Document:

EXHIBIT
      10.1

     

    

     

    JOINT
      VENTURE AGREEMENT

     

    THIS
      JOINT VENTURE AGREEMENT (the “JV Agreement“) is made and entered into effective
      as of September
      17, 2006 (the “Effective Date”), by and between Star
      Ethanol, LLC,
      an
      Illinois limited liability company (“Star”), and Ethanex
      Energy, Inc.,
      a
      Nevada corporation (“Ethanex”). Ethanex and Star shall be referred to
      individually as a “Party” and collectively as the “Parties.”

     

    RECITALS

    

    A. The
      Parties signed a non-binding letter of intent dated August
      15, 2006, as subsequently amended (the “LOI”) regarding the establishment of a
      joint venture company to construct and operate a 132 million gallon ethanol
      production facility in Franklin County, Illinois utilizing fractionation
      technology in the production of ethanol and ethanol-related products.

     

    B.  The
      Parties now desire to formally organize a limited liability company under the
      laws of the State of Illinois (the “Company”) through which they will construct
      an ethanol facility and develop, manufacture, distribute, and sell ethanol
      and
      ethanol-based products.

     

    C.  Each
      Party shall collaborate and lend its expertise to the successful achievement
      of
      the Company’s commercial objectives.

     

    D. 
      The
      Parties enter into this JV Agreement to set out the terms governing the
      management and operations of the Company and the Parties’ investment and
      relationship as Members in the Company. 

     

    NOW,
      THEREFORE, in consideration of the above Recitals, which are incorporated herein
      by this reference, and the mutual promises, agreements and covenants set forth
      in this JV Agreement, Star
      and
      Ethanex agree as follows:

     

    ARTICLE
      1

    DEFINITIONS
      AND INTERPRETATION

    

    In
      this
      JV Agreement, unless otherwise clearly indicated by the context, the following
      terms, whether used in singular or plural forms, shall have the following
      meanings:

     

    
      	
              1.1

            	
              “Articles
                of Organization” means the Articles of Organization to be filed with the
                Illinois
                Secretary of State’s office for purposes of legally organizing the
                Company, in the form attached hereto as Exhibit
                1.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              1.2

            	
              “Assignment
                Agreement” means the Assignment Agreement between Ethanex and the Company,
                in the form attached hereto as Exhibit
                4,
                to be executed on the Effective Date pursuant to Section
                8.1
                of
                this JV Agreement.

            

    

     

    
      	
              1.3

            	
              “Construction
                Start Date” means shall have the meaning ascribed to such term in the
                definitive agreement among the Company and the Company’s designated EPC
                contractor.

            

    

     

    
      	
              1.4

            	
              “Contribution
                Agreement” means the Contribution Agreement between Star and the Company,
                in the form attached hereto as Exhibit
                3,
                to be executed on the Effective Date pursuant to Section
                8.2
                of
                this JV Agreement. 

            

    

     

    
      	
              1.5

            	
              “Deposit”
                means the sum of $2,000,000 to be paid by Ethanex to the Company
                upon the
                execution of this JV Agreement, as more fully described in Article
                3
                below.

            

    

     

    
      	
              1.6

            	
              “Effective
                Date” has the meaning set forth in the
                preamble.

            

    

     

    
      	
              1.7
                

            	
              “Equity
                Determination Date” means the earlier of the Mechanical Completion Date
                and September 31, 2008.

            

    

     

    
      	
              1.8

            	
              “Mechanical
                Completion Date” shall have the meaning ascribed to such term in the
                definitive agreement among the Company and the Company’s designated EPC
                contractor.

            

    

     

    
      	
              1.9

            	
              “Operating
                Agreement” means the Operating Agreement of the Company by and among
                Ethanex, Star and the Company, in the form attached hereto as Exhibit
                2,
                to be executed on the Effective
                Date.

            

    

     

    
      	
              1.10

            	
              “Plant”
                means a 132 million gallon per year nameplate ethanol production
                plant to
                be constructed and operated by the Company on the Plant Site.
                

            

    

     

    
      	
              1.11

            	
              “Plant
                Site” means certain real property located in Franklin County,
                Illinois.

            

    

     

    
      	
              1.12

            	
              “Related
                Agreements” means the following agreements each to be dated and deemed
                effective as of the Effective Date: (i) Operating Agreement, (ii)
                Contribution Agreement, and (iii) Assignment
                Agreement.

            

    

     

    
      	
              1.13

            	
              “Star
                Assets” means the assets of Star to be contributed as initial capital of
                the Company including all of the assets owned, controlled by, or
                licensed
                to Star or its subsidiaries including, but not limited to all cash,
                equipment, buildings and improvements, start-up costs, land leases,
                intellectual property, licenses and sublicenses, purchase agreements,
                construction and engineering contracts, and business plans. The assets
                to
                be contributed shall include all of the assets owned, controlled
                by, or
                licensed to Star or its affiliates with the right to sublicense,
                including
                all of the assets owned or controlled by Star or its affiliates located
                at
                the Facility including, without limitation, all leases, licenses,
                permits,
                governmental authorizations, intellectual and other intangible property,
                real property, personal property, equipment, materials, supplies,
                prepaid
                deposits, accounts receivable, claims and causes of
                action.

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
              1.14

            	
              “Third
                Party” means any person or legal entity other than Ethanex, Star, or the
                Company. 

            

    

     

    
      	
              1.15

            	
              “Member,”
                “Membership Interest,” “Board” and “Manager” shall have the meanings set
                forth in the Operating Agreement. 

            

    

     

    
      	
              1.16

            	
              In
                this JV Agreement, except to the extent that the context otherwise
                requires (i) whenever the words “include,” “includes” or “including” are
                used they are deemed to be followed by the words “without limitation,” and
                (ii) the definitions contained in this JV Agreement are applicable
                to the
                singular as well as the plural of such terms.

            

    

     

    ARTICLE
      2

    ORGANIZATIONAL
      MATTERS OF COMPANY

    

    	2.1  	
            On
              or before the Effective Date, the Parties shall organize the Company
              as a
              limited liability company under the laws of the State of Illinois
              by filing the Articles of Organization, in the form attached hereto
              as
              Exhibit
              1,
              with the Illinois Secretary of State’s office.

          

     

    	2.2  	
            The
              name of the Company shall be Ethanex Southern Illinois,
              LLC.

          

     

    	2.3  	
            Subject
              to the terms and conditions of this JV Agreement, on the Effective
              Date,
              the Parties shall adopt and execute the Operating Agreement in the
              form
              attached hereto as Exhibit
              2.
              The Operating Agreement shall more fully set forth the rights and
              obligations of the Members in the Company and, to the extent permitted
              by
              applicable law, shall be consistent with the terms of this JV Agreement.
              

          

     

    	2.4  	
            The
              duration of the Company shall be perpetual subject to the provisions
              of
              this JV Agreement and the Operating Agreement.

          

     

    	2.5  	
            The
              purpose of the Company will be to (i) construct and operate the Plant,
              (ii) develop, manufacture, distribute and sell ethanol and ethanol-based
              products, and (iii) engage in all activities necessary, customary,
              convenient or incident to the activities described herein.
              

          

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    ARTICLE
      3

    DEPOSIT;
      DISPOSITION OF DEPOSIT

    

    	3.1  	
            Upon
              the signing of this JV Agreement, Ethanex
              shall make an initial capital contribution to the Company in the form
              of
              the Deposit.

          

     

    	3.2  	
            In
              the event that this JV Agreement is terminated before the Effective
              Date
              or the Parties, for any reason, are unable to come to agreement on
              the
              Related Agreements or any other definitive transaction documents, then
              the
              Company shall be obligated to refund the Deposit to Ethanex.
              

          

     

    	3.3  	
            In
              the event, however, the Related Agreements and any other definitive
              transaction documents necessary for the JV contemplated hereby are
              entered
              into and the JV is subsequently terminated, the Deposit shall be treated
              as a portion of Ethanex’s initial capital contribution.
              

          

     

    ARTICLE
      4

    INITIAL
      CAPITAL CONTRIBUTIONS

     

    	4.1  	
            Upon
              the Effective Date, and contemporaneously with the execution of the
              Related Agreements, Ethanex shall contribute management expertise,
              goodwill and tangible and intangible assets of Ethanex. Ethanex will
              also
              undertake to raise the project financing necessary to complete
              construction of the Plant in part through the sale of Ethanex
              securities.

          

     

    	4.2  	
            Subject
              to adjustment as set forth in this Section
              4.2,
              Star shall make an initial capital contribution of Eleven Million Two
              Hundred and Fifty Thousand Dollars ($11,250,000) an amount representing
              the anticipated equity contribution necessary for Star to secure a
              fifteen
              percent 15% equity interest in the Plant based upon an anticipated
              Two
              Hundred and Fifty Million Dollar ($250,000,000) cost of construction
              with
              seventy percent (70%) leverage. One half (1/2) of such contribution
              or
              Five Million Six Hundred Twenty-Five Thousand Dollars ($5,625,000)
              shall
              be due within 60 days of the Effective Date. Star shall contribute
              the
              amounts called for in this Section
              4.2
              in
              cash, or in the form of the Star Assets at a mutually agreed upon
              valuation. The Parties anticipate that on or before March 31, 2007,
              the
              Company and its and the Company’s designated EPC contractor will determine
              the fixed price to construct the Plant. On or before the earlier of
              the
              Mechanical Completion Date and September 31, 2008, Star shall contribute
              an amount in cash equal to the difference of Five Million Six Hundred
              Twenty-Five Thousand Dollars ($5,625,000) (or such other amount actually
              contributed pursuant to Section
              4.2
              above), and fifteen percent (15%) of the actual equity cost to construct
              the Plant. At such time, Star shall have the right to contribute an
              additional amount in cash to bring the total amount contributed to
              twenty-five (25%) of the actual equity cost to construct the Plant.
              By way
              of example: (a) within 60 days of the Effective Date Star contributes
              cash
              and Star Assets with an agreed upon value of Five Million Six Hundred
              Twenty-Five Thousand Dollars ($5,625,000), (b) the actual (anticipated)
              cost to construct the Plant is Two Hundred Million Dollars ($200,000,000)
              with seventy-five percent (75%) leverage (i.e. Fifty Million ($50,000,000)
              of equity required), (c) Star would be required to contribute an
              additional One Million Eight Hundred Seventy-Five Thousand Dollars
              ($1,875,000) on or before the Mechanical Completion Date and September
              31,
              2008 in order to preserve its fifteen percent (15%) interest in the
              Company, but shall have the right to contribute up to an additional
              Six
              Million Eight Hundred Seventy-Five Thousand Dollars ($6,875,000) in
              order
              to secure a 25%) interest in the Company. In the event that the actual
              cost to complete the Plant exceeds the amount anticipated on the earlier
              of the Mechanical Completion Date and September 31, 2008, each of the
              Parties shall have the right to make additional capital contributions
              necessary to preserve the anticipated seventy-five percent (75%) -
              twenty-five percent (25%) ownership ratio between Ethanex and Star,
              respectively. Notwithstanding the amount of any such cost overrun,
              Star
              shall be required to contribute an amount sufficient to preserve a
              minimum
              fifteen percent (15%) ownership interest in the
              Company.

          

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    	4.3  	
            Ethanex
              hereby agrees to advance Star up to Four Million Dollars ($4,000,000)
              to
              be applied to Star’s initial capital contribution.Such advance will take
              the form of a senior subordinated debenture bearing interest at the
              rate
              of 11% per year, compounded quarterly. In the event Ethanex loans funds
              to
              Star to enable Star to make its initial capital contribution as
              contemplated in the previous sentence, such loan will be repaid, interest
              first, out of distributions made pursuant to the Operating Agreement.
              

          

     

    	4.4  	
            The
              capital contribution provided by Ethanex pursuant to Section
              4.1
              above shall be used by the Company to fund the capitalizable assets
              of the
              Company including, without limitation, the design, engineering and
              construction costs of the Plant and the purchase of equipment to be
              used
              in the operation of the Plant.

          

     

    	4.5  	
            The
              capital contribution provided by Star pursuant to Section
              4.2
              above shall be used by the Company, to the extent practical, to facilitate
              the construction and operation of the Plant, and to serve as security
              for
              third party financing to fund the capitalizable assets of the Company
              including, without limitation, the design, engineering and construction
              costs of the Plant and the purchase of equipment to be used in the
              operation of the Plant. 

          

     

    ARTICLE
      5

    OWNERSHIP

    

    	5.1  	
            Subject
              to the satisfaction of each Party’s contribution obligations as set forth
              in Article
              4
              above, the Membership Interests of the Company shall be owned seventy-five
              percent (75%) by Ethanex and twenty-five percent (25%) by Star; provided,
              however, that in the event Star fails to meet its financial obligations,
              then its ownership percentage shall be reduced
              proportionately.

          

    

    	5.2  	
            Without
              the prior written consent of the other Party, a Party shall not acquire,
              by purchase or otherwise, directly or indirectly, ownership or voting
              control of Membership Interests of the Company representing more than
              the
              other Party’s Membership Interest of the Company on a fully diluted basis.
              Profits and losses of the Company shall be allocated among the Parties
              in
              accordance with their relative Membership Interests.
              

          

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    ARTICLE
      6

    GOVERNANCE

    

    	6.1  	
            The
              management of the Company and the responsibility for preparation and
              adoption of the Company’s business plan shall be vested in the Board of
              Directors (the “Board) and such executives, officers and employees as the
              Board may authorize and designate from time to time. The Board initially
              shall be comprised of five (5) persons, two (2) of whom shall be nominated
              by Ethanex, two (2) to be nominated by Star, and one (1) to be nominated
              by the Parties jointly. The Board shall have authority, on behalf and
              in
              the name of the Company, to perform those acts as provided in the
              Operating Agreement, subject to those powers that are reserved to the
              Members of the Company, also as provided in the Operating Agreement.
              

          

    

    	6.2  	
            The
              Chairperson of the Board shall initially be appointed by Ethanex. The
              Chairperson shall preside over all Board meetings and, in the event
              of a
              deadlock by the Board, shall cast the deciding vote of the Board. The
              Chairperson of the Board also shall serve as the Manager of the Company
              as
              set forth in the Operating Agreement.

          

    

    	6.3  	
            The
              day-to-day management and operation of the Company shall be performed
              by a
              President/CEO appointed by and serving under the direction of the Board.
              The initial President/CEO of the Company shall be appointed by Ethanex.
              The President/CEO of the Company shall have the rights and duties provided
              in the Operating Agreement.

          

    

    	6.4  	
            The
              Parties agree that neither the Board nor the Company shall have the
              authority to do or undertake certain actions which are reserved to
              the
              Members as provided in the Operating Agreement. Certain actions of
              the
              Company shall require the approval of Members owning at least seventy-five
              percent (75%) of the Membership Interests of the Company as set forth
              in
              the Operating Agreement. 

          

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    ARTICLE
      7

    OBLIGATIONS
      OF THE PARTIES

    

    	7.1  	
            In
              addition to the other obligations set forth in this JV Agreement, Ethanex
              agrees that it shall:

          

    

    	(a)  	
            Coordinate
              with Star to direct the activities of engineers, contractors, vendors,
              and
              other consultants engaged by the Company to provide products or services
              to the Company in order to build and operate the Plant as soon as
              commercially practicable; 

          

    

    	(b)  	
            provide
              management support and local logistical support integral to completion
              of
              the Plant; 

          

    

    	(c)  	
            use
              its commercially best efforts to coordinate with Delta T Corporation,
              TIC
              Holdings, Inc., or firms of equivalent experience and resources, together
              with the other necessary design and construction professionals, to
              begin
              construction of the Plant as soon as commercially practicable;
              

          

    

    	(d)  	
            work
              toward retaining Morsey Construction to construct certain portions
              of the
              Plant;

          

    

    	(e)  	
            in
              accordance with the terms and conditions of this JV Agreement, execute
              and
              deliver on the Effective Date the following Related
              Agreements:

          

    

    	(i)  	
            the
              Operating Agreement, in the form attached hereto as Exhibit
              2;

          

    

    	(ii)  	
            the
              Assignment Agreement, in the form attached hereto as Exhibit
              4,
              as more fully described in Section
              8.2
              below; and 

          

    

    	(iii)  	
            take
              any further actions as may be necessary to complete and implement the
              transactions contemplated by this JV
              Agreement.

          

    

    	7.2  	
            In
              addition to the other obligations set forth in this JV Agreement, Star
              agrees that it shall:

          

    

    	(a)  	
            provide
              reasonable assistance to Ethanex and the Company in connection with
              Ethanex’s obligation to raise the Third Party Financing, including,
              without limitation, by making key Star executives available for investor
              meetings and providing financial, technical and market related information
              in Star’s control to aid in the preparation of private placement
              materials, subscription documentation or loan
              documentation;

          

    

    	(b)  	
            use
              its commercially best efforts to assist Ethanex and the Company with
              the
              coordination and direction of engineers, contractors, vendors and
              consultants engaged by the Company to provide products or services
              to the
              Company in order to complete the construction of the Plant by the Plant
              Completion Date;

          

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    	(d)  	
            in
              accordance with the terms and conditions of this JV Agreement, execute
              and
              deliver on the Effective Date the following Related
              Agreements:

          

    

    	(iv)  	
            the
              Operating Agreement, in the form attached hereto as Exhibit
              2;
              and

          

    

    	(v)  	
            the
              Contribution Agreement, in the form attached hereto as Exhibit
              3,
              as more fully described in Section
              8.1
              below; and

          

    

    
      	 	
              (d)
                 

            	
              take
                any further actions as may be necessary to complete and implement
                the
                transactions contemplated by this JV Agreement.

            

    

    

    ARTICLE
      8

    RELATED
      AGREEMENTS

    

    	8.1  	
            Unless
              otherwise agreed in writing by the Parties, on the Effective Date,
              Ethanex
              shall execute and deliver to the Company the Assignment Agreement whereby
              Ethanex shall assign or otherwise transfer to the company, and the
              Company
              shall assume or otherwise take or acquire from Ethanex, Ethanex’s
              contractual right or option to have a qualified Third Party engineering,
              procurement, and construction firm construct a large scale, multi-million
              gallon per year ethanol plant for Ethanex.

          

    

    	8.2  	
            Unless
              otherwise agreed in writing by the Parties, on the Effective Date,
              Star
              shall execute and deliver to the Company the Contribution Agreement
              relating to the assets to be contributed to the Company as described
              in
              Section
              4.2
              above. The execution and delivery by Star of the Contribution Agreement
              shall be deemed a condition precedent to the Obligation of Ethanex
              to
              execute and deliver the Assignment Agreement as described in Section
              8.1
              above.

          

    

    	8.3  	
            In
              addition to the Related Agreements, the Parties shall cause the Company
              to
              enter into an executive employment agreement in a form mutually agreeable
              by the Company and Ronald J. Gerino providing for an initial base salary
              of $150,000 and benefits to be determined by the
              Board.

          

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    ARTICLE
      9

    TRANSFER
      RESTRICTIONS

    

    	9.1  	
            Any
              sale, gift, transfer or other disposition, whether voluntary or by
              operation of law, of a Member’s Membership Interest, other than in
              accordance with the terms of this JV Agreement and the Operating Agreement
              shall be void and shall transfer no right, title or interest in or
              to any
              such Membership Interest to the purported
              transferee.

          

    

    	9.2  	
            Any
              permitted transfer of a Membership Interest of the Company shall be
              performed in accordance with the terms and provisions set forth in
              Article
              XI
              of
              the Operating Agreement. 

          

    

    ARTICLE
      10

    REPRESENTATIONS
      AND WARRANTIES

    

    	10.1  	
            Each
              Party represents and warrants to the other that it has the legal right,
              power and authority to enter into this JV Agreement and the Related
              Agreements, and to fully perform its obligations hereunder and thereunder,
              and that the performance of such obligations shall not conflict with
              its
              charter or organizational documents or any agreements, contracts or
              other
              arrangements to which it is a party. 

          

    

    	10.2  	
            EXCEPT
              AS EXPRESSLY SET FORTH IN THIS JV AGREEMENT OR THE RELATED AGREEMENTS,
              NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, EITHER
              EXPRESS OR IMPLIED, INCLUDING WARRANTIES AS TO MERCHANTABILITY, FITNESS
              FOR A PARTICULAR PURPOSE OR
              NON-INFRINGEMENT.

          

    

    	10.3  	
            IN
              NO EVENT SHALL EITHER PARTY, ITS DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES,
              OR AGENTS BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL,
              SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING,
              WITHOUT LIMITATION, LOSS OF PROFITS OR LOSS OF BUSINESS OPPORTUNITIES,
              WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE,
              STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS
              AGREEMENT. 

          

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    ARTICLE
      11

    NON-EXCLUSIVE
      RELATIONSHIP

    

    
      	
              11.1

            	
              The
                Parties acknowledge that the Company is not intended to be the exclusive
                vehicle for either Party to participate in the ethanol industry.
                To the
                extent the parties can pursue or exploit other business opportunities
                relating to the manufacture, use, distribution and sale of ethanol
                and
                ethanol-based products without a breach of their respective obligations
                to
                each other and to the Company under this JV Agreement and the Related
                Agreements, they shall be free to do so.

            

    

    

    ARTICLE
      12

    TERM
      AND
      TERMINATION

    

    
      	
              12.1

            	
              This
                JV Agreement shall commence when fully signed by the Parties hereto
                and
                shall continue in effect unless terminated pursuant to the provisions
                of
                this Article
                12
                or
                by mutual written agreement of the Parties.

            

    

    

    	12.2  	
            This
              JV Agreement may be terminated and the transactions contemplated hereby
              abandoned by a Party sending written notice to other Party upon the
              occurrence of one or more of the following
              events:

          

    

    	(a)  	
            if
              the other Party shall commit a material breach of any of its obligations
              under this JV Agreement, which, if remediable, is not remedied within
              thirty (30) business days from the giving of written notice requiring
              said
              breach to be remedied;

          

    

    	(b)  	
            if
              the other Party, its creditor(s), or any Third Party shall file for
              the
              other Party’s liquidation, bankruptcy, reorganization, or dissolution, or
              if the other Party is unable to pay any debts as they become due, or
              if
              the creditor(s) of the other Party have taken over its management.
              

          

    

    	12.3  	
            Termination
              of this JV Agreement shall be without prejudice to the accrued rights
              and
              liabilities of the Parties at the date of termination, unless waived
              in
              writing by mutual agreement of the Parties.

          

    

    	12.4  	
            Upon
              termination of this JV Agreement, each Party shall discontinue use,
              cancel
              and return to the other Party, all confidential and/or proprietary
              information of the other Party that has been furnished or obtained
              in
              contemplation of the transactions contemplated hereunder or in connection
              with this JV Agreement and the Related Agreements, together with all
              reproductions and copies thereof and other written documents related
              thereto retaining no reproductions or copies or other written documents
              relating to such confidential and/or proprietary information.
              

          

    

    	12.5  	
            If
              this JV Agreement is terminated and the transactions contemplated hereby
              are abandoned, this JV Agreement shall become null and void, except
              for
              the provisions of this Article
              12
              and the other provisions of this JV Agreement which, by their nature,
              are
              intended to survive. 

          

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    ARTICLE
      13

    FORCE
      MAJEURE

    

    	13.1  	
            The
              failure or delay of either Party to perform any obligation under this
              JV
              Agreement solely by reason of acts of God, acts of government (except
              as
              otherwise enumerated herein), riots, wars, embargoes, strikes, lockouts,
              accidents or other causes beyond its control (each a “Force Majeure
              Event”) shall not be deemed a breach of this JV Agreement; provided,
              however, that the Party so prevented from complying herewith shall
              not
              have procured such Force Majeure Event, shall have used all reasonable
              diligence to avoid such Force Majeure Event and ameliorate its effects,
              and shall continue to take all actions within its power to comply as
              fully
              as reasonably possible with the terms of this JV Agreement.
              

          

    

    	13.2  	
            Except
              where the nature of the Force Majeure Event shall prevent it from doing
              so, the Party suffering such Force Majeure Event shall notify the other
              Party in writing within three (3) days after the occurrence of such
              Force
              Majeure Event and shall in every instance, to the extent possible and
              lawful under the circumstances, use its commercially best efforts to
              remove or remedy such Force Majeure Event with all reasonable dispatch.
              

          

    

    ARTICLE
      14

    GOVERNING
      LAW AND WAIVER OF JURY TRIAL

    

    
      	
              14.1

            	
              The
                validity, performance, construction and effect of this JV Agreement
                shall
                be governed by the laws of the State of Illinois, without regard
                to
                conflict of law principles. 

            

    

    

    
      	
              14.2

            	
              Each
                Party hereby waives any right to a trial by jury in any action, lawsuit
                or
                proceeding to enforce or defend any right under this JV Agreement,
                or any
                amendment thereto, and agrees that any action, lawsuit or proceeding
                will
                be tried before a court and not before a jury.

            

    

    

    ARTICLE
      15

    NON-WAIVER
      AND OTHER REMEDIES

    

    
      	
              15.1

            	
              Failure
                of any Party to insist upon the strict and punctual performance of
                any
                provision hereof shall not constitute waiver of nor estoppel against
                asserting the right to require such performance, nor shall a waiver
                or
                estoppel in one instance constitute a waiver or estoppel with respect
                to a
                later breach whether of similar nature or
                otherwise.

            

    

    

    
      	
              15.2

            	
              Subject
                to Section
                14.2
                above, nothing in this JV Agreement shall prevent a Party from enforcing
                its rights by such remedies as may be available in lieu of or in
                addition
                to termination.

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    ARTICLE
      16

    NOTICE

    

    
      	
              16.1

            	
              All
                notices, requests, demands and other communications under this Agreement
                or in connection herewith shall be given by letter (delivered by
                hand or
                by air courier) or by facsimile transmission confirmed by such letter,
                and
                shall be addressed to the Parties as
                follows:

            

    

     

    If
      to
Star:                               
      Star
      Ethanol, LLC

    c/o
      Ronald J. Gerino 

    11417
      Sam
      Pyle Bridge Road

    Benton,
      Illinois 62812

    Fax: 618.439.0009

     

    With
      a
      copy
      to:                   
Eric
      J.
      Dimbeck, Esq.

    111
      East
      Washington Street

    Benton,
      Illinois 62812

    Fax: 618.438-5015

     

    If
      to
      Ethanex:                       
Ethanex
      Energy, Inc.

    14500
      Parallel Road, Suite A

    Basehor,
      Kansas 66007

    Attn:
      Albert Knapp, President & CEO

    Fax:
       913.724.4107

    

    With
      a
      copy
      to:                   
Louis
      W.
      Zehil, Esq.

    McGuireWoods
      LLP

    1345
      Avenue of the Americas, 7th
      Floor

    New
      York,
      New York 10105

    Fax:
       212.548.2175

     

    
      	16.2  	
              Any
                notice, request, demand or other communication shall be effective
                (i) if
                given by facsimile, at the time such facsimile is transmitted and
                the
                appropriate confirmation is received (or, if such time is not during
                a
                normal business day, at the beginning of the following business day),
                or
                (ii) if given by air courier, when delivered at the applicable address
                specified above. Either Party may change its address at any time
                by
                written notice to the other Party given pursuant to this Article
                16.

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    
       

    

    ARTICLE
      17

    MISCELLANEOUS

    

    	17.1  	
            In
              the event that any provision of this JV Agreement becomes or is declared
              by a court or other tribunal of competent jurisdiction to be illegal,
              invalid, unenforceable or void, such provision(s) shall be limited
              or
              eliminated to the extent necessary so that this JV Agreement shall
              otherwise remain in full force and effect without said provision.
              

          

    

    	17.2  	
            Each
              Party shall pay all costs and expenses that it incurs with respect
              to the
              negotiation, execution, delivery and performance of this JV Agreement.
              

          

    

    	17.3  	
            Neither
              this JV Agreement nor any rights hereunder shall be assignable, directly
              or indirectly, by any Party hereto without the prior written consent
              of
              the other Party, which consent shall not be unreasonably withheld or
              delayed. 

          

    

    	17.4  	
            This
              JV Agreement supersedes all previous and contemporaneous representations,
              understandings or agreements, oral or written, between the Parties
              with
              respect to the subject matter hereof, and the agreements and documents
              contemplated hereby contain the entire understanding of the Parties
              as to
              the terms and conditions of their relationship. No changes, alterations
              or
              modifications hereto shall be effective unless they are in writing
              and are
              signed by an authorized representative of each
              Party.

          

    

    	17.5  	
            The
              headings in this JV Agreement are included for convenience of reference
              only and do not substantively affect the terms or interpretation of
              this
              JV Agreement.

          

    

    	17.6  	
            This
              JV Agreement may be executed in one or more counterparts, each of which,
              when executed, shall be deemed to be an original and all of which together
              will be deemed to be one and the same instrument. Delivery of an executed
              counterpart of a signature page to this JV Agreement by facsimile
              transmission shall be effective as delivery of a manually executed
              counterpart of this JV Agreement.

          

    

    [Signature
      Page to Follow]

    
      
         

         

      

      
        13

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Parties have executed this JV Agreement as of the date
      first set forth above.

     

     

    
      	 	 	 
	 	
              STAR
                ETHANOL, LLC, an Illinois limited liability company

            
	 
 	 
 	 
 
	 	By:  	/s/
              Ronald
              J. Gerino
	 	
              
Name:
              Ronald
              J. Gerino
              Title:
                President and CEO

            
	 	 

      	 	 	 
	 	
              ETHANEX
                ENERGY, INC., a
                Nevada corporation

            
	 
 	 
 	 
 
	 	By:  	/s/ Albert
              Knapp
	 	
              
                

              

              Name:
                Albert
                Knapp

              Title:
                President and CEO

            
	 	 

    14EXHIBIT
      10.2

     

     

     

     

     

     

    OPERATING
      AGREEMENT

     

    OF

     

    ETHANEX
      SOUTHERN ILLINOIS, LLC

    
 

    

    

    

    

    

    

    

    

    

    DATED:
      September 20, 2006

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
      OF
      CONTENTS

    
 

    
      
        
          	 	 	 	 	
                  Page

                
	 	 	 	 	 
	
                  ARTICLE
                    I.

                	
                     

                	
                  FORMATION

                	
                       

                	
                  1

                
	
                  1.1

                	 	
                  Organization

                	 	
                  1

                
	
                  1.2

                	 	
                  Agreement;
                    Effect of Inconsistencies with Act

                	 	
                  1

                
	
                  1.3

                	 	
                  Name

                	 	
                  2

                
	
                  1.4

                	 	
                  Term

                	 	
                  2

                
	
                  1.5

                	 	
                  Registered
                    Agent and Office

                	 	
                  2

                
	
                  1.6

                	 	
                  Principal
                    Office

                	 	
                  2

                
	
                  ARTICLE
                    II.

                	 	
                  NATURE
                    OF BUSINESS

                	 	
                  2

                
	
                  2.1

                	 	 	 	
                  2

                
	
                  ARTICLE
                    III.

                	 	
                  NAME
                    AND ADDRESS OF INITIAL MEMBERS

                	 	
                  2

                
	
                  3.1

                	 	 	 	
                  2

                
	
                  ARTICLE
                    IV.

                	 	
                  MANAGEMENT

                	 	
                  2

                
	
                  4.1

                	 	
                  Management-General

                	 	
                  2

                
	
                  4.2

                	 	
                  Management
                    Powers and Responsibilities

                	 	
                  3

                
	
                  4.3

                	 	
                  Other
                    Activities by Manager and Members

                	 	
                  4

                
	
                  4.4

                	 	
                  Reserved
                    Powers

                	 	
                  4

                
	
                  4.5

                	 	
                  President/CEO

                	 	
                  6

                
	
                  4.6

                	 	
                  Liability
                    for Certain Acts

                	 	
                  7

                
	
                  4.7

                	 	
                  Resignation

                	 	
                  7

                
	
                  4.8

                	 	
                  Removal

                	 	
                  7

                
	
                  4.9

                	 	
                  Compensation
                    of Manager

                	 	
                  8

                
	
                  ARTICLE
                    V.

                	 	
                  BOARD
                    OF DIRECTORS

                	 	
                  8

                
	
                  5.1

                	 	
                  Number
                    and Tenure

                	 	
                  8

                
	
                  5.2

                	 	
                  Chairman
                    of the Board

                	 	
                  8

                
	
                  5.3

                	 	
                  Meetings

                	 	
                  8

                
	
                  5.4

                	 	
                  Telephone
                    Meetings

                	 	
                  8

                
	
                  5.5

                	 	
                  Action
                    by Written Consent

                	 	
                  8

                
	
                  5.6

                	 	
                  Minutes
                    of Meetings

                	 	
                  8

                
	
                  5.7

                	 	
                  Business
                    Plan

                	 	
                  9

                

        

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        
          	
                  ARTICLE
                    VI.

                	 	
                  RIGHTS
                    AND DUTIES OF THE MEMBERS

                	 	
                  9

                
	
                  6.1

                	 	
                  Liability
                    of Members

                	 	
                  9

                
	
                  6.2

                	 	
                  Indemnification

                	 	
                  9

                
	
                  6.3

                	 	
                  Business
                    Opportunities

                	 	
                  9

                
	
                  6.4

                	 	
                  Company
                    Books

                	 	
                  10

                
	
                  6.5

                	 	
                  Voting

                	 	
                  10

                
	
                  6.6

                	 	
                  Priority
                    and Return of Capital

                	 	
                  10

                
	
                  6.7

                	 	
                  Pledge
                    Restriction

                	 	
                  10

                
	
                  ARTICLE
                    VII.

                	 	
                  CONTRIBUTIONS

                	 	
                  10

                
	
                  7.1

                	 	
                  Initial
                    Contributions

                	 	
                  10

                
	
                  7.2

                	 	
                  Additional
                    Capital Contributions

                	 	
                  10

                
	
                  7.3

                	 	
                  Capital
                    Accounts

                	 	
                  11

                
	
                  ARTICLE VIII.

                	 	
                  ACCOUNTING
                    METHOD, ALLOCATIONS, DISTRIBUTIONS

                	 	
                  12

                
	
                  8.1

                	 	
                  Method
                    of Accounting

                	 	
                  12

                
	
                  8.2

                	 	
                  Allocations

                	 	
                  12

                
	
                  8.3

                	 	
                  Distributions

                	 	
                  12

                
	
                  8.4

                	 	
                  Special
                    Allocations

                	 	
                  13

                
	
                  ARTICLE
                    IX.

                	 	
                  RECORDS,
                    TAX MATTERS, BANKING

                	 	
                  14

                
	
                  9.1

                	 	
                  Books
                    and Records

                	 	
                  14

                
	
                  9.2

                	 	
                  Tax
                    Matters

                	 	
                  15

                
	
                  9.3

                	 	
                  Bank
                    Accounts

                	 	
                  15

                
	
                  ARTICLE
                    X.

                	 	
                  SECURITIES
                    LAWS MATTERS

                	 	
                  15

                
	
                  10.1

                	 	
                  Representations

                	 	
                  15

                
	
                  10.2

                	 	
                  Compliance
                    with Securities Laws and Other State and Federal Law

                	 	
                  16

                
	
                  ARTICLE
                    XI.

                	 	
                  ADMISSION
                    OF ADDITIONAL MEMBERS AND MEMBERSHIP INTEREST TRANSFERS

                	 	
                  16

                
	
                  11.1

                	 	
                  Admission
                    of Additional Members

                	 	
                  16

                
	
                  11.2

                	 	
                  Disposition

                	 	
                  16

                
	
                  11.3

                	 	
                  General
                    Restrictions on Transfers

                	 	
                  17

                
	
                  11.4

                	 	
                  Right
                    of First Refusal

                	 	
                  17

                
	
                  11.5

                	 	
                  Failure
                    to Fully Exercise Options; Co-Sale

                	 	
                  18

                
	
                  11.6

                	 	
                  Drag
                    Along Rights

                	 	
                  19

                
	
                  11.7

                	 	
                  Termination
                    of Transfer Restrictions

                	 	
                  19

                
	
                  11.8

                	 	
                  Insolvency

                	 	
                  19

                

        

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        
          	
                  ARTICLE
                    XII.

                	 	
                  DISSOLUTION
                    AND WINDING UP

                	 	
                  20

                
	
                  12.1

                	 	
                  Dissolution

                	 	
                  20

                
	
                  12.2

                	 	
                  Effect
                    of Dissolution

                	 	
                  20

                
	
                  12.3

                	 	
                  Distribution
                    of Assets on Dissolution

                	 	
                  21

                
	
                  12.4

                	 	
                  Winding
                    Up and Articles of Dissolution

                	 	
                  21

                
	
                  ARTICLE
                    XIII.

                	 	
                  PROTECTION
                    OF CONFIDENTIAL INFORMATION

                	 	
                  21

                
	
                  13.1

                	 	
                  Protection
                    of Confidential Information

                	 	
                  21

                
	
                  13.2

                	 	
                  Exceptions

                	 	
                  21

                
	
                  13.3

                	 	
                  Use
                    of Confidential Information

                	 	
                  21

                
	
                  13.4

                	 	
                  Return
                    of Confidential Information

                	 	
                  21

                
	
                  13.5

                	 	
                  Access
                    to Confidential Information

                	 	
                  22

                
	
                  13.6

                	 	
                  Proprietary
                    Nature of Information

                	 	
                  22

                
	
                  13.7

                	 	
                  Company-Developed
                    Technology

                	 	
                  22

                
	
                  ARTICLE XIV.

                	 	
                  AMENDMENT

                	 	
                  23

                
	
                  14.1

                	 	 	 	
                  23

                
	
                  ARTICLE
                    XV.

                	 	
                  MISCELLANEOUS
                    PROVISIONS

                	 	
                  23

                
	
                  15.1

                	 	
                  Entire
                    Agreement

                	 	
                  23

                
	
                  15.2

                	 	
                  Rights
                    of Creditors and Third Parties under Operating Agreement

                	 	
                  23

                
	
                  15.3

                	 	
                  Notices

                	 	
                  23

                
	
                  15.4

                	 	
                  Execution
                    of Additional Instruments

                	 	
                  23

                
	
                  15.5

                	 	
                  Construction

                	 	
                  23

                
	
                  15.6

                	 	
                  Headings

                	 	
                  23

                
	
                  15.7

                	 	
                  Waivers

                	 	
                  23

                
	
                  15.8

                	 	
                  Rights
                    and Remedies Cumulative

                	 	
                  23

                
	
                  15.9

                	 	
                  Severability

                	 	
                  24

                
	
                  15.10

                	 	
                  Heirs,
                    Successors and Assigns

                	 	
                  24

                
	
                  15.11

                	 	
                  Counterparts

                	 	
                  24

                
	
                  ARTICLE
                    XVI.

                	 	
                  DEFINITIONS

                	 	
                  24

                
	
                  16.1

                	 	 	 	
                  24

                
	
                  EXHIBIT
                    A

                	 	
                  ETHANEX
                    SOUTHERN ILLINOIS, LLC IDENTIFICATION OF SPECIFIC ITEMS

                	 	
                  29

                
	
                  EXHIBIT
                    B

                	 	
                  ETHANEX
                    SOUTHERN ILLINOIS, LLC INITIAL CAPITAL CONTRIBUTIONS

                	 	
                  30

                
	
                  EXHIBIT
                    C

                	 	
                  ETHANEX
                    SOUTHERN ILLINOIS, LLC CERTIFICATION OF MEMBERSHIP
                    INTEREST

                	 	
                  31

                

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    OPERATING
      AGREEMENT

    OF

    ETHANEX
      SOUTHERN ILLINOIS, LLC

     

    THIS
      OPERATING
      AGREEMENT (the “Agreement”), dated this 20th day of September 2006, is adopted
      by and between all Members listed in Exhibit
      A
      to this
      Agreement, and Ethanex Southern Illinois, LLC, an Illinois limited liability
      company (the “Company”). 

     

    ARTICLE
      I. FORMATION

     

    1.1  Organization. The
      Members have organized the Company as an Illinois limited liability company
      pursuant to the provisions of the Act.

     

    THE
      MEMBERSHIP INTEREST OF ANY MEMBER IN THE COMPANY IS SUBJECT TO THE RESTRICTIONS
      ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN ARTICLE
      XI
      OF THIS
      AGREEMENT. THE MEMBERSHIP INTERESTS HAVE BEEN ACQUIRED BY THE MEMBERS FOR
      INVESTMENT ONLY AND HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS
      OR
      UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE
      MEMBERSHIP INTERESTS NOR ANY PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED,
      HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE
      WITH THE TERMS AND CONDITIONS OF ARTICLE
      XI
      OF THIS
      AGREEMENT.

     

    1.2  Agreement;
      Effect of Inconsistencies with Act. For
      and
      in consideration of the mutual covenants herein contained and for other good
      and
      valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the Members and the Company hereby agree to the terms and
      conditions of this Agreement, as it may from time to time be amended according
      to its terms. It is the express intention of the parties that this Agreement
      shall be the sole source of agreement of the parties, and, except to the extent
      a provision of this Agreement expressly incorporates federal income tax rules
      by
      reference to sections of the Code or Regulations or is expressly prohibited
      or
      ineffective under the Act, this Agreement shall govern, even when inconsistent
      with, or different than, the provisions of the Act or any other law or rule.
      To
      the extent any provision of this Agreement is prohibited or ineffective under
      the Act, this Agreement shall be considered amended to the smallest degree
      possible in order to make the Agreement effective under the Act. In the event
      the Act is subsequently amended or interpreted in such a way to make any
      provision of this Agreement that was formerly invalid valid, such provision
      shall be considered to be valid from the effective date of such interpretation
      or amendment. The Members shall be entitled to rely on the provisions of this
      Agreement, and the Members shall not be liable to the Company for any action
      or
      refusal to act taken in good faith reliance on the terms of this Agreement.
      The
      Members hereby agree that the duties and obligations imposed on the Members
      as
      such shall be those set forth in this Agreement, which is intended to govern
      the
      relationship between the Company and the Members, notwithstanding any provision
      of the Act or common law to the contrary.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    1.3  Name.
      The
      name of the Company shall be as set forth in Exhibit
      A
      and all
      business of the Company shall be conducted under that name with such variations
      and changes as the Members deem necessary, but in any case, only to the extent
      permitted by applicable law.

     

    1.4  Term.
      The
      term
      of the Company shall be perpetual and shall not expire except in accordance
      with
      the provisions of Article
      XI
      of this
      Agreement and in accordance with the Act. 

     

    1.5  Registered
      Agent and Office.
      The
      Company’s registered agent and the registered office shall be as set forth in
Exhibit
      A.
      The
      Members may, from time to time, change the registered agent or office through
      appropriate filings with the Illinois Secretary of State. In the event the
      registered agent ceases to act as such for any reason or the registered office
      shall change, the Members shall promptly designate a replacement registered
      agent or file a notice of change of address as the case may be. If the Members
      shall fail to designate a replacement registered agent or change of address
      of
      the registered office, a Member shall automatically become the registered agent
      and the registered office of the Company shall be located at the Member’s
      address.

     

    1.6  Principal
      Office.
      The
      principal office of the Company shall be located as set forth in Exhibit
      A.
      The
      Company may locate its places of business and registered office at any other
      place or places, as the Members may from time to time deem
      advisable.

     

    ARTICLE
      II. NATURE
      OF BUSINESS

     

    2.1  The
      principal business of the Company is the construction and operation of an
      ethanol facility, as well as the manufacture, distribution, and sale of ethanol
      and ethanol-based products, and to engage in and take any necessary or ancillary
      action or conduct any lawful business concerning or related thereto. In
      addition, the Company may undertake and conduct any business activity that
      is
      authorized by the Act that the Members may from time to time deem to be in
      the
      best interest of the Company. The Company shall have all of the powers permitted
      by law. 

     

    ARTICLE
      III. NAME
      AND ADDRESS OF INITIAL MEMBERS

     

    3.1  The
      names, addresses and federal identification numbers of the initial Members
      are
      as set forth in Exhibit
      A.
      

     

    ARTICLE
      IV. MANAGEMENT

     

    4.1  Management-General.
      The
      overall business and affairs of the Company shall be managed by the Manager,
      working under direction and authority of the Board of Directors (the “Board”).
      Except for situations or matters in which the approval of the Members is
      expressly required by this Operating Agreement or the non-waiveable provisions
      of the Act, the Manager shall manage and control the business affairs and
      properties of the Company, make all decisions regarding those matters, and
      perform any and all other acts or activities customary or incident to the
      management of the Company’s business. The Manager shall act in good faith and in
      a manner that the Manager reasonably believes to be in the best interests of
      the
      Company and its Members. The Manager may delegate to any Person such powers
      and
      responsibilities as the Manager may deem appropriate for the efficient operation
      of the business of the Company.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    4.2  Management
      Powers and Responsibilities.
      Without
      limiting the generality of Section
      4.1,
      but
      subject to the provisions of Section
      4.4,
      and any
      other limitations in this Agreement, the Manager shall have the power and
      authority, on behalf of the Company:

     

    (a)  to
      open
      accounts in the name of the Company with banks and other financial institutions,
      and designate and remove from time to time, at the discretion of the Manager,
      all signatories on such bank accounts;

     

    (b)  to
      execute on behalf of the Company all instruments and documents including,
      without limitation, checks, drafts, notes and other negotiable instruments,
      mortgages or deeds of trust, security agreements, financing statements,
      documents providing for the acquisition, mortgage or disposition of the
      Company’s Property, assignments, bills of sale, leases and any other instruments
      or documents necessary to conduct the business of the Company;

     

    (c)  to
      collect and receive all revenue, income and profits derived from the operation
      of the Company’s business, and to disperse Company funds for Company purposes to
      those Persons entitled to receive the same in accordance with this
      Agreement;

     

    (d)  within
      the ordinary course of the Company’s business, to acquire, manage, hold, lease
      sell, exchange and otherwise dispose of real, personal or mixed Property, or
      interests therein, upon such terms and conditions as the Manager deems to be
      in
      the best interest of the Company; 

     

    (e)  to
      pay,
      on behalf of the Company, any organizational expenses incurred in the
      organization of the Company;

     

    (f)  to
      make
      all reasonable and necessary expenditures with respect to the Property of the
      Company as the Manager deems to be in the best interest of the
      Company;

     

    (g)  to
      invest
      any Company funds temporarily in time deposits, short-term governmental
      obligations, commercial paper or other investments;

     

    (h)  to
      pay
      all taxes, licenses or assessments of whatever kind or nature imposed upon
      or
      against the Company, and for such purposes to file such returns and do all
      such
      other acts or things as may be deemed necessary or advisable by the
      Manager;

     

    (i)  to
      purchase commercial general liability insurance and such other insurance
      coverage as the Board shall determine to be necessary or desirable to insure
      the
      Members or to protect the Company’s assets;

     

    (j)  to
      employ, engage or contract with Persons in the operation and management of
      the
      Company’s business;

     

    (k)  to
      employ
      accountants, legal counsel, consultants or other experts to perform services
      for
      the Company and to compensate them from Company funds; 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (l)  to
      institute, prosecute, defend, settle, compromise and dismiss claims, lawsuits
      or
      other judicial or administrative proceedings, involving an amount in controversy
      of less than $50,000, brought by or on behalf of, or against the Company or
      the
      Members in connection with activities arising out of, or connected with, or
      incidental to this Agreement or the business of the Company; provided, however,
      that the Manager shall provide to the Board each calendar quarter or more often
      as requested by any Member, a description of any claim, lawsuit or judicial
      or
      administrative proceeding where the amount in controversy exceeds $10,000;
      and
      provided further that any Member may notify the Manager of a strategic interest
      in any claim, lawsuit or proceeding involving an amount in controversy of less
      than $50,000, in which case the institution, prosecution, defense, settlement,
      compromise or dismissal of the claim, lawsuit or proceeding and the engagement
      of legal counsel in connection therewith shall be subject to Section
      4.6
      below;
      and

     

    (m)  to
      do and
      perform all other acts as may be necessary or appropriate to the conduct of
      the
      Company’s business.

     

    4.3  Other
      Activities by Manager and Members.
      The
      duty of the Manager and Members to act on behalf of the Company shall be
      non-exclusive. The Manager shall not be required to devote full-time attention
      to the business of the Company and may have other business interests and may
      engage in other activities in addition to those relating to the Company provided
      that the Manager will manage and operate the business of the Company separately
      from the Manager’s other business interests. Neither the Company nor any Member
      shall have any right, by virtue of this Agreement, to share or participate
      in
      such other investments or other activities of the Manager or Members or to
      the
      income or proceeds derived therefrom.

     

    4.4  Reserved
      Powers.
      Notwithstanding any other provision of this Agreement, the Manager shall have
      no
      authority to and shall not cause or commit the Company to do any of the
      following without the express written consent of all Members holding at least
      eighty-five percent (85%) of the Membership Interests of the
      Company:

     

    (a)  make
      annual capital expenditures which are not contemplated in the applicable
      Business Plan and which are in excess of $100,000 in the aggregate for any
      Fiscal Year;

     

    (b)  enter
      into any agreement relating to merger, amalgamation, consolidation,
      reconstruction, demerger, joint venture, or acquisition of shares, debt,
      Membership Interests or assets of another Person;

     

    (c)  engage
      in
      any new business that is outside the scope or mandate of the Company as set
      forth in Section
      2.1,
      or
      establish, construct or close any plant or trading facilities or introduce
      any
      new product line or service offering, except to the extent contemplated in
      the
      applicable Business Plan;

     

    (d)  dispose
      of, whether by sale, disposition or otherwise, all or a portion (which is
      material to the Company’s business or execution and implementation of the
      Business Plan) of the Company’s business and/or assets other than pursuant to
      arm’s length sales in the ordinary course of business;

     

    
      
         

      

      
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    (e)  enter
      into any contract or written agreement:

     

    (i)  involving
      an amount to be paid by the Company over the life of the contract which is
      anticipated to be in excess of $100,000, other than any contract relating
      directly to the sale of products or the purchase of raw materials;

     

    (ii)  outside
      of the ordinary course of the business of the Company;

     

    (iii)  relating
      to the sale of products which is not contemplated in the applicable Business
      Plan; or

     

    (iv)  relating
      to the purchase of raw materials which is not contemplated in the applicable
      Business Plan;

     

    (f)  lend
      any
      funds of the Company (other than normal trade credit) to any Person, guaranty
      the obligations of another Person, indemnify another Person except in the
      ordinary course of business, or become a surety for the obligations of any
      Person;

     

    (g)  mortgage,
      pledge, grant a security interest in, or otherwise encumber Property of the
      Company;

     

    (h)  incur
      or
      refinance any indebtedness for money borrowed by the Company, whether secured
      or
      unsecured and including any indebtedness for money borrowed from a
      Member;

     

    (i)  incur
      any
      liability or make any single expenditure or series of related expenditures
      in an
      amount exceeding $100,000 in the aggregate in any Fiscal Year, except as
      contemplated in the applicable Business Plan;

     

    (j)  amend,
      modify or revoke this Agreement or any other organizational or governing
      documents of the Company, any Related Agreement, or the Business
      Plan;

     

    (k)  redeem
      any Membership Interests, incorporate or issue any securities in the Company,
      establish any subsidiary company, or invest in another Person;

     

    (l)  change
      the Company’s name;

     

    (m)  authorize
      the Company to make an assignment for the benefit of creditors, file a petition
      in bankruptcy, or consent to the appointment of a receiver for the Company
      or
      its assets;

     

    (n)  institute,
      prosecute, defend, settle, compromise or dismiss any claim, lawsuit, or judicial
      or administrative proceeding involving an amount in controversy in excess of
      $50,000 brought by or on behalf of, or against, the Company or the Members
      in
      connection with activities arising out of, or connected with or incidental
      to
      this Agreement or the business of the Company;

     

    (o)  substantially
      reduce, increase or otherwise modify the Company’s insurance
      program;

     

    (p)  determine,
      establish or substantially modify the Company’s accounting policies or
      practices;

     

    
      
         

      

      
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    (q)  except
      as
      provided in the Related Agreements, acquire, license, sell, transfer, or
      otherwise grant or dispose of any right or interest to or from any Person of
      any
      rights in intellectual property, patents, trademarks, know-how and other
      technology;

     

    (r)  change
      the compensation or benefits payable or to become payable to any present or
      former employee, sales person, consultant or agent, or to which such Persons
      are
      or may become entitled, outside the ordinary course of the Company’s business,
      except for such changes as may be required by any law, regulation, ordinance
      or
      decree;

     

    (s)  change
      any management or other similar fees or royalties or other similar payments
      paid
      or payable to a Member;

     

    (t)  admit
      any
      Person to the Company as a Member, or determine the terms and conditions of
      such
      admission;

     

    (u)  voluntarily
      dissolve, wind-up or liquidate the Company;

     

    (v)  do
      any
      act that is unrelated to the purpose of the Company or that otherwise
      contravenes any provision of this Agreement; or

     

    (w)  take
      any
      action or execute any instrument which, by another express provision of this
      Agreement, requires the approval of the Members or the Board.

     

    4.5  President/CEO.
      Subject
      to the approval of the Board, the Manager shall have the right to appoint a
      President/CEO of the Company who shall be a full time employee of and
      compensated by the Company. The initial President/CEO shall be determined at
      the
      first meeting of the Board of Directors, who shall serve in such capacity until
      resignation or removal by action of a majority of the Board. The President/CEO
      shall report to the Manager and shall supervise, administer and manage the
      day-to-day business affairs of the Company. Notwithstanding the foregoing,
      and
      subject to the limitations set forth in Section
      4.4,
      the
      President/CEO shall:

     

    (a)  effectuate
      this Agreement and the regulations and decisions of the Members and the Board
      of
      Directors;

     

    (b)  direct
      and supervise the day-to-day operations of the Company;

     

    (c)  within
      parameters set by a majority vote of the Board, establish such charges for
      services and products of the Company as may be necessary to provide adequate
      income for the efficient operation of the Company;

     

    (d)  within
      the budget established by the Board, set and adjust wages and rates of pay
      for
      all personnel of the Company and shall appoint, hire and dismiss all personnel
      and regulate their hours of work;

     

    (e)  set
      and
      adjust reimbursable rates and costs to be paid to the Members by the Company
      when such Member or its staff is engaged in Company business;

     

    
      
         

      

      
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    (f)  keep
      the
      Board, the Manager, and Members advised in all matters pertaining to the
      day-to-day operations of the Company, the services rendered, the products
      provided, operating income and expenses, the financial position of the Company,
      and, to this end, the President/CEO shall prepare and submit a report to the
      Board at each regular meeting and at other times as may be directed by the
      Board;

     

    (g)  within
      parameters set by the Manager, execute on behalf of the Company all instruments
      and documents, including checks, drafts, notes and other negotiable instruments
      and deposit the same into bank accounts approved by the Manager;

     

    (h)  specifically
      refer all issues of a legal nature that arise in the operation of the Company’s
      business immediately to legal counsel approved by the Board, so as not to
      compromise the position of the Company, Members or Board;

     

    (i)  refer
      all
      claims potentially covered by the Company’s insurance policies so as to not
      jeopardize insurance coverage on any such claims; and

     

    (j)  do
      and
      perform all other authorized acts as may be approved by the Board and as are
      necessary or appropriate to the conduct of the Company’s business.

     

    4.6  Liability
      for Certain Acts.
      The
      Manager shall exercise its business judgment in managing the business,
      operations and affairs of the Company. Unless fraud, deceit, gross negligence,
      willful or wanton misconduct, a wrongful taking by the Manager, or a breach
      of
      the Manager’s fiduciary duty, shall be proved by a non-appealable court order,
      judgment, decree or decision, the Manager shall not be liable or obligated
      to
      the Company or Members for any mistake of fact or judgment or for the doing
      of
      any act or the failure to do any act by the Manager in conducting the business,
      operations and affairs of the Company, which may cause or result in any loss
      or
      damage to the Company or its Members. The Manager does not, in any way,
      guarantee the return of the Members’ Capital Contributions or a profit for the
      Members from the operations of the Company. The Manager shall not be responsible
      to any Members because of a loss of their investments or a loss in operations,
      unless the loss shall have been the result of fraud, deceit, gross negligence,
      willful or wanton misconduct, a wrongful taking by the Manager, or a breach
      of
      the Manager’s fiduciary duty, provided as set forth in this Section
      4.6.
      The
      Manager shall incur no liability to the Company or to any of the Members as
      a
      result of engaging in any other business or venture.

     

    4.7  Resignation.
      The
      Manager and the President/CEO of the Company may resign at any time by giving
      written notice to the Board. The resignation of the Manager or President/CEO
      shall take effect upon receipt of notice thereof or at such later time as shall
      be specified in such notice; and, unless otherwise specified therein, the
      acceptance of such resignation shall not be necessary to make it effective.
      The
      resignation of a Manager who is also a Member shall not affect the Manager’s
      rights as a Member and shall not constitute a withdrawal of the Member.

     

    4.8  Removal.
      The
      Manager may be removed at any time by the affirmative vote of the Members
      holding no less than eighty-five percent (85%) of the Membership Interests
      of
      the Company. The President/CEO may be removed at any time upon the majority
      vote
      of the Board. The removal of the Manager who is also a Member shall not affect
      the Manager’s rights as a Member and shall not constitute a withdrawal of the
      Member. 

     

    
      
         

      

      
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    4.9  Compensation
      of Manager.
      The
      Manager shall be reimbursed all reasonable expenses incurred in managing the
      Company and may be entitled to reasonable compensation, in an amount to be
      determined from time to time by the affirmative vote of the Members holding
      a
      majority of the Membership Interests. 

     

    ARTICLE
      V. BOARD
      OF DIRECTORS

     

    5.1  Number
      and Tenure.
      The
      Board shall initially consist of five (5) persons (each a “Director”): two (2)
      of whom shall be representatives of Ethanex, two (2) of whom shall be
      representatives of Star, and one (1) who shall be appointed by Ethanex and
      Star,
      jointly. Decisions of the Board shall be made majority vote, with each member
      of
      the Board exercising one vote. In order to constitute a quorum, at lease one
      representative of each Member must be present during Board meetings. The total
      number of Directors on the Board may be increased or decreased by the unanimous
      vote of the Members. Each Director shall hold office until his successor shall
      have been appointed by the applicable Member(s). Directors need not be residents
      of the State of Illinois. 

     

    5.2  Chairman
      of the Board.
      One of
      the Directors serving on the Board shall serve as Chairperson of the Board.
      The
      Chairperson of the Board also shall serve as the Manager of the Company. The
      initial Chairperson of the Board shall be appointed by Ethanex. The Chairperson
      shall preside over all Board meetings. In the event of a deadlock concerning
      an
      issue to be resolved by the Board, the Chairperson shall cast the deciding
      vote.

     

    5.3  Meetings.
      The
      Board shall meet on a quarterly basis, or more often as necessary, at a time
      and
      place to be determined by the Members. Any Member, in its discretion, may call
      for a meeting of the Board upon ten (10) business days prior written
      Notice.

     

    5.4  Telephone
      Meetings.
      Board
      representatives may participate in Board meetings by means of telephone
      conference or similar communications equipment, and such participation in a
      telephone conference shall constitute presence in person at such
      meeting.

     

    5.5  Action
      by Written Consent.
      Any
      action required or permitted to be taken by the Board, either at a meeting
      or
      otherwise, may be taken without a meeting provided that all representatives
      consent thereto in writing and the writing or writings are filed with the
      minutes of proceedings of the Board; and provided further that written notice
      of
      the action to be taken by written consent will be given to all Members at least
      forty-eight (48) hours prior to the intended effectiveness of any such
      action.

     

    5.6  Minutes
      of Meetings.
      The
      decisions and resolutions of the Board will be reported in minutes, which will
      state the date, time and place of the meeting (or the date of the written
      consent in lieu of a meeting), the Board members present at a meeting, the
      resolutions put to a vote (or the subject of a written consent) and the results
      of such voting (or written consent). The minutes will be entered in a minute
      book kept at the principal office of the Company and a copy of the minutes
      will
      be provided to each Member.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    5.7  Business
      Plan.
      After
      soliciting input from the Members, the President/CEO shall prepare and submit
      to
      the Board (no later than October 1 of each year) for approval by unanimous
      vote
      of the Board an annual business plan (the “Business Plan”) for the succeeding
      year consistent with the purpose of the Company as set forth in Section
      2.1.
      The
      Board shall review the draft Business Plan and offer any revisions thereto
      as
      promptly as commercially practicable after receipt and in any event prior to
      December 1. At a minimum, the Business Plan shall contain:

     

    (i)  the
      estimated receipts and expenditures (capital, operating and other) of the
      Company in sufficient detail to provide an estimate of cash flow, capital
      proceeds and other financial requirements of the Company for such
      year;

     

    (ii)  information
      concerning the strategic direction of the Company;

     

    (iii)  strategic
      and tactical marketing plans and initiatives;

     

    (iv)  plans
      and
      initiatives to solicit new customers and accounts, and to retain existing
      customers and accounts;

     

    (v)  information
      on an overall Company basis respecting material proposed changes to the
      Company’s employee salaries, benefits and policies; and 

     

    (vi)  such
      other information or other matters necessary or desirable in order to inform
      the
      Board of the Company’s business and to enable the Board to make an informed
      decision with respect to approval of such Business Plan. 

     

    After
      the
      final Business Plan has been approved by unanimous vote of the Board, the
      Manager shall implement the Business Plan. If the Board is not able to agree
      on
      a Business Plan for any year, then, until such time as the Board agrees on
      the
      Business Plan for such year, the Business Plan for the previous year shall
      continue to apply to the business and affairs of the Company.

     

    ARTICLE
      VI. RIGHTS
      AND DUTIES OF THE MEMBERS

     

    6.1  Liability
      of Members.
      Each
      Member’s liability shall be limited as set forth in the Act and other applicable
      law. A Member will not personally be liable for any debts or losses of the
      Company beyond the Member’s respective Capital Contributions, except as
      otherwise provided herein or required by law.

     

    6.2  Indemnification.
      The
      Company shall indemnify the Members, and their respective agents for all costs,
      losses, liabilities, and damages paid or accrued in connection with the business
      of the Company, to the fullest extent provided or allowed by the laws of the
      State of Illinois. In addition, upon written request, the Company may advance
      costs of defense of any legal proceeding to the Members or any other agent,
      prior to the conclusion of the matter and as such costs are
      incurred.

     

    6.3  Business
      Opportunities.
      The
      initial Members acknowledge that the Company is not intended to be the exclusive
      vehicle for either party to participate in the ethanol industry. To the extent
      the initial Members can pursue, engage in or invest in other business
      opportunities relating to the manufacture, distribution and sale of ethanol
      and
      ethanol-based products and corn and corn-based products without a breach of
      their respective obligations to the Company under this Agreement and any Related
      Agreement, they are free to do so. 

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    6.4  Company
      Books.
      In
      accordance with Section
      9.1
      herein,
      the Manager shall maintain and preserve, during the term of the Company and
      for
      three (3) years after dissolution, all accounts, books and relevant Company
      records. Upon reasonable request, each Member shall have the right, during
      ordinary business hours, to inspect and copy such Company documents at the
      requesting Member’s expense.

     

    6.5  Voting.
      Except
      as otherwise provided in this Agreement, each Member shall have one vote for
      each one percent of the Member’s Membership Interest outstanding. Therefore, the
      total individual votes for all Members available to be cast at any one time
      will
      be one hundred (100). A majority vote consisting of over 50% will be
      required.

     

    6.6  Priority
      and Return of Capital.
      Except
      as may be expressly provided elsewhere in this Agreement, no Member shall have
      priority over any other Member, either as to the return of Capital Contributions
      or as to Net Profits, Net Losses or Distributions; provided, however, that
      this
Section
      6.6
      shall
      not apply to operating and other loans (as distinguished from Capital
      Contributions and Member loans) which a Member has made to the Company or to
      another Member.

     

    6.7  Pledge
      Restriction.
      Each
      Member agrees that no Member shall be permitted to pledge their Membership
      Interest as collateral for any loan or financial obligation without the vote
      or
      consent of holders of eighty-five percent (85%) of the Membership Interests
      in
      the Company. 

     

    ARTICLE
      VII. CONTRIBUTIONS

     

    7.1  Initial
      Contributions.
      The
      initial Members shall make the Initial Capital Contributions described on
Exhibit
      B
      at the
      time and on the terms specified on Exhibit
      B
      and
      shall perform that Member’s Commitment. The value of the Initial Capital
      Contributions shall be as set forth on Exhibit
      B.
      No
      interest shall accrue on any Initial Capital Contribution and the Members shall
      not have the right to withdraw or be repaid any Initial Capital Contribution
      except as provided in this Agreement.

     

    7.2  Additional
      Capital Contributions.

     

    (a)  No
      Member
      shall be responsible for, or obligated to provide for, capital requirements
      and
      expenses of the Company in excess of their Initial Capital
      Contribution.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (b)  Upon
      the
      vote of Members holding eighty-five percent (85%) of the Membership Interests
      of
      the Company, the Manager may request Additional Capital Contributions from
      each
      Member by way of written notice stating the amount of additional funds required,
      the purpose therefore, and the date upon which Additional Capital Contributions
      may be made by each Member. Each Member shall have the right to make their
      pro
      rata share of the Additional Capital Contribution in accordance with their
      Membership Interest at the time specified in such notice. If any Member does
      not
      make the full amount of their share of a requested Additional Capital
      Contribution within ten (10) days after the expiration of the time specified
      in
      such notice, the Manager shall send a written notice to each Member specifying
      the amount not contributed (the “Non-Contribution Notice”). Each Member shall
      have the right to make the Additional Capital Contribution requested from the
      non-contributing Member on a pro rata basis in accordance with their Membership
      Interests or as they otherwise agree by sending a written notice to the Manager
      within (5) days of the Member’s receipt of the Non-Contribution Notice
      indicating the Member’s interest to contribute a portion of the non-contributing
      Member’s Additional Capital Contribution. (the “Portion Notice”). The value of
      the Membership Interest for the Additional Capital Contribution made by a Member
      shall be based on the lower of the Company’s Net Book Value or its fair market
      value as reasonably determined by the Board in its sole discretion immediately
      preceding the Additional Capital Contribution. If the Board determines that
      the
      Company needs additional funds, but determines not to request Additional Capital
      Contributions, the Board may cause the Company to borrow such funds from any
      Person, including any Member, upon such terms and conditions as may be agreed
      to
      at the time. No such loan to the Company from a Member shall be deemed to
      constitute a Capital Contribution to the Company and shall not increase the
      Capital Account of the Member making the loan.

     

    7.3  Capital
      Accounts.

     

    (a)  A
      separate Capital Account will be maintained for each Member. Each Member’s
      Capital Account will be increased by (1) the amount of money contributed by
      such
      Member to the Company, including Additional Capital Contributions; (2) the
      value, as agreed by the Board, of Property contributed by such Member to the
      Company (net of liabilities secured by such contributed Property that the
      Company is considered to assume or take subject to under Section 752 of the
      Code); and (3) the amount of Net Profits allocated to such Member. Each Member’s
      Capital Account will be decreased by (1) the amount of money distributed to
      such
      Member by the Company; (2) the value, agreed by the Board, of Property
      distributed to such Member by the Company (net of liabilities secured by such
      distributed Property that such Member is considered to assume or take subject
      to
      under Section 752 of the Code); and (3) the amount of Net Losses allocated
      to
      such Member.

     

    (b)  In
      the
      event of a permitted sale or exchange of a Membership Interest in the Company
      pursuant to the terms of this Agreement, the Capital Account of the transferor
      shall become the Capital Account of the transferee to the extent it relates
      to
      the transferred Membership Interest.

     

    (c)  The
      manner in which Capital Accounts are to be maintained pursuant to this
Section
      7.3
      is
      intended to comply with the requirements of Code Section 704(b) and the
      Regulations promulgated thereunder and this Agreement shall be considered
      amended to the smallest degree possible in order to comply with Code Section
      704(b) and the regulations thereunder.

     

    (d)  Upon
      liquidation of the Company (or any Member’s Membership Interest), liquidating
      distributions shall be made pursuant to Section
      8.3(c).
      Liquidation proceeds will be paid as reasonably determined by the
      Manager.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    ARTICLE
      VIII. ACCOUNTING
      METHOD, ALLOCATIONS, DISTRIBUTIONS

     

    8.1  Method
      of Accounting.
      The Net
      Profits and/or Net Losses of the Company shall be determined in accordance
      with
      accounting principles applied on a consistent basis under the method of
      accounting as set forth in Exhibit
      A.

     

    8.2  Allocations.

     

    (a)  Net
      Profits and credits earned by the Company for each Fiscal Year attributable
      to
      the operations of the Company shall be allocated to the Members in accordance
      with the Membership Interest identified in Exhibit
      C
      and
      shall be credited to each Member’s Capital Account (exclusive of credits) in
      accordance with the following:

     

    (i)  First,
      if
      the Capital Account of any Member has a negative balance, Net Profits shall
      be
      credited to each Member having a negative Capital Account balance in an amount
      equal to the negative Capital Account balance, in the ratio that the Member’s
      negative Capital Account balance bears to the aggregate negative Capital Account
      balances of the Members having negative Capital Account balances;

     

    (ii)  Second,
      if previous cumulative Net Losses have been incurred, Net Profits will be
      allocated pro rata in proportion to the amount of cumulative Net Losses
      allocated to each Member; and

     

    (iii)  Thereafter,
      to all Members pro rata in proportion to their relative Membership Interest
      in
      effect as of the effective date of the allocation, except that for any Fiscal
      Year which has any changes in the Membership Interests, the allocation will
      be
      calculated using the per share per day method as provided for in the
      Code.

     

    (b)  After
      giving effect to the allocations provided for in the provisions of this
      Agreement covering special allocations and curative losses, all Net Losses
      of
      the Company for each Fiscal Year shall be allocated first to the Members in
      an
      amount equal to the Net Profits previously credited to the Members (and not
      previously reduced by this Section) and second to all Members and shall be
      charged to the Members’ Capital Accounts pro rata in proportion to their
      relative Membership Interest in effect as of the effective date of the
      allocation, except that for any Fiscal Year which has any changes in the
      Membership Interests, the allocation will be calculated using the per share
      per
      day method as provided for in the Code. Notwithstanding the foregoing, in no
      event shall any such loss be allocated to a Member, to the extent that it would
      result in such Member having a negative Capital Account balance, if any other
      Member has a positive Capital Account balance. The foregoing reallocation of
      losses to a Member with a positive Capital Account balance shall remain in
      effect only until all Members have Capital Account balances of zero. If all
      Members have Capital Account balances of zero and any Member has made a loan
      to
      the Company which remains outstanding at the end of any Fiscal Year, net losses
      shall be allocated first, on a pro rata basis, to each Member whose loan remains
      outstanding up to the aggregate amount of the loan balance.

    
      
         

      

      
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    8.3  Distributions.

     

    (a)  Except
      as
      provided in Section
      8.3(d)
      and
      except as required in Section
      8.3(a)(iii),
      distributions of Distributable Cash attributable to operations of the Company
      shall be made at such time as determined by the Board and which is not, in
      the
      reasonable opinion of the Board, necessary to conduct the Company’s business.
      Except as expressly provided herein, no Member shall have priority over any
      other Member, either as to distributions or the return of Capital Contributions
      other than what is provided by this Section
      8.3.
      All
      amounts withheld pursuant to the Code or any provisions of state or local tax
      law with respect to any payment or distribution to the Members from the Company
      shall be treated as amounts distributed to the relevant Member or Members
      pursuant to this Section
      8.3.
      All
      distributions of Distributable Cash attributable to operations of the Company
      shall be made as follows, unless otherwise agreed to by the
      Members:

     

    (i)  First,
      if
      cumulative Net Profits from inception of the Company exist at the end of any
      calendar year, to the Members, in proportion to their Membership
      Interests;

     

    (ii)  Second,
      to all Members pro rata to the amount of Net Profits allocated to the Members
      per Section
      8.2
      net of
      the distribution made in Section
      8.3(a)(i);

     

    (iii)  Third,
      to
      all Members pro rata in proportion to the sums of their respective Initial
      Capital Contributions and any Additional Capital Contributions, until the full
      amount of all Initial and Additional Capital Contributions shall have been
      returned to all Members; and

     

    (iv)  Thereafter,
      to all Members pro rata in proportion to the relative Membership Interest they
      hold, in effect as of the effective date of the distribution. 

     

    (b)  Except
      as
      expressly provided in Section
      8.3(a)
      or as a
      result of the application of Section
      8.4,
      no
      distributions which are disproportionate to a Member’s Membership Interest are
      permitted without the approval of Members holding eighty-five percent (85%)
      of
      the Membership Interests, and then, only after the Members take into
      consideration the potential future impact on Sections
      8.2 and 8.3
      and
      concluding their consideration with a written summary of the Members’
decision.

     

    (c)  In
      the
      event of the liquidation of the Company, distributions to Members shall be
      made,
      after the allocations described in Section
      8.2
      and to
      the extent such distributions were not previously made pursuant to Section
      8.3(a),
      on a
      pro rata basis to all Members based on the Membership Interest they hold, in
      effect as of the effective date of the distribution.

     

    (d)  No
      distribution shall be declared and paid unless, after the distribution is made,
      the book value of the assets of the Company is in excess of all liabilities
      of
      the Company, except liabilities to Members on account of their contributions.
      For any kind of distribution, a Member, irrespective of the nature of their
      Capital Contribution, has the right to demand and receive only cash as compared
      to demanding the distribution of any specific asset of the Company.

     

    
      
         

      

      
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    8.4  Special
      Allocations.
      

     

    (a)  Except
      as
      otherwise provided in this Agreement, special allocations will be made as
      permitted and/or required by the Code.

     

    (b)  Items
      of
      income, gain, loss, deduction, credit and tax preference for state and local
      income tax purposes shall be allocated to and among the Members in a manner
      consistent with the allocation of such items for federal income tax purposes
      in
      accordance with the foregoing provisions of this Article
      VIII.

     

    ARTICLE
      IX.  
      RECORDS, TAX MATTERS, BANKING

     

    9.1  Books
      and Records.
      The
      Manager, at the expense of the Company, shall maintain the following books
      and
      records at the principal office or at the offices of the Company’s
      attorneys:

     

    (a)  A
      list of
      the full name and address of each Member, both past and present;

     

    (b)  A
      copy of
      the Articles of Organization for the Company, and all amendments thereto;

     

    (c)  Copies
      of
      the currently effective Agreement and all amendments thereto, copies of any
      prior Agreement no longer in effect, and copies of any writings permitted or
      required with respect to a Member’s obligation to contribute cash, Property, or
      services;

     

    (d)  Copies
      of
      the Company’s federal, state and local income tax returns and reports (or the
      portions of the returns of others showing the taxable income deductions, gain,
      loss, and credits of the Company), if any, for the three most recent
      years;

     

    (e)  Copies
      of
      the financial statements of the Company, if any for the three (3) most recent
      years; 

     

    (f)  Minutes
      of every meeting of the Board or the Members; 

     

    (g)  Any
      written consents obtained from Members or the Board for actions taken by the
      President/CEO or actions taken by the Members or the Board of Managers without
      a
      meeting; and 

     

    (h)  If
      not
      set forth in this Agreement, a writing or other data compilation from which
      information can be obtained through retrieval devices into a reasonably usable
      form setting forth the following:

     

    (i)  The
      amount of cash and a description and statement of the agreed value of the other
      Property or services contributed by the Members and which the Members have
      agreed to contribute;

     

    (i)  The
      times
      at which
      or events on the happening of which any additional Commitments agreed to be
      made
      by the Members are to be made;

     

    (ii)  Any
      right
      of a Member to receive, or of the Company to make, distributions to a Member
      which include a return of all or any part of the Member’s Capital Contribution
      or distributions in kind; and

     

    (iii)  Any
      events upon the happening of which the Company is to be dissolved and its
      affairs wound up.

     

    
      
         

      

      
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    9.2  Tax
      Matters.
      The
      Manager shall cause the accountants for the Company to prepare and timely file
      all tax returns required to be filed by the Company pursuant to the Code and
      all
      other tax returns deemed necessary and required in each jurisdiction in which
      the Company does business. The Manager shall instruct the Company’s accountants
      to prepare and deliver all necessary tax returns and information to each Member
      within ninety (90) days following the end of each year. The Manager is hereby
      designated as the Tax Matters Partner as defined in Section 6231 of the Code
      and
      shall be authorized and required to represent the Company in connection with
      all
      examinations of the Company’s affairs by tax authorities, including resulting
      administrative and judicial proceedings, and to expend Company funds for
      professional services and costs associated therewith. The Tax Matters Partner
      and each Member shall use their reasonable efforts to comply with the
      responsibilities outlined in the Code (and regulations promulgated thereunder),
      and in doing so shall incur no liability to each other.

     

    9.3  Bank
      Accounts.
      All
      funds of the Company shall be deposited in the name of the Company in an account
      or accounts maintained with such bank or banks selected by the Manager. Checks
      shall be drawn upon the Company account or accounts only for the purposes of
      the
      Company and shall be signed by authorized Persons on behalf of the
      Company.

     

    ARTICLE
      X.  
      SECURITIES LAWS MATTERS

     

    10.1  Representations.
      Each
      Member, by executing this Agreement, hereby represents and warrants to the
      Company and to each Member that such Member:

     

    (a)  Is
      aware
      that the acquisition of their Membership Interest in the Company has not been
      registered under the Securities Act of 1933, as amended, or registered or
      qualified under the securities laws of any state;

     

    (b)  Is
      acquiring the Membership Interest in their own name and solely for their own
      account (or for a trust account if a trustee) and not for the account of any
      other person;

     

    (c)  Is
      acquiring their Membership Interest for the purpose of investment only, and
      not
      with a view to or for sale in connection with any distribution of such
      Membership Interest;

     

    (d)  Understands
      that any Disposition of their Membership Interest is limited by this Agreement
      and in any event may not be effected unless the Disposition is registered and
      qualified under applicable securities laws, or is eligible for an exemption
      from
      registration and qualification, and, except as expressly provided otherwise
      herein, that no understanding has been made with regard to registering or
      qualifying such Membership Interest in the future;

     

    (e)  Understands
      that any certificate or other document which evidences their Membership Interest
      in the Company may bear one or more restrictive legends stating that the
      Membership Interest evidenced therein has not been registered under the
      Securities Act of 1933, as amended or qualified under any securities
      laws;

     

    
      
         

      

      
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    (f)  Is
      capable of evaluating, through their own knowledge and experience in financial
      and business matters, the merits and risks of this investment and of protecting
      their own interest in connection with this investment;

     

    (g)  Is
      able
      to bear the economic risk of the loss of their Membership Interest;

     

    (h)  Has
      not
      seen or received any advertisement or general solicitation with respect to
      the
      sale of the Membership Interest;

     

    (i)  Acknowledges
      that the Company has given him the opportunity to obtain any information and
      ask
      questions concerning the Company, Membership Interest in the Company, and their
      investment, and to the extent that he or she availed himself or herself of
      that
      opportunity, he or she has received from the Company satisfactory information
      and answers; and

     

    (j)  Acknowledges
      that the Company and each Member are relying on the foregoing
      representations.

     

    10.2  Compliance
      with Securities Laws and Other State and Federal Law.
      Notwithstanding the other provisions of this Article
      X,
      no
      Member may transfer their Membership Interest in the Company unless such Member
      provides to the remaining Members such evidence and assurances as the remaining
      Members, may reasonably request, including but not limited to an opinion of
      counsel satisfactory to the Members that the transfer of such Membership
Interest:

     

    (a)  Shall
      not
      cause a termination of the Company under any applicable federal or state
      law;

     

    (b)  Shall
      not
      violate any applicable state or federal securities laws; and 

     

    (c)  Shall
      be
      accomplished in compliance with the registration requirements of all applicable
      state and federal securities law or pursuant to an applicable exemption there
      from, and that all such filings or other actions necessary to effect any such
      transaction have been undertaken or will have been undertaken prior to, or
      concurrent with, the transfer.

     

    ARTICLE
      XI.  
      ADMISSION OF ADDITIONAL MEMBERS AND MEMBERSHIP INTEREST
      TRANSFERS

     

    11.1  Admission
      of Additional Members.
      The
      Members, by unanimous vote may admit Additional Members and determine the
      Capital Contributions and/or Commitments and the corresponding allocated
      Membership Interest of such Additional Members. As a condition of admission,
      any
      Additional Member shall agree to be subject to all the terms and conditions
      of
      this Agreement by signing the original Agreement maintained by the Company.
      

     

    11.2  Disposition.
      The
      Membership Interest of any Member is transferable either voluntarily or by
      operation of law, subject to the provisions of this Article
      XI.
      Upon a
      transfer of a Member’s Membership Interest in compliance with this Article
      XI,
      the
      transferee shall be admitted as an Additional Member without further action
      at
      the time the transfer is completed, subject to the condition of admission
      required by Section
      11.1.

     

    
      
         

      

      
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    11.3  General
      Restrictions on Transfers.

     

    (a)  Except
      as
      otherwise provided in this Agreement, no Member may, without the written consent
      of all Members, Dispose of a Membership Interest in the Company. For purposes
      of
      this Agreement, a transfer of a Membership Interest in the Company shall include
      any Disposition of all or a portion of a Membership Interest in the Company.
      Any
      purported Disposition or gift of all or a portion of a Membership Interest
      made
      in violation of this Agreement shall be void as against the Company and the
      other Member, and the transferring or gifting Member shall indemnify and hold
      the Company and the other Member harmless from and against any and all loss,
      damage or expense (including, without limitation, tax liabilities or loss of
      tax
      benefits) incurred or suffered by the Company or other Member and arising
      directly or indirectly as a result of any Disposition or gift, or purported
      Disposition or gift, in violation of this Article
      XI.

     

    (b)  Notwithstanding
      anything in this Agreement to the contrary, a Disposition shall be void if,
      in
      the opinion of counsel to the Company, the Disposition would:

     

    (i)  Cause
      a
      termination of the Company under any applicable federal or state law or deemed
      termination of the Company under any applicable federal or state income tax
      law;
      or

     

    (ii)  Not
      be
      accomplished in compliance with the registration requirements of all applicable
      state and federal securities laws or pursuant to an applicable exemption there
      from.

     

    11.4  Right
      of First Refusal.

     

    (a)  In
      the
      event that a Member (“Selling Member”) desires to Dispose of all (but not less
      than all) of its Membership Interest (the “Offered Interest”) to any Person
      other than a current Member (the “Offeror”), the proposed Disposition shall not
      be permitted unless the Selling Member shall afford the Company and the other
      Members a right of first refusal pursuant to this Section
      11.4.

     

    (b)  Before
      Disposing of its Offered Interest in the Company, the Selling Member must
      provide to the Company and other Members at least thirty (30) days (the “Notice
      Period”) prior written notice (the “Disposition Notice”) of its intention to
      Dispose the Offered Interest. In the Disposition Notice, the Selling Member
      shall specify: (i) the price at which the Offered Interest is proposed to be
      sold or transferred (the “Offering Price”), which may not consist of
      consideration other than cash and/or promissory notes, (ii) the portion of
      their
      Membership Interest to be sold, (iii) the identity of the proposed Offeror
      or
      transferee, and (iv) any other material terms of the proposed Disposition.
      

     

    (c)  The
      Manager may elect, on behalf of the Company, within the first five (5) days
      of
      the Notice Period, to purchase the Offered Interest to be disposed of by the
      Selling Member at the Offering Price. The terms and conditions of the purchase
      by the Company shall be the terms and conditions of the proposed Disposition
      as
      set forth in the Disposition Notice. If the Company elects not to purchase
      the
      Offered Interest, the Company shall notify each non-selling Member. The notice
      shall state that the Company did not exercise its option to purchase the Offered
      Interest. 

     

    
      
         

      

      
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    (d)  If
      the
      Company elects not to purchase the Offered Interest, the Offered Interest,
      may
      be purchased by the non-selling Member on the same terms and at the same price
      available to the Company. The non-selling Member must give written notice to
      the
      Disposing Selling Member of the exercise of their option to purchase the Offered
      Interest before the expiration of the Notice Period. Alternatively, each
      non-selling Member may within the same 30-day period, notify the Manager of
      its
      desire to participate in the sale of that Member’s Membership Interest on the
      terms set forth in the Disposition Notice.

     

    (e)  If
      neither the Company nor the non-selling Member shall have elected to purchase
      the entire Offered Interest covered by the Disposition Notice as provided in
      the
      foregoing subsections of this Section
      11.4,
      the
      Selling Member may sell to Persons other than the Company and the non-selling
      Member, provided that any Disposition must be made on the terms and conditions
      and to the party specified in the Disposition Notice. 

     

    (f)  Unless
      otherwise agreed, the closing of any sale of a Membership Interest shall take
      place at the Company’s principal office. Once transferred, the Membership
      Interest shall be subject to all of the terms and conditions of this Agreement,
      and any third party purchaser shall agree to be bound by the terms and
      conditions of the Agreement as a condition concurrent with the transfer of
      the
      Membership Interest by signing the original Agreement maintained by the
      Company.

     

    11.5  Failure
      to Fully Exercise Options; Co-Sale.
      

     

    (a)  If
      the
      Company and the non-selling Members do not exercise their options to purchase
      the Offered Interest within the period described in this Agreement (the “Option
      Period”), then all options of the Company and the non-selling Members to
      purchase the Offered Interest, whether exercised or not, shall terminate, but
      each Member which has, pursuant to Section
      11.4,
      expressed a desire to sell its Membership Interests in the transaction (a
“Participating Member”), shall be entitled to do so pursuant to this Section.
      The Company shall promptly, on expiration of the Option Period, notify the
      Selling Member of the Participating Members wishing to sell. The Selling Member
      shall use commercially reasonable efforts to interest the Offeror in purchasing,
      in addition to the Offered Interest, the Membership Interests of the
      Participating Members. If the Offeror does not wish to purchase, in addition
      to
      the Offered Interest, the Membership Interests made available by the
      Participating Members, then each Participating Member and the Selling Member
      shall be entitled to sell, at the price and on the terms and conditions set
      forth in the Disposition Notice, a portion of the Membership Interests being
      sold to the Offeror, in the same proportion as such Selling Member or
      Participating Member’s ownership of Membership Interests bears to the aggregate
      Membership Interests owned by the Selling Member and the Participating Members.
      The transaction contemplated by the Disposition Notice shall be consummated
      not
      later than sixty (60) days after the expiration of the Option
      Period.

     

    
      
         

      

      
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    (b)  The
      proceeds of any sale made by the Selling Member without compliance with the
      provisions of this Section
      11.5
      shall be
      deemed to be held in constructive trust in such amount as would have been due
      the Participating Members if the Selling Member had complied with this
      Agreement.

     

    11.6  Drag
      Along Rights.

     

    (a)  In
      the
      event that an offer is made to all the Members of the Company which provides
      for
      the acquisition (either by way of a purchase, amalgamation, arrangement,
      corporate reorganization or other means of a merger or acquisition) by a
      Qualified Offeror (as defined below), of all (but not less than all) of the
      then
      outstanding Membership Interests upon the same terms and conditions (including
      price, if applicable) to all the Members; and the third party offer has been
      irrevocably accepted by Members in respect of not less than sixty-six and two
      thirds percent (66 2/3%) of the then issued and outstanding Membership Interests
      held by all Members, then any Member who has not accepted the offer (an
“Objecting Member”) shall, subject to the provisions of this Section
      11.6,
      be
      deemed to have done so upon being notified by such Qualified Offeror of the
      names of Members who have irrevocably accepted such offer and the number of
      Membership Interests in respect of which they have accepted the offer, provided
      that any Selling Member who has accepted such third party offer in respect
      of
      its Membership Interests has first complied with Section
      11.4
      of this
      Agreement. For purposes hereof, a “Qualified Offeror” shall be deemed a Person
      which (a) has no affiliation with, is not directly or indirectly materially
      owned or controlled by, does not directly or indirectly materially own or
      control, and has no interlocking directors with, a Member; (b) is not a material
      customer, supplier, distributor or creditor of or to a Member or an Affiliate
      thereof; and (c) has not engaged, is not currently engaged, and to such Member’s
      knowledge has no present intention to engage, in any material transaction with
      a
      Member within one year before or after the date such offer is made.

     

    11.7  Termination
      of Transfer Restrictions.
      This
      restrictions on the transfer of Membership Interests set forth in this
Article
      XI
      shall
      terminate upon the earlier of the following events:

     

    (a)  The
      sale
      of all or substantially all of the assets or business of the Company, by merger,
      sale of assets or otherwise (except a merger or consolidation in which the
      holders of Membership Interests of the Company immediately prior to such merger
      or consolidation continue to hold immediately following such merger or
      consolidation at least 80% by voting power of the Membership Interests of the
      surviving corporation); or

     

    (b)  The
      closing of the Company’s IPO.

     

    11.8  Insolvency.
      Upon
      the insolvency, as hereinafter defined, of any Member, the Company, or if the
      Company declines, any Member on a pro rata basis may, within ninety (90) days
      after such insolvency, elect to purchase the Membership Interest
      of
      the
      insolvent Member. The purchase price shall be the reasonable fair market value
      of the Company, as determined by the Board in their sole discretion, multiplied
      by the Membership Interest to be purchased, and adjusted for usual and customary
      discounts for lack of marketability and minority interest. Any liabilities
      or
      indebtedness of the insolvent Member to the Company or any other Member shall
      be
      paid by the insolvent Member at the closing. A Member shall be deemed to have
      become insolvent for purposes of this Section
      11.8
      if any
      of the following events shall occur:

     

    
      
         

      

      
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    (a)  Said
      Member shall file a voluntary petition in bankruptcy or shall be adjudicated
      a
      bankrupt or insolvent, or shall file any petition or answer seeking any
      reorganization, arrangement, composition, readjustment, liquidation, dissolution
      or similar relief for himself under the present or any future federal bankruptcy
      act or any other present or future applicable federal, state or other statute
      or
      law relating to bankruptcy, insolvency or other relief for debtors, or shall
      seek or consent to or acquiesce in the appointment of any trustee, receiver,
      conservator or liquidator of said Member or of all or any substantial part
      of
      their properties or their Membership Interest in the Company (the phrase
“acquiesce in the appointment” being deemed to include, without limitation,
      failure to file a petition or motion to vacate or to discharge any order,
      judgment or decree providing for such appointment within ten (10) days after
      such appointment); or

     

    (b)  A
      court
      of competent jurisdiction shall enter an order, judgment or decree approving
      a
      petition filed against said Member seeking any reorganization, arrangement,
      composition, readjustment, liquidation, dissolution or similar relief under
      the
      present or future applicable federal, state or other statute or law relating
      to
      bankruptcy, insolvency or other relief for debtors, and said Member shall
      acquiesce in the entry of such order, judgment or decree (the phrase “acquiesce
      in the appointment” being deemed to include, without limitation, failure to file
      a petition or motion to vacate or to discharge any order, judgment or decree
      within ten (10) days after the entry of such order, judgment or decree), or
      such
      order, judgment or decree shall remain unvacated and unstayed for an aggregate
      of ninety (90) days (whether or not consecutive) from the date of entry thereof,
      or any trustee, receiver, conservator or liquidator of said Member or all or
      any
      substantial part of their Property or their Membership Interest in said Company
      shall be appointed without the consent or acquiescence of said Member or such
      appointment shall remain unvacated and unstayed for an aggregate of ninety
      (90)
      days (whether or not consecutive); or

     

    (c)  Said
      Member shall admit in writing of their inability to pay their debts as they
      mature; or

     

    (d)  Said
      Member shall give notice to any governmental body of insolvency or pending
      insolvency; or

     

    (e)  Said
      Member shall make an assignment of their pro rata share of the assets and
      profits of the Company for the benefit of creditors or take any other similar
      action for the protection or benefit of creditors.

     

    ARTICLE
      XII. DISSOLUTION
      AND WINDING UP

     

    12.1  Dissolution.
      The
      Company shall be dissolved and its affairs wound up at such time as the Members
      may determine.

     

    12.2  Effect
      of Dissolution.
      Upon
      dissolution, the Company shall cease carrying on its normal business operations.
      However, the Company will not be terminated until the winding up of the affairs
      of the Company is completed and the Articles of Dissolution have been filed
      with
      the Illinois Secretary of State in accordance with the Act.

     

    
      
         

      

      
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    12.3  Distribution
      of Assets on Dissolution.
      Upon
      the winding up of the Company, the Company Property shall be
      distributed:

     

    (a)  To
      creditors, including any Member if it is a creditor, to the extent permitted
      by
      law, in satisfaction of Company liabilities;

     

    (b)  To
      all
      the Members, considering that such distribution may be in cash or Property
      or
      partly in both, as determined by the Members.

     

    12.4  Winding
      Up and Articles of Dissolution.
      The
      winding up of the Company shall be completed when all debts, liabilities, and
      obligations of the Company have been paid and discharged or reasonably adequate
      provision therefore has been made, and all of the remaining Property and assets
      of the Company have been distributed to the Members. Upon the completion of
      winding up of the Company, Articles of Dissolution shall be executed and filed
      with the Illinois Secretary of State in accordance with the Act. 

     

    ARTICLE
      XIII. PROTECTION
      OF CONFIDENTIAL INFORMATION

     

    13.1  Protection
      of Confidential Information. Without
      the express prior written approval of all Members, each Member agrees to hold
      in
      strict confidence and not to disclose to any Person any Confidential Information
      (whether during the term of the Company or after termination of the Member’s
      association with the Company).

     

    13.2  Exceptions.
      Notwithstanding
      the limitation in Section
      13.1
      above,
      no Member shall be deemed to be in breach of this Article
      XIII
      if it
      discloses Confidential Information (a) in the course of any legal or regulatory
      proceeding pursuant to a lawful demand or if such disclosure is otherwise
      required by law; provided, that if a Member receives such demand or otherwise
      believes it is compelled by law to disclose Confidential Information sought
      by
      such demand or requirement, such Member shall give notice to the Company and
      all
      other Members so as to afford the Company and/or the other Member(s) an
      opportunity to contest the demand or legal requirement, or (b) to a prospective
      purchaser that requires such Confidential Information in order to evaluate
      whether or not to acquire a Membership Interest pursuant to the terms of this
      Agreement; provided, that such prospective purchaser is obligated by a
      confidentiality agreement with terms concerning the disclosure and use of
      Confidential Information at least as restrictive as those herein, and such
      Member obtains the prior written consent of the other Member, which consent
      shall not be unreasonably withheld or delayed.

     

    13.3  Use
      of Confidential Information. Each
      Member agrees to use Confidential Information to perform its obligations and
      functions under this Agreement only and for no other purposes. Notwithstanding
      the foregoing, information that is developed or otherwise in the possession
      of a
      Member and subsequently transmitted or contributed by such Member to the Company
      shall (unless otherwise agreed by such Member) continue to be the Property
      of
      such Member and may (unless otherwise agreed by such Member) continue to be
      used
      by such Member in the conduct of its business.

     

    13.4  Return
      of Confidential Information.
      At the
      dissolution of the Company or earlier termination of a Member’s Membership
      Interest, (a) any Confidential Information that has been received or acquired
      will remain subject to the terms of this Article
      XIII
      for a
      period of seven (7) years, and (b) any documents containing Confidential
      Information shall either be destroyed by the Receiving Party or returned to
      the
      Company or the Disclosing Party, upon request.

     

    
      
         

      

      
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    13.5  Access
      to Confidential Information.
      Each
      Member shall use its reasonable best efforts to restrict access to the
      Confidential Information within its organization only to those employees,
      officers and directors, and advisors (“Recipients”) who have a clear need to
      know the same for the purpose of this Agreement and operation of the Company,
      provided that the Receiving Party advises the Recipients of their obligations
      under this Article
      XIII
      and
      guarantees the adherence of such Recipients to the terms of this Article
      XIII.

     

    13.6  Proprietary
      Nature of Information. Any
      and
      all Confidential Information disclosed is proprietary and the Disclosing Party
      reserves full rights to the Confidential Information, remains the sole owner
      of
      the Confidential Information and does not assign to the Receiving Party any
      rights to the Confidential Information.

     

    13.7  Company-Developed
      Technology.
      

     

    (a)  It
      is not
      intended by the parties hereto that the Company create, develop or discover
      technology at any time during the term of this Agreement. The Members agree,
      however, that in the event the Company, independently or in combination with
      a
      Member, conceives of any new idea, invention or discovery, excluding any
      Improvement on Technology licensed to the Company, (“Company Intellectual
      Property”) shall be owned by the Company and the Members shall cooperate and do
      those things as may be required to vest in the Company as its sole Property
      all
      its Company Intellectual Property.

     

    (b)  Each
      Member shall disclose promptly and fully to the Company all inventions,
      improvements or discoveries made, conceived, developed, or first reduced to
      practice by the Member, either solely or in collaboration with others, during
      the period of the Member’s association with the Company in any capacity that
      relate to:

     

    (i)  Any
      products, research or business of the Company or to tasks assigned to the Member
      by or on behalf of the Company; 

     

    (ii)  Any
      process, method, apparatus or article useful in connection with the manufacture
      or development of such products; 

     

    (iii)  Anything
      done on the time or with the facilities of the Company; or

     

    (iv)  Any
      invention and discovery that relates directly or indirectly to the present
      or
      prospective business of the Company.

     

    (c)  Each
      Member shall assist and cooperate (at the expense of the Company) with the
      Company in any controversy or legal or administrative proceedings involving
      or
      relation to Company Intellectual Property or the registration or protections
      that might be issued. 

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    ARTICLE
      XIV. AMENDMENT

     

    14.1  This
      Agreement may be amended or modified from time to time only by a written
      instrument adopted and executed by the Members. No Member shall have any vested
      rights in this Agreement, which may not be modified through an amendment to
      this
      Agreement.

     

    ARTICLE
      XV. MISCELLANEOUS
      PROVISIONS

     

    15.1  Entire
      Agreement.
      This
      Agreement represents the entire agreement between the Members and the
      Company.

     

    15.2  Rights
      of Creditors and Third Parties under Operating Agreement.
      This
      Agreement is entered into between the Company and the Members for the exclusive
      benefit of the Company, its Members, and their successors and assignees. This
      Agreement is expressly not intended for the benefit of any creditor of the
      Company or any other Person. Except and only to the extent provided by
      applicable statute, no such creditor or third party shall have any rights under
      this Agreement or any agreement between the Company and the Members with respect
      to any Capital Contribution or otherwise.

     

    15.3  Notices.
      Any
      and
      all notices, designations, consents, offers, acceptances, or any other
      communication provided for herein shall be shall be in writing and shall be
      considered effective when delivered, if by personal delivery, upon receipt,
      if
      sent by FAX, which FAX has been telephonically confirmed, between the hours
      of
      9:00 a.m. and 5:00 p.m. local time of the recipient, on a business day, upon
      delivery, or if not, at 9:00 a.m., local time on the next business day, or
      upon
      first attempted delivery after mailing by certified mail, return receipt
      requested, postage prepaid, addressed to the Member’s and/or Company’s address
      as it appears in the Company’s records, as appropriate.

     

    15.4  Execution
      of Additional Instruments.
      Each
      Member hereby agrees to execute such other and further statements of interest
      and holdings, designations, powers of attorney and other instruments necessary
      to comply with any laws, rules or regulations.

     

    15.5  Construction.
      Whenever the singular number is used in this Agreement and when required by
      the
      context, the same shall include the plural, and the masculine gender shall
      include the feminine and neuter genders and vice versa.

     

    15.6  Headings.
      The
      headings in this Agreement are inserted for convenience only and are in no
      way
      intended to describe, interpret, define, or limit the scope, extent or intent
      of
      this Agreement or any provision hereof.

     

    15.7  Waivers.
      The
      failure of any party to seek redress for violation of or to insist upon the
      strict performance of any covenant or condition of this Agreement shall not
      prevent a subsequent act, which would have originally constituted a violation,
      from having the effect of an original violation.

     

    15.8  Rights
      and Remedies Cumulative.
      The
      rights and remedies provided by this Agreement are cumulative and the use of
      any
      one right or remedy by any party shall not preclude or waive the right to use
      any or all other remedies. Said rights and remedies are given in addition to
      any
      other rights and parties may have by law, statute, ordinance or
      otherwise.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    15.9  Severability.
      If any
      provision of this Agreement or the application thereof to any person or
      circumstance shall be invalid, illegal or unenforceable to any extent, the
      remainder of this Agreement and the application thereof shall not be affected
      and shall be enforceable to the fullest extent permitted by law.

     

    15.10    
      Heirs,
      Successors and Assigns.
      Each
      and all of the covenants, terms, provisions and agreements herein contained
      shall be binding upon and inure to the benefit of the parties hereto and, to
      the
      extent permitted by this Agreement, their respective heirs, legal
      representatives, successors and assigns.

     

    15.11  
        Counterparts.
      This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original but all of which shall constitute one and the same
      instrument.

     

    ARTICLE
      XVI. DEFINITIONS

     

    16.1  For
      purposes of this Agreement, unless the context clearly indicates otherwise,
      the
      following terms shall have the following meanings:

     

    (a)  “Act”
      means
      the
      Illinois Limited Liability Company Act and all amendments to the
      Act.

     

    (b)  “Additional
      Capital Contributions” means contributions
      made based on the Manager’s determination that additional funds are required for
      operation of the Company, including capital expenditures and debt
      service.

     

    (c)  “Additional
      Member” means
      a
      Member other than the initial Members listed in Exhibit
      A
      who has
      acquired a Membership Interest in the Company.

     

    (d)  “Affiliate”
      means
      any
      corporation or other entity which controls, is controlled by, or is under common
      control with a Party. A corporation or other entity shall be regarded as in
      control of another corporation or entity if it owns or directly or indirectly
      controls more than fifty percent (50%) of the voting stock or other ownership
      interest of the other corporation or entity, or if it possesses, directly or
      indirectly, the power to direct or cause the direction of the management and
      policies of the corporation or other entity or the power to elect or appoint
      more than fifty percent (50%) of the members of the governing body of the
      corporation or other entity.

     

    (e)  “Agreement”
      means
      this Operating Agreement including all amendments adopted in accordance with
      this Operating Agreement and the Act.

     

    (f)  “Articles”
      or
      “Articles
      of Organization”
means
      the Articles of Organization of the Company as properly adopted and amended
      from
      time to time by the Members and filed with the Illinois Secretary of
      State.

     

    (g)  “Board”
or
      “Board
      of Directors”
means
      the board established pursuant to Section
      5.1
      of this
      Agreement. 

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    (h)  “Business
      Plan”
means
      the business plan of the Company to be prepared by the Manager under the
      direction of and subject to the approval of the Board as described in
Section
      5.7
      of this
      Agreement. 

     

    (i)  “Capital
      Account” means
      as
      of any given date, the Capital Contribution to the Company by a Member as
      adjusted up to the date in question.

     

    (j)  “Capital
      Contribution” means
      a
      Member’s Initial Capital Contribution as provided in Section
      7.1
      of this
      Agreement and any Additional Capital Contribution made by any Member as provided
      in Section
      7.2
      of this
      Agreement. .

     

    (k)  “Code”
      means
      the
      Internal Revenue Code of 1986 as amended from time to time. All references
      here
      to section of the Code shall include any corresponding provision or provisions
      of succeeding law.

     

    (l)  “Commitment”
      means
      the
      obligation of a Member to make a Capital Contribution in the
      future.

     

    (m)  “Company
      Property”
means
      any Property owned by the Company.

     

    (n)  “Confidential
      Information”
means,
      without limitation, any and all information, technical knowledge, know-how,
      business plans, pricing strategies, market designs, trade secrets, product
      specification, product compositions, data, drawings, sketches, flow sheets,
      manufacturing processes, quality control specification, communications of a
      sensitive or private nature relating to or useful in connection with the design,
      construction and/or operation of any of the Members’ facilities or business, and
      information that may be learned or acquired during a due diligence examination
      of a Member and its books, records and other assets or during any negotiation
      or
      discussion concerning the subject of this Agreement. 

     

    (o)  “Contribution”
      means
      any
      contribution of Property made by or on behalf of a Member as consideration
      for a
      Membership Interest.

     

    (p)  “Disposition”
      or
      “Dispose”
      means as it
      relates to the Membership Interest of any Member, any sale, assignment,
      transfer, exchange, mortgage, pledge, grant, hypothecation, or other transfer,
      absolute or as security or encumbrance (including dispositions by operation
      of
      law).

     

    (q)  “Distributable
      Cash” means
      all
      cash, revenues and funds received by the Company from Company operations, less
      the sum of the following to the extent paid or set aside by the Company: (i)
      all
      principal and interest payments on indebtedness of the Company and all other
      sums paid to lenders; (ii) all cash expenditures incurred incident to the normal
      operation of the Company’s business; (iii) such cash Reserves as the Members
      deem reasonably necessary to the proper operation of the Company’s business; and
      (iv) such amounts as may be required to satisfy conditions imposed by lenders
      or
      other creditors.

     

    (r)  “Distribution”
      means
      a
      transfer of Property to a Member on account of a Membership Interest as
      described in Article
      VIII.

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    (s)  “Effective
      Date”
means
      the date of the Joint Venture Agreement, unless otherwise agreed in writing
      by
      the initial Members.

     

    (t)  “Ethanex”
means
      Ethanex Energy, Inc., a Nevada corporation.

     

    (u)  “Fiscal
      Year” means
      the
      calendar year ending on December 31 of any year.

     

    (v)  “Initial
      Capital Contribution” means
      the
      Capital Contribution agreed to be made by the Members as described in
Section
      7.1.

     

    (w)  “IPO”
means
      the initial firm-commitment underwritten public offering of Membership
      Interests, or equity securities into which such Member Interests are converted
      or for which such Membership Interests are exchanged, pursuant to an effective
      registration statement under the United States Securities Act of 1933, as
      amended, or pursuant to the foreign equivalent thereof, resulting in the
      Company, or the successor entity to the Company as the case may be, becoming
      listed on a public securities exchange. 

     

    (x)  “Manager”
      means
      the
      person described in Section
      4.1 or
      any
      other person or entity that succeeds him in that capacity. The initial Manager
      shall be the person identified on Exhibit
      A
      to this
      Agreement. References to the Manager as him, her, it, itself, or other like
      references shall also, where the context so requires, be deemed to include
      the
      masculine or feminine reference, as the case may be.

     

    (y)  “Member”
      means
      the
      Members executing this Agreement, any transferee of a Member, or any Additional
      Member. At any time there is more than one Member, the term “Member” shall mean
      all Members, and any action that may be taken under this Agreement by the
      Members may be taken by any Member, provided that any dispute with respect
      to
      any action shall be decided by the Members holding eighty-five percent (85%)
      of
      the Membership Interests of the Company. 

     

    (z)  “Membership”
      means
      all
      of the rights of Members including the right to share in Net Profits, Net Losses
      and Distributions and the right to participate in certain management decisions
      of the Company as identified in this Agreement.

     

    (aa)  “Membership
      Interest” means
      the
      term used to indicate a Member’s ownership percentage of the Company. The
      initial Membership Interest of each Member is set forth on Exhibit
      B
      and
Exhibit
      C
      hereof.

     

    (bb)  “Net
      Book Value” means
      at
      any point in time, the sum of all the assets and liabilities of the Company
      as
      recorded in the general ledger.

     

    (cc)  “Net
      Losses” means
      for
      each Fiscal Year, the losses and deductions of the Company determined in
      accordance with accounting principles consistently applied from year to year
      employed under the method of accounting identified in the Agreement, and as
      reported, separately or in the aggregate, as appropriate, on the Company’s
      information tax return filed for federal income tax purposes, plus any
      expenditures described in the Code.

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    (dd)  “Net
      Profits”
      means
      for each Fiscal Year, the income and gains of the Company determined in
      accordance with accounting principles consistently applied from year to year
      employed under the method of accounting identified in the Agreement, and as
      reported, separately or in the aggregate, as appropriate, on the Company’s
      information tax return filed for federal income tax purposes, plus any income
      described in the Code.

     

    (ee)  “Person”
      means
      an
      individual, trust, estate, firm, corporation, partnership, limited liability
      company, association or other legal entity. 

     

    (ff)  “President/CEO”
means
      the President and Chief Executive Officer of the Company to be appointed by
      the
      Manager under the direction and approval of the Board as described in
Section
      4.5
      of this
      Agreement. 

     

    (gg)  “Property”
      means
      any
      property, real or personal, tangible or intangible (including goodwill),
      including money and any legal or equitable interest in such property, but
      excluding services and promises to perform services in the future.

     

    (hh)  “Related
      Agreement”
means
      (i) the Joint Venture Agreement dated September 17, 2006, and the following
      agreements each to be dated and deemed effective as of the Effective Date:
      (ii)
      the Contribution Agreement between Star and the Company, and (iii) the
      Assignment Agreement between Ethanex and the Company. 

     

    (ii)  “Regulations”
means
      the regulation promulgated or issued by the Treasury Department under the Code.
      

     

    (jj)  “Reserves”
means
      funds set aside or amounts allocated during such period to reserves which shall
      be maintained in amounts deemed sufficient by the Manager for working capital,
      to pay taxes, insurance, debt service or other costs or expenses incident to
      the
      ownership or operation of the Company’s business or as may be required to
      satisfy conditions imposed by lenders or other creditors. 

     

    (kk)  “Star”
means
      Star Ethanol, LLC, an Illinois limited liability company. 

     

    (ll)  “Tax
      Matters Partner”
means
      the Person designated to be the Tax Matters Partner in accordance with
Section
      9.2
      of this
      Agreement. 

     

    

    (SIGNATURE
      PAGE FOLLOWS)

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, this Operating Agreement of Ethanex
      Southern Illinois,
      LLC has
      been signed and is effective as of September 20, 2006.

     

     

    COMPANY:

     

    Ethanex
      Southern Illinois,
      LLC, an
      Illinois limited  liability
      company

     

    By:
      /s/
      Bryan Sherbacow_________

    Bryan
      Sherbacow, Manager

     

    

    MEMBERS:

     

    /s/
      Ronald J. Gerino______________

    Star
      Ethanol, LLC    

    By:
      Ronald J. Gerino, Manager

     

    /s/
      Albert Knapp_________________

    Ethanex
      Energy, Inc.

    By:
      Albert Knapp, 

    President
      and CEO

     

     

    28

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