SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
MINNESOTA CORN PROCESSORS, LLC
A Colorado Limited Liability Company
(CONTAINS RESTRICTIONS ON
TRANSFERABILITY OF MEMBERSHIP INTERESTS)
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MINNESOTA CORN PROCESSORS, LLC
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
(CONTAINS RESTRICTIONS ON TRANSFERS
OF MEMBERSHIP INTERESTS)
TABLE OF CONTENTS
PAGE
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RECITALS ................................................... D-1
ARTICLE I DEFINITIONS ................................................ D-1
1.1 Terms Defined in the Act ................................... D-1
1.2 Terms Defined Herein ....................................... D-1
ARTICLE II THE LIMITED LIABILITY COMPANY .............................. D-6
2.1 Formation; Effective Date of Agreement ..................... D-6
2.2 Name ....................................................... D-6
2.3 Business Purpose ........................................... D-6
2.4 Powers ..................................................... D-6
2.5 Duration ................................................... D-6
2.6 Registered Office and Registered Agent ..................... D-6
2.7 Principal Office ........................................... D-7
2.8 Title to Property; No Agency Power ......................... D-7
2.9 Limited Liability of Members and Directors ................. D-7
ARTICLE III MEMBERS .................................................... D-7
3.1 Membership ................................................. D-7
3.2 Ownership of Membership Interests .......................... D-7
3.3 Classes of Membership ...................................... D-8
3.4 Voting ..................................................... D-8
3.5 Place of Meetings .......................................... D-9
3.6 Regular Meetings ........................................... D-9
3.7 Special Meetings ........................................... D-9
3.8 Notice of Meetings ......................................... D-9
3.9 Waiver of Notice ........................................... D-9
3.10 Quorum ..................................................... D-9
3.11 Proxies; Mail Ballots ...................................... D-9
3.12 Action Without Meeting ..................................... D-9
3.13 Telephonic Meetings ........................................ D-9
3.14 Termination of Membership .................................. D-9
3.15 Continuation of the Company ................................ D-10
3.16 No Obligation to Purchase Units ............................ D-10
3.17 Advance Consent to Certain Substitute Members .............. D-10
3.18 Compliance with Articles of Organization and Operating
Agreement ................................................. D-11
3.19 No Dissenters' Rights ...................................... D-11
ARTICLE IV CAPITAL .................................................... D-11
4.1 Units ...................................................... D-11
4.2 Capital Accounts ........................................... D-11
4.3 Initial Issuance of Units; Offering of Additional Units .... D-11
4.4 No Capital Calls ........................................... D-12
4.5 Tax Withholding Obligations ................................ D-12
4.6 Transferee Succeeds to Transferor's Capital Account ........ D-12
4.7 No Right to Return of Contributions ........................ D-12
4.8 No Interest on Capital Contributions ....................... D-12
4.9 Loans to the Company ....................................... D-12
4.10 No Repayment Liability ..................................... D-12
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PAGE
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ARTICLE V ALLOCATIONS AND DISTRIBUTIONS .............................. D-12
5.1 Allocation of Profits and Losses ........................... D-12
5.2 Special Allocations ........................................ D-12
5.3 Curative Allocations ....................................... D-14
5.4 Loss Limitation ............................................ D-14
5.5 Other Allocation Rules ..................................... D-14
5.6 Tax Allocations ............................................ D-14
5.7 Distributions .............................................. D-15
5.8 Tax Withholding Obligations Constitute a Distribution ...... D-15
ARTICLE VI BOARD OF DIRECTORS ......................................... D-15
6.1 Board of Directors ......................................... D-15
6.2 Qualifications of Directors ................................ D-15
6.3 Election of Directors ...................................... D-16
6.4 Removal of Directors ....................................... D-16
6.5 Vacancies .................................................. D-16
6.6 Annual Meeting ............................................. D-16
6.7 Regular Meetings ........................................... D-16
6.8 Special Meetings ........................................... D-16
6.9 Quorum, Voting ............................................. D-16
6.10 Executive Committee ........................................ D-16
6.11 Compensation ............................................... D-16
6.12 Number of Districts ........................................ D-17
6.13 Districting Committee ...................................... D-17
6.14 Counties and Districts ..................................... D-17
6.15 Directors and Districts .................................... D-18
6.16 Board Actions Requiring Approval of Members ................ D-18
6.17 Board Actions Requiring Approval of ADM .................... D-18
6.18 Absent Directors ........................................... D-18
6.19 Action Without Meeting ..................................... D-19
6.20 Telephonic Meetings ........................................ D-19
ARTICLE VII DUTIES OF DIRECTORS ........................................ D-19
7.1 General Powers ............................................. D-19
7.2 Employment of President and Chief Executive Officer ........ D-19
7.3 Bonds and Insurance ........................................ D-19
7.4 Accounting System and Audit ................................ D-19
7.5 Agreements with Members .................................... D-19
7.6 Depository ................................................. D-19
ARTICLE VIII BOARD OFFICERS; PRESIDENT AND CHIEF EXECUTIVE
OFFICER .................................................... D-19
8.1 Election of Board Officers ................................. D-19
8.2 Duties of Chairman ......................................... D-20
8.3 Duties of Vice Chairman .................................... D-20
8.4 Duties of Secretary ........................................ D-20
8.5 Duties of President and Chief Executive Officer ............ D-20
8.6 Compensation ............................................... D-21
8.7 Special Powers ............................................. D-21
ARTICLE IX REQUIRED RECORDS; ACCOUNTING AND TAX MATTERS ............... D-21
9.1 Required Records ........................................... D-21
9.2 Books of Account ........................................... D-21
9.3 Tax Characterization, Returns, Elections and Information ... D-21
9.4 Tax Matters Partner; Tax Audit Costs ....................... D-22
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PAGE
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ARTICLE X TRANSFER OF MEMBER INTERESTS .............................. D-22
10.1 Restrictions on Transfer. ................................. D-22
10.2 Conditions Precedent to Transfers ......................... D-22
10.3 Substitution of Member .................................... D-23
10.4 Effective Date of Transfer ................................ D-23
10.5 Distributions and Allocations in Respect to Transferred
Interest ................................................. D-23
ARTICLE XI DISSOLUTION AND WINDING UP ................................ D-24
11.1 Liquidating Events ........................................ D-24
11.2 Winding Up ................................................ D-24
11.3 Distributions Upon Dissolution ............................ D-24
11.4 Compliance With Regulations; Deficit Capital Accounts ..... D-25
11.5 Deemed Distribution and Recontribution .................... D-25
11.6 Allocations During Period of Liquidation .................. D-25
11.7 Character of Liquidating Distributions .................... D-25
ARTICLE XII MEMBERS BOUND BY AGREEMENT ................................ D-25
ARTICLE XIII INDEMNIFICATION OF DIRECTORS AND EMPLOYEES ................ D-26
13.1 Indemnity of Directors, Employees and Other Agents ........ D-26
ARTICLE XIV MISCELLANEOUS ............................................. D-26
14.1 Entire Agreement .......................................... D-26
14.2 Amendment ................................................. D-26
14.3 Conflict with Articles .................................... D-26
14.4 Certificates of Membership Interest ....................... D-26
14.5 Severability .............................................. D-26
14.6 Remedies .................................................. D-27
14.7 Consent and Waiver ........................................ D-27
14.8 No Third Party Beneficiary ................................ D-27
14.9 Notices ................................................... D-27
14.10 Binding Effect ............................................ D-27
14.11 Necessary Instruments and Acts ............................ D-27
14.12 Number and Gender ......................................... D-27
14.13 Interpretation ............................................ D-27
14.14 Counterparts .............................................. D-27
14.15 Governing Law ............................................. D-27
SCHEDULE A
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MINNESOTA CORN PROCESSORS, LLC
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
(CONTAINS RESTRICTIONS ON TRANSFERS
OF MEMBERSHIP INTERESTS)
THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT is entered into and
made effective as of the 18th day of October, 1999 by and between Minnesota Corn
Processors, LLC, a Colorado limited liability company (the "Company"), and the
members of the Company who are identified as such on the Membership Register
from time to time (collectively, the "Members").
RECITALS
WHEREAS, the Cooperative, as the only initial Member, has caused the
Company to be formed under the laws of the State of Colorado for the following
purposes: (a) to acquire all of the businesses and assets of Minnesota Corn
Processors, Inc., a Minnesota cooperative corporation (the Cooperative"); and
(b) to operate the corn processing and marketing business currently operated by
the Cooperative; and (c) for any other lawful purpose;
WHEREAS, the Cooperative and the Company previously entered into an
Operating Agreement dated as of January 22, 1999 (the "Original Agreement"), and
an Amended and Restated Operating Agreement dated as of May 17, 1999 the
"Amended Agreement"), and adopted the Original Agreement and, subsequently, the
Amended Agreement, as the operating agreement of the Company as contemplated by
Section 7-80-108 of the Colorado Limited Liability Company Act;
WHEREAS, the Cooperative and the Company wish to amend and restate the
Amended Agreement in its entirety effective as of the date hereof and hereby
adopt this Second Amended and Restated Operating Agreement as the operating
agreement of the Company for purposes of Section 7-80-108 of the Colorado
Limited Liability Company Act;
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
of the Members contained herein, and the mutual benefits to be gained by the
performance hereof, each of the Members agrees as follows:
ARTICLE I
DEFINITIONS
1.1 Terms Defined in the Act. Unless defined specifically herein, terms
relating to a limited liability company shall have the meanings given in or
interpreted under the Colorado Limited Liability Company Act.
1.2 Terms Defined Herein. The following capitalized words and phrases shall
have the following respective meanings as used herein, except as may be
otherwise expressly provided in this Agreement or unless the context otherwise
specifies.
"ACT" means the Colorado Limited Liability Company Act, as amended, and
any successor thereto.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Unit
Holder, the deficit balance, if any, in such Unit Holder's Capital Account as of
the end of the relevant allocation period, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which such Unit Holder is
deemed to be obligated to restore pursuant to the penultimate sentences in
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
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(ii) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Regulations.
This definition is intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.
"ADM" means Archer Daniels Midland, a Delaware corporation.
"AFFILIATE" means, with respect to a specified Person, any Person,
directly or indirectly, through one or more intermediaries, controlling or
controlled by, or under common control with a specified Person. The term
"control", as used in the preceding sentence, means with respect to a
corporation the right to exercise, directly or indirectly, more than 50% of the
voting rights attributable to the controlled corporation, and, with respect to
any partnership, trust or other entity or association, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled entity.
"AGREEMENT" means this Second Amended and Restated Operating Agreement of
Minnesota Corn Processors, LLC, as amended, modified or supplemented from time
to time, including any schedules to this Agreement. Words such as "herein",
"hereinafter", "hereof", and "hereunder" refer to this Agreement.
"ARTICLES OF ORGANIZATION" means the Articles of Organization filed on
behalf of the Company with the Secretary of State of Colorado, as from time to
time amended.
"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company established by Article VI. For purposes of the Act, the "Board" or
"Board of Directors" shall mean the board of managers of the Company.
"CAPITAL ACCOUNT" means, with respect to any Unit Holder, the Capital
Account maintained for such Person in accordance with the provisions of Section
4.2 herein.
"CAPITAL CONTRIBUTIONS" means, with respect to any Unit Holder, the
amount of money and the Gross Asset Value of any property (other than money) and
the agreed value of services rendered or the obligation to perform services
which are contributed to the capital of the Company with respect to the Units
held by such Person pursuant to the terms of this Agreement.
"CERTIFICATE OF MEMBERSHIP INTEREST" means a certificate or other
evidence of ownership of the Units adopted by the Company pursuant to Section
14.4 of this Agreement.
"CLASS A MEMBER" means a Member that owns Class A Units.
"CLASS B MEMBER" means a Member that owns Class B Units.
"CLASS A UNITS" means the unit of measurement used to quantify the
Membership Interest of a Member eligible to purchase a voting Membership
Interest.
"CLASS B UNITS" means the unit of measurement used to quantify the
Membership Interest of a Member eligible to purchase a non-voting Membership
Interest.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding law).
"COMPANY" shall have the meaning assigned to that term in the first
paragraph of this Agreement.
"COMPANY MINIMUM GAIN" shall have the same meaning as "partnership
minimum gain" in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"COMPETITOR" means (i) each Person identified as a Competitor on Schedule
A attached hereto and the successors and assigns thereof; (ii) any other Person
identified by the Company as a Competitor; and (iii) any officer or director of
any Person identified in (i) and (ii) hereof.
"DEPRECIATION" means, for each allocation period, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such allocation
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period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such
allocation period, Depreciation shall be an amount which bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such allocation period bears
to such beginning adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
allocation period is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Board of Directors.
"DIRECTOR" or "DIRECTORS" means the natural persons elected, appointed,
or otherwise designated as directors by the Members to direct the business and
affairs of the Company as provided in Article VI. For purposes of the Act, the
directors shall be deemed to be the "managers" of the Company.
"ESTABLISHED VALUE" means a per-Unit value established by the Board of
Directors from time to time, which shall be based on (i) seventy-five percent
(75%) of the fair market value for the Units, as determined by the Board of
Directors using reasonable valuation methods; or (ii) the book value of the
Units as shown on the Company's most recent audited financial statements,
whichever is less.
"EVENT OF DISASSOCIATION" shall have the meaning assigned to that term in
Section 3.15 of this Agreement.
"GROSS ASSET VALUE" means with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Member to
the Company shall be the gross fair market value of such asset, as determined by
the Board of Directors, provided that the initial Gross Asset Values of the
assets contributed to the Company pursuant to Section 4.3 hereof shall be as set
forth in such section;
(b) The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values (taking Code Section 7701(g)
into account), as determined by the Board of Directors as of the following
times: (i) the acquisition of an additional interest in the Company by any new
or existing Member in exchange for more than a DE MINIMIS Capital Contribution;
(ii) the distribution by the Company to a Member of more than a DE MINIMIS
amount of Company property as consideration for an interest in the Company; and
(iii) the liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided that an adjustment described in clauses (i) and
(ii) of this paragraph shall be made only if the Board of Directors reasonably
determines that such adjustment is necessary to reflect the relative economic
interests of the Members in the Company;
(c) The Gross Asset Value of any item of Company assets distributed to
any Member shall be adjusted to equal the gross fair market value (taking Code
Section 7701(g) into account) of such asset on the date of distribution as
determined by the Board of Directors; and
(d) The Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (f) of the
definition of "Profits and Losses" or Section 5.2(c) hereof; provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv)
to the extent that an adjustment pursuant to subparagraph (b) is required in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (b) or (d), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Profits and Losses.
"INITIAL AGREED VALUE PER UNIT" shall mean the fair market value of each
Unit received by the Initial Members pursuant to the Transaction Agreement in
the merger of MCP Colorado into the Company as determined by a nationally
recognized appraisal firm selected by the Cooperative. The Board of Directors
shall be authorized to make reasonable modifications to such appraisal to
reflect
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intervening events between the date of the appraisal and the transfer of Units
to the Initial Members pursuant to the merger of MCP Colorado with and into the
Company pursuant to the Transaction Agreement.
"INITIAL MEMBERS" shall mean, (i) prior to the merger of MCP Colorado
into the Company pursuant to the Transaction Agreement, the Cooperative, and
(ii) from and after the effective time of the merger of MCP Colorado into the
Company pursuant to the Transaction Agreement, each Person who receives Class A
Units or Class B Units pursuant to such merger.
"LIQUIDATING EVENT" shall have the meaning assigned to that term in
Section 9.1 of this Agreement.
"LOSSES" shall have the meaning associated with that term in the
definition of Profits and Losses hereunder.
"MCP COLORADO" means Minnesota Corn Processors Colorado, the transitory
Colorado cooperative into which the Cooperative will be merged in anticipation
of the merger of such Colorado cooperative into the Company.
"THE COOPERATIVE" means Minnesota Corn Processors, Inc., a Minnesota
cooperative corporation.
"MEMBER" means any Person (i) who has become a Member pursuant to the
terms of this Agreement, and who is designated as a Member on the Membership
Register, (ii) who is the owner of 1,000 or more Units, and (iii) who has not
ceased to be a Member pursuant to the terms of this Agreement.
"MEMBERS" means all such Persons.
"MEMBERSHIP INTEREST" means a Unit Holder's share of the Profits and
Losses of the Company and a Unit Holder's right to receive distributions of cash
or other assets of the Company in accordance with the terms of this Agreement.
"MEMBERSHIP REGISTER" shall have the meaning specified in Section 3.1 of
this Agreement.
"1996 LOSS PAYABLE" shall mean the unpaid portion of the Cooperative's
operating loss for fiscal year ended September 30, 1996 that was assessed
against a unit of equity participation by the Board of Directors of The
Cooperative and which pursuant to the Transaction Agreement continues as a lien
in favor of the Company against a Class A Unit into which such unit of equity
participation has been converted.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"NONRECOURSE LIABILITY" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"PERSON" means any individual, partnership, limited liability company,
association, corporation, cooperative, estate, trust or other entity, and also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
"PROFITS" shall have the meaning associated with that term in the
definition of Profits and Losses hereunder.
"PRODUCER" means and includes Persons (including individuals, firms,
partnerships, corporations, or associations) who are (1) currently or formerly
engaged in the production of one or more agricultural products, including
tenants of land used for the production of any such product, and lessors of such
land who receive as rent part of the produce of such land, and associations of
such producers, (2) members of the immediate family (i.e., a spouse, parent,
brother or sister, child or grandchild) of any Member, and (3) current or former
employees or agents of the Company.
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"PROFITS AND LOSSES" shall mean, for each allocation period, an amount
equal to the Company's taxable income or loss for such allocation period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):
(a) Any income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses pursuant to this
definition of "Profits" and "Losses" shall be added to such taxable income or
loss;
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition of "Profits" and
"Losses" shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraphs (b) or (c) of the definition of Gross Asset Value, the
amount of such adjustment shall be treated as an item of gain (if the adjustment
increases the Gross Asset Value of the asset) or an item of loss (if the
adjustment decreases the Gross Asset Value of the asset) from the disposition of
such asset and shall be taken into account for purposes of computing Profits or
Losses;
(d) Gain or loss resulting from any disposition of Property with respect
to which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the Property disposed of,
notwithstanding that the adjusted tax basis of such Property differs from its
Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Allocation Year, computed in
accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Code Section 734(b) is required, pursuant to Regulations
Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a Member's
interest in the Company, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses; and
(g) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Section 5.2 or Section 5.3 hereof
shall not be taken into account in computing Profits or Losses.
The amounts of the items of Company income, gain, loss or deduction
available to be specially allocated pursuant to Section 5.2 or Section 5.3
hereof shall be determined by applying rules analogous to those set forth in
subparagraphs (a) through (f) above.
"PROPERTY" means all real and personal property, including cash, acquired
and operated by the Company and any improvements thereto, and shall include both
tangible and intangible property.
"REGULATIONS" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code as such Regulations may be amended from
time to time (including corresponding provisions of succeeding Regulations).
"SPECIAL FINANCIAL INTERESTS" means the nonvoting financial interest in
the Company issued to the former holders of nonqualified written notices of
allocation issued by the Cooperative, the stated amounts of which shall
correspond to the stated amounts of such nonqualified written notices of
allocation.
"REGULATORY ALLOCATIONS" has the meaning set forth in Section 5.3
hereof.
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"TAX WITHHOLDING OBLIGATION" means an amount equal to the portion of any
amount allocated, credited, or otherwise distributable to a Unit Holder which
the Company is required to withhold for income tax purposes pursuant to any
applicable federal, state, local, or other governmental agency law or
regulation.
"TRANSACTION AGREEMENT" means the Amended and Restated Transaction
Agreement dated as of May 17, 1999 among the Cooperative, MCP Colorado and the
Company.
"TRANSFER" means, as a noun, any voluntary or involuntary transfer, sale
or other disposition and, as a verb, to voluntarily or involuntarily transfer,
sell, or otherwise dispose of, but shall not include a pledge, grant of a
security interest or other encumbrance.
"UNIT" means the unit of measurement used herein to quantify the
Membership Interest of a Unit Holder, consisting of Class A Units or Class B
Units, as reflected on the Membership Register. A Unit Holder's Membership
Interest as quantified by the number of Units owned by such Person may be
evidenced by a certificate of Units issued by the Company, which certificate
shall contain appropriate restrictive legends.
"UNIT HOLDER NONRECOURSE DEBT" has the same meaning as the term "partner
nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.
"UNIT HOLDER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect
to each Unit Holder Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Unit Holder Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"UNIT HOLDER NONRECOURSE DEDUCTIONS" has the same meaning as the term
"partner nonrecourse deductions" in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of
the Regulations.
"UNIT HOLDERS" means all Persons who hold Units. "Unit Holder" means any
one of the Unit Holders.
ARTICLE II
THE LIMITED LIABILITY COMPANY
2.1 Formation; Effective Date of Agreement. The Company is formed as a
Colorado limited liability company pursuant to and in accordance with the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. This Agreement is made effective as of the formation of the Company.
2.2 Name. The name of the Company shall be Minnesota Corn Processors, LLC.
All business of the Company shall be conducted in such name or in trade names
approved by the Board of Directors. The name of the Company may be changed from
time to time in accordance with the Act.
2.3 Business Purpose. The purpose of the Company is to conduct any business
activity in which a limited liability company organized under the Act may be
lawfully engaged in and to conduct any and all activities related or incidental
thereto, including the acquisition, improvement, leasing, operation, mortgage
and disposition of personal property and real property.
2.4 Powers. The Company may carry on any lawful business, purpose or
activity permitted by the Act and shall possess and may exercise all the powers
and privileges granted by the Act or by any other law or by this Agreement,
together with any powers incidental, necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.
2.5 Duration. The duration of the Company shall be perpetual, unless
dissolved earlier as provided herein.
2.6 Registered Office and Registered Agent. The location of the registered
office and the name of the registered agent of the Company in the State of
Colorado shall be as stated in the Articles of
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Organization. The registered office and registered agent of the Company in the
State of Colorado may be changed from time to time by the Board of Directors.
2.7 Principal Office. The principal office of the Company shall be located
at 901 North Highway 59, Marshall, MN 56258, or at such other place(s) within or
without the State of Minnesota as the Board of Directors may determine from time
to time.
2.8 Title to Property; No Agency Power. All Property originally transferred
to or subsequently acquired by or on account of the Company shall be owned by
the Company as an entity. No Member, Director or Unit Holder shall have any
ownership interest in such Property in such Person's individual name or right.
The Company shall hold all of its Property in the name of the Company and not in
the name of any Member, Director or Unit Holder. Subject to the approval by the
Board or the Members when required by this Agreement, title to Property may be
transferred by an instrument of transfer executed by the appropriate officer of
the Company as designated by the Board. No Member, Director or Unit Holder has
the authority, in said Person's capacity as Member, Director or Unit Holder, to
transfer title to Property or bind the Company or the other Members or any one
of them. Only duly authorized officers, directors and agents of the Company
shall have the authority to bind the Company.
2.9 Limited Liability of Members and Directors. Except as otherwise
expressly provided by the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company. No Member, Director or other
agent of the Company, solely by reason of such status, shall be personally
liable, under a judgment, decree or order of a court, or in any other manner,
for the acts, debts, obligations or liabilities of the Company, whether arising
in contract, tort or otherwise.
ARTICLE III
MEMBERS
3.1 Membership. There shall be no Members admitted to the Company except as
provided in this Agreement. The name, address, Capital Contribution, and class
of membership of each Member shall be set forth in a membership register
maintained by the Company at its principal office or by a duly appointed agent
of the Company (the "Membership Register"), which shall be modified from time to
time as additional Units are issued and as Units are transferred pursuant to
Article X. Prior to the merger of MCP Colorado into the Company pursuant to the
Transaction Agreement, the Cooperative (or its successors) shall be the only
Member of the Company. From and after the effective time of the merger of MCP
Colorado into the Company pursuant to the Transaction Agreement, the membership
interest of the Cooperative (or its successor) in the Company shall be canceled,
and (A) the Class A Members of this Company shall include, (i) initially, the
members of the Cooperative who receive Class A Units from the Cooperative
pursuant to the Transaction Agreement; and (ii) individuals, corporations or
other entities who acquire a minimum of 1,000 Class A Units in a permitted
transfer or in an offering by the Company of additional Class A Units. The Class
B Members of this Company shall include, (i) initially, Archer Daniels Midland,
as the transferee of Class B Units from the Cooperative pursuant to the
Transaction Agreement, and (ii) individuals, corporations or other entities who
acquire a minimum of 1,000 Class B Units in a permitted transfer.
The holders of Special Financial Interests shall not be Members of the
Company and shall have no rights other than the rights to distributions
specified in Sections 5.7(a) and 11.3(d) and the corresponding right to income
allocations provided in Section 5.2(i).
3.2 Ownership of Membership Interests.
(a) Minimum Ownership of Units Required. Each Class A Member shall own
not less than 1,000 Class A Units. Each Class B Member shall own not less than
1,000 Class B Units.
(b) Limitation on Ownership of Membership Interests.
(i) Number of Units. No Class A Member shall own more than two
percent (2%) of the total issued and outstanding Class A Units of the Company.
For purposes of this Section 3.2(b), the
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number of Units owned by any Member shall include Units owned by the member's
spouse, children, parents, or brothers and sisters, and by any Affiliate of the
Member or the Member's spouse, children, parents or brothers and sisters.
(ii) Nonproducers. Only Producers shall be eligible to own Class A
Units of the Company.
(iii) Competitors. Any Competitor of the Company shall not be eligible
to own Class A Units of the Company.
(c) Company Right to Purchase Units. If (A) any Member holds at any time
less than the minimum number of Units required by Section 3.2(a) or more than
the maximum number of Units permitted under Section 3.2(b), or if any Class A
Units are held by any Person who is not a Producer, and such violation of this
Agreement is not cured within one (1) year after notice thereof by the Company,
or (B) any Member is or becomes a Competitor, that Member's voting rights, if
any, shall be suspended as provided in Section 3.14 below and, in addition, the
Company shall have the right (but not the obligation) to purchase, and the
Member shall be required to sell (i) in the case of a violation of Section
3.2(a), 3.2(b)(ii) or 3.2(b)(iii), all of the Units owned by such Member, and
(ii) in the case of a violation of Section 3.2(b)(i), that Member's Units in
excess of the two percent (2%) maximum provided for in Section 3.2(b)(i). The
purchase price for Units purchased by the Company under this Section shall be an
amount equal to the Established Value of the Units determined at the time the
Company notifies the Member of the violation and shall be payable, at the
Company's option, in one lump sum or equal installments over a period of five
(5) years, with interest at a rate equal to the interest rate for 91 day U.S.
Treasury bills, adjusted quarterly.
3.3 Classes of Membership. This Company has two (2) classes of Membership.
(a) Class A Membership. Class A Membership (as quantified by the Class A
Units) shall be the voting Membership Interests of the Company.
(b) Class B Membership. Class B Membership (as quantified by the Class B
Units) shall be non-voting Membership Interests.
3.4 Voting.
(a) Units Required. Each Class A Member owning a minimum of 5,000 Class A
Units shall be entitled to one (1) vote with respect to any matter to be
determined by the Members under this Agreement or the Act, regardless of the
number of Units owned by such Class A Member. Any Class A Member who is in
default of any of its obligations under this Agreement shall not be entitled to
vote on any matter during the period of such default. When determining the
aggregate number of Units held by a Member for purposes of this Agreement, the
Units held by any Member who is in default of any obligations under this
Agreement shall be excluded. Each Member other than individual Members shall
designate in writing to the Chairman of the Board of the Company the name of one
(1) individual authorized to act as such Member's representative with respect to
all matters covered by this Agreement, including the right to exercise such
Member's voting rights hereunder. The Company and the other Members shall be
entitled to rely on the authority of the individual so designated. Each Member
may change such Member's representative by written notice to the Chairman of the
Board at such Member's sole discretion.
A member absent from any meeting may submit an absentee vote on any
motion, resolution, or amendment to be acted upon at such meeting. An absentee
vote must be cast on a ballot containing the exact text of the proposed motion,
resolution, or amendment by delivering such ballot to the Secretary at the
principal office of the Company by hand, by United States mail (with postage
prepaid thereon), by facsimile, by overnight courier or by any other reasonable
means, to arrive not later than five (5) days prior to the day of the meeting at
which the vote is taken.
(b) Non-Voting Members. Any Class A Member owning at least 1,000 Class A
Units but less than 5,000 Class A Units as of the date upon which notice of
action to be taken by the Members is mailed to the Members shall be considered a
non-voting member of the Company and shall not be entitled to vote on any
matters reserved to the Members. The Units held by such non-voting members
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shall be excluded in determining the aggregate number of Units held by Members.
Notwithstanding that such member is not entitled to vote, the Units in the hands
of the non-voting member shall continue to be subject to all the applicable
provisions of this Agreement, including but not limited to the transfer
restrictions set forth in Article X hereof. In the event a non-voting member
purchases the minimum number of Class A Units required to receive voting rights
under Section 3.4(a) hereof, such member shall be entitled to the voting rights
set forth in Section 3.4(a) without any further action by the Members or the
Board.
3.5 Place of Meetings. Each meeting of the Members shall be held at such
place as the Board of Directors may from time to time designate in writing to
the Members.
3.6 Regular Meetings. Regular meetings of the Members shall be held not
less than once per year, at such time and place as determined by the Board of
Directors; provided however, that if a regular meeting has not been held within
six (6) months after the end of each fiscal year of the Company any Member may
demand a meeting of the members by written demand to the Board of Directors.
3.7 Special Meetings. Special meetings of the Members may be called by the
Board of Directors or twenty percent (20%) of the Class A Members. The business
transacted at a special meeting of the Members is limited to the purposes stated
in the notice of the meeting.
3.8 Notice of Meetings. Written notice of each meeting of the Members,
stating the date, time and place, and in the case of a special meeting, the
purpose of the meeting, shall be given in writing at least fourteen (14) days
and not more than sixty (60) days prior to the meeting to every Member entitled
to vote at such meeting.
3.9 Waiver of Notice. A Member may waive the notice of meeting required
under this Article. A written notice of waiver signed by the Member entitled to
notice is effective whether given before, during or after the meeting.
Attendance by a Member at a meeting is waiver of notice of that meeting, unless
the Member objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened and thereafter
does not participate in the meeting.
3.10 Quorum. The presence (in person or by proxy or mail ballot) of at
least ten percent (10%) of the Class A Members is required for the transaction
of business at a meeting of the Members; provided, however, that a quorum shall
never be more than fifty (50) Class A Members.
3.11 Proxies; Mail Ballots. Voting by proxy or by mail ballot shall be
permitted on any matter if authorized by the Board of Directors.
3.12 Action Without Meeting. Any action required or permitted to be taken
at a meeting of the Members of the Company may be taken without a meeting by
written action signed by all of the Class A Members. The written action is
effective when signed by all the Class A Members, unless a different effective
time is provided in the written action.
3.13 Telephonic Meetings. Any regular or special meeting of the Members may
be taken by telephonic or electronic conference or any other means of
communication through which the Members can simultaneously hear each other
during the conference, if the same notice is given of the conference to each
Member, and if the Members participating in the conference would be sufficient
to constitute a quorum at a meeting. Participation in a telephonic, electronic,
or other conference of such means constitutes presence at the meeting in person
or by proxy if all the other requirements are met.
3.14 Termination of Membership. A Member's Membership Interest terminates
and such Person ceases to be a Member on and following the occurrence of any of
the following events (each an "Event of Disassociation"):
(a) Complete Transfer. The Member transfers all of the Member's Units,
regardless of whether the transferee(s) is admitted as a substitute Member
pursuant to Section 10.5 of this Agreement;
(b) Dissolution of Member. Any event terminating the existence of any
non-individual Member;
(c) Death of Individual Member. The death of any individual Member;
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(d) Withdrawal. The Member resigns by written notice to the Chairman of
the Board; or
(e) Disqualification. The Member holds less than the minimum number of
Units required by Section 3.2(a) or more than the maximum number of Units
permitted by Section 3.2(b) and fails to cure the applicable violation within
one (1) year after notice thereof by the Company.
A Person who has ceased to be a Member shall be considered a non-member
Unit Holder only, and shall have no right to any information or accounting of
the affairs of the Company, shall not be entitled to inspect the books or
records of the Company, shall not be entitled to vote on any matters reserved to
the Members, and shall not have any of the other rights of a Member under the
Act or this Agreement. The Units held by such Unit Holder shall be excluded in
determining the aggregate number of Units held by Members. Notwithstanding that
such Unit Holder is no longer a Member, the Units in the hands of such Unit
Holder shall continue to be subject to all the applicable provisions of this
Agreement, including but not limited to the transfer restrictions set forth in
Article X hereof.
In the event such Unit Holder ceased to be a Member pursuant to Section
3.14(f), such Unit Holder shall be reinstated as a Member without any further
action by the Members or the Board upon a showing to the Board that such Unit
Holder meets the minimum and maximum requirements set forth in Section 3.2.
3.15 Continuation of the Company. The Company shall not be dissolved upon
the occurrence of an Event of Disassociation or any other event which is deemed
to terminate the continued membership of a Member. The Company's affairs shall
not be required to be wound up. The Company shall continue without dissolution.
3.16 No Obligation to Purchase Units. No Member whose membership in the
Company terminates shall have any right to demand or receive a return of such
terminated Member's Capital Contributions. Neither the remaining Members nor the
Company shall have any obligation to purchase or redeem the Units of any such
terminated Member.
3.17 Advance Consent to Certain Substitute Members.
(a) Substitute Member -- Dissolution. In the event of dissolution of a
non-individual Member, any person who continues the business of a dissolved
Member, or who holds some or all of the Membership Interest of the dissolved
Member, shall be admitted as a substitute Member; provided, however, that such
Person shall not be admitted as a substitute Member unless and until each of the
conditions set forth in Section 10.3 of this Agreement have been satisfied.
(b) Substitute Member -- Death. In the event of the death of an
individual Member, each of the following Persons who holds some or all of the
Membership interest of the deceased Member shall be admitted as a substitute
Member; provided, however, that such Person shall not be admitted as a
substitute Member unless and until each of the conditions set forth in Section
10.3 of this Agreement are satisfied at the time such Person becomes the holder
of all or some of such Membership Interest:
(i) the estate of the deceased Member;
(ii) the surviving joint tenant of the Membership Interest; and
(iii) any distributee of the estate of the deceased Member, including
any trustee(s) of a trust which holds some or all of the Membership Interest of
the deceased Member.
The rights of the estate of a deceased Member shall be exercised by the personal
representative(s) appointed by the court as the personal representative of the
estate of a deceased Member.
(c) Substitute Member. The purpose of this Section 3.17 is that the
voting rights of any Member whose membership is terminated by the dissolution or
death of such Member shall follow the Membership Interest of such Member
notwithstanding such termination, through the automatic substitution of the
holder of all or some of such Membership Interest as a substitute Member. Any
Person who is admitted as a substitute Member under this Section 3.17 shall be
entitled to all of the rights and bound by the obligations of, the Member for
which it is substituted.
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3.18 Compliance with Articles of Organization and Operating Agreement. Each
Member of the Company is subject to the terms of the Company's Articles of
Organization, this Agreement, and such other reasonable policies and procedures
as the Board from time to time adopts to implement the terms of this Agreement.
3.19 No Dissenters' Rights. No Member or Unit Holder shall have any
dissenters' rights or appraisal rights or other similar rights as a result of
any merger or consolidation or other action involving the Company approved by
the Class A Members as provided in Section 6.16 hereof.
ARTICLE IV
CAPITAL
4.1 Units. The Company shall be authorized to issue 500,000,000 Units. Of
the total number of Units authorized in this Section 4.1, 350,000,000 Units are
hereby designated as Class A Units, and 150,000,000 Units are hereby designated
as Class B Units.
4.2 Capital Accounts. A Capital Account maintained for such Unit Holder in
accordance with the following provisions:
(a) To each Unit Holder's Capital Account there shall be credited (i)
such Unit Holder's Capital Contributions (determined in the case of the initial
Unit Holders as provided in Section 4.3(a)), (ii) such Unit Holder's
distributive share of Profits and any items in the nature of income or gain
which are specially allocated pursuant to Section 5.2 or Section 5.3 hereof, and
(iii) the amount of any Company liabilities assumed by such Unit Holder or which
are secured by any Property distributed to such Unit Holder.
(b) To each Unit Holder's Capital Account there shall be debited (i) the
amount of money and the Gross Asset Value of any Property distributed to such
Unit Holder pursuant to any provision of this Agreement, (ii) such Unit Holder's
distributive share of Losses and any items in the nature of expenses or losses
which are specially allocated pursuant to Section 5.2 or Section 5.3 hereof, and
(iii) the amount of any liabilities of such Unit Holder assumed by the Company
or which are secured by any Property contributed by such Unit Holder to the
Company;
(c) In determining the amount of any liability for purposes of
subparagraphs (a) and (b) above there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
The provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the Board of Directors shall determine that it is prudent, it may modify
the manner in which the Capital Accounts are maintained, provided that it is not
likely to have a material effect on the amounts distributed to any Person
pursuant to Article XI hereof upon the dissolution of the Company. The Board of
Directors also shall (i) make any adjustments that are necessary or appropriate
to maintain equality between the Capital Accounts of the Unit Holders and the
amount of capital reflected on the Company's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii)
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).
4.3 Initial Issuance of Units; Offering of Additional Units.
(a) MCP Colorado will fund the Company on the Closing Date specified in
the Transaction Agreement by contributing all of its assets to the Company in
consideration of the Company's assumption of all of MCP Colorado's liabilities
and other obligations. On the effective date of the merger of MCP Colorado into
the Company, each member of MCP Colorado shall be issued the number and class of
Units that corresponds to the number and class of units such member held in MCP
Colorado. As the result of the foregoing transactions, the Unit Holder shall be
deemed to have made a
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Capital Contribution in the amount the product of (i) the number of Units
distributed to such Unit Holder, times (ii) the Initial Agreed Value Per Unit.
(b) From time to time, the Board of Directors may authorize the issuance
and sale by the Company of additional Units (within the limits set forth in
Section 4.1). In the event the Company offers such additional Units, the Company
shall offer the existing Class A and Class B Members the opportunity to purchase
additional Units so as to permit them to maintain at a constant level their then
existing percentage of the total Class A or Class B Units. Class A and Class B
Members may purchase all or any portion of the additional Units offered pursuant
to this Section 4.3(b).
4.4 No Capital Calls. The Company may not require Members to make
additional contributions of capital to the Company for any reason, except as
provided in Section 4.5.
4.5 Tax Withholding Obligations. The Board of Directors may, in its
discretion, by resolution require that any Member to whom a Tax Withholding
Obligation is attributable make an additional contribution to the capital of the
Company in an amount equal to such Tax Withholding Obligation less the amount of
any loans for such purpose made to the Company pursuant to Section 4.9.
4.6 Transferee Succeeds to Transferor's Capital Account. Any transfers
permitted by Article X of this Agreement by a Member to a transferee of all or a
part of such Member's Membership Interest in the Company shall vest in such
transferee (and such transferee shall become a successor in interest) the
interest of the transferor Member's Capital Account to the extent of the
Membership Interest transferred.
4.7 No Right to Return of Contributions. The Members (including terminated
members) shall have no right to the withdrawal or the return of their respective
Capital Contributions except to the extent set forth in Article XI upon
liquidation of the Company.
4.8 No Interest on Capital Contributions. Other than Distributions
authorized pursuant to Article V or Article XI, no Member shall be entitled to
receive any interest or other property on account of the Member's Capital
Contributions to the Company.
4.9 Loans to the Company. A Member may lend money to the Company if
authorized by the Board of Directors. Any such loan shall not be treated as a
Capital Contribution for any purpose and shall not entitle the Member to any
increase in such Member's Membership Interest. The Company shall be obligated to
such Member for the amount of any such loan, with interest thereon at such rate
as may have been agreed upon by the Board of Directors.
4.10 No Repayment Liability. No Member, Director or other Unit Holder shall
be personally liable for the repayment of any Capital Contributions of any other
Unit Holder.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocation of Profits and Losses. After giving effect to the special
allocations set forth in Section 5.2 or Section 5.3, Profits and Losses for any
accounting period shall be allocated to the Unit Holders and shall be divided
among them in proportion to the number of Units held by each as set forth on the
Membership Register.
5.2 Special Allocations. The following special allocations shall be made
in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article V, if there is a net decrease in Company Minimum Gain during any
allocation period, each Unit Holder shall be specially allocated items of
Company income and gain for such allocation period (and, if necessary,
subsequent allocation periods) in an amount equal to such Unit Holder's share of
the net decrease in Company Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Unit
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Holder pursuant thereto. The items to be so allocated shall be determined in
accordance with sections 1.704-2(f) (6) and 1.704-2(j) (2) of the Regulations.
This Section 3.3(a) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(f) of the Regulations and shall be interpreted
consistently therewith.
(b) Unit Holder Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i) (4) of the Regulations, notwithstanding any other provision
of this Article V, if there is a net decrease in Unit Holder Nonrecourse Debt
Minimum Gain attributable to a Unit Holder Nonrecourse Debt during any
allocation period, each Unit Holder who has a share of the Unit Holder
Nonrecourse Debt Minimum Gain attributable to such Unit Holder Nonrecourse Debt,
determined in accordance with Section 1.704-2(i) (5) of the Regulations, shall
be specially allocated items of Company income and gain for such allocation
period (and, if necessary, subsequent allocation periods) in an amount equal to
such Unit Holder's share of the net decrease in Unit Holder Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i) (4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Unit Holder pursuant thereto. The items
to be so allocated shall be determined in accordance with Sections 1.704-2(i)
(4) and 1.704-2(j) (2) of the Regulations. This Section 5.2(b) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(i) (4) of
the Regulations and shall be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Unit Holder unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Company income and gain shall be specially allocated
to such Unit Holder in an amount and manner sufficient to eliminate, to the
extent required by the Regulations, the Adjusted Capital Account Deficit of the
Unit Holder as quickly as possible, provided that an allocation pursuant to this
Section 5.2(c) shall be made only if and to the extent that the Unit Holder
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article V have been tentatively made as if this Section
5.2(c) were not in the Agreement.
(d) Gross Income Allocation. In the event any Unit Holder has a deficit
Capital Account at the end of any allocation period which is in excess of the
sum of (i) the amount such Unit Holder is obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
each such Unit Holder shall be specially allocated items of Company income and
gain in the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 5.2(d) shall be made only if and to the
extent that such Unit Holder would have a deficit Capital Account in excess of
such sum after all other allocations provided for in this Article V have been
made as if Section 5.2(c) and this Section 5.2(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any allocation
period shall be specially allocated to the Unit Holders in proportion to their
respective Units held.
(f) Unit Holder Nonrecourse Deductions. Any Unit Holder Nonrecourse
Deductions for any allocation period shall be specially allocated to the Unit
Holder who bears the economic risk of loss with respect to the Unit Holder
Nonrecourse Debt to which such Unit Holder Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i) (1).
(g) Section 754 Adjustments. To the extent an adjustment to the adjusted
tax basis of any Company asset, pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Unit Holder in complete
liquidation of such Unit Holder's interest in the Company, the amount of such
adjustment to Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Unit Holders in accordance with their interests in the Company in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Unit Holder to
whom such distributio
