Document:

Unassociated Document

Exhibit 10.1

 

FORBEARANCE

TO

LOAN AND SECURITY AGREEMENT

This FORBEARANCE to Loan and Security Agreement (this “Agreement”) is entered into this ____ day of August 2013, by and between Silicon Valley Bank (“Bank”) and DecisionPoint Systems, Inc., a Delaware corporation (“DSI”), DecisionPoint Systems International, Inc., a Delaware corporation (“DSII”), DecisionPoint Systems Group, Inc., a Delaware corporation (“DSG”), DecisionPoint Systems CA, Inc., a California corporation (“DSCA”), DecisionPoint Systems CT, Inc., a Connecticut corporation (“DSCT”) and CMAC, Inc., a Georgia corporation (“CMAC” and together with DSI, DSII, DSG, DSCA and DSCT, jointly and severally, the “Borrower”) whose address is 8697 Research, Irvine, CA  92618.

Recitals

 

A.           Bank and Borrower have entered into that certain Loan and Security Agreement dated as of December 15, 2006 (as the same may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”).  Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

B.           Borrower acknowledges that Borrower is currently in default of the Loan Agreement for failing to comply with the Tangible Net Worth Financial Covenant set forth in Section 6.9(b) of the Loan Agreement for the compliance periods ending May 31, 2013 and June 30, 2013 and each such failure to comply constitutes an Event of Default (the “Existing Defaults”). Borrower has advised Bank that Borrower anticipates failing to comply with the Tangible Net Worth Financial Covenant set forth in Section 6.9(b) of the Loan Agreement for the compliance period ending July 31, 2013, and such failure to comply will constitute an Event of Default (the “Anticipated Default”).

 

C.           Borrower has requested that Bank forbear from exercising its rights and remedies against Borrower during the Forbearance Period (as defined in Section 2.1 below).  Although Bank is under no obligation to do so, Bank is willing to forbear from exercising its rights and remedies against Borrower through the Forbearance Period on the terms and conditions set forth in this Agreement, so long as Borrower complies with the terms, covenants and conditions set forth in this Agreement.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1. Definitions.  Capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Loan Agreement.

 

2. Forbearance.

 

2.1 Forbearance Period.  Subject to all the terms and conditions set forth herein, Bank shall forbear from filing any legal action or instituting or enforcing any rights and remedies it may have against Borrower from the Forbearance Effective Date (as defined in Section 10) until the date (the “Forbearance Termination Date”) which is the earliest to occur of:  (a) August 28, 2013, (b) the failure after the date hereof of Borrower to comply with any of the terms or undertakings of this Agreement, (c) the occurrence after the date hereof of any Event of Default (other than the Existing Defaults and the Anticipated Default) or (d) the date that Borrower joins in, assists, cooperates, or participates as an adverse party or adverse witness in any suit or other proceeding against Bank relating to the Obligations in connection with or related to any of the transactions contemplated by any of the other Loan Documents.  Except as expressly provided herein, this Agreement does not constitute a waiver or release by Bank of any Obligations or of the Existing Defaults or of the Anticipated Default (if such Anticipated Default does occur) or any other present or future Event of Default whether or not known to Bank.  If Borrower does not comply with the terms of this Agreement, Bank shall have no further obligations under this Agreement and shall be permitted to exercise at such time any rights and remedies against Borrower as it deems appropriate in its sole and absolute discretion.  Borrower understands that Bank has made no commitment and is under no obligation whatsoever to grant any additional extensions of time at the end of the Forbearance Period.  The time period between the Forbearance Effective Date and the Forbearance Termination Date is referred to herein as the “Forbearance Period.”

 

 

  

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2.2 Forbearance Terms. Repayment and performance of all Obligations of Borrower to Bank under the Loan Agreement and this Agreement shall be secured by the Collateral.

 

3. Limitation of Forbearance.

 

3.1 This Agreement is effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2 This Agreement shall be construed in connection with and as part of the Loan Documents, and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents are hereby ratified and confirmed and shall remain in full force and effect.

 

4. Acknowledgment; Consent.

 

4.1 Reserve.  Borrower acknowledges and agrees that notwithstanding anything to the contrary in the Loan Agreement, during the Forbearance Period, one hundred percent (100%) of the outstanding Obligations of the Term Loan and Term Loan II shall be reserved against the lesser of the Maximum Dollar Amount or the Borrowing Base.

 

4.2 Apex.  Borrower has advised Bank that DSI anticipates receiving up to $5,000,000 of cash proceeds from the issuance of equity securities of DSI by _____________, 2013 (the “Equity Financing Transaction”).  Bank hereby acknowledges and agrees that, provided no Event of Default has occurred and is continuing (other than the Existing Defaults and the Anticipated Default), DSI may transfer up to ten percent (10%) of any net cash proceeds that DSI receives from any equity financing transaction prior to _________________, 2013 to DSI’s Canadian subsidiary, Apex.

 

4.3 Limited Waiver Regarding Existing Defaults and Anticipated Default.  Provided that Borrower receives at least $1,500,000 gross cash proceeds from the Equity Financing Transaction by the Forbearance Termination Date and evidence of the same is provided to Bank, such evidence to be satisfactory to Bank in its good faith business judgment, on or about such date, Bank and Borrower agree that the Existing Defaults and the Anticipated Default (if the Anticipated Default does occur) will be deemed waived as of such date.  It is understood by the parties hereto, however, that such waiver, if it does occur, will not constitute a waiver of any other provision or term of the Loan Agreement or any related document, nor an agreement to waive in the future this covenant or any other provision or term of the Loan Agreement or any related document.

 

4.4 Agreement Regarding Tangible Net Worth Financial Covenant.  Bank and Borrower agree that the net cash proceeds received by Borrower from the Equity Financing Transaction during the Forbearance Period will not be included in subclause (i) of the calculation of the Tangible Net Worth Financial Covenant.  Bank and Borrower further agree that any non-cash warrant liability of Borrower arising as a result of warrants issued as part of the Equity Financing Transaction will not be included in the calculation of the Tangible Net Worth Financial Covenant. 

 

5. Representations and Warranties.  Borrower represents and warrants to Bank as follows:

 

5.1 (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default other than the Existing Default has occurred and is continuing;

 

5.2 Borrower has the power and authority to execute and deliver this Agreement and to perform its obligations under the Loan Agreement;

 

5.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

5.4 The execution and delivery by Borrower of this Agreement and the performance by Borrower of its obligations under the Loan Agreement have been duly authorized by all necessary action on the part of Borrower;

 

5.5 The execution and delivery by Borrower of this Agreement and the performance by Borrower of its obligations under the Loan Agreement do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

5.6 The execution and delivery by Borrower of this Agreement and the performance by Borrower of its obligations under the Loan Agreement do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and

 

5.7 This Agreement has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

 

  

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6. Prior Agreement.  The Loan Documents are hereby ratified and reaffirmed and shall remain in full force and effect.  This Agreement is not a novation and the terms and conditions of this Agreement shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents.  In the event of any conflict or inconsistency between this Agreement and the terms of such documents, the terms of this Agreement shall be controlling, but such document shall not otherwise be affected or the rights therein impaired.  As of the date hereof, the aggregate outstanding principal amount owing to Bank is $___________________________.

 

7. Release by Borrower.

 

7.1 FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves, releases, and discharges Bank and its present or former employees, officers, directors, agents, representatives, attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind, nature, description or character whatsoever, whether known or unknown, suspected or unsuspected, absolute or contingent, arising out of or in any manner whatsoever connected with or related to facts, circumstances, issues, controversies or claims existing or arising from the beginning of time through and including the date of execution of this Agreement (collectively “Released Claims”).  Without limiting the foregoing, the Released Claims shall include any and all liabilities or claims arising out of or in any manner whatsoever connected with or related to the Loan Documents, the Recitals hereto, any instruments, agreements or documents executed in connection with any of the foregoing or the origination, negotiation, administration, servicing and/or enforcement of any of the foregoing.

 

7.2 In furtherance of this release, Borrower expressly acknowledges and waives any and all rights under Section 1542 of the California Civil Code, which provides as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” (Emphasis added.)

7.3 By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever.  Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by Bank with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights.

 

7.4 This release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release.  Borrower acknowledges that the release contained herein constitutes a material inducement to Bank to enter into this Agreement, and that Bank would not have done so but for Bank’s expectation that such release is valid and enforceable in all events.

 

7.5 Borrower hereby represents and warrants to Bank, and Bank is relying thereon, as follows:

 

(a) Except as expressly stated in this Agreement, neither Bank nor any agent, employee or representative of Bank has made any statement or representation to Borrower regarding any fact relied upon by Borrower in entering into this Agreement.

 

(b) Borrower has made such investigation of the facts pertaining to this Agreement and all of the matters appertaining thereto, as it deems necessary.

 

(c) The terms of this Agreement are contractual and not a mere recital.

 

(d) This Agreement has been carefully read by Borrower, the contents hereof are known and understood by Borrower, and this Agreement is signed freely, and without duress, by Borrower.

 

(e) Borrower represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or entity any claims or other matters herein released.  Borrower shall indemnify Bank, defend and hold it harmless from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of any claims or matters released herein.

 

8. Integration.  This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents

 

9. Counterparts.  This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

10. Conditions to Effectiveness.  The parties agree that the forbearance obligations of Bank herein shall be effective upon the satisfaction of each of the following conditions precedent, each in form and substance satisfactory to Bank, on or prior to August _____, 2013, (the date of the satisfaction of such conditions precedent referred to herein as the “Forbearance Effective Date”): (a) the due execution and delivery to Bank of this Agreement by each party hereto and (b) Borrower’s payment of a forbearance fee in the amount of $5,000 (which fee shall be fully earned by Bank upon the execution and delivery of this Agreement by the parties hereto).

 

11. Miscellaneous.

 

11.1 This Agreement shall constitute a Loan Document under the Loan Agreement; the failure to comply with the covenants contained herein shall constitute an Event of Default under the Loan Agreement; and all obligations included in this Agreement (including, without limitation, all obligations for the payment of principal, interest, fees, and other amounts and expenses) shall constitute obligations under the Loan Agreement and secured by the Collateral.

 

11.2           Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12. Governing Law.  This Agreement and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of California.

 

[Signature page follows.]

 

 

  

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In Witness Whereof, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above.

	
BANK

	  
	
 

Silicon Valley Bank

 

 

By:   ________________________________________

                                                     

Name: _______________________________________

                                                       

Title:  _______________________________________                                                      

 

	  
	
BORROWER

	
BORROWER

	
 

DecisionPoint Systems, Inc.

 

 

 

 

By: ________________________________________

 

Name: _______________________________________

 

Title: _______________________________________

 

 

	
 

DecisionPoint Systems International, Inc.

 

 

 

 

By: ________________________________________

 

Name: _______________________________________

 

Title: _______________________________________

 

                                                     

 

	
BORROWER

	
BORROWER

	
 

DecisionPoint Systems Group, Inc.

 

 

 

 

By: ________________________________________

 

Name: _______________________________________

 

Title: _______________________________________

 

                                                      

	
 

DecisionPoint Systems CA, Inc.

 

 

 
 
By: ________________________________________

 

Name: _______________________________________

 

Title: _______________________________________

 

	
BORROWER

	
BORROWER

	
 

DecisionPoint Systems CT, Inc.

 

 

 

 

By: ________________________________________

 

Name: _______________________________________

 

Title: _______________________________________

 

                                                  

	
 

CMAC, Inc.

 

By: ________________________________________

 

Name: _______________________________________

 

Title: _______________________________________                                                     

 

 

 

4EXHIBIT 10.1

 

FIRST AMENDMENT

TO AMENDED AND RESTATED MEMBER CONTROL
AGREEMENT

OF TWIN CITIES POWER HOLDINGS, L.L.C.

 

This First Amendment to Amended and Restated
Member Control Agreement (“First Amendment to MCA”) dated July 30, 2013 and is to be effective as of the 28th
day of June, 2013 by and among Timothy S. Krieger (“Krieger”) and Summer Enterprises, L.L.C., a Minnesota Limited Liability
Company (“Summer”) who are all of the members of Twin Cities Power Holdings, L.L.C., a MinnesotaS Limited Liability
Company (the “Company”). Krieger, Summer and the Company are jointly referred to as Parties (“Parties”).

 

R E C I T A L S

 

		A.	The Company entered into an Amended and Restated Member Control Agreement dated as of July 18, 2012 (the “Agreement”).

 

		B.	The Parties now desire to amend the Agreement to delete all references to the Hanson Preferred Units and substitute in its
place a Certificate of Designation of Series A Preferred Units of the Company.

  

THE PARTIES HEREBY AGREE AS FOLLOWS:

 

		1.	The terms and conditions of that certain Certificate of Designation of Series A Preferred Units of Twin Cities Power Holdings,
L.L.C., are hereby incorporated into the Agreement and the Agreement shall be deemed to have been modified to incorporate the rights
and preferences of the Series A Preferred Units.

 

		2.	Summer Enterprises, L.L.C. does herein agree to be bound by the terms of the Amended and Restated Member Control Agreement
dated July 18, 2012 as amended by the First Amendment to Amended and Restated Member Control Agreement.

 

		3.	All other terms and conditions of the Amended and Restated Member Control Agreement of Twin Cities Power Holdings, L.L.C. as
amended by this First Amendment to Amended and Restated Member Control Agreement of Twin Cities Power Holdings, L.L.C. shall remain
in full force and effect except as herein amended.

 

 

 

 

 

 

 

 

 

 

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

 

	MEMBERS:	
        COMPANY:

         

	
         

        /s/ Timothy S. Kreiger

        Timothy S. Krieger
	
        TWIN CITIES POWER HOLDINGS, L.L.C.

         

        /s/ Timothy S. Kreiger

        By: Timothy S. Krieger

        Its: President/CEO

	 	 
	
        SUMMER ENTERPRISES, L.L.C.

         

         /s/Timothy S. Kreiger

        By: Timothy S. Krieger

        Its: President/CEO
	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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CERTIFICATE OF DESIGNATION

OF

SERIES A PREFERRED UNITS

OF

TWIN CITIES POWER HOLDINGS, LLC

 

WHEREAS, TWIN CITIES POWER HOLDINGS, LLC
is a Minnesota limited liability company organized under Chapter 322B, Minnesota Statutes (the “Company”);

 

WHEREAS, pursuant to Article II, paragraph
2.02 of its Articles of Organization dated December 30, 2009 (the “Articles”) and its Amended and Restated Member Control
Agreement dated July 18, 2012, the Company is authorized to establish by resolution different classes and/or series of membership
interests and may fix the rights and preferences of said membership interests in any class or series.

 

WHEREAS, the Board of Governors has resolved
that the Company issue “Common Units” and one or more classes of Preferred Units to be designated, respectively, as
“Common Units” and “Preferred Units”;

 

NOW, THEREFORE, the Board of Governors
hereby establishes the rights, preferences, and restrictions of the Company’s Series A Preferred Units as follows:

 

1. Designation; Authorization; Liquidation
Preference; Parity.

 

(a) Designation. A series of the
Company’s Preferred Units shall be designated as its Series A Preferred Units (the “Preferred Units” or the “Units”).

 

(b) Authorization. The number of
authorized units constituting the Preferred Units is 496.

 

(c) Liquidation Preference. The
Preferred Units shall have a preference upon distribution in liquidation of $5,535.00 per Unit plus distributions accrued and interest
thereon at the rate of 20% per annum from the date accrued (the “Liquidation Preference”).

 

(d) Parity. The Preferred Units
shall be senior to the Company’s Common Units and rank on parity with all other classes and series of preferred equity of
the Company now or hereafter authorized, issued, or outstanding, other than any classes or series ranking senior to the Preferred
Units as to distribution rights and rights upon liquidation, winding up, or dissolution of the Company, provided that the holders
of the Preferred Units so permit. The Preferred Units shall be junior to all outstanding debt of the Company, whether senior or
subordinated. 

 

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2. Distributions.

 

(a) Payment. The holders of record
of Preferred Units shall be entitled to receive, when, as, and if declared by the Board of Governors, out of funds legally available
therefor, non-cumulative cash distributions at the rate of $92.25 per unit per month (the “Distribution Rate”). The
distributions shall be payable monthly in arrears on the first day of each month, beginning August 1, 2013 or, if any such day
is a non-business day, on the next business day (each of such dates, a “Distribution Payment Date” and each preceding
monthly period being a “Distribution Period”). Each declared distribution shall be payable to holders of record as
they appear on the Unit Register of the Company at the close of business on the Record Dates. The Record Dates shall be set as
of the first day of each Distribution Period.

 

(b) Participation. The Preferred
Units shall not participate in distributions with the Common Units.

 

(c) Noncumulative. Distributions
on the Preferred Units shall be noncumulative. If the Board of Governors fails to declare a distribution payable on a Distribution
Payment Date in respect of the Preferred Units due to a lack of legally available funds or the need to meet debt obligations, then
the right of holders of Preferred Units to receive a distribution in respect of the Distribution Period ending on such Distribution
Payment Date will be lost and the Company will have no obligation to pay the distribution accrued for such Distribution Period
or to pay any interest thereon, whether or not distributions on the Preferred Units are declared for any future Distribution Period,
provided that the provisions of this paragraph shall not affect the determination of the amount of the Liquidation Preference or
the priority of the payment of distributions, or the amount thereof, as provided in Section 3(e).

 

(d) Computation. The amount of distributions
payable on Preferred Units for each full Distribution Period shall be computed by multiplying the number of Preferred Units outstanding
by the Distribution Rate. The amount of any distribution payable per Unit for any period shorter than a full Distribution Period
shall be computed by multiplying the Distribution Rate by 12, dividing by a 360-day year, and multiplying by the actual number
of days elapsed in such period.

 

(e) Priority.

 

(i) Except for distributions to holders
of the Common Units in lieu of income taxes as described in the Company’s Member Control Agreement, as amended from time
to time (“Tax Distributions”), no distributions shall be declared, paid, or set apart for payment on Preferred Units
of any series ranking as to distributions on a parity with or junior to the Preferred Units for any period unless the full distribution
accrued on the Preferred Units has been, or contemporaneously is, declared and paid for all prior Distribution Periods from the
date of the issuance of the Preferred Units and a sum sufficient for the payment thereof set apart for such payment.

 

When distributions are not paid in full
(or declared and a sum sufficient for such full payment is not so set apart) upon the Preferred Units and any other Preferred Units
ranking on a parity as to distributions with the Preferred Units, all distributions declared upon the Preferred Units and any other
series of Preferred Units ranking on a parity as to distributions shall be declared pro rata, so that the amount of distributions
declared per Unit on Preferred Units and such other series of Preferred Units shall in all cases bear to each other the same ratio
that accrued distributions for the then-current Distribution Period on the Preferred Units and accrued distributions, including
required or permitted accumulations, if any, of such other series of Preferred Unit, bear to each other.

 

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(ii) So long as any Preferred Units are
outstanding and full distributions on the Preferred Units for all past distribution periods have not been paid, no distribution,
other than: (A) Tax Distributions in cash as described in Section 2.(d)(i); (B) distributions paid in additional Preferred Units;
(C) distributions of options, warrants, or rights to subscribe for or purchase Common Units or any other Preferred Units ranking
junior to the Preferred Units as to distributions or upon liquidation, shall be declared or paid or set aside for payment or other
distribution declared or made upon the Common Units or upon any other Units of the Company ranking junior to the Preferred Units
as to distributions or upon liquidation, nor shall any Common Units or any other Units of the Company ranking junior to or on a
parity with the Preferred Units as to distributions or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the redemption of any such Units) by the Company otherwise than
pursuant to a pro rata offer to purchase or a concurrent redemption of all, or a pro rata portion, of the outstanding
Preferred Units and any other Units on a parity with Preferred Units (except by conversion into or exchange for Units of the Company
ranking junior to the Preferred Units as to distributions and upon liquidation) unless and until the Company shall have paid full
distributions on the Preferred Units for all prior Distribution Periods from the date of the issuance of the Preferred Units.

 

3. Voting. So long as any Preferred
Units are outstanding, in addition to any other vote or consent of members of the Company required by law or by the Articles, the
consent of the holders of at least a majority of the Preferred Units, acting as a single class, given in person or by proxy, either
in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting:

 

(a) Any amendment, alteration, or
repeal of any of the provisions of the Articles that affects adversely the voting powers, rights, or preferences of the holders
of the Preferred Units, provided that the amendment of the provisions of the Articles so as to authorize or create, or to increase
the authorized amount of, any Units of any class ranking junior to or on a parity with the Preferred Units shall not be deemed
to affect adversely the voting powers, rights, or preferences of the holders of the Preferred Units;

 

(b) The authorization or creation
of, or the increase in the authorized amount of, any Units of any class or any security convertible into Units of a class ranking
prior to the Preferred Units in the distribution of assets on any liquidation, dissolution, conservatorship, receivership, or winding
up of the Company, or in the payment of distributions; or

 

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(c) The merger or consolidation
of the Company with or into any other entity, unless the Preferred Units or an equivalent class of securities remain outstanding
after the merger or consolidation and the resulting entity will thereafter have no class of Units and no other securities either
authorized or outstanding ranking prior to the Preferred Units in the distribution of its assets on liquidation, dissolution or
winding up or in the payment of distributions, provided that no such consent of the holders of Preferred Units shall be required
if, at or prior to the time when such amendment, alteration or repeal is to take effect or when the issuance of any such prior
Units or convertible security is to be made, or when such consolidation or merger, purchase or redemption is to take effect, as
the case may be, provision is made for the redemption of all Preferred Units at the time outstanding.

 

4. Redemption. The Preferred Units
shall not be redeemable, except as set forth in Section 3(c).

 

5. Liquidation Rights.

 

(a) Upon the dissolution, liquidation
or winding up of the Company, the holders of the Preferred Units shall be entitled to receive and to be paid out of the assets
of the Company available for distribution to its members, before any payment or distribution shall be made on the Common Units
or on any other class of Units ranking junior to the Preferred Units upon liquidation, the amount of the Liquidation Preference.

 

(b) The sale of all or substantially
all the property or business of the Company, or the merger or consolidation of the Company into or with any other corporation or
the merger or consolidation of any other corporation into or with the Company shall be deemed to be a dissolution, liquidation,
or winding up, voluntary or involuntary, for the purposes of this Section 5.

 

(c) After the payment to the holders
of the Preferred Units of the full preferential amounts provided for in this Section 5, the holders of Preferred Units as such
shall have no right or claim to any of the remaining assets of the Company.

 

(d) In the event the assets of the
Company available for distribution to the holders of Preferred Units upon any dissolution, liquidation, or winding up of the Company,
whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant
hereto, no such distribution shall be made on account of any other class or series of Preferred Units ranking on a parity with
the Preferred Units upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on
account of the Preferred Units, ratably, in proportion to the full distributable amounts for which holders of all such parity Units
are respectively entitled upon such dissolution, liquidation, or winding up.

 

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(e) Subject to the rights of the
holders of Units of any series or class or classes of Units ranking on a parity with the Preferred Units upon liquidation, dissolution,
or winding up of the Company, after payment shall have been made in full to the holders of the Preferred Units as provided herein,
but not prior thereto, any other series or class or classes of Units ranking junior to the Preferred Units upon liquidation, subject
to the respective terms and provisions applying thereto, shall be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Preferred Units shall not be entitled to share therein.

 

6. Ranking. A Unit of any class
of the Company shall be deemed to rank:

 

(a) Prior to the Preferred Units,
if the holders of such class or classes shall be entitled to the receipt of distributions or of amounts distributable upon dissolution,
liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of Preferred Units;

 

(b) On a parity with the Preferred
Units, if the holders of such Units shall be entitled to the receipt of distributions or of amounts distributable upon dissolution,
liquidation or winding up of the Company, in proportion to their respective distribution rates or liquidation prices, without preference
or priority, one over the other, as between the holders of such Units and the holders of the Preferred Units; and

 

(c) Junior to the Preferred Units,
if such class shall be Common Units or if the holders of the Preferred Units shall be entitled to receipt of distributions or of
amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority
to the holders of Units of such class or classes.

 

7. Conversion and Cancellation.
The Company’s existing class of preferred units is hereby converted, on a one-for-one basis, into Preferred Units and the
existing class of preferred units is, upon such conversion, cancelled.

 

The Preferred Units are not convertible
into Common Units.

 

 

 

 

 

 

 

 

 

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