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HomeMy WebLinkAboutPROOF OF OWNERSHIP - 20-00505 - PLARS Op Agr - for Quicksilver Subdivision Rezone to MDR2OPERATING AGREEMENT of PLARS, LLC i THE LIMITED LIABILITY COMPANY MEMBERSHIP UNITS DESCRIBED AND REPRESENTED BY THIS. OPERATING AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 661933 ACT") OR ANY APPLICABLE STATE SECURITIES LAWS ("STATE ACTS") AND ARE RESTRICTED SECURITIES AS SUCH TERM IS DEFINED IN RULE 144 UNDER THE 1933 .QCT. THE UNITS MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE 1933 ACT AND APPLICABLE STATE ACTS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE ACTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. This Operating Agreement of PLARS, LLC, a limited liability company organized pursuant to the Act, is entered into and shall be effective as of the Effective Date, by Morgan Peterson and Lacie Peterson, who are all of the Members of the Company, and by Morgan Peterson, who is the sole Manager of the !Company. ARTICLE I FORMATION 1.1. Organization. The Members hereby organize the Company as an Idaho limited liability company pursuant to the provisions of the Act. 1.2. Name. The name of the Company is PLARS, LLC, and all business of the Company shall be conducted under that name. 1.3. Effective Date. This Agreement shall be effective upon the filing of the Certificate with the Idaho Secretary of State. 1.4. Term. The existence of the Company shall be perpetual, and the Company -- shall only be dissolved and its affairs wound up in accordance with the Act or this Agreement. 1.5. Registered Agent and Office. The registered agent for the service of process and the registered office shall be that person and location reflected in the Certificate. The registered office or agent may be changed by indicating the change on the annual report. prescribed by the Act or by delivering to the Secretary of State the Statement of Change of Registered Agent meeting the requirements of the Act. 1.6. Nature of Business. The Company is created to own and provide management and related services to other businesses related to owning and leasing real property. The Company shall have the authority to do all things necessary or convenient to accomplish its purpose and operate its business as described in this Agreement. 1.7. Purpose of Formation. The Company is formed by persons who know and trust one another, and who are willing to surrender certain rights as provided in this Agreement. Capital is material to the Company's business prospects, its investment objectives, and its income tax status. An unauthorized Transfer of a Member's Units could create a substantial hardship to the Company, jeopardize its capital base, or adversely affect its tax structure. In order to protect and promote those expectations and agreements, this �Agreement imposes certain restrictions on the ownership of Units and the Transfer of those 1 -- OPERATING AGREEMENT OF PLARS, LLC Units. Those restrictions are not intended as a penalty but as a method to protect and preserve existing relationships based upon trust and to protect the Company's capital and its financial ability to continue to operate. ARTICLE II DEFINITIONS For purposes of this Agreement, unless the context clearly indicates otherwise, the following terms shall have the following meanings: Act. The Idaho Uniform Limited Liability Company Act and all amendments to the Act. Agreement. This Operating Agreement including all amendments adopted in accordance herewith. Capital Account. The account maintained in accordance with Article III. Capital Contribution. Any contribution of Property or services or the obligation to contribute Property or services made by or on behalf of a Member. Certificate. The Certificate of Organization of the Company as properly adopted and amended from time to time by the Members and filed with the Idaho Secretary of State. Code. The Internal Revenue Code of 1986, as amended from time to time. Company. PLARS, LLC, a limited liability company formed under the Act, and any successor limited liability company. Company Property. Any Property owned by the Company. Consent of the Managers. Consent of the Managers requires that a majority of the Managers consent to the particular matter. In the event that there is only one (1) Manager, Consent of the Managers shall mean that such Manager consent to the particular matter. Consent of the Members. Consent of the Members requires that Members holding a majority of the Units entitled to vote consent to or approve a particular matter. Distribution (Distribute). A transfer of Property to a Member on account of Units as described in this Agreement. 2 - � OPERATING AGREEMENT OF PLARS, LLC Initial Capital Contribution. The Capital Contribution agreed to be made by the Initial Members as described in Article III. Initial Members. Those persons identified on Exhibit "A" attached hereto and made apart of this Agreement by this reference who have executed this Agreement. Losses. 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 adopted by the Company and as reported separately or in the aggregate, as appropriate, on the tax return of the Company filed for federal income tax purposes. Managers. The Managers shall mean Morgan Peterson and any other persons that succeed him in that capacity. Each Manager must be a Member of the Company. References to the Manager as him, her, it, itself, or other like references shall also include the masculine or feminine reference, as the case may be. In the event that there is only one (1) Manager, all plural references to Managers shall include the singular. Member. A person who holds Units and who also has the right to exercise all rights attributable to those Units by reason of being (i) an Initial Member, or (ii) admitted as a Member pursuant to Article X. Person. Person refers to a Member or a Transferee. Profits. 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 adopted by the Company and as reported separately or in the aggregate, as appropriate, on the tax return of the Company filed for federal income tax purposes. Property. Any property, real or personal, tangible or intangible, including money and any legal or equitable interest in such property, but excluding services and promises to perform services in the future. Regulations. Except where the context indicates otherwise, the permanent, temporary, and proposed regulations of Department of the Treasury under the Code as such regulations may be lawfully changed from time to time. Sharing Ratio. A fraction (expressed as a percentage), the numerator of which is the total of such Person's Units and the denominator is the total of all outstanding Units. Taxable Year. The taxable year of the Company as determined pursuant to §706 of the Code. 3 — OPERATING AGREEMENT OF PLARS, LLC Transfer. Transfer shall mean any sale, lease, exchange, gift, or any other disposition whatsoever of a Unit or any interest in a Unit, including any distribution by a personal representative, administrator, or trustee, or any transfer by execution, attachment, operation of bankruptcy law, or enforcement of a pledge or other security interest. Transferee. Transferee means a person who does not have voting or any other rights under this Agreement, except for Economic Rights as defined in Exhibit "B". A Transferee can only become a Member if admitted to the Company as a Member as provided in Article X. A Transferee who becomes a Member is thereafter referred to as a Member for all purposes of this Agreement. Units. Ownership rights of a Member of the Company as further set forth in Article ,A,RTICLE III CONTRIBUTIONS, UNITS, AND CAPITAL ACCOUNTS 3.1. Units. Ownership rights in the Company are reflected in Units. The name, address, and number of Units held by each Member is as set forth in the attached Exhibit "A". Each Unit has the following described rights: 3.1.1. Each Unit held by a Member has equal rights with every other Unit held by Members and in matters subject to a vote of Members has one vote. 3.1.2. Each Unit has equal rights with every other Unit with respect to the sharing of Profits and Losses and with respect to Distributions. 3.2. Initial Capital Contributions. The description and value of the Initial Capital Contributions of each Initial Member are as set forth in the attached Exhibit "A". 3.3. Transfer of Units. Units are freely transferable subject to Article X. 3.4. Subsequent Capital Contributions. No Member is required to make additional Capital Contributions. 3.5. Capital Accounts. The Company shall establish and maintain a Capital Account for each Person. Each Capital Account shall be increased by (i) the amount of any money contributed by the Person to the capital of the Company (including liabilities assumed by the Person which are treated as money contributions), (ii) the fair market value of any Property contributed, as determined by the Company and the contributing Person at arm's length at the time of contribution (net of liabilities assumed by the Company or subject to 4 - OPERATING AGREEMENT OF PLARS, LLC which the Company takes such Property, within the meaning of § 752 of the Code), and (iii) the Person's share of Profits and of any separately allocated items of income or gain v except adjustments required by the Code (including any gain and income from unrealized income with respect to accounts receivable allocated to the Person to reflect the difference between the book value and tax basis of assets contributed by the Person). Each Person's Capital Account shall be decreased by (i) the amount of any money Distributed to the Person by the Company (including liabilities assumed by the Company which are treated as money distributions), (ii) the fair market value of any Property Distributed to the Person, as determined by the Company and the receiving Person at arm's length. at the time of distribution (net of liabilities of the Company assumed by the Person or subject to which the Person takes such Property within the meaning of § 752 of the Code), and (iii) the Person's share of Losses and of any separately allocated items of deduction or loss (including any loss or deduction allocated to the Person to reflect the difference between the book value and tax basis of assets contributed by the Person). 3.6. Distribution of Property. If the Company at any time Distributes any Company Property in-kind to any Person, the Capital Account of each Person shall be adjusted to account for that Person's allocable share of the Profits or Losses that would have been realized by the Company had it sold the Company Property that was Distributed at its fair market value immediately prior to its Distribution. 3.7. Basis Adjustment. The §704(b) basis of Company Property shall be adjusted to equal such Company Property's, respective fair market value, as determined by the Consent of the Members, at the following times: (i) the acquisition of an additional interest in the Company by any new or existing Person in exchange for more than a de minimis Capital Contribution, (ii) the distribution by the Company to a Person of more than a de minimis amount of Property as consideration for an interest in the Company, and (iii) the liquidation of the Company, provided that the adjustments are necessary or appropriate to reflect the relative economic interests of the Persons. Such adjustments are to be treated as items of Profits or Losses and allocated in accordance with Section 7.1. ARTICLE IV PRINCIPAL OFFICE; ACCOUNTING AND RECORDS 4.1. Principal Office. The principal office of the Company shall be the location reflected in the Certificate or as otherwise designated by Consent of the Managers. 4.2. Records to be Maintained. The Company books shall be maintained at the principal office of the Company or such other place as the Managers determine by the Consent of the Managers. Each Member shall at all times have reasonable access to and may 5 - OPERATING AGREEMENT OF PLARS, LLC inspect and copy any of them, subject to Section 4.4. The Company shall maintain books and records which properly reflect all financial transactions made by the Company. 4.3. Reports to Members. All Members shall be entitled to receive financial reports on the Company at least annually. All Members shall be provided with those information returns required by law. 4.4. Member's Access To Records. During regular business hours and at a reasonable location specified by the Company, a Member may obtain from the Company and inspect and copy (at the Member's expense) full information regarding the activities, financial condition, and other circumstances of the Company as is just and reasonable if: (i) the Member seeks the information for a purpose material to the Member's interest as a Member; (ii) the Member makes a demand in a record received by the Company, describing with reasonable particularity the information sought and the purpose for seeking the information; and (iii) the information sought is directly connected to the Member's purpose. The Company may charge the Member the reasonable costs of copying, including labor and material. ARTICLE V RIGHTS AND DUTIES OF MANAGERS AND MEMBERS 5.1. Management; Powers and Authority of Managers. The Members hereby vest the management of the Company with the Managers, who shall have sole power and authority to conduct the affairs and transact the business of the Company except to the extent management powers are expressly reserved to the Members by this Agreement. Subject to the foregoing and Section 5.3, with Consent of the Managers, the Managers shall have the power and authority on behalf of the Company: 5.1.1. To acquire Property from any person as the Managers may determine. The fact that the Manager or a Member is directly or indirectly affiliated or connected with any such person shall not prohibit the Manager from dealing with that person; 5.1.2. To borrow money for the Company from banks, other lending institutions, the Manager, a Member, or affiliates of the Manager or a Member on such terms as the Manager deems appropriate. No debt shall be contracted or liability incurred by or on behalf of the Company, except by the Manager or, to the event permitted under the Act, by agents or employees of the Company expressly authorized to contract such debt or incur such liability by Consent of the Managers; 5.1.3. To purchase liability and other insurance to protect the Company's property and business; 6 - OPERATING AGREEMENT OF PLARS, LLC 5.1.4. To invest any Company funds temporarily (by way of example but not limitation) in time deposits, short-term governmental obligations, commercial paper, or y other investments; 5.1.5. To sell or otherwise Transfer Company Properly in the ordinary course of the Company's business so long as such sale or Transfer is not in violation of or cause a default under any agreement to which the Company may be bound; 5.1.6. To execute on behalf of the Company all instruments and documents, including, without limitation, checks; drafts; notes and other negotiable instruments; documents providing for the acquisition, or Transfer of Company Property; assignments; bills of sale; leases; partnership agreements, operating agreements of other limited liability companies; and. any other instruments or documents necessary to the operation of the Company in the ordinary course of business of the Company; 5.1.7. To employ accountants, legal counsel, managing agents, or other experts to perform services for the Company and to compensate them from Company funds; 5.1.8. To enter into any and all other agreements on behalf of the Company, with any other person in the ordinary course of business of the Company as the Managers may approve; and 5.1.9. To do and perform all other acts as may be necessary or appropriate to the conduct of the Company's business in the ordinary course. 5.2. Chief Operating Officer; Authority of Chief Operating Officer. Upon Consent of the Managers, the Managers may designate one Manager to be the Chief Operating Officer of the Company. The Chief Operating Officer shall have authority to conduct all of the Company's transactions in the ordinary course of business. This includes the authority to conduct all activities designated in Sections 5.1.1. through 5.1.9. 5.3. Limitations on Manager's Authority. Notwithstanding any other provision of this Agreement, no Manager (including the Chief Operating Officer) shall cause or commit the Company to do any of the following without the Consent of the Members: 5.3.1. Sell or otherwise Transfer any Company Property, real or personal, other than in the ordinary course of business; 5.3.2. Mortgage, pledge, or grant a security interest in any Company Property; 5.3.3. Sell or otherwise Transfer all or substantially all of the Company Property as part of a single transaction, transactions, or plan; or 7 - OPERATING AGREEMENT OF PLA.RS, LLC 5.3.4. Construct any capital improvements, repairs, alterations, or changes involving an amount in excess of Ten Thousand Dollars ($10,000). 5.4. Limitations on Authority of Others. Unless authorized to do so by this Agreement or by Consent of the Managers, no attorney-in-fact, employee, or other agent of the Company shall have any power or authority to bind the Company in any way, to pledge its credit, or to render it liable pecuniarily for any purpose. No Member shall have any power or authority to bind the Company unless the Member has been authorized by the Consent of the Managers to act as an agent of the Company. 5.5. Indemnity of the Manager, Employees, and Other Agents. 5.5.1. The Company shall reimburse a Manager for any . payment made and indemnify such Manager for any debt, obligation, or other liability incurred by such Managerer C-- in the course of the Manager's activities on behalf of the Company, if, in making the payment or incurring the debt, obligation, or other liability, the Manager complied with the duties stated in §30-6-405 of the Act and Article VI of this Agreement. 5.5.2. The Company shall indemnify each Manager for and hold each of them harmless from any liability, whether civil or criminal, and any loss, damage, or expense, including reasonable attorneys' fees, incurred in connection with the ordinary and proper conduct of the Company's business and the preservation of its business and property, or by reason of the fact that such person is or was a Manager to the full extent permitted by Idaho law if the Manager to be indemnified (i) acted in good faith and in a manner such Manager believed to be consistent with the provisions of this Agreement; and (ii) with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. Notwithstanding the foregoing, each of the following events shall not of itself create a presumption that indemnification isnot available hereunder: (i) the termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, (ii) the instigation of any suit or proceeding by judgment, order, settlement, or conviction, or (iii) a plea of nolo contendere or its equivalent. The obligation of the Company to indemnify any Manager hereunder shall be satisfied out of Company assets only, and if the assets of the Company are insufficient to satisfy its obligation to indemnify any Manager, such Manager shall not be entitled to contribution from any Person. 5.6. Removal. A Manager may be removed at any time, with or without cause, by the Consent of the Members. The removal of a Manager who is also a Member shall not affect the Member's rights as a Member and shall not constitute a withdrawal of such Member. 8 - OPERATING AGREEMENT OF PLARS, LLC 5.7. Vacancies. Any vacancy occurring for any reason in the Managers of the Company shall be filled by the Consent of the Members. 5.8. Compensation. The compensation of the Managers shall be fixed from time to time by the Consent of the Members. No Manager shall be prevented from receiving such salary by reason of the fact that he is also a Member of the Company. 5.9. Liability of Members. No Member shall'be liable as such for the liabilities of the Company. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Members for liabilities of the Company. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not be construed as creating a deficit restoration obligation or otherwise personally obligating any Member to make a Capital Contribution in excess of the Initial Capital Contribution. 5.10. Representations- and Warranties. Each Member hereby represents and warrants to the Company and each other Member that: (i) the Member is acquiring its interest in the Company for the Member's own account as an investment and without an intent to distribute the interest; and (ii) the Member acknowledges that the Units have not been registered under the Securities Act of 1933 or any state securities laws, and may not be resold or transferred by the Member without appropriate registration or the availability of an exemption from such requirements. 5.11. Title to and Conveyance of company Property. Title to Company Property shall be held in the Company name. Conveyance of title to real property held in the name of the Company shall be effective only upon the execution of all documents relating thereto by the Managers, after obtaining the Consent of the Members. ARTICLE VI STANDARDS OF CONDUCT FOR MEMBERS AND MANAGERS. 6.1. Manager Duties; Liability for Certain Acts. The Members and Managers of the Company are experienced in business matters and have negotiated the terms of this Agreement. As such, they intend that any fiduciary duties existing among the Members, the Company, and the Managers exist only to the extent set forth in this Agreement. Each Manager owes to the Company the fiduciary duties of loyalty and care stated in Sections 6.2. and 6.3. and the other duties otherwise stated in this Article VI. A Manager who so performs the duties as Manager shall not have any liability to the Company or any Person by reason of being or having been a Manager of the Company. The Managers do not guarantee the return of Capital Contribution or a profit from the operations of the Company. The Managers 9 - OPERATING AGREEMENT OF PLARS, LLC shall not be liable for any loss or damage sustained by the Company or any Person, except for (i) a breach of the duty of loyalty as defined and limited in Section 6.2.; (ii) a financial benefit received by a Manager to which such Manager is not entitled; (iii) a breach of a duty under §30-6-406 of the Act; (iv) an intentional infliction of harm on the Company or a Member; or (v) an intentional violation of criminal law. 6.2. Duty of Loyalty. Subject to Section 6.6., a Manager's duty of loyalty includes only the duty (and no other duty) to account to the Company for any property, profit, or benefit derived by the Manager (i) in the conduct or winding up of the Company's activities; or (ii) from an unauthorized use by the Manager of Company Property. 6.3. Business Judgment Rule. Subject to Section 6.6., each Manager shall perform his duties as a Manager in good faith, in a manner he believes to be in the best interests of the Company, and with the care that a person in a like position would reasonably exercise under similar circumstances. In discharging this duty, a Manager may rely in good faith upon opinions, reports, statements, or other information provided by another person that the Manager reasonably believes is a competent and reliable source for the information. 6.4. Good Faith and Fair Dealing. Subject to Section 6.6., all Members and Managers shall discharge the duties under this Agreement and exercise any rights hereunder consistently with the contractual obligation of good faith and fair dealing. 6.5. Ratification. Subject to Section 6.6., the Members agree that any Manager may engage in any act or transaction that would otherwise violate the duties described in this Article (or any other duty) if the act or transaction is ratified by the Consent of the Members. 6.6. Definitions and Limitations on Duties. Each Member recognizes and agrees that a Manager shall not be required to manage the Company as his sole and exclusive function. The Members agree that each Manager and each Member may engage in or possess an interest in other business ventures of every nature and description (even if it is competitive with the Company), independently or with others, including, but not limited to, the ownership of an investment in stock, securities, real estate, and other investment properties. Neither the Company nor any Person shall have any right to share or participate in such other investments or activities of a Manager and/or Person or to the income or proceeds derived therefrom. None of the Managers or any Person shall incur any liability to the Company or to any Person as a result of engaging in any other business or venture. 10 — OPERATING AGREEMENT OF PLA.RS, LLC ARTICLE VII ALLOCATIONS AND DISTRIBUTIONS 7.1. Allocations of Profits and Losses from Operations. Except as may be required by § 704(c) of the Code, Profits, Losses, and other items of income, gain, loss, deduction, and credit shall be apportioned in proportion to Sharing Ratios. 7.2. Distributions. Each year the Company may, in the discretion of the Manager, Distribute cash according to each Person's Sharing Ratio. 7.3. Limitations on Distributions. No Distribution shall be declared and paid unless, after the Distribution is made, the assets of the Company are in excess of all liabilities of the Company, except liabilities to Persons on account of their Capital Accounts. 7.4. Guaranteed Payments. Upon the Consent of the Members, the Managers may make guaranteed payments to the Members in exchange for services provided by the Members- to the Company. ARTICLE VIII TAXES 8.1. Elections. With the Consent of the Managers, a Manager may make any tax elections for the Company allowed under the Code or the tax laws of any Taxing Jurisdiction. The Company shall be taxed as a partnership. 8.2. Taxes of Taxing Jurisdictions. 8.2.1. To the extent that the laws of any. Taxing Jurisdiction require, each -Person as may be required by the Taxing Jurisdiction, will submit an agreement indicating that the Person will make timely income tax payments to the Taxing Jurisdiction and that the Person accepts personal jurisdiction of the Taxing Jurisdiction with regard to the collection of income takes attributable to the Person's income, interest, and penalties assessed on such income. If a Person fails to provide such agreement, the Company may withhold and pay over to such Taxing Jurisdiction the amount of tax, penalty, and interest determined under the laws of the Ting Jurisdiction with respect to such Person and such Person's income. Any such payments with respect to the income of a Person shall be treated as a Distribution for purposes of Article VII. 8.2.2. The Members may, where permitted by the rules of any Taxing Jurisdiction, file a composite, combined, or aggregate tax return reflecting the income of the Company and pay the tax, interest, and penalties of some or all of the Members on such 11 - OPERATING AGREEMENT OF PLARS, LLC income to the Taxing Jurisdiction, in which case the Company shall inform. the Members of the amount of such tax, interest, and penalties so paid. 8.3. Tax Matters Partner. Morgan Peterson shall be the tax matters partner of the Company pursuant to § 6231(a)(7) of the Code. The tax matters partner shall take such action as may be necessary to cause each Member to become a notice partner within the meaning of § 6223 of the Code. The tax matters partner may not take any action contemplated by §§ 6222 through 6232 of the Code without the Consent of the Members. 8.4. Method of Accounting. The records of the Company shall be maintained on the method of accounting determined by the Consent of the Managers. ARTICLE IX TRANSFER OF UNITS Subject to the provisions of Article X, Units of the Company are freely transferable. ARTICLE X ADMISSION OF ADDITIONAL MEMBERS New Members shall be admitted to the Company only by Consent of the Members. The Members may grant or withhold the approval of such admission for any reason, or no reason, in their sole and absolute discretion. ARTICLE XI DISSOCIATION OF A MEMBER There shall be no dissociation of a Member under the Act. A Member may not voluntarily withdraw from the Company. ARTICLE XII DISSOLUTION AND WINDING UP 12.1. Dissolution. The Company shall be dissolved and its affairs wound up, upon the (i) Consent of the Members, (ii) passage of ninety (90) days during which the Company has no Members, or (iii) entry of an order of dissolution by any court having jurisdiction to enter such order. 12 - OPERATING AGREEMENT OF PLARS, LLC 12.2. Effect of Dissolution. Upon dissolution, the Company shall cease carrying on as distinguished from the winding up of the Company business, but the Company is not terminated, but continues until the winding up of the affairs of the Company is completed and the Certificate of Dissolution has been issued by the Secretary of State. 12.3. Distribution of Assets on Dissolution. Upon the winding up of the Company, the Company Property shall be Distributed in the following order: 123.1. to creditors, including Members who are creditors, to the extent permitted by law, in satisfaction of Company liabilities; 12.3.2. to Persons in accordance with positive Capital Account balances taking into account all Capital Account adjustments for the Company's Taxable Year in which the liquidation occurs; and then 12.3.3. to Persons in accordance with each Person's Sharing Ratio. 12.4. Time of Payment. Liquidation proceeds shall be paid within sixty (60) days of the end of the Company's Taxable Year or, if later, within ninety (90) days after the date of liquidation. Such Distributions shall be in cash or Property (which need not be Distributed proportionately) or a combination of cash and Property, as determined by Consent of the Members. 12.5. Winding Up and Certificate 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 therefor 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, a Certificate of Dissolution shall be delivered to the Secretary of State for filing. The Certificate of Dissolution shall set forth the information required by the Act. ARTICLE XIII AMENDMENT This Agreement may be amended or modified from time to time only by a written instrument executed by all of the Members at the time of the amendment. No Member shall have any vested rights in this Agreement that may not be modified through an amendment to this Agreement. No oral amendment to this Agreement, including to this paragraph, is permitted. The Members intend that compliance with the requirements of this Article is a condition precedent to any amendment of this Agreement for the purposes of Section 30-6- 110(1)(d) and Section 30-6-112(1) of the Act and that any purported amendment of this Agreement that does not comply with the requirements of this Article is ineffective. 13 - OPERATING AGREEMENT OF PLARS, LLC ARTICLE XIV MISCELLANEOUS PROVISIONS 14.1. Entire Agreement. This Agreement represents the entire agreement among all the Members and between the Company and the Managers pertaining to the subject matter of this Agreement. There are no verbal- agreements with respect to this Agreement. 14.2. No Partnership Intended for Nontaz Purposes. The Members have formed the Company under the Act, and expressly do not intend hereby to form a partnership under either the Idaho Uniform Partnership Act or the Idaho Uniform Limited Partnership Act. The Members do not intend to be partners one to another, or partners as to any third party. To the extent any Member, by word or action, represents to another person that any other Member is a partner or that the Company is a partnership, the Member making such wrongful representation shall be liable to any other Member who incurs personal liability by reason of such wrongful representation. 14.3. Rights of Creditors and Third Parties under this Agreement. This Agreement is entered into among the Company and the Members for the exclusive benefit of the Company, its Members, and their successors and Transferees. This Agreement is expressly not intended for the benefit of any creditor of the Company or any otherperson. Except, and only to the extent provided by applicable statute, no such creditor or third party --- shall have any rights under this Agreement. 14.4. Transferee Rights. If any Transferee obtains any rights in a Unit, the provisions of Exhibit "B" shall become effective, and all other provisions of this Agreement shall remain in effect, except as specifically modified by Exhibit "B". 14.5. Income Tax Provisions. All income tax provisions on the attached Exhibit "C" are incorporated by this reference. 14.6: Counterparts; Electronic Delivery. This Agreement may be executed in counterparts, all of which, when taken together, shall constitute one and the same instrument. Delivery of an. executed copy of this Agreement by telecopy or other means of electronic communication producing a printed copy will be deemed to be an execution and delivery of this Agreement on the date of such communication by the Member so delivering such a copy. Any Member so delivering such a copy via electronic communication shall deliver an executed original of this Agreement to the Company upon request. [Signature Page Follows] G:IWPDATA\RBM118314 (PLARS)SOA vOLwpd: 14 - OPERATING AGREEMENT OF PLARS, LLC IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day, month, and year set forth below. Date: � fforgan Peerson, Member Date: L cie Peterso ,Member CONSENT OF THE MANAGER The undersigned hereby accepts all duties and responsibilities as a Manager. hereunder. The undersigned recognizes that he can be replaced at anytime by the Members as provided herein. Date: / Morgan Peterson, Manager 15 - OPERATING AGREEMENT OF PLARS, LLC Names and Addresses of Members Morgan Peterson 4318 E. 265 N. Rigby, Idaho 83442 Lacie Peterson 4318 E. 265.N. Rigby, Idaho 83442 G:\WPDATA\RBM\18314 (PLARS)\OA vOl.wpd: EXHIBIT "A" Description of Initial Capital f-1 _ __L__*1___L* _ Cash Cash Value Units $1,500 1,500 $1,500 15500 EXHIBIT "B" RIGHTS OF TRANSFEREE The provisions of this Exhibit "B" only become effective if there is a Transferee who holds any interest in the Company. 1. No Rights to Transferee. A Transferee shall have no rights under Sections 4.3. or 4.4. 2, Other Transferee Rights. No Transferee acquires greater rights under this Agreement than those provided by Idaho law, and any provision of this Agreement that purports to give the Transferee rights in addition to those rights specified in Idaho law, shall be interpreted so as to provide the Transferee only those rights conferred by Idaho law. A Transferee has no other rights and is owed no duties by the Members or Manager. 3. Economic Rights. The rights of the Transferee are limited to those Economic Rights expressly conferred by Idaho law. The term "Economic Rights" is synonymous with the term "transferable interest" under the Act. EXHIBIT "C" INCOME TAX PROVISIONS C.I. Compliance with § 704(b) of the Code. All provisions of the Agreement relating to maintenance of Capital Accounts are intended, and shall be construed, and, if necessary, modified to cause the allocations of Profits, Losses, income, gain and credit pursuant to this Agreement to have substantial economic effect under the Regulations promulgated under § 704(b) of the Code, in light of the Distributions made pursuant to this Agreement. C.2. Definitions. The definitions that follow are part of the Agreement Company Minimum Gain. An amount determined by first computing for each Company Nonrecourse Liability any gain the Company would realize if it Transferred the Company Property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains. The amount of Company Minimum Gain includes such minimum gain arising from a conversion, refinancing, or other change to a debt instrument, only to the extent a Member is allocated a share of that minimum gain. For any Taxable Year, the net increase or decrease in Company Minimum Gain is determined by comparing the Company Minimum Gain on the last day of the immediately preceding Taxable Year with the Minimum Gain on the last day of the current Taxable Year. Notwithstanding any provision to the contrary contained in this Agreement, Company Minimum Gain and increases and decreases in Company Minimum Gain are intended to be computed in accordance with § 704 of the Code and the Regulations. A Member's share of Company Minimum Gain at the end of any Taxable Year equals: the sum of Nonrecourse Deductions (as defined in § 1.704-2(b)(i) of the Regulations) allocated to that Member (and to that Member's predecessors in interest) up to that time and the Distributions made to that Member (and to that Member's predecessors in interest) up to that time of proceeds of a nonrecourse liability allocable to an increase in Company Minimum Gain minus the sum of that Member's (and that Member's predecessors' in interest) aggregate share of the net decreases in Company Minimum Gain plus their aggregate share of decreases resulting from revaluations of Company Property subject to one or more Company Nonrecourse Liabilities. Company Nonrecourse Liability. A company liability to the extent that no Member or Related Person bears the economic risk of loss (as defined in § 1.752-2 of the Regulations) with respect to the liability. Member Minimum Gain. An amount determined by first computing for each Member Nonrecourse Liability any gain the Company would realize if it Transferred all of the Company Property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains. The amount of Member Minimum Gain includes such minimum gain arising from a conversion, refinancing, or other change to a debt instrument, only to the extent a Member is allocated a share of that minimum gain. For any Taxable Year, the net increase or decrease in Member Minimum Gain is determined by comparing the Member Minimum Gain on the last day of the immediately preceding Taxable Year with the Member Minimum Gain on the last day of the current Taxable Year. Notwithstanding any provision to the contrary contained in this Agreement, Member Minimum Gain and increases and decreases in Member Minimum Gain are intended to be computed in accordance with § 704 of the Code and the Regulations. Member Nonrecourse Liability. Any company liability to the extent the liability is nonrecourse under state law, and on which a Member or Related Person bears the economic risk of loss under § 1.752-2 of the Regulations because, for example, the Member or Related Person is the creditor or a guarantor. Nonrecourse .Liabilities. Nonrecourse liabilities include Company Nonrecourse Liabilities and Member Nonrecourse Liabilities. Offsettable Decrease. Any allocation that unexpectedly causes or increases a deficit in the Member's Capital Account as of the end of the Taxable Year to which the allocation relates attributable to depletion allowances under § 1. 704- 1 (b)(2)(iv)(k) ofthe Regulations, allocations of loss and deductions under §§ 704(e)(2) or 706 of the Code or under § 1.751-1 of the Regulations, or Distributions that, as of the end of the year are reasonably expected to be made to the extent they exceed the offsetting increases to such Member's Capital Account that reasonably are expected to occur during or (prior to) the Taxable Years in which the such Distributions are expected to be made (other than increases pursuant to a Minimum Gain Chargeback). . Related Person. A person having a relationship to a Member that is described in § 1.752-4(b) of the Regulations. C.3. Compliance with § 704(b) of the Code. The provisions of this Article III as they relate to the maintenance of Capital Accounts are intended, and shall be construed, and, if necessary, modified to cause the allocations of Profits, Losses, income, gain and credit pursuant to Article VI of this Agreement to have substantial economic effect under the Regulations promulgated under § 704(b) of the Code, in light of the Distributions made pursuant to this Agreement and the Capital Contributions made pursuant to this Article M. CA. Company Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain for a Taxable Year, each Member must be allocated items of income and gain for that Taxable Year equal to that Member's share ofthe net decrease in Company Minimum Gain. A Member's share of the net decrease in Company Minimum Gain is the amount of the total net decrease multiplied by the Member's percentage share of the Company Minimum Gain at the end of the immediately preceding Taxable Year. A Member's share of any decrease in Company Minimum Gain resulting from a revaluation of Company Property equals the increase in the Member's Capital Account attributable to the revaluation to the extent the reduction in minimum gain is caused by the revaluation. A Member is not subject to the Company Minimum Gain Chargeback Requirement to the extent the Member's share of the net decrease in Company Minimum Gain is caused by a guarantee, refinancing, or other change in the debt instrument causing it to become partially or wholly a Recourse Liability or a Member Nonrecourse Liability, and the Member bears the economic risk of loss (within the meaning of §1.752-2 of the Regulations) for the newly guaranteed, refinanced, or otherwise changed liability. C.5. Member Minimum Gain Chargeback. IfduringaTaxable Year there is a net decrease in Member Minimum Gain, any Member with a share of that Member Minimum Gain (as determined under § 1.704-2(i)(5) of the Regulations) as of the beginning of that Taxable Year must be allocated items of income and gain for that Taxable Year (and, if necessary, for succeeding Taxable Years) equal to that Member's share of the net decrease in the Company Minimum Gain. A Member's share of the net decrease in Member Minimum Gain is determined in a manner consistent with the provisions of § 1.704- 2(g)(2) of the Regulations. A Member is not subject to this Member Minimum Gain Chargeback, however, to the extent the net decrease in Member Minimum Gain arises because the liability ceases to be Member Nonrecourse Liability due to a conversion, refinancing, or other change in the debt instrument that causes it to become partially or wholly a Company Nonrecourse Liability. The amount that would otherwise be subject to the Member Minimum Gain Chargeback is added to the Member's share of Company Minimum Gain. In addition, rules consistent with those applicable to Company Minimum Gain shall be applied to determine the shares of Member Minimum Gain and Member Minimum Gain Chargeback to the extent provided under the Regulations issued pursuant to § 704(b) of the Code. C.6. Qualified Income Offset. In the event any Member, in such capacity, unexpectedly receives an Offsettable Decrease, such Member will be allocated items of income and gain (consisting of a pro rata portion of each item of partnership income and gain for such year) in an amount and manner sufficient to offset such Offsettable Decrease as quickly as possible.