breach under the Technology    License   Agreement or by the Technology Sublicensor of infringement or breach under the   Technology   Sublicense Agreement, (x) any claims made under any Project Document for indemnification,   (xi) any notice ofnon-renewal or termination of a Project Document from the Company's   counter-party to such agreement or by the Technology Licensor of the Technology    License   Agreement or a termination of any material subcontract by the Operator, (xii) any notice    of a   force majeure event or any other notice (other than a notice related solely to administrative or   ministerial matters) received or delivered by the Company under a Project Document, (xiii) any   testing of the scales used to weigh Refined Coal, .Unrefined Coal or feedstock coal    at the Facility   where such scales were inaccurate by two percent or more, (xiv) any notices delivered to    the   Company pursuant to the Operating and Maintenance Agreement, (xv) subject to applicable legal   privilege and confidentiality considerations and restrictions, any other material    issues, including   material Tax and operational issues, related to the Facility, the Company Business,    the   Technology Licensor, the Power Plant, the Site or any other refined coal production    facility   which Seller, the Utility or any of their respective Affiliates owns or operates,   that could   reasonably be expected to result in a Material Adverse Effect, (xvi) the amount of Refined    Coal   purchased by the Utility in any Fiscal Year or a Fiscal Year Projection (as defined in the Refined   Coal Sale Agreement) provided by the Utility for any Fiscal Year gives rise to the Company'   s   right to terminate the Refined Coal Sale Agreement in accordance with Section 8.2.7    thereof and   (xvii) any events, discussions, notices or changes with respect to any material Tax applicable    to   the Company.   (d) The Manager shall keep the Members informed, on a prompt basis, of any   events requiring Notice under Section 7.8(c), and shall reasonably cooperate with the Members   ,   their members and their respective Affiliates in an effort to avoid or mitigate any    cost or   regulatory consequences to them that might arise from any such investigation or   action   (including by reviewing written submissions in advance, attending meetings with authorities    and   coordinating and providing assistance in meeting with regulators).   (e) The Manager shall deliver or cause the Operator to deliver to the Members   all sampling reports received with respect to the Refined Coal produced by the    Facility.   (~ The Manager shall deliver or cause the Operator to deliver such other   reports and information in its possession related to the Company or the Facility reasonabl   y   requested by a Member and shall prepare and promptly deliver to a Member any other    reports   that are reasonably requested by such Member not involving material expense or undue    burden   4U    

 

to the Company or the Operator (unless the Member requesting such report agrees to reimburse   the Company for any material expense incurred in producing such report).   ARTICLE VIII   MANAGEMENT   Section 8.1 Mana ear.   (a) Except as otherwise provided in this Agreement, the Manager shall have   exclusive authority to manage the Company and direct the operation of the Facility and shall   have all such power and authority as is consistent with that granted to the "manager" of a limited   liability company under, and within the meaning of, the Act. Without limiting the foregoing, the   Manager shall have the authority to, subject to Sections 8.1(c), ~ and ~, (x) set production   levels of Refined Coal at the Facility or otherwise cause the Company to curtail or discontinue   production of Refined Coal at the Facility, (y) determine the price, quality and volume of coal   feedstock acquired by the Company (otherwise consistent with the terms of this Agreement and   the Project Documents) and (z) otherwise bind the Company. Subject to the foregoing and to the   extent of available funds of the Company and until the earlier of the dissolution of the Company   and such date as the production and sale of Refined Coal ceases to be eligible for Tax Credits,   subject to the other terms of this Agreement, the Manager shall cause the Company to conduct its   business and operate the Facility (i) in accordance with the Project Documents, (ii) in accordance   with the Operating Protocols and (iii) in accordance with Prudent Operating Standards and in all   material respects with applicable Law, including using commercially reasonable efforts to   maintain all permits, registrations, licenses and other authorizations from Governmental Bodies   required for the operation of the Facility.   (b) The Manager may vest in the Officers of the Company the authority to   take such actions for and on behalf of the Company not otherwise provided for in this Agreement   (and to the extent not reserved to the Members), to the extent any such actions are not   inconsistent with or in breach of the terms of this Agreement or a directive of the Manager, but   neither the Company nor the Manager on behalf of the Company shall hire any employees.   Subject to Section 8.1(d), the Company, and the Manager or any Officer on behalf of and in the   name of the Company, may enter into and cause to be performed the Project Documents to   which the Company is a party and any documents contemplated hereby or thereby or related   thereto, including any authorized amendments thereto, without any further act, vote or approval   of any Person, including any Member.   (c) In addition to any other approval required by applicable Law or this   Agreement, and subject to Section 3.2, the following matters are reserved to the Members, and   the Manager shall have no authority to, and shall not authorize any Officers to, and covenants   and agrees that it shall not, cause the Company to do or take any of the following actions without   the prior written consent of the Members holding at least 51 percent of the outstanding   Membership Interests:   (i) any merger or consolidation of the Company with another Person,   or sale, lease or other disposition of all or substantially all of the assets of the Company to, or   41    

 

causing the Company to acquire another Person, or causing the Company to acquire assets   outside the ordinary course of the Company's business;   (ii) causing the Company to incur indebtedness for borrowed money in   excess of $1,000,000 in the aggregate, other than indebtedness under the Secured Promissory   Note, as amended, or the Security Agreement, as amended (each as defined in the Feedstock   Coal Purchase Agreement);   (iii) causing the Company to waive performance under any agreement   between the Company, on the one hand, and any Member, the Manager or any Affiliate of a   Member or the Manager, on the other hand, or to consent on behalf of the Company with respect   to any issue under such agreement that permits the Company to provide consent;   (iv) causing the Company to institute any litigation or arbitration   involving more than $500,000 or to settle claims, litigation or arbitration involving more than   $500,000;   (v) causing the Company to guarantee the payment of money or the   performance of any contract or other obligation of any Person;   (vi) approval of the Approved Budget and amendments thereto, as   provided in, and subject to, Article IX;   (vii) shutting down or reducing production more than ten percent below   the amount set forth in the Approved Budget, other than shut-downs or reductions (a) due to   exigencies related to safety, environmental, health or other such emergency situations, (b)   resulting from an event of force majeure, (c) resulting from any action, omission or breach by the   Company's counterparty to a Project Document or a reduced demand for fuel by the Utility, (d)   in cases involving the occurrence of a Tax Event as provided herein with respect to which the   Company has delivered a Producer Suspension Event Notice to the Utility pursuant to Section   8.1.2(a)(i) of the Refined Coal Sale Agreement, (e) during any Month as to which an Investor   has elected to not make its Monthly Capital Contribution to the Company as set forth in Section   4.1(e), (~ as required to comply with the terms and conditions of any of the Project Documents,   or (g) as otherwise specifically provided for herein; and   (viii) increasing production during any Quarter by more than ten percent   above the amount set forth in the Approved Budget, other than (a) as required to comply with the   terms and conditions of any of the Project Documents or (b) as otherwise specifically provided   for herein;   provided, however, that in the case of the actions described in clause (iv) above, any such   consent shall not be unreasonably withheld.   (d) In addition to any other approval required by applicable Law or this   Agreement, and subject to Section 3.2, the following matters are reserved to the Members, and   the Manager shall have no authority to, and shall not authorize any Officers to, and covenants   42    

 

and agrees that it shall not, cause the Company to do or take any of the following actions without   the prior written consent of the Members holding 60 percent of the outstanding Membership   Interests:   (i) causing the Company to enter into new or replacement Project   Documents, to assign any Project Documents, or to effect a material modification or amendment,   waiver of a material term or, except pursuant to Section 8.2 or Section 11.1, termination of any   Project Document or any document, schedule or exhibit attached thereto;   (ii) approval of transactions or agreements between the Company, on   the one hand, and any Member, the Manager, or any Affiliate of a Member or the Manager, on   the other hand, involving payment of more than $50,000 for any single contract or payment   during a Fiscal Year, or more than $50,000 in the aggregate, and any amendment to any of the   foregoing, except for an assignment by the Operator of the Operating and Maintenance   Agreement to an Affiliate of CCS-AE experienced in the operation of refined coal facilities and   management of coal feedstocks, and except for any Project Documents and the Purchase   Agreements or transactions pursuant thereto, in each case as in effect as of the Acquisition Date,   and this Agreement as in effect as of the Effective Date, which, for purposes of this Section   8.1 d ,are deemed approved;   (iii) any sale, lease, Encumbrance of any part of, or disposition or   relocation of, the Facility;   (iv) causing the Company to make any elections for federal Tax   purposes, except as expressly permitted or required herein;   (v) causing the Company to initiate Bankruptcy proceedings or   consenting to the filing of a Bankruptcy petition;   (vi) taking any affirmative action that would cause operations of the   Facility not to conform with the Operating Protocols (which, for the avoidance of doubt, may not   be amended except in accordance with this Section 8.1(d)); and   (vii) in the event of a casualty to the Facility (other than a casualty that   is not material in nature or amount and the repair of which would not affect the eligibility of the   Company to generate Tax Credits from sales of Refined Coal from the Facility), determining   whether to repair or restore the Facility or to distribute the proceeds to the Members;   provided, however, that in the case of the actions described in clause (i) above, any such consent   shall not be unreasonably withheld.   (e) In addition to any other approval required by applicable Law or this   Agreement, and subject to Section 3.2, the following matters are reserved to the Members, and   the Manager shall have no authority to, and shall not authorize any Officers to, and covenants   and agrees that it shall not, cause the Company to do or take any of the following actions without   43    

 

the prior written consent of the Members holding 100 percent of the outstanding Membership   Interests:   (i) any issuance, sale, buy-back or redemption by the Company of   limited liability company interests in the Company; or the admission of any Person as a Member   except as otherwise provided herein;   (ii) amending (other than any technical amendment that does not   adversely affect the rights of the Members) or terminating the Company's Articles of   Organization;   (iii) converting the Company from a limited liability company to   another form of entity; and   (iv) causing the Company to engage in any business or activity that is   not within the purpose of the Company, as set forth herein, or to change such purpose.   Section 8.2 Tax Event.   (a) If a Tax Event has occurred and is continuing and a Member or Members   holding at least 40 percent of the outstanding Membership Interests (including the Adversely   Affected Member in the case of an Individual Member Tax Event and, if the Adversely Affected   Member is CCS-AE or the Manager and such Person holds a 0.2 percent or lesser Membership   Interest in the Company, including at least one Member who is neither a CCS Affiliated Member   nor a Manager Affiliated Member) deliver Notice to the Manager that they wish the Company to   suspend production of Refined Coal under the Refined Coal Sale Agreement, then the Manager   shall, within one Business Day of receipt of such Notice, cause the Company to provide a   Producer Suspension Event Notice to the Utility pursuant to Section 8.1.2(a)(i) of the Refined   Coal Sale Agreement, and, following delivery of such Producer Suspension Event Notice to the   Utility, the Company shall suspend production and delivery of Refined Coal pursuant to Section   8.1.2(b) of the Refined Coal Sale Agreement.   (b) Following the delivery of any Producer Suspension Event Notice pursuant   to Section 8.1.2(a)(i) of the Refined Coal Sale Agreement, the Manager, on behalf of the   Company, shall exercise commercially reasonable efforts to determine and negotiate with the   Utility amendments to the Refined Coal Sale Agreement and Ancillary Documents (as defined in   the Refined Coal Sale Agreement) as may be necessary or appropriate to eliminate the effects of   the Tax Event to the extent possible (such actions, "Producer Suspension Remedial Actions") in   accordance with the Refined Coal Sale Agreement, provided, however, that the Manager shall   not agree to any Producer Suspension Remedial Actions without the prior written consent of a   Member or Members holding more than 60 percent of the outstanding Membership Interests (and   including the Adversely Affected Member in the case of an Individual Member Tax Event).   Absent such agreement on Producer Suspension Remedial Actions, the Company shall not   resume production of Refined Coal without the prior written consent of (i) in the case of an   Individual Member Tax Event, the Adversely Affected Member, or (ii) in any other case,   Members holding more than 60 percent of the outstanding Membership Interests.   44    

 

(c) If within 120 Days following delivery of the Producer Suspension Event   Notice, the Company, the Utility and the Members specified in Section 8.2(b) are unable to agree   in good faith on any Producer Suspension Remedial Action with respect to the Tax Event   following discussions as required by Section 8.1.2(b) of the Refined Coal Sale Agreement and a   Member or Members holding at least 40 percent of the outstanding Membership Interests   (including the Adversely Affected Member in the case of an Individual Member Tax Event)   deliver Notice (a "Tax Event Member Termination Notice") to the Manager that they wish to   terminate the Refined Coal Sale Agreement pursuant to Section 8.2.2 of the Refined Coal Sale   Agreement, then (subject to Section 11.2) the Manager shall cause the Company to provide the   Utility notice of the Company's termination of the Refined Coal Sale Agreement in accordance   with Section 8.2.2 of the Refined Coal Sale Agreement.   Section 8.3 Exercise of Termination Rim If (a) the Company has the right to   terminate the Refined Coal Sale Agreement under Section 8.2.7 thereof, and (b) a Member or   Members holding at least 40 percent of the outstanding Membership Interests deliver Notice to   the Manager that they would like the Company to so terminate the Refined Coal Sale Agreement   (a "Low Volume Member Termination Notice"), then (subject to Section 11.2) the Manager shall   cause the Company to provide a notice to the Utility of the Company's termination of the   Refined Coal Sale Agreement in accordance with Section 8.2.7 of the Refined Coal Sale   Agreement. Notwithstanding the foregoing, a Member or Members may not deliver a Low   Volume Termination Notice based on the Company's right to terminate the Refined Coal Sale   Agreement under clause (a) or clause (b) of Section 8.2.7 of such agreement unless the Company   would still have a termination right under such clause if the reference in such clause to   "2,500,000 Tons of Refined Coal" were replaced with a reference to "2,000,000 Tons of Refined   Coal."   Section 8.4 Management Fee; Expenses of the Company. The Company will pay to   the Manager within ten Business Days following the last day of each Quarter, a management fee   equal to three and one-half percent of the aggregate Monthly Capital Contributions required to be   made by all Members with respect to the preceding Quarter, excluding that portion of such   contributions equal to such management fee (the "Management Fee"). The Company will pay   all expenses related to the Company and its business and operations. The Company will   reimburse the Manager and its Affiliates for reasonable and appropriately incurred expenses   incurred on behalf of the Company, including labor at the Site, consistent with the Approved   Budget.   Section 8.5 Removal or Resignation of the Manager. The Manager may resign by   providing written Notice to the Company and the Members; provided that the Manager's   resignation may not be effective until a successor Manager is selected pursuant to this Section   8^ 5. The Manager maybe removed for cause by the Members holding at least 51 percent of the   outstanding Membership Interests held by all Members who are not Manager Affiliated   Members, and excluding in any case any Membership Interests held by Manager. For purposes   of this section, "cause" means: (a) fraud, intentional misconduct, gross negligence, or criminal   violation of Law by the Manager in the performance of its duties and obligations under this   Agreement or in connection with causing the Company to perform in accordance with the Project   45    

 

Documents; (b) the Bankruptcy or dissolution of the Manager; or (c) a material breach by   Manager of this Agreement which could reasonably be expected to adversely affect the Tax   Credits available to the Members, which breach has not been cured within 30 days from the date   Notice thereof is given to the Manager by a Member. Upon the resignation or removal of the   Manager, the Members holding at least 51 percent of the outstanding Membership Interests shall   select a new Manager. Except as provided in Section 8.7, the Manager shall not assign its rights   or obligations as Manager without the prior written approval of each Member.   Section 8.6 Third Partv Reliance. Third parties dealing with the Company shall be   entitled to rely conclusively on the power and authority of the Manager. No Person dealing with   the Company shall be required to ascertain whether the Manager is acting in accordance with the   provisions of this Agreement. All Persons may rely on a document executed by the Manager in   the name of the Company as binding the Company.   Section 8.7 Officers. The Manager may, from time to time as it deems advisable,   appoint officers of the Company (the "Officers") and assign, in writing, titles (including   President, Vice President, Secretary and Treasurer) to any such person. Unless the Manager   decides otherwise, if the title is one commonly used for officers of a business corporation formed   under the Colorado Business Corporations Act, the assignment of such title shall constitute the   delegation to such person of the authorities and duties that are normally associated with that   office, subject to Sections 8.1(cL(d) and (e) and any other approval rights of the Members under   this Agreement or applicable Law and subject to the Company being a limited liability company   and not a corporation. Any delegation pursuant to this Section 8.7 may be amended or revoked   at any time by the Manager. Officers shall not be compensated by the Company and shall serve   at the discretion of and subject to the direction of the Manager. Officers shall not be "managers"   under the Act.   Section 8.8 Contracts with Affiliates. The Company may enter into contracts and   agreements with the Manager, CCS-AE, or an Affiliate of the Manager or CCS-AE for the   rendering of services, the sale or lease of supplies and equipment to the Company necessary or   appropriate for the operation of the Company business consistent with the purposes stated herein;   provided, however, that any such contract or agreement entered into with any such Person must   be approved by the Members to the extent specified in Section 8.1(c) and Section 8.1(d), and   with respect to any contract or agreement with any such Person as to which the consent of the   Members is not required. under Section 8.1(c) or Section 8_.1(d), such contract or agreement must   be entered into on an arm's length basis and the cost of services, supplies and equipment under,   and the other terms of, such contracts and agreements must be consistent with the Approved   Budget and no less favorable to the Company than those available to the Company from   unrelated third parties that are engaged in the business of rendering comparable services or   selling or leasing comparable supplies and equipment.   Section 8.9 Operating Protocols. The Members acknowledge that the Operating   Protocols were jointly developed by the Members to reflect and conform to statements regarding   the operation of the Facility and testing of Refined Coal and additional operating and testing   conditioi7s and regnireinents contained in the Private Letter Rulings. If, and to the extent that, a   Private Letter Ruling is hereafter modified and contains additional operating and testing   46    

 

conditions and requirements that are not then reflected in the Operating Protocols, or the   Treasury Department or IRS issues guidance requiring additional or different operating and   testing conditions, and. such additional requirements require changes to the Operating Protocols   in order that they be properly reflected therein, the Members will promptly meet and negotiate in   good faith to agree upon any required amendments to the Operating Protocols, which require   approval of the Members pursuant to Section 8.1(d)(vi~.   Section 8.10 Insurance. The Company shall acquire and maintain, or cause to be   maintained, insurance coverage specified in Schedule 8.10 throughout the entire term of this   Agreement and other types of insurance with respect to the Facility and/or the operations of the   Company, as is required by the Project Documents and any other contracts to which the   Company is a party, and such additional insurance as may otherwise be reasonably determined   by the Manager to be necessary or advisable from time to time. The Company will name each   Member as an additional insured on such insurance policies.   Section 8.11 Duties Liabilities and Exculpation.   (a) To the extent that, at Law or in equity, a Manager or Member has duties   (including fiduciary duties) and liabilities relating thereto to the Company or to any Member or   other Person bound by this Agreement, a Manager or Member acting under this Agreement shall   not be liable to the Company or to any Member or other Person bound by this Agreement for its   good faith reliance on the provisions of this Agreement, its good faith actions or failure to act   (including actions taken or omitted to be taken in good faith in accordance with the written   direction of one or more Members in accordance with the terms hereof ,for any errors of   judgment, or for any act or omission believed in good faith to be within the scope of authority   conferred by this Agreement, but nothing herein shall relieve the Manager or any Member for   fraud, intentional misconduct,, a knowing material violation of Law, gross negligence or a   material breach of the express terms of this Agreement. The provisions of this Agreement, to the   extent that they restrict the duties and liabilities of the Manager or a Member otherwise existing   at Law or in equity, are agreed by the Manager and the Members to replace such other duties and   liabilities of such Manager or Member. IN NO EVENT SHALL THE .COMPANY, ANY   MEMBER OR THE MANAGER BE LIABLE UNDER THIS AGREEMENT TO THE   COMPANY, ANOTHER MEMBER OR THE MANAGER FOR ANY LOST PROFITS, OR   LOST TAX CREDITS OR OTHER TAX BENEFITS OF, OR ANY CONSEQUENTIAL,   PUNITIVE, SPECIAL OR INCIDENTAL DAMAGES INCURRED BY SUCH PERSON   WHETHER ARISING FROM A BREACH OF THIS AGREEMENT OR OTHERWISE;   PROVIDED HOWEVER, THAT CLAIMS BY A PERSON THAT IS NOT THE COMPANY,,   THE MANAGER OR A MEMBER OR AN AFFILIATE OF A MEMBER AND WITH   RESPECT TO WHICH A PERSON IS ENTITLED TO INDEMNIFICATION UNDER THIS   AGREEMENT, REGARDLESS OF THE NATURE OF SUCH THIRD PARTY CLAIM,   SHALL NOT BE CONSIDERED LOST PROFITS, OR LOST TAX CREDITS OR OTHER   TAX BENEFITS OF, OR CONSEQUENTIAL, PUNITIVE, SPECIAL OR INCIDENTAL   DAMAGES INCURRED BY THE PERSON ENTITLED TO INDEMNIFICATION.   FURTHERMORE; IN NO EVENT SHALL THE MANAGER BE LIABLE IN ANY MANNER   47    

 

FOR A DEBT, OBLIGATION OR LIABILITY OF THE COMPANY SOLELY BY REASON   OF SERVING AS THE MANAGER OF THE COMPANY.   (b) Except as otherwise expressly provided in this Agreement, including the   limits on indemnification set forth in Section 8.12:   (i) each of the Members and the Manager shall be fully protected in   relying in good faith upon the records of the Company and upon such information, opinions,   reports or statements presented to the Company by any other Person who is a Member, the   Manager or any Officer of the Company, or by any other individual as to matters the Members or   the Manager reasonably believe are within such other individual's professional or expert   competence and who has been selected with reasonable care by or on behalf of the Company,   including information, opinions, reports or statements as to the value and amount of the assets,   liabilities, profits or losses of the Company or any other facts pertinent to the existence and   amount of assets from which distribution to the Members might properly be paid;   (ii) provided that no Officer nor the Manager or its officers has actual   knowledge of any inaccuracy thereof, the Manager shall not be bound to make any investigation   into the facts or matters stated in any resolution, certificate, statement, instrument, opinion,   report, notice, request, direction, consent or other paper or document, but the Manager, in its   discretion, may make such further inquiry or investigation into such facts or matters as it may see   fit; and   (iii) the Manager shall not be required to take any action hereunder, nor   shall any other provision of this Agreement be deemed to impose a duty on the Manager to take   any action, if the Manager shall reasonably determine, or shall have been advised in writing by   counsel, that such action is contrary to any applicable Law or this Agreement.   Section 8.12 Company Indemnification.   (a) The Company shall indemnify and hold harmless any person serving as a   Manager or Officer of the Company from and against any out-of-pocket loss, expenses,   judgment, settlement cost, fee and related expenses (including attorneys' fees and expenses,   which shall be paid as incurred), costs or damages suffered or sustained by such person, the   Manager in its capacity as Manager or Officer of the Company; provided, however, that no   Manager or Officer shall be entitled to be indemnified and held harmless to the extent the matter   for which such Manager or Officer seeks indemnification is attributable to such Manager's or   Officer's breach of this Agreement, fraud, intentional misconduct, a knowing violation of Law or   gross negligence. The Company shall also indemnify and hold harmless each Member from and   against any out-of-pocket loss, expenses, judgment, settlement cost, fee and related expenses   (including attorneys' fees and expenses, which shall be paid as incurred), costs or damages   suffered or sustained by such Member in its capacity as such (including for any Company   liabilities) to the extent the matter for which such Member seeks indemnification does not relate   to such Member's breach of this Agreement, fraud, intentional misconduct, a knowing violation   of Law or gross negligence, it being agreed that the Company shall be entitled to control the   defense of any such claim.   48    

 

(b) Notwithstanding the foregoing, the provisions of this Section 8.12 shall   not be construed so as to provide for indemnification for any liability to the extent (but only to   the extent) that such indemnification would be in violation of applicable Law, but shall be   construed so as to effectuate the provisions of this Section 8.12 to the fullest extent permitted by   Law.   Section 8.13 Enforcement of Company Rights.   (a) Notwithstanding anything to the contrary contained herein, if (a) the   Company's counterparty under any agreement between the Company, on the one hand, and the   Manager, CCS-AE or any of their Affiliates, on the other hand (other than this Agreement), has   failed to perform any material obligation or is otherwise in breach of any material term of such   agreement, and (b) the Manager fails to use commercially reasonable efforts to commence and   thereafter continue proper enforcement actions within five Business Days after Notice from any   Member specifying such failure, then, upon the election of a Member or Members holding at   least 40 percent of the outstanding Membership Interests, a Member nominated by such Member   or Members holding at least 40 percent of the outstanding Membership Interests shall be entitled   to enforce the rights of the Company under such agreement at the Company's expense.   (b) Neither the Manager nor the Company shall directly or indirectly modify   or amend the rights of any Member in relation to its status as such (including by way of any side   agreement) except pursuant to an amendment to this Agreement effected in accordance with   Section 12.2, and neither the Manager nor the Company shall waive its rights under this   Agreement with respect to any Member without the prior written consent of Members holding at   least 51 percent of the outstanding Membership Interests.   Section 8.14 Operating and Maintenance Agreement. The Manager is responsible for   ensuring that the terms of the Operating and Maintenance Agreement are consistent in all   respects with the terms of this Agreement. In addition, (a) the Manager and the Company shall   prohibit the Operator from taking any action in connection with the services provided under the   Operating and Maintenance Agreement that requires the prior approval of the Members pursuant   to the terms of this Agreement without first obtaining such prior approval of the Members and   (b) the Manager shall be liable for any action taken by the Operator pursuant to the Operating   and Maintenance Agreement, or omission of the Operator, in each case that would be a breach of   this Agreement if the Manager or the Company took or failed to take such action.   ARTICLE IX   APPROVED BUDGETS   Section 9.1 Preparation. On or before November 30 of each year through the term of   this Agreement, except for the year during which the term of this Agreement ends, the Manager   will prepare and deliver to the Members a proposed operating budget for the following Fiscal   Year (including the proposed Annual Budget for the following Fiscal Year under the Operating   and Maintenance Agreement), setting forth anticipated production levels and anticipated   revenues and expenses of the Company for each Month of such Fiscal Year, taking into account   any required downtime for maintenance or downtime at the Power Plant, the Target Capital   49    

 

Contribution for such Fiscal Year, and the anticipated Monthly Capital Contributions for each   Member for the period covered by such budget. If the Members approve such proposed   operating budget in accordance with Section 8.1(c), then such operating budget shall be deemed   the Approved Budget for the applicable Fiscal Year. If the Members do not so approve such   proposed operating budget within 15 days following the delivery thereof by the Manager, the   Manager and the Members shall use good faith efforts to prepare or cause to be prepared a   revised operating budget, which shall be submitted to the Members for their approval, and, upon   approval of such revised operating budget in accordance with Section 8.1(c), such revised   operating budget shall become the Approved Budget for the applicable Fiscal Year. To the   extent that the Members do not so approve such revised operating budget within 15 days   following the delivery thereof by the Manager, as to amounts relating to any items of the revised   operating budget that are not so approved and for which there was a corresponding amount in the   preceding Fiscal Year's Approved Budget, the corresponding amounts for such items in the   preceding Fiscal Year's Approved Budget (adjusted to reflect any then-existing contractual   obligations to which such items relate) will be substituted for suchdisputed items in the revised   operating budget, and, as so modified, such revised operating budget shall be deemed the   Approved Budget for the applicable Fiscal Year. The Approved Budget for each Fiscal Year   shall have a copy of the final Annual Budget (as defined in the Operating and Maintenance   Agreement) for such Fiscal Year attached thereto.   Section 9.2 Amendments and Supplements. The Manager may from time to time   during any Fiscal Year, upon prior written notice to the Members but without the approval of the   Members, amend the Approved Budget to decrease expected expenditures, or to increase   expected expenditures (i) to the extent such decrease or increase is related to a proportionate   decrease or increase in production that is approved by the Members pursuant to Section 8.1(c) or   that is permitted pursuant to Section 8.1(c) without the approval of the Members or (ii) so long as   any increase, exclusive of increases described in the preceding clause (i), does not exceed an   amount equal to ten percent, in the aggregate for all such amendments during such Fiscal Year.   Any other amendment of the Approved Budget shall require the approval of the Members in   accordance with Section 8.1(c), and if so approved, each such variance shall be added to the   Approved Budget, which, as so amended, shall thereafter be the Approved Budget for the   applicable Fiscal Year.   ARTICLE X   TRANSFERS; DUTY OF FIRST OFFER   Section 10.1 Prohibited Transfers. Except for transfers provided for in Sections 3.10,   3.11, 3.12, 4_4, and 11.2 (which sections shall not be subject to this Article X), no Member shall   sell, transfer, assign, convey, or otherwise dispose of all or any part of its Membership Interest (a   "Transfer") or any interest, rights or obligations with respect thereto except pursuant to Section   10.2 and Section 10.3. A Member may not pledge, mortgage, encumber or hypothecate all or   any part of its Membership Interest. Any attempted Transfer or pledge, mortgage, encumbrance,   or hypothecation, other than in strict accordance with this Article X, shall be null and void, and   the purported transferee shall have no rights as a Member or otherwise in or to the Membership   Interest.   50    

 

Section 10.2 Conditions to Transfer by Members. Notwithstanding anything contained   herein to the contrary, upon the satisfaction of the following conditions, a Member may Transfer   all or a portion of its Membership Interests and the transferee shall become a Member with   respect to such transferred Membership Interest:   (a) The transferring Member and the prospective transferee each execute,   acknowledge and deliver to the Company such instruments of transfer and assignment with   respect to such Transfer and such other instruments as are reasonably necessary and reasonably   satisfactory in form and substance to the Manager to effect such Transfer and to confirm. such   transferring Member's intention that the transferee become a Member in its place;   (b) The transferee executes, adopts and acknowledges this Agreement, and   executes such other agreements as the Manager may reasonably deem appropriate to confirm the   undertaking of the transferee to be bound by the terms of this Agreement and to assume the   obligations of the transferring Member under this Agreement;   (c) The transferee executes documentation in form reasonable satisfactory to   the Manager and the Seller pursuant to which the transferee assumes the obligations of the   transferring Member under the applicable Purchase Agreement pursuant to which the transferred   Membership Interests were originally purchased from Seller;   (d) Except in the case of any Involuntary Transfer, the transferor will remain   primarily liable under this Agreement and, in the case of a Transfer by an Investor, under the   applicable Purchase Agreement, which, together with the Investor Guarantee provided by such   transferor, shall remain in full force and effect; provided, however: (i) subject to clause (ii)   below, if the transferee (or an affiliated guarantor) is a Person with (A)~a credit rating with   respect to its long term, senior unsecured debt not supported by third party credit enhancement   from Standard & Poor's Financial Services LLC (or its successor) of at least BB or from   Moody's Investors Services, Inc. (or its successor) of at least Bat or (B) a Net Worth of at least   $500,000,000, or as otherwise approved by the Manager with the consent of Members holding at   least 51 percent of the outstanding Membership Interests, then (x) the transferor will no longer   remain primarily liable under this Agreement or the applicable Purchase Agreement with respect   to obligations related to the period after the Transfer and the transferee will be solely responsible   for the obligations of the transferor thereunder to the extent related to the period after the   Transfer and (y) the Investor Guarantee provided by such transferor shall no longer remain in   effect; or (ii) if the transferee is an Affiliate of the transferor, then the transferor will no longer   remain primarily liable under this Agreement or the applicable Purchase Agreement, provided   that the Investor Guarantee provided by such transferor (or affiliated guarantor) shall remain in   effect.   (e) The Transfer will not violate any securities Laws or any other applicable   federal or state Laws or the order of any court having jurisdiction over the Company or any of its   assets;   (~ The Transfer will not cause the Company to be classified as a corporation   or publicly traded partnership for federal Tax purposes;   51    

 

(g) The Transfer will not cause the Company to be treated as a partnership to   which TEFRA applies;   (h) In the case of a Transfer by CCS-AE that would reduce CCS-AE's   Membership Interest in the Company below two-tenths of a percent (0.2%), Members who hold   at least 51 percent of all Membership Interests held by Members who are not CCS Affiliated   Members have consented to such Transfer in writing;   (i) The Transfer will not result in the sale of Refined Coal to any Related   Person;   (j) The Transfer will not cause any Member to be required under GAAP to   consolidate the Company without the consent of that Member; and   (k) The Transfer maybe only to a Qualified Person and following such   Transfer there maybe not more than ten Members of the Company in the aggregate.   Section 10.3 Right of First Offer. If an Investor desires to Transfer any of its   Membership Interest (other than to the Company or an Affiliate of such Investor) and the   Transfer otherwise complies with the restrictions contained in this Article X, such Investor shall   deliver a Notice to the Company and CCS-AE setting forth such Investor's desire to sell its   Membership Interest (an "Offer Notice"). If CCS-AE delivers a Notice to such Investor within   five Business Days after delivery of the Offer Notice that CCS-AE is interested in purchasing all   of such Investor's Membership Interest, then CCS-AE and such Investor shall negotiate in good   faith for a period of 20 Business Days (or such other period on which such Investor and CCS-AE   may agree) after delivery of an Offer Notice, to agree on the price and other terms on which   CCS-AE would purchase such Investor's Membership Interest. An Investor shall not be required   to sell to CCS-AE, and CCS-AE shall not be required to purchase, such Investor's Membership   Interest unless the parties mutually agree on the terms and conditions for such transaction. If an   Investor and CCS-AE agree on the price and other terms and conditions for the purchase and sale   of an Investor's Membership Interest, then the closing of the sale of the Membership Interest   covered by the Offer Notice pursuant to this Section 10.3 shall occur within 20 Business Days   after the parties so agree or at such other time as the parties agree. At the closing, CCS-AE and   such Investor shall each execute, acknowledge and deliver to the Company such instruments of   transfer and assignment as necessary or appropriate to effect such Transfer and to confirm such   Member's intention that CCS-AE own such Investor's Membership Interest. If CCS-AE and an   Investor do not agree on the price and other terms for the purchase and sale of such Investor's   Membership Interest within the applicable period set forth in this Section 10.3, subject to the   other restrictions contained in this Agreement, such Investor may sell or assign its rights in the   Membership Interest to another Person for a period of up to 13 months from the end of such 20   Business Day period on material terms no more favorable in the aggregate to the transferee than   the material terms set forth in the last written offer delivered by CCS-AE to such Investor prior   to the end of the period set forth in this Section 10.3, if any.   Section 10.4 Admission. Any transferee of all or part of a Membership Interest   pursuant to a Transfer made in accordance with this Agreement shall be admitted to the   52    

 

Company as a substitute Member upon its execution of a counterpart to this Agreement;   provided, however, that in the case of an Involuntary Transfer to a Seller Designee who has   executed and delivered a Seller Designee Agreement, such Seller Designee shall be admitted as a   substitute Member at the effective time of such Involuntary Transfer.   ARTICLE XI   DISSOLUTION AND WINDING-UP   Section 11.1 Events of Dissolution. The Company shall be dissolved and its affairs   shall be wound up upon the first to occur of any of the following with the date as of which such   event occurs or such election is made, being the date of dissolution of the Company:   (a) on the date specified in Section 2.4;   (b) the unanimous written consent of the Members to dissolve and terminate   the Company;   (c) the entry of a decree of judicial dissolution under Section 7-80-810 of the   Act;   (d) six months following the tenth anniversary of the date the Facility was   first placed in service for purposes of federal income Tax, or such later date as the Company is   not expected to operate at a pre-Tax profit;   (e) at any time there are no members of the Company unless the Company is   continued in accordance with the Act;   (~ upon the written election of a Member or Members holding 40 percent of   the outstanding Membership Interests, at any time following the termination of the Refined Coal   Sale Agreement in accordance with its terms;   (g) at the written election of a Member or Members holding 40 percent of the   outstanding Membership Interests at any time after all of such Members are and have been at all   times for the preceding six Months in default on its or their Fixed Payment obligations under the   applicable Purchase Agreement to the extent that neither Seller nor CCS-AE has taken action to   effect an Involuntary Transfer of such Members' Membership Interest and such Members are   then still Members;   (h) upon the written election of a Member or Members holding 40 percent of   the outstanding Membership Interests, if for any Fiscal Year the Variable Cost Per Ton exceeds   130% of the Variable Cost Per Ton Target or if the Variable Cost Per Ton Estimate for a given   Fiscal Year exceeds 130% of the Variable Cost Per Ton Target for such Fiscal Year; or   (i) at the time specified in Section 11.2.   Section 11.2 Purchase of Membership Interest. If a Member or Members (such   Members, the "Electing Member") have (a) delivered a Tax Event Member Termination Notice   53    

 

directing the Company to terminate the Refined Coal Sale Agreement pursuant to Section 8.2.2   of the Refined Coal Sale Agreement under Section 82(c) hereof, or (b) delivered a Low Volume   Member Termination Notice directing the Company to terminate the Refined Coal Sale   Agreement pursuant to Section 8.2.7 of the Refined Coal Sale Agreement under Section 8.3   hereof (each such action described in clause (a) and (b) above, a "Significant Company Action"),   then CCS-AE may elect, by delivery of an Option Notice to each Electing Member within 21   days of the Electing Member's delivery of a Tax Event Member Termination Notice or a Low   Volume Member Termination Notice, as applicable, with respect to a Significant Company   Action, to purchase (or designate a Qualified Person to purchase) each Electing Member's   Membership Interest for a cash payment in an amount equal to the then Fair Market Value of   such Membership Interest, which shall be determined as though all of the material contracts,   licenses and other agreements to which the Company is a party will remain in full force and   effect until the dissolution of the Company and shall take into account that the Facility is a   "refined coal production facility" as defined in Section 45(d)(8) of the Code. If CCS-AE does   not timely exercise such option, the Company shall, on the first Business Day following the   expiration of its 21-day option period, deliver to the Utility notice of the Company's termination   of the Refined Coal Sale agreement in accordance with Section 8.2.2 or Section 8.2.7 of the   Refined Coal Sale Agreement, as applicable, and the Company shall be dissolved as of the date   the termination of the Refined Coal Sale Agreement becomes effective (following the passage of   any applicable notice period provided in the Refined Coal Sale Agreement). Notwithstanding   anything in this Agreement to the contrary, if CCS-AE exercises such option with respect to all   of the Electing Members who delivered a Tax Event Member Termination Notice or a Low   Volume Member Termination Notice, as applicable, prior to the expiration of its 21-day option   period and the purchase of each Electing Member's Membership Interest is consummated   thereafter in accordance with this Section 11.2, the Manager shall not be required to take such   Significant Company Action on behalf of the Company. If CCS-AE so elects to purchase or   designate a purchaser for an Electing Member's Membership Interest, such closing shall occur   within 30 Business Days after CCS-AE delivers such Option Notice to such Electing Member   unless, within ten Business Days of delivery of the Option Notice, the Electing Member indicates   its objection to the proposed Fair Market Value purchase price by giving Notice to CCS-AE to   such effect, in which case, such closing shall occur within eve Business Days after the Fair   Market Value is determined in accordance with Section 11.4, or at such other time as the parties   may otherwise agree. If closing does not occur by such outside date, the Company shall   thereupon immediately deliver to the Utility notice of the Company's termination of the Refined   Coal Sale Agreement in accordance with Section 8.2.2 or Section 8.2.7 of the Refined Coal Sale   Agreement, as applicable, and the Company shall be deemed dissolved as of the date the   termination of the Refined Coal Sale Agreement becomes effective (following the passage of any   applicable notice period provided in the Refined Coal Sale Agreement). At the closing, (i) the   Electing Member shall make the Reconveyance Representations and Warranties to CCS-AE or   the other transferee of the Membership Interests, and (ii) CCS-AE and the Electing Member shall   each execute, acknowledge and deliver to the Company such instruments of transfer and   assignment as necessary or appropriate to effect such Transfer and to confirm such Member's   intention that CCS-AE own the Electing Member's Membership Interest. Each Member hereby   constitutes and appoints the Manager, with full power of substitution, as his, her or its true and   lawful agent and attorney-in-fact, with full power and authority in his, her or its name, place and   54    

 

stead, to execute and deliver (i) an assignment or other instrument of conveyance on behalf of   such Member and (ii) all such certificates and other instruments and all amendments thereof on   behalf of such Member as the Manager may reasonably deem to be necessary or appropriate in   order to effectuate the provisions of this Section 11.2. The foregoing power of attorney is   irrevocable and coupled with an interest, and shall survive the death, disability, incapacity,   dissolution, Bankruptcy, or termination of any Member and the Transfer of all or any portion of   his, her or its Membership Interests and shall extend to such holder's heirs, successors, assigns   and personal representatives.   Section 11.3 Purchase of Facility. Upon the occurrence of one of the events set forth in   Section 11.1, CCS-AE shall have the option to purchase the Facility from the Company for a   cash payment in an amount equal to the then Fair Market Value of the Facility, which shall be   determined as though all of the material contracts, licenses and other agreements to which the   Company is a party will remain in full force and effect until the dissolution of the Company and   shall take into account that the Facility is a "refined coal production facility" as defined in   Section 45(d)(8) of the Code, such option to be exercisable by CCS-AE by delivery of an Option   Notice to the Manager and the Members within 30 days following the applicable dissolution   event. If CCS-AE so elects to purchase the Facility, the closing of such purchase and sale shall   occur within 30 Business Days after CCS-AE delivers such Option Notice, unless, within ten   Business Days of delivery of the- Option Notice, a Member or Members collectively holding at   least 40 percent of the outstanding Membership Interests (such Member or Members, the   "Notif~n~ Member") indicate its or their objection to the proposed Fair Market Value purchase   price by giving Notice to CCS-AE to such effect, in which case, such closing shall occur within   five Business Days after the Fair Market Value is determined in accordance with Section 11.4.   Section 11.4 Fair Market Value. If pursuant to Section 11.2 or Section 11.3, the   Electing Member or the Notifying Member disputes that CCS-AE's proposed purchase price set   forth in the Option Notice reflects the applicable Fair Market Value pursuant to Section 11.3 or   Section 11.4, as applicable, the Notifying Member or the Electing Member, as applicable, may   deliver to CCS-AE, within ten Business Days after its receipt of the Option Notice, Notice of its   dispute of the proposed purchase price (the "Dispute Notice"). Failure by the Electing Member   or the Notifying Member to deliver the Dispute Notice within such ten Business Day period shall   be deemed to constitute its approval of such purchase price, which, in such event, will be deemed   to constitute the Fair Market Value for purposes hereof. If a Dispute Notice is delivered   pursuant hereto within such ten Business Day period, CCS-AE and the Person giving the Dispute   Notice will negotiate in good faith to agree upon the applicable Fair Market Value purchase   price. If they are unable to agree upon the Fair Market Value purchase price within 15 days after   delivery of the Dispute Notice, either such Person may deliver written Notice to the other that it   elects to have the Fair Market Value price determined by an Independent Appraiser (the   "Appraisal Notice"). The Person making such election shall propose an Independent Appraiser   in the Appraisal Notice. If CCS-AE and the Electing Member or Notifying Member, as   applicable, are unable to agree on the Independent Appraiser within ten Business Days after   delivery of the Appraisal Notice, then either Person may request that the American Arbitration   Association designate the Independent Appraiser. Once designated, the Independent Appraiser   will be instructed to perform an appraisal of the Membership Interest or the Facility, as   55    

 

applicable, and determine its Fair Market Value and furnish a written report thereof to the   Members within 30 days following such designation. The Independent Appraiser's   determination of the Fair Market Value shall be final and binding and shall be determined as   though all of the material contracts, licenses and other agreements to which the Company is a   party shall remain in full force and effect until the dissolution of the Company and shall take int   o   account that the Facility is a "refined coal production facility" as defined in Section 45(d)(8) of   the Code; provided, however, that in the event that the Independent Appraiser's determination of   the Fair Market Value is greater than CCS-AE's proposed purchase price set forth in the Option   Notice, then CCS-AE shall be entitled to withdraw its exercise under the Option Notice, in which   case, it will have no obligation to purchase the Membership Interest or Facility, as applicable,   hereunder. The fees and expenses of the Independent Appraiser shall be borne by the Company.   Section 11.5 Distribution of Assets. Upon the occurrence of one of the events set forth   in Section 11.1, unless CCS-AE delivers an Option Notice and the closing with respect theret   o   occurs in accordance with the provisions of either Section 11.2 or Section 11.3, as applicable,    the   Manager and Members holding at least 51 percent of the outstanding Membership Interests shall   appoint one or more liquidators (which may include one or more Members or the Manager). If   the Manager and Members holding at least 51 percent of the outstanding Membership Interests   are unable to agree on one or more liquidators within ten Business Days after one of the events   set forth in Section 11.1 occurs, then the Manager shall be the liquidator of the Company. Upon   their appointment, the liquidators shall proceed diligently to wind-up the affairs of the Company   and shall make final distributions as provided herein and in the Act by the later of the end of th   e   Company taxable year in which such event occurs or within 90 days after such date. The   liquidators shall sell any and all Company property, including to Members. The liquidators shal   l   first pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations   of   the Company (including all expenses incurred in liquidation) or otherwise make adequate   provision for payment and discharge thereof (including the establishment of a cash escrow fund   for contingent, conditional or unmatured liabilities in such amount and for such term as the   liquidators may reasonably determine) in the order of priority as provided by Law. The balance   of the assets of the Company shall be distributed pro rata to the Members in accordance with the   positive balance in their Capital Accounts, after giving effect to all contributions, distributions   and allocations for all periods. The distribution of cash and/or property to a Member in   accordance with the provisions of this Section 11.5 constitutes a complete return to the Member   of its Capital Contributions and a complete distribution to the Member on its Membership   Interest in the Company of all the Company's property. If the assets of the Company remaining   after the payment or discharge of the debts and liabilities of the Company are insufficient to   return Capital Contributions of each Member, such Member shall have no recourse against the   Company or any other Member.   Section 11.6 In-Kind Distributions. Except as provided in Section 11.5, there shall be   no distribution of assets of the Company in kind without the prior written consent of all of the   Members.   Section 11.7 Statement of Dissolution. Prior to Dissolution of the Company and the   completion of the winding up of its business, the liquidation trustee, on behalf of the Company,   56    

 

will file a statement of dissolution with the Colorado Secretary of State pursuant to the Act.. At   such time, the Manager will also file an application for withdrawal of the Company's certificate   of authority in any jurisdiction where the Company is then qualified to do business.   ARTICLE XII   MISCELLANEOUS   Section 12.1 Notices. Unless otherwise provided herein, any offer, acceptance,   election, approval, consent, certification, request, waiver, notice or other communication   required or permitted to be given hereunder (collectively referred to as a "Notice"), shall be in   writing and delivered (a) in person, (b) by registered or certified mail with postage prepaid and   return receipt requested, (c) by recognized overnight courier service with charges prepaid or   (d) by facsimile transmission, directed to the intended recipient at the address of such Member   set forth on Exhibit B or at such other address as any Member hereafter may designate to the   others in accordance with a Notice under this Section 12.1. A Notice or other communication   will be deemed delivered on the earliest to occur of (i) its actual receipt when delivered in   person, (ii) the fifth Business Day following its deposit in registered or certified mail, with   postage prepaid, and return receipt requested, (iii) the second Business Day following its deposit   with a recognized overnight courier service, or (iv) the date of receipt of a facsimile or, if such   date of receipt is not a Business Day, the next Business Day following such date of receipt,   provided the sender can and does provide evidence of successful transmission. Any Notice   received later than 5:00 p.m. shall be deemed to be received on the next Business Day. A copy   of any Notice maybe delivered by e-mail but such copy will not constitute formal notice under   this Agreement.   Section 12.2 Amendment. Except as otherwise provided in this Section 12.2, this   Agreement maybe modified or amended only by an instrument in writing duly executed and   delivered by the Members holding at least 75 percent of the Membership Interests; provided that   (a) any amendment that disproportionately (other than on the basis of relative ownership) affects   a Member shall require the approval of such Member and (b) Section 8.1(e) may not be amended   except by an instrument in writing duly executed and delivered by Members holding at least   100 percent of the Membership Interests. Notwithstanding the foregoing, the Manager shall   have the authority, without the consent of the Members, to amend Exhibit B to reflect a   resignation of a Member from the Company in accordance with the terms of this Agreement, a   Transfer of a Membership Interest in accordance with the terms of this Agreement, the admission   of a new Member in accordance with the terms of this Agreement, or a change in percentage of   Membership Interest in accordance with the terms of this Agreement or otherwise resulting from   any of the foregoing events. The Manager will give the Members prompt Notice of any   amendment made pursuant to this Section 12.2.   Section 12.3 Partition. Each of the Members hereby irrevocably waives, to the extent it   may lawfully do so, any right that such Member may have to maintain any action for partition   with respect to the Company property.   Section 12.4 Waivers and Modifications. Any waiver or consent, express, implied or   deemed, to or of any breach or default by any Person in the performance by that Person of its   57    

 

obligations with respect to the Company or any action inconsistent with this Agreement is not    a   consent or waiver to or of any other breach or default in the performance by that Person of the   same or any other obligations of that Person with. respect to the Company or any other such   action. Failure on the part of a Person to insist in any one or more instances upon strict   performance of any provisions of this Agreement, to take advantage of any of its rights.   hereunder, or to declare any Person in default with respect to the Company, irrespective of ho   w   long that failure continues, does not constitute a waiver by that Person of its rights with respec   t   to that Person or its rights with respect to that default until the applicable statute of limitations   period has lapsed. All waivers and consents hereunder shall be in writing and shall be delivered   to the other Members in the manner set forth in Section 12.1.   Section 12.5 Severability. Any term or provision of this Agreement that is invalid or   unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of   the remaining terms and provisions thereof or the validity or enforceability of the offending ter   m   or provision in any other situation or in any other jurisdiction.   Section 12.6 Successors; No Third-Party Beneficiaries. This Agreement is binding on   and inures to the benefit of the Members and their respective heirs, legal representatives,   successors and permitted assigns. Nothing in this Agreement shall provide any benefit to any   third party or entitle any third party to any claim, cause of action, remedy or right of any kind,    it   being the intent of the Members that this Agreement shall not be construed as a third-party   beneficiary contract.   Section 12.7 Entire Agreement. This Agreement, including the Exhibits and Schedules   attached hereto or incorporated herein by reference, and together with the Purchase Agreements   ,   constitutes the entire agreement of the Members with respect to the matters covered herein. This   Agreement and the Purchase Agreements supersede all prior agreements and oral understandings   among the parties hereto with respect to such matters, including the Second A&R LLC   Agreement.   Section 12.8 Public Statements. Neither the Company, the Manager nor any Member   shall issue any public announcement, statement or other disclosure before Consulting with the   Manager and the other Members (including a right to review in advance and comment on such   proposed disclosure) to the extent such public announcement or other disclosure specifically   identifies the Manager, any Member or such Member's Affiliates (other than Affiliates of the   disclosing Party), includes the detailed terms of this Agreement or any Purchase Agreement or   describes the Tax structure or Tax treatment of the transactions contemplated by this Agreemen   t   and the Purchase Agreements and will not make such issuance without the consent of the   Manager and all of the Members; provided that if such disclosure is required by any Law or by   obligations pursuant to any listing agreement with, or requirement, rule or regulation of, any   national securities exchange, each other Member shall be deemed to have consented to such   disclosure two Business Days (or in the case of disclosure pursuant to an 8-K filing, one   Business Day) after receiving the proposed disclosure if the reviewing Member has not requested   Consultation or if the disclosing Member has Consulted with the reviewing Member regarding   the proposed disclosure during such period. Copies of all proposed disclosure that is subject to   this Section 12.8 shall be sent by tl~e Person proposing to make such disclosure by e-mail to eac   h   58    

 

other Person entitled to Consult regarding such disclosure at the e-mail addresses specified on   Exhibit B for such other Persons and including in the case of each Investor, by e-mail to such   Investor's Representatives specified on Exhibit B. Neither the Company, nor the Manager nor   any other Member will, without the prior written consent of the applicable Member, in each   instance, (a) use in advertising, publicity, or otherwise the name of any Member or such   Member's Affiliates, or any partner or employee of such Member or an Affiliate of such   Member, nor any trade name, trademark, trade device, service mark, symbol or any abbreviation,   contraction or simulation thereof owned by such Member or any Affiliate of such Member, or (b)   represent, directly or indirectly, that any product or any service provided by the Company has   been approved or endorsed by such Member or its Affiliates. Notwithstanding anything   contained in this Section 12.8 to the contrary, neither the Manager nor any Member shall be   prohibited from publicly disclosing that, and shall not be required to Consult with the other Party   in connection therewith, the Manager or such Member has entered into this Agreement or any   other Transaction Agreement (as defined in the Purchase Agreements) so long as such public   disclosure does not directly or indirectly identify the other Members or the Affiliates thereof, or   the terms of the Transaction Documents. For the avoidance of doubt, nothing in this Section   12.8 shall limit such Person's obligation to disclose information pursuant to Section 12.12.   Notwithstanding the foregoing, nothing in this Section 12.8 shall apply to an announcement,   statement or disclosure by a Member regarding such Member's Affiliates or a use by a Member   of the name or mark of its Affiliates.   Section 12.9 Applicable Law. THIS AGREEMENT, INCLUDING THE   INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEABILITY HEREOF,   WILL BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO WITHOUT   REGARD TO THE CONFLICT OF LAWS RULES THEREOF.   Section 12.10 Further Assurances. In connection with this Agreement and the   transactions contemplated hereby, each Member shall execute and deliver any additional   documents and instruments and perform any additional acts that maybe reasonably required or   useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the   terms hereof.   Section 12.11 Counterparts. This Agreement may be executed in any number of   counterparts, each of which shall be an original but all of which together will constitute one   instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have   executed the same counterpart. A facsimile or other electronic transmission of this Agreement   bearing a signature on behalf of a Member, the Manager or the Company will be legal and   binding on such Person.   Section 12.12 Confidentiality. The Members shall, and shall cause their Affiliates and   their respective stockholders (other than the holders of the publicly traded stock of a Member or   its Affiliates), n7embers, subsidiaries and Representatives to, hold confidential all information   they may have or obtain concerning the other Members or the Company and its assets, business,   operations or prospects or this Agreement (the "Confidential Information"); provided, however,   that Confidential Information shall not include infarmation that (a) is or becomes generally   available to the public other than as a result of an unauthorized disclosure by a Member or any of   59    

 

its Representatives, (b) is or becomes available to a Member or any of its Representatives on a   nonconfidential basis prior to its disclosure by the Company or its Representatives, (c) is   required or requested to be disclosed by a Member or any of its Affiliates or their respective   stockholders, members, subsidiaries or Representatives as a result of any applicable Law or rule   or regulation of any stock exchange, (d) is required or requested by the IRS or any other Taxing   authority in connection with the Facility or Tax Credits relating thereto, including in connection   with a request for any private letter ruling, any determination letter or any audit or (e) is   otherwise subject to legal, judicial, regulatory or FINRA (or any successor thereto) requests for   information or documents. Subject to the provisions of Section 12.8, if such party is required or   requested to disclose any Confidential Information as described in clause (c) or (e) above, such   party will, to the extent not prohibited by Law provide the other Members with prompt Notice   and will disclose only that portion of such Confidential Information that is legally required to be   furnished. In the case of disclosures to the IRS described in clause (d) above, a disclosing   Member will obtain reliable assurance that, to the maximum extent permitted by applicable Law,   such information will not be made available for public inspection pursuant to Section 6110 of the   Code. Nothing herein shall be construed as prohibiting a party hereunder from using such   Confidential Information in connection with (i) any claim against another Member hereunder,   (ii) any exercise by a party hereunder of any of its rights hereunder and (iii) a disposition by a   Member of all or a portion of its Membership Interest or a disposition of an equity interest in   such Member or its Affiliates, provided that such potential purchaser shall have entered into a   confidentiality agreement with respect to Confidential Information on customary terms used in   confidentiality agreements in connection with corporate acquisitions before any such information   maybe disclosed. Notwithstanding anything to the contrary set forth herein or in any other   agreement to which the Members are parties or by which they are bound, the obligations of   confidentiality contained herein and therein, as they relate to the Company, shall not apply to the   U.S. federal Tax structure or U.S. federal Tax treatment of the Company or the Transaction   Agreements (as defined in the Purchase Agreements), and each Member (and any employee,   representative, or agent of any Member hereto) may disclose to any and all Persons, without   limitation of any kind, the U.S. federal Tax structure and U.S. federal Tax treatment of the   Company, this Agreement and the agreements referenced herein. The preceding sentence is   intended to cause an investment in the Company not to be treated as having been offered under   conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision)   of the Treasury Regulations promulgated under Section 6011 of the Code and shall be construed   in a manner consistent with such purpose. In addition, each Member acknowledges that it has no   proprietary or exclusive rights to the Tax structure of the Company or any Tax matter or Tax   idea related to the Company. For the avoidance of doubt, nothing in this Section 12.12 shall   limit such Person's right to disclose information pursuant to Section 12.8.   Section 12.13 Joint Efforts. To the full extent permitted by Law, neither this Agreement   nor any ambiguity or uncertainty herein will be construed against any of the parties hereto,   whether under any rule of construction or otherwise. On the contrary, this Agreement has been   prepared by the joint efforts of the respective attorneys for, and has been reviewed by, each of   the parties hereto.   60    

 

Section 12.14 Waiver of Jury Each party hereto knowingly and    intentionally,   irrevocably and unconditionally waives trial by jury in and as to any legal action or proceedin   g   relating to this Agreement and for any claim, counterclaim, cross-claim    or third-party claim   therein.   Section 12.15 Specific Performance. The Members agree that irreparable    damage will   result if this Agreement is not performed in accordance with its terms,    and the Members agree   that any damages available at Law for a breach of this Agreement would    not be an adequate   remedy. Therefore, to the full extent permitted by Law, the provisions    hereof and the obligations   of the Members hereunder shall be enforceable in a court of equity, or    other tribunal with   jurisdiction, by a decree of specific performance, and appropriate injunctive relief may   be   applied for and granted in connection therewith. Except as otherwise specified    in this   Agreement or the Purchase Agreements with respect to exclusive remedies,    such remedies and   all other remedies provided for in this Agreement shall, however, be cumulative    and not   exclusive and shall be in addition to any other remedies that a Member   may have under this   Agreement.   Section 12.16 No Duplication. Any liability for indemnification or other    money   damages under this Agreement shall be determined without duplication    of recovery. Without   limiting the generality of the prior sentence, if a statement of fact, condition    or event constitutes   a breach of more than one representation, warranty, covenant or agreement    which is subject to   indemnification or other remedies for money damages under this Agreement,    only one recovery   of damages shall be allowed.   Section 12.17 Survival; Limitation on Liability. All indemnities and    reimbursement   obligations made pursuant to this Agreement shall survive dissolution   and liquidation of the   Company until expiration of the longest applicable statute of limitations   (including extensions   and waivers) with respect to the matter for which a Person would be entitled to    be indemnified or   reimbursed, as the case maybe. In addition to the provisions of this Agreement,    each Investor's   liability under this Agreement is subject to the cap on liability set forth in Section 8.2 of   the   applicable Purchase Agreement.   Section 12.18 Enforcement Costs. In the event of any action, suit or proceeding,    at law   or in equity, among the parties hereto relating to the enforcement of   the parties' rights and   obligations under this Agreement, the party that prevails in such action,    suit or proceeding shall   be entitled to reimbursement from the non-prevailing party of its costs    and expenses reasonably   incurred relating to such enforcement, including reasonable attorney's    fees; provided, that if a   party prevails on some but not all issues in such action, suit or proceeding,    then the costs and   expenses between the parties shall be allocated in proportion to damages,    and if damages are not   an appropriate measure, as the court may determine.   [Remainder of page intentionally left blank]   61    

 

IN: WITNESS W1;I.LR~t7~', the ~~i•ties Dave ca~~sed il~i~ "1'13irc~ Amer7ded and ite~tat~~i   Lirt~it~ ci Liak~ility Ccarnpany A~;i•e:etnerlt tc~ be drily executed ari~i delivered ens ~f the ciat~. #first   abt~ve w~•ittG►~.   INITIAL MANAGTNG MEMBER:   GG~-,~ P, Lt,C   B~:   Name: t36J   ~   t~~°{....C~.,   't`itl~;   ~~ ~.~'~ t 't°~ ~-t~ ~   [Signature Page to Third Amended and Restated Limited liability Company Agreement of RCM6, LLC]    

 

I'   Charles 5. McNerl ~   [Signature Page to 'Chird Amended and Restated Limited Liability Company Agreement of RCM6, LLC]    

 

LIBERTY INVES'T'OR:   Liberty Clean duels 2, LLC   B~:   _ __   Name: Tim P. Lennennan   Title: Senior Vice President   [Signature Page to "Third Amended and Restated Limited Liability Company    Agreement of 1ZCM6, 1,1~C]    

 

;1° t; .   ADA-RC1Vt6 LLC   By:   Naive: L. Heath Sampson   Title: Manager   [Signature Page to Third Amended and Restated Limited Liability Company Agreement of RCM6, LLC]    

 

Schedule 8.10   Insurance   Coverage Policy Limit   Property $ISM any one occurrence, including real   (Including Mobile Equipment & &personal property, EDP, Inventory,   Transit) Coal, Mobile Equipment   General Liability $2M/agg;   $1 M/occ, Prod/Complet Ops,   Personal/Adv Inj;   $1 M Premises;   $ l Ok Med   $1M EBL   Auto $1 M Liability;   $1 M UUIJNI; $Sk Med   Workers Compensation Statutory limits; $1 M Employers   Liability including ND Stop Gap   Workers Compensation - WA Statutory limits   Umbrella $SOM   (Underlying are GL, Auto, EBL,   Stop Gap, EL)   Crime/ERISA $SOOk   Pollution Liability $ l 00M ($90M of which is specific to   the refined coal operations located at the   Centralia power plant site)   RCM6, LLC shall be an Additional Insured on all insurance policies required herein.   2. Each Member and, if requested by a Member, the controlling equity holders of such   Member shall be named as an Additional Insured on all insurance policies required herein   and as a Loss Payee under property insurance policies, as their respective interests may   appear.   All required insurance shall apply on a pi-iinary and non-contributory basis.   4. All policies shall waive subrogation against Additional Insureds.    

 

5. All policies shall contain provisions that provide at least thirty (30) days prior written   notice to Named and Additional Insureds of any cancellation, suspension or non-renewal   of coverage, except for cancellation due to non-payment of premium in which case ten   (10) days' notice is provided. Certificates of Insurance evidencing the insurance required   above will be issued to the Additional Insureds.   6. All claims-made liability coverages (including, without limitation, all pollution liability   coverages) shall remain in full force and effect for at least two years after the end of the   term of the Company.    

 

EXHIBIT A   Diagram of the Facility   [Please see attached.)   Exhibit A-1    

 

.~   W    

 

15      14      ~      13      12    __.      it      70      ',,   g   ~   _.~      7      ~      6      `'      4      ..    _.._3    __.___~.      ~_~.      ~      ~'   I _'__      _      _      _      ...   .   N      '..   '.   _      ~.      ~      ~      q   _   <   i   i   LEGEND      ABBREVIATION   S   ___._..      _.      ____.      ~   I   colic      coNca   ~   .....      non      —      aiF      —      LANE      DiPMETER      '.   ~.      '~....~      EXAR      OV   A   ..._      _~___      ss      E%SANiTgRY    SEWER      ELfI      EIEVNT10   N   _~~:      ~_.'.      ~      '      —      EL      FO   Ov✓   i   Ry   FNOVE   Dft   T   ~   .._      ~      .   --uy   e      EX    Si00.M    SEWE   R   E    CTR~C    SOUND      ryB   R   ~   F,      g   :   ~~~      ~E      ~`      —v--a~—      EX    WPTER    LNE      TYP    CAL      B   S`      :,   ~.      -..-....      "~      i   ''•      g   _.      1   ,'~      ~~      m   ~      22395      vaOFO5ED    SPOT    ELEVATIO   N   g'      ~      '   I   W   '..      .,...      w      _   .   '   r   :..~-.      ...      .,~      ....      '      .~      .....      ...      ..........      ........    .   w   .....      .........      .....      ...      N52   )   I   50   0   ~~   ~   i   11/1'C    F.      ~.      Ci   i   ~   ~      _~      I   ~      ~      ~      VSPHPLT-~      rzPANS    DN    L      I   y<~CHnMFER      ~'..   $:   i   '''      ~~      ~      i   ~      ~      PA      EU~ENi      _      OI    i   ._      _.   .   z   p   ',   '.   .....      ~..      _.      .      ~      .   ,   S   i   ~   i   '.      ~;   l~      ~`   e,      '....      (T00.)      ~      FILL    w~iH    1•WAS    EO-~      i   3.   0    WEEP    HOLES      R      1   m      Q   CRUSHE~L    MESTONE      ~      I   @      0'os      ~      r   pS   P ~ENT    I~   `   ~   i   "      ,.      ~^      ~      ROVIDE    112      IPAVEM      __""   _   '      ''.   ~   ~G      ~t      \.      ____      GUTS    Ai    t0o.ON    RO   L   ~~      .   i   :.      y:   .   -      ~      ~:   STA    MESS    WARE    CLOT   H   -      I',.      .   .   ....      ~      ~      ~   '.      i   i   a.      b   as~iz      a   ..      B   E   ___      h      I   ba    KE   Y   '      O   .      ..      ~      CONC    fiT   E   -      _►      EX    WALL      11295      _      BETA    N      O    WFLL      ~~      ~~   „   .,~\      \      ~      ~      F   ~•:      ~      -      ~      15295   :   .      ~      -320.66      6      ~      ~   c   .      _..      Z   ~~      v   ..      ~._~   '   _.      .      ..      .....      2)2.85      n      '.   _      -   -      ~.   `3Y1.95-~--~      VE      FY    ZOOO    PSF    MIN    FpR      IIN~ISTURBED    FAR   M   M%T      \~   ~      '~      ~   ~~      R'BEARINGCPPNCIt   t   OF'F10E/BftEnl(      I&1THROOM1I      ---   -   oA      roi      F   ~   rs   'E   o   ~      ,t    ''    ~   ~   o   ~      ~      `    ~      n3+¢      RETAINING    WALL    SECTIO   N   .\ ~      R~      ~   s   r      ~   Y   #   ~   s   ~   °      ~      Nor    roswi   e   raw      oo      G   '~   ~      ~      a   ~   ,    {   ~      _   i   ___      --      -   -   N    52]<0   0   xCaE      --      ..      CGP      rttPG      N      _   _   (S    ES   T no      wn   n   M    lOH      ~~~~      (B    x<Ol      ._      ...   .   .      i   -      9   7   M9(OH7      —      M   H   ~      -      _._      _      _   .   rnee      -~'i-~      em~mHc      ~:   ~   —._      .___   _   ;   ~,o,    ~   a   Ot      T   _..   .   DE      Ol    S   H   ~...      taut      __—_—      H   LRUS    E   R   _      _      _      ~'   ~      ~SSUEO    FOR    CONSTRUCTION      i   ~0-2&1)''   .   ~      BILFINGEP    IN~USTPIAL    SERVICES    INC      { ~      -   -   ENGINEEPIN   G   GENERAL      GRADING      USE    OF    SITE      e~~nuces~,^~~"n;~;~;~my   ~rc   ME^      —   _   ~   i   ELOCntiOry    O~~rvDERGROUN~UTiLrt1ES.    EITfFR    SMOwx    OR    NOT      1   ELEVAT      TAE    ExiSTi~vGSURGnLESNnLL    eE    ~t4TCHED    NT    THE    EDGES      t,      nSTaGiNGAREn    WiILBE    PROVIDED    FOR    CONTPALTOR'S    USE    IN      CENTRAUA,    W   A   e   '   THE    VERIFICATION    OF    iM      10.u50   F   SH(IWN    ON    THESE    VLnH5,    5unll6E    THE    RE5PoN5iBI~Itt    OF    THE    COMRACTOR.    FUDSMnLL    BE      OF    NEW    PAVEMErvi.      RECENINGSTORiHG    EOl11PMENT    A~vD    MPTERinLS.PV.CEAIEM    OFA      yP   a   ~   x      i   IOCnTED    PRIOR    TO    TRErvCHiHG.E%CPVATiON.GRnpiNG    OR    CAuSTRUCTION.    THESE      Z.      YO    FRE45H4LL    BE    CIEAREO    WITHOtR    PEFMI5510N    OF    tHEOWYER.      GONSTRUCiION    TRhILER,    EfG    UPON    COMGIEfION    OF    CONSTRUR10N,    Tt1E      ....~      'i   PROViSiONS    SMhLL    IN    UO    Wnv    nBSCLVE    nNV    PnRTY    FROM    COMPLYING    WITH    1HE      ~.      FILL    ~tACED    UNDER    PFVED    SURFACE55HALL    BE    CQNPACTED    TO    NT    LEl5T    9B      STAGING    AREA    SHNLL    BE    FULLY    RESTORED    TO    ~iS    ORIGINN.    fANORION.      `~~   ~   0'~      --""'-"-"""-   -   4   s   UNDERGRODUOFnC~L~T'Sn~E1v    N~u~OnMnGE    aREVExTtON    nCT.Gw.PTER    3f9.    R5vA.      vERCEM    OF    STANpAftD/MO~IFIEO    P0.0CTOR~0.5TM    Od9By(nSTM    D   -ASST      2.      CONTRA4TOft    5HNLL    RESTRICT    R50PEMTIOnS    TO    THE    IMMFDNiEV1GINrtY      ~"^"""      4      ()~      CLEAN    C~Q~$~~UT~~N$      ~      I—    -   -   CONTMCTOR    SNnLL    irvSPECT    THE    PREMISESTO    ~ETEFMINE    Tf~E    LONDrtiON5    UNDER      A%IMUM    ~ENSiiV    UNLE550TiERWISE    SPECIF1E0    BV    LOCAL    GOVERNING      OF    iNE    WORK    A55HOWNON    TiESE    PUNS.      ~~A   ~L   ~,      ~      '\.      SITE    PLAN      ~   M      ~   E    wORK    5iO8E    00NEnxO    TnEKNDAND    AMWNT    OF    MNTER    AL5    T09E    REUOVEo.      nUTHORYry    SVEC    ~CPTIONS.    TESTING    SHAlL    BE    VERiFlE00v    A5g15      V      ~,   GO      TRnCTOR    SHn~~nCCEVT    THE    SITE    CONDrt    OxS    /S    iOUrvD      ENG    NEED      a      ~      l   ~      ',   nLL    BE    1nttEN    i0    vREVENT    DaunGE    TO    EX    ST    NG    S~RUC'IIRES    THAT    ARE    TO    REMA    N      ~      _   _   0      G    DPROPENry    Sr+n~t    6E    REPA    PED    OR    REntOVEO    nN~REPtACED    nT    THE      *      )~i      -"   E   onn      v   O      CTORS    COSia50~RECTE00~THE    OWNER.      ~      `      ~      °'E      ....      '~      ~~~I      .-      .   E      LS    nND    WORHMahSHP    FOR    PNVCMENTS/+N~OTHERMSCELLANEOVS    STEMS    SHALL    BE      I   xP      °~^'^      "'s      ""   '   °   °'..—.   I   MEo~N000vs,a~~.Eo    Ha«aRow~Ew,~,~EaEo~REME.,,s.~o      i   ~4'.~.      _   =      o   ~   E~   F ~   -----~----      I   i   ~_      _--L    ;   -   ~soF.,,E~~,,.~o~FA~~~a      oar.      i   c~oi      o   Exhibit    A-   2    

 

EXHIBIT B   Members and Membership Interests   Member Name and Address Membership Interest   CCS-AE, LLC 0.2 percent   c/o Clean Coal Solutions, LLC   5251 DTC Parkway, Suite 825   Greenwood Village, CO 80111   Attention: Jim Zerefos   Facsimile: (303) 751-9210   Email: jzerefos@cleancoalsolutions.com   With a copy to (which shall not constitute   Notice):   Davis, Graham &Stubbs LLP   1550 17ti' Street, Suite 500   Denver, CO 80202   Attention: Brian Boonstra and   Randall E. Hubbard   Email: brian.boonstra(a~d~slaw.com   randy.hubbard(cryd slaw.com   Liberty Clean Fuels 2, LLC 49.9 percent   12300 Liberty Boulevard   Englewood, CO 80112   Attention: General Counsel   Facsimile: (720) 875-5382   Email : legalnotices@libertymedia. com   With a copy to (which shall not constitute   Notice):   Sherman &Howard L.L.C.   633 17th Street, Suite 3000   Denver, CO 80202   Attention: Joanne Norris, Esq.   Facsimile: (303) 298-0940   Email: jnorris@shermanhoward.com   The Liberty Investor's "Representatives"   for purposes of Section 8.1(c) means:   Roger Tullberg at roger libertymedia.com   Exhibit B-1    

 

Member Name and Address Membership Interest   Tim Lenneman at tim@libertymedia.com,   Craig Troyer at Craig@libertymedia.com or   such other individuals as may hereafter be   designated by the Liberty Investor.   ADA-RCM6 LLC 24.95 percent   c/o ADA-ES, Inc.   9135 S. Ridgeline Blvd, Suite 200   Highlands Ranch, CO 80129   Attention: L. Heath Sampson   Facsimile: (303) 734-0330   Email: heath.sampson@adaes.com   With a copy to (which shall not constitute   Notice):   Fortis Law Partners LLC   1900 Wazee Street, Suite 300   Denver, CO 80202   Attention: Julie A. Herzog   Facsimile:. (303) 567-8989   Email: jherzog@fortislawpartners.com   Charles S. McNeil 24.95 percent   c/o NexGen Resources Corporation   5251 DTC Parkway, Suite 825   Greenwood Village, CO 80111   Facsimile: 303 751 9210   Email: cmcneil@nexgen-group.com   With a copy to (which shall not constitute   Notice):   Brian C. Humphrey   c/o NexGen Resources Corporation   5251 DTC Parkway, Suite 825   Greenwood Village, CO 80111   Facsimile: 303 751 9210   Email:   bhumphrey@nexgen- group. com   Exhibit B-1    

 

EXHIBIT C   Operating Protocols   OPERATING PROTOCOLS   Certain Definitions Applicable to the Operating Protocols   "ASTM" has the meaning set forth in "Coal Sampling Procedures" below of this Exhibit C.   "Refined Coal Guidance" means IRS Notice 2010-54 and such other guidance issued by the IRS   supplementing, amending or superseding IRS Notice 2010-54.   "Redetermination Test" means a test conducted by the Operator on behalf of the Company as   provided in Section 6.04 of the Refined Coal Guidance, unless otherwise agreed to by the   Company, that conforms to the Coal Sampling Procedures or the Pilot Scale Testing Procedures,   as applicable.   "Coal Sampling Procedures" means the redetermination procedure set forth in "Coal Sampling   Procedures" below of this Exhibit C in accordance with Section 6.04(2)(b) of the Refined Coal   Guidance or any subsequent or successor provision or provision of any Revised Coal Sampling   Guidance comparable thereto.   "Pilot Scale Testing Procedures" means the redetermination procedure set forth in "Pilot Scale   Testing Procedures" below of this Exhibit C in accordance with Section 6.03(2)(a) and 6.04(3) of   the Refined Coal Guidance or any subsequent or successor provision or provision of any Revised   Pilot Scale Testing Guidance comparable thereto.   "Revised Coal Sampling Guidance" has the meaning set forth in "Coal Sampling Procedures"   below of this Exhibit C.   "Revised Pilot Scale Testing Guidance" has the meaning set forth in "Pilot Scale Testing   Procedures" below of this Exhibit C.   "Owner-Specific IRS Guidance" means the written guidance from the IRS to the Company set   forth in a PLR, a determination letter or other written guidance from the IRS with respect to   transactions contemplated by the Operating and Maintenance Agreement or in relation to the   Facility.   "Federal Tax Authority" means (a) the United States Treasury Department, (b) the IRS, (c) the   United States Tax Court, (d) the United States Board of Tax Appeals, (e) any other court of the   United States in connection with its exercise of original, trial or appellate jurisdiction over any   case involving federal tax matters, and (~ any successor to any of the foregoing, or any new or   other Governmental Body having jurisdiction or authority over federal tax matters.   Exhibit G 1    

 

"Coal Sampling Technology Changes" has the meaning set forth in "Coal Sampling Procedures"   below of this Exhibit C. '   "Pilot Scale Testing Technolo~v Changes" has the meaning set forth in "Pilot Scale Testing   Procedures" below of this Exhibit C.   Coal Sampling Procedures   The Operator shall conduct coal sampling and have laboratory analysis performed by an   American Society for Testing Materials ("ASTM") certified laboratory for Redetermination Test   purposes as provided in Section 6.04(2)(b) of the Refined Coal Guidance. In the. event the   Refined Coal Guidance or the Owner-Specific IRS Guidance is supplemented, amended,   superseded or otherwise modified by any subsequent written guidance issued by the IRS or other   Federal Tax Authority, including without limitation the original issuance of any Owner-Specific   IRS Guidance ("Revised Coal Sampling Guidance"), or if testing methodology applicable to   sulfur or mercury are promulgated, amended, superseded or otherwise modified by ASTM, or if   technology specified in this procedure evolves or becomes obsolete ("Coal Sampling Technology   Changes"), the Operator may recommend revisions to this procedure, and the Company shall   make the final determination with respect to approval of and implementing any changes to this   procedure required or permitted by such Revised Coal Sampling Guidance or Coal Sampling   Technology Changes, considering technical advice from a recognized expert in the field of   interest (i.e., coal sampling/laboratory analysis); provided that the Company's approval of any   revisions to this procedure recommended in good faith by the Operator shall not be unreasonably   withheld, conditioned or delayed.   The Coal Sampling Procedure is described below:   The Operator shall collect samples of feedstock coal and refined coal during the emissions   qualification test conducted under Section 6.03 of the Refined Coal Guidance. Thereafter, within   six months after such date, the Operation shall collect another set of samples of feedstock coal   and refined coal for re-determination testing. The Operator shall cause the samples to be   analyzed for mercury and sulfur content and compared to mercury and sulfur content of the raw   and refined coal samples obtained during the section 6.03 emissions qualification testing. ~~If the   sulfur and mercury content of both the feedstock coal and the refined coal, on average, do not   vary by more than 10 percent below the bottom (nor by more than 10 percent above the top) of   the range of the sulfur content and range of the mercury content of the feedstock coal and the   refined coal used in the most recent determination pursuant to section 6.03, then the process is   deemed to have passed the section 6.04(2)(b) re-determination.   Sample Collection   All coal samples will be collected from moving coal belts upstream and downstream of the   refined coal facility. Samples will be collected using a collection device that reaches over the   moving belt and collects apart-stream cut of the coal on the belt. Each sample will weigh a   minimum of one pound (or such other larger amounts so as to permit the laboratory to produce   Exhibit C-2    

 

sufficient combustion emission data to permit the laboratory to come to a reliable conclusion)   and will be immediately transferred to a labeled plastic bag and sealed to prevent moisture loss.   Sample FrequencX   Prior to the original 3-hour section 6.03 emissions qualification testing of refined coal, at least 15   samples will be taken, with provisions for bunker size to approximate the coal actually burned   during that testing period.   No more than six months shall laps between each section 6.03 emissions qualification or section   6.04 re-determination. For each section 6.04 re-determination, another set of samples will be   collected and analyzed.   Sample Preparation   Coal samples will be prepared for analysis using procedures in ASTM D2234. The samples will   then be crushed and further prepared for analysis according to ASTM method D2013.   Sample Analysis &Reporting   Standard laboratory techniques will be used to measure sulfur and mercury content of the coal   samples. The sulfur and mercury content of the coal samples collected during the section 6.03   emissions qualification testing will be compared to the sulfur and mercury content of a set of   coal samples collected during the re-determination period.   Pilot Scale Testing Procedures   The Operator will conduct, or will engage a third party to conduct a pilot scale test as provided in   Section 6.03(2)(a) of the Refined Coal Guidance using the following pilot scale testing   procedures. In the event the Refined Coal Guidance or the Owner-Specific IRS Guidance is   supplemented, amended, superseded or otherwise modified by any subsequent written guidance   issued by the IRS or other Federal Tax Authority, including without limitation the original   issuance of any Owner-Specific IRS .Guidance ("Revised Pilot Scale Testing Guidance"), or if   technology specified in this procedure evolves or becomes obsolete ("Pilot Scale Testing   Technology Changes"), the Operator may recommend revisions to this procedure, and the   Company shall make the final determination with respect to approval of and implementing any   changes to this procedure required or permitted by such Revised Pilot Scale Testing Guidance or   Pilot Scale Testing Technology Changes, considering technical advice from a recognized expert   in the field of interest (i.e., pilot scale testing procedures), provided that the Company's approval   of any revisions to this procedure recommended in good faith by the Operator shall not be   unreasonably withheld, conditioned or delayed. The Pilot Scale Testing Procedures is described   below:   Combustion Test   A 2-day test series will be conducted using a demonstration pilot-scale combustion   furnace to establish the emissions reduction that is achieved for both NOx and Hg when Refined   Coal produced from Power River Basin subbituminous Coal, as well as coal from the coal mines   commonly referred to as the Spring Creek Mine, the Decker Coal Mine and the Absaloka Mine   Exhibit C-3    

 

in the northern portion of the Powder River Basin (or such other Coal as is designated by the   Company) is fired in acoal-fired, steam producing boiler of a size and type commonly used in   commercial operations.   During each day of the test, steady furnace operating conditions shall be maintained,   including combustion air and other - operating conditions as specified by the Company. Gaseous   emission levels of O2, NOX, SO2, CO, and COZ will be monitored and recoded during each test   period. Hg sampling will be conducted using a continuous mercury monitor ("CMM") at the   electrostatic precipitator ("ESP") outlet to establish reductions from feedstock levels when the   refined coal is fired. The combustion test facility's ("CTF") ESP operating at conditions as   specified by the Company.   NOX emission levels will be continuously monitored and recorded by the gas analyzers   located at the furnace exit and at the ESP outlet to determine the level of NOX emissions   reduction. Hg emissions will be monitored and recorded by CMMs set up at the ESP outlet to   determine the level of Hg emissions reduction. Both untreated feedstock Coal and Refined Coal   will be tested. Upon completion of feedstock Coal testing and sampling, the remaining fuel in the   coal feeder will be removed, and the Refined Coal will be loaded into the feeder for the   remainder of testing.   Combustion Test Facility   The CTF is a balanced-draft furnace that meters primary air, secondary air, overfire air,   and fuel feed rate to maintain a stable combustion environment for testing. A schematic of the   furnace and auxiliary systems is provided in Figure 1. Combustion gases (O2, COZ, CO, NOx,   and SOZ) are monitored online at two locations: the furnace exit and the stack (ESP outlet). The   data collected by the analyzers are continuously recorded by the CTF data acquisition and   control program. An ESP will be used for particulate control during these tests. Mercury   concentrations at the ESP outlet will be continuously monitored and recorded by extractive   sampling from the flue gas ductwork and will be analyzed by a CMM.   t Stack:   Tertiary ,   V'ulvorl~ad Cr~~E   fir   feeder   'I   Cn71 Jn~~;ctio~i ~~   PO~~ Secondary   -,,Air   ''.*~,   Primary Air and `   Coai   ~>~3   `~,r,~y rtltGC3d-la I}t   F~r7   I' robp   ',arl~   Haat ~Ius Gas   Exchangers Sample. g~mpiingPort Cycbr~e   N~ 2   ~, ,~   ~   3j~;,   .   ,;   E   1 ~luQ Gas   Sainpia   Purl NU. 1 Selective   Catalytic   "Qve~re Air Reduction   Reactor   High-   Temperature   "~aghouse   t~~   Writ   aCfUbbC:r   Flue t;~~   Sam~Sir~   Pori   S~~raY Llerlro~ tatic ~lci. a   Dryer Prec~pit~ior   EcRL' JG~?74GO.CDR   Exhibit C-4    

 

Figure 1. Schematic of the CTF.   Refined Coal Specifications   Raw Materials (to~be supplied by the Compan   Subbituminous coal from the region known as the Powder River Basin, as well as coal from the   coal mines commonly referred to as the Spring Creek Mine, the Decker Coal Mine and the   Absaloka Mine in the northern portion of the Powder River Basin.   M-45-PCA, a solid or liquid urea, ammonia, or amine-based material, combined with an alkaline   earth metal hydroxide.   M-45-PCB, an inorganic liquid halogen solution that reacts with the mercury in coal .resulting in   changes to the chemical of the mercury, oxidizing more of it, and promoting capture of the   mercury on particulate matter.   Process   M-45-PCA is metered and delivered onto each coal conveyor belt using metering weigh belts   and conveyors. The metering weigh belts will be calibrated to correlate to mass add rates of M-   45-PCA. M-45-PCA application rates is controlled by speed of the weigh belts.   M-45-PCB is supplied to each coal conveyor belt by individual pumps calibrated to correlate   pump milliamps to mass add rates of M-45-PCB. M-45-PCB application rate is controlled by the   amperage to the pumps.   M-45-PCA Application Rate: 0.4% by weight of coal, comprised of the following:   M45-PC-A1: 0.08% by weight of coal   M45-PC-A2: 0.16% by weight of coal   Water: 0.16% by weight of coal   M-45-PCB Application Rate: 3 ppm.   Process Verification and Quality Control   Chemical usage for M-45-PCA and M-45-PCB will be compared with Refined Coal production   as measured by each of the coal conveyor weigh belt scales as follows:   1. The Operator personnel will monitor application rate to each coal conveyor belt as   recorded in the computer database system, and compare the rate to coal belt mass rates.   Exhibit C-5    

 

2. The computer database will automatically calculate daily totals for application of M-45-   PCA and M-45-PCB, and Refined Coal production. The Operator personnel will review   this report daily, and the daily information will be compiled into daily, weekly and   monthly reports.   Exhibit C-6    

 

EXHIBIT D   Site   That portion of the Site on which the Facility is located and the immediate area around the   Facility necessary for or incident to the operation of the Facility for the production of Refined   Coal is depicted in the image below.   Exhibit D-1    

 

~ ~   ~l   ~ $ C.   t   _'   i~ J   ;J.   y ~   p._ C`   7 ,•. ',   ~. a Y   ~Y   j ~ ~s   /,   ~~~f.   s-,   ~ }   "~ 7~~   s   .~o~ a ~ jf   f .. 3':L:   J L F 4   f 4:   f J   '`r~ r' j ~ +~~ k 6   j ~ 4   y ~p `! i   J ~ x ~'+ ~ ' ~~L7 ~~r ~~ ~~   Exhibit D-2    

 

EXHIBIT E   Reconveyance Representations and Warranties   (a) Member is either (i) a corporation or limited liability company duly formed,   validly existing and in good standing under the laws of the state of its jurisdiction and has all   requisite power and authority to transfer the Membership Interest to the Seller Designee as   contemplated by the Amended and Restated Limited Liability Company Agreement of the   Company or (ii) an individual.   (b) Member owns all of the Membership Interest purchased by Member pursuant to   its Purchase Agreement, except for any interest transferred by Member in accordance with the   terms of the Amended and Restated Limited Liability Company Agreement of the Company.   (c) Member has absolute record and beneficial ownership and title to all of the   Membership Interest held by Member, free and clear of any_ Encumbrances except   Encumbrances under the Amended and Restated Limited Liability Company Agreement of the   Company and liens for taxes not yet due and payable.   (d) Member has all requisite power and authority to execute, deliver and perform the   documents necessary to effect the transfer of the Membership Interest from Member to the Seller   Designee and such documents have been duly and validly executed and delivered by Member   and constitute Member's legal, valid and binding obligation, enforceable against it in accordance   with its terms (subject, however, to the effects of Bankruptcy, insolvency, reorganization,   moratorium and similar laws from time to time in effect relating to the rights and remedies of   creditors as well as to general principles of equity whether considered at law or in equity).   (e) Neither the execution, delivery and performance by Member of the documents   necessary to effect the transfer of the Membership Interest from Member to the Seller Designee   nor the consummation of the transactions contemplated thereby will (i) (if Member is not an   individual) conflict with or result in any breach of any provision of the organizational or charter   documents of Member; (ii) violate (or give rise to any right of termination, cancellation or   acceleration under) any of the terms, conditions or provisions of any material contract,   instrument or obligation to which Member is a party or by which Member is bound; or (iii) to   Member's knowledge, violate any Law or any material license, franchise, permit or authorization   applicable to or affecting Member or any of its assets, other than any license, franchise, permit or   authorization applicable to or affecting the Company or any of its assets.   (~ No declaration, filing or registration with, or notice to, or authorization, consent   or approval of any Governmental Body or any other Person that has not been made or obtained is   necessary for the execution, delivery and performance by Member of the documents necessary to   effect the transfer of the Membership Interest from Member to the Seller Designee or the   consummation by Member of the transactions contemplated thereby; provided, however, that the   Member is not snaking any representation or warranty regarding any actions that may be required   Exhibit E-1    

 

under any license, franchise, permit, authorization or contract to which the Company is a party or   by which the Company is bound or affected.   Exhibit E-2    

 

EXHIBIT F   Form of Seller Designee Agreement   This Seller Designee Agreement (this "Agreement"), dated as of [DATE], is by [NAME]   (the "New Seller Designee") for the benefit of OE-TO, LLC, a Colorado limited liability   company (the "Seller") RCM6, LLC, a Colorado limited liability company (the "Company"),   and each Member of the Company (including Persons admitted as Members after the date of this   Agreement). Capitalized terms used herein but not defined herein shall have the meanings   ascribed to such terms in the LLC Agreement (as defined below).   WHEREAS, the New Seller Designee has been nominated to serve as the Seller Designee   under the Amended and Restated Limited Liability Company Agreement of the Company   (the "LLC Agreement");   WHEREAS, Section 3.13 of the LLC Agreement provides that, before the nomination of   a Seller Designee will be effective, the nominated Seller Designee must execute and deliver this   Agreement to the Company and each Member; and   WHEREAS, the New Seller Designee desires to make effective its nomination as Seller   Designee.   NOW, THEREFORE, for value received, in consideration of the agreements herein   contained and other good and valuable consideration, receipt and sufficiency thereof being   hereby acknowledged, the New Seller Designee hereby agrees as follows:   1. Acceptance of Nomination. The New Seller Designee hereby accepts its   nomination as Seller Designee and agrees to perform and be bound by all the terms, conditions   and covenants of and assumes the duties and obligations of the Seller Designee under the LLC   Agreement effective as of the date of this Agreement. Without limiting the generality of the   foregoing, the New Seller Designee hereby agrees as follows, without any further action on the   part of the Seller, the Company, the Manager, the New Seller Designee or the transferring   Member:   (a) New Seller Designee hereby accepts each Involuntary Transfer effective   as of the effective date of such Involuntary Transfer, as determined in accordance with the LLC   Agreement or the Purchase Agreement, as applicable (the "Involuntary Transfer Effective   Date"); and   (b) With respect to each Membership Interest transferred to it in an   Involuntary Transfer, New Seller Designee:   (i) hereby confirms that New Seller Designee will become a Member   in place of the transferring Member effective as of the Involuntary Transfer Effective   Date;   Exhibit F-1    

 

(ii) hereby assumes the duties and obligations of the transferring   Member under the LLC Agreement to the extent related to the period from and after the   Involuntary Transfer Effective Date; and   (iii) hereby assumes the duties and obligations of the transferring   Member under the applicable Purchase Agreement pursuant to which the transferred   Membership Interest was originally purchased from Seller to the extent related to the   period from and after the Involuntary Transfer Effective Date.   2. Representations and Warranties. As of the date of this Agreement and as of the   date of each Involuntary Transfer, the New Seller Designee hereby represents and warrants to the   Seller, the Company and each Member (including Persons admitted as Members after the date of   this Agreement) as follows:   (a) New Seller Designee is a corporation or limited liability company duly   organized, validly existing and in good standing under the laws of the state of its jurisdiction, and   New Seller Designee has all requisite power and authority to acquire Membership Interests   pursuant to Involuntary Transfers;   (b) New Seller Designee has all requisite power and authority to execute,   deliver and perform this Agreement and to consummate Involuntary Transfers, and the   execution, delivery and performance of this Agreement and the consummation of Involuntary   Transfers have been duly and validly authorized by it, and no other proceedings or actions on its   part are necessary to authorize the execution, delivery and performance of this Agreement or to   consummate Involuntary Transfers;   (c) This Agreement has been duly and validly executed and delivered by New   Seller Designee, and this Agreement constitutes its legal, valid and binding obligation,   enforceable against New Seller Designee in accordance with its terms (subject, however, to the   effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time   in effect relating to the rights and remedies of creditors as well as to general principles of equity   whether considered at law or in equity);   (d) Neither the execution, delivery and performance by New Seller Designee   of this Agreement, nor the consummation of Involuntary Transfers, will (i) conflict with or result   in any breach of any provision of New Seller Designee's organizational or charter documents,   (ii) violate (or give rise to any right of termination, cancellation or acceleration under) any of the   terms, conditions or provisions of any material contract, instrument or obligation to which New   Seller Designee is a party or by which any of its assets is bound, or (iii) violate any Law or any   material license, franchise, permit or other authorization applicable to or affecting New Seller   Designee or any of its assets or result in the creation of any Encumbrances on New Seller   Designee or any of its assets (except pursuant to the LLC Agreement and the Purchase   Agreements);   (e) As of the date of this Agreement, there are no actions, suits, claims,   arbitrations or other proceedings, or investigations or inquiries by any Governmental Body or   Exhibit F-2    

 

other Person, that are ongoing or, to New Seller Designee's knowledge, pending or threatened in   writing against New Seller Designee that question the validity of this Agreement, or that seek to   delay, prevent or alter the consummation of the transactions contemplated hereby, and New   Seller Designee is not subject to any injunction, order or decree of any arbitration tribunal or any   federal, state, local or foreign court that pertains to the Company or that could affect. any   Involuntary Transfer;   (~ Any and all Membership Interests acquired pursuant to Involuntary   Transfers will be for New Seller Designee's own account and not with a view to or for resale in   connection with any distribution or public offering;   (g) New Seller Designee is an "accredited investor" within the meaning of   Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act");   (h) New Seller Designee understands that the Membership Interests have not   and will not be registered under the Securities Act and that, under the Securities Act and   applicable rules and regulations thereunder, Membership Interests maybe resold without   registration under the Securities Act only in certain limited circumstances, and New Seller   Designee understands that no public market now exists for Membership Interests and that it is   unlikely that a public market will ever exist for Membership Interests;   (i) New Seller Designee has had an opportunity to conduct due diligence   relating to the Company and Involuntary Transfers and has received or has been given access to   all documents and information requested by it;   (j) New Seller Designee is not relying on any projection or forecast in respect   of the Facility or the production of Refined Coal provided directly or indirectly by any Member,   the Company or their respective Affiliates; and   (k) New Seller Designee is a Qualified Person.   3. Termination. The New Seller Designee's status as the Seller Designee for   purposes of the Purchase Agreement and the LLC Agreement will terminate upon the earlier to   occur of the Secondary Seller Designee becoming the Seller Designee in accordance with the   terms of the LLC Agreement or the nomination of a new Seller Designee by CCS-AE .becoming   effective pursuant to Section 3.13 of the LLC Agreement. No such termination shall affect (a)   the duties and obligations of New Seller Designee as a Member with respect to Membership   Interests transferred to the New Seller Designee in Involuntary Transfers prior to such   termination or (b) the rights of the Company and the Members with respect to breaches of any   agreement, covenant, representation or warranty contained in this Agreement prior to such   termination.   4. Governin~aw. THIS AGREEMENT, INCLUDING THE INTERPRETATION,   CONSTRUCTION, VALIDITY AND ENFORCEABILITY HEREOF, WILL BE GOVERNED   BY THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO THE   CONFLICTS OF LAWS RULES THEREOF.   Exhibit F-3    

 

5. Jury Trial Waiver. Each party knowingly and intentionally, irrevocably and   unconditionally waives trial by jury in and as to any legal action or proceeding relating to this   Agreement and for any claim, counterclaim, cross-claim or third-party claim therein.   [The remainder of this page is intentionally left blank]   Exhibit F-4    

 

IN WITNESS WHEREOF, the New Seller Designee has executed this Agreement as of   the date first above written.   [NAME]   Name:   Title:   Exhibit F-5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00258-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00258-of-00352.parquet"}]]