HomeMy WebLinkAboutPROOF OF OWNERSHIP - Reynolds Properties LLC Operating AgreementOPERATING AGREEMENT FOR
REYNOLDS PROPERTIES, LLC
PREAMBLE
The undersigned, pursuant to section 53-60 1 (11), Idaho Code, hereby enter into this Operating
Agreement to govern the conduct and affairs of Reynolds Properties, LLC, an Idaho limited
liability company, and agree as set forth in the following articles and sections.
ARTICLE I
1.01 Formation: On the 6h day of June, 2005, the undersigned organized an Idaho Limited
liability company by executing and delivering Articles of Organization to the Idaho Secretary of
State in accordance with and pursuant to the Idaho Limited Liability Company Act.
1.02 Name: The name of the company is Reynolds Properties, LLC.
1,03 Principal Place of Business: The principal place of business of the Company within
the state of Idaho shall be 2481 North 2000 West, Rexburg, Idaho 83440. The registered office may
be at any other place or places as the managers may from time to time deem advisable,
1.04 Registered Office and Registered Agent: The Company,s initial registered office shall
be at 67 Winn DR. Suite 100, Rexburg, Idaho 83440, and the name of its registered agent at such
address shall be Curtis Ferney. The registered office and registered agent may be changed from
time to time by filing the address of the new registered office and/or the new name of the new
registered agent with the Idaho Secretary of State pursuant to the Idaho Act.
1.05 Term: The term of the Company shall be from the date of filing of Articles of
Organization with the Secretary of State of the State of Idaho until dissolved in accordance with
either the provisions of this Operating Agreement or the Act.
Operating Agreement Page -1.
ARTICLE H
BUSINESS OF COMPANY
2.01 Permitted Businesses: The business of the Company shall be:
2.01.01 To own, operate and manage a land acquisition and development business.
Furthermore, the business of the Company shall be to accomplish any lawful business
whatsoever which shall, at any time, appear conducive to, or expedient for, the protection or
benefit of the Company and its assets.
2.01.02 To exercise all other powers necessary to or reasonably conducted with the Company's
business which may be legally exercised by limiters liability companies under the Idaho Act.
2,01.03 To engage in all activities necessary, customary, convenient, or incident
to any of the foregoing.
ARTICLE III
NAMES AND ADDRESSES OF MEMBERS
3.01 The names and addresses of the Members are as follows:
NAMY ADDRESS
Jeff Reynolds 4520 North State Road 37
Orleans, Indiana 47452
812-865-3232
Curtis Ferney
Office 67 W � n DR. ite 100
Rex urg, Id 440
20 -3 -13
Home 2481 North 2000 West
04-jl,e Rexburg, Idaho 83440
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ARTICLE IV
RIGH'T'S AND DUTIES OF MANAGERS
4.01 Management: In the event the Members, by affirmative vote of Members holding at
least a Majority Interest, appoint one or more managers, the business and affairs of the
Company shall be managed by its Managers. In the event Members do not appoint a Manager, or
in the event the position of Manager(s) is vacant for any reason, the business and affairs of the
Company managed by its Members, with decisions decided by affirmative vote of Members,
with decisions decided by affirmative vote of Members holding at least a Majority Interest. The
Managers shall direct, manage, and control the business of the company to the best of their
ability. Except for situations in which the approval of the Members is expressly required by this
Operating Agreement or by nonwaiveable provisions of applicable law, the Managers shall
have full and complete authority, power, and discretion to manage and control the business,
affairs, and properties of the Company, to make all decisions regarding those matters, and to
perform any and all other acts or activities customary or incident to the management of the
Company's business. At any time when there is more than one manager, any one Manager may
take any action permitted to be taken by the managers, unless the approval of more than one of
the Managers is expressly required pursuant to this Operating Agreement or the Act.
4.02 Number, Tenure, and Qualifications: The Company shall initially have two
Managers. The number of Managers of the Company shall be fixed from time to time by the
affirmative vote of Members holding at least a majority Interest, but in no instance shall there be less
than one Manager. Each Manager shall hold office until his successor is elected and qualified.
Managers shall be elected by the affirmative vote of Members holding at least a Majority
Interest. Managers need not be residents of the state of Idaho or Members. The initial Managers who
shall hold office until a successor(s) is/are elected are: Jeff Reynolds, Curtis Ferney
4.03 Certain Powers of Manager: Without limiting the generality of section 4.01, the
Managers shall have power and authority, on behalf of the Company:
4.03.0 1 To acquire property from any Person as the Members may determine. The
fact that a Manager or a Member is directly or indirectly affiliated or connected with any such Person
shall not prohibit the Managers from dealing with that Person provided the transaction is approved
by a majority of the disinterested Managers or Members;
4.03.02 To borrow money for the Company from banks, other lending institutions, the
Managers, Members, or affiliates of the Managers or Members on such terms as the Members deem
appropriate, and, in connection therewith, to hypothecate, encumber, and grant security interests in
the assets of the Company to secure repayment of the borrowed sums. No debt shall be contracted or
liability incurred by or on behalf of the Company except as approved by affirmative vote of
Members holding at least a majority Interest, or to the extent permitted under the Act, by agents or
employees of the Company expressly authorized to contract such debt or incur such liability by the
Managers or Members;
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4.03.03 To purchase liability and other insurance to protect the Company's property
and business;
4.03.04 To hold and own any Company real and/or personal properties in the name of
the Company;
4.03.05 To invest any Company funds temporarily (by way of example but not
limitation) in time deposits, short-term governmental obligations, commercial paper, or other
investments;
4.03.06 Upon the affirmative vote of the Members holding at least Majority Interest,
to sell or otherwise dispose of all or substantially all of the assets of the Company as part of a single
transaction or plan so long as such disposition is not in violation of, or a cause of a default under,
any other agreement to which the Company may be bound, provided, however, that the affirmative
vote of the Members shall not be required with respect to any sale or disposition of the Company's
assets in the ordinary course of the Company's business;
4.03.07 To execute on behalf of the Company the following instruments and
documents, without lirnitation: checks; drafts; notes and other negotiable instruments. To execute on
behalf of the Company the following instruments and documents, with the approval of the majority
interest of the members: mortgages or deeds of trust; security agreements; financing statements;
documents providing for the acquisition, mortgage, or disposition of the Company's property;
assignments; bills of sale; deeds; leases; partnership agreements; operating agreements of other
limited liability companies; and any other instruments or documents necessary, in the opinion of the
Managers, to the business of the Company;
4.03.08 To employ accountants, legal counsel, managing agents, or other experts to
perform services for the Company and to compensate them from Company funds;
4.03.09 To enter into any and all other agreements on behalf of the Company, with
any other person for any purpose, in such forms as the Managers may approve; and
4.03.10 To do and perform all other acts as may be necessary or appropriate to the
conduct of the Company's business.
4.03.11 Unless authorized to do so by this Operating Agreement or by a Manager or
Managers of the Company, 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 Managers to act as an agent of the Company in
accordance with the previous sentence.
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4.04 Liability for Certain Acts: Each Manager shall perform his duties as Manager in good
faith, in a manner he reasonably believes to be in the best interests of the Company, and with such
care as an ordinarily prudent person in a like position would use under similar circumstances. A
Manager who so performs the duties as Manager shall not have any liability by reason of being or
having been a Manager of the Company_ The Manager does not, in any way, guarantee the return of
the Interest Holders' Capital Contributions or a profit for the Interest Holders from the operations of
the Company. The Manager shall not be liable to the Company or to any Member for any loss or
damage sustained by the Company or any Member, unless the loss or damage shall have been the
result of gross negligence or willful misconduct by the Manager.
4.05 Managers Have No Exclusive Duty to Company: The Manager shall not be required
to manage the Company as his sole and exclusive function and he (or any Manager) may have other
business interests and may engage in other activities in addition to those relating to the Company.
Neither the Company nor any Member shall have any right, by virtue of this Operating Agreement,
to share or participate in such other investments or activities of the Manager or to the income or
proceeds derived therefrom except as provided in section 53-622(2) of the Act. The Manager shall
incur no liability to the Company or to any of the Members as a result of engaging in any other
business or venture except as provided in section 53 -+622(2) of the Act.
4.06 Sank & Supplier accounts The Managers may, from time to time, open bank and
supplier or trade accounts in the name of the Company, and the Managers shall be the sole
signatories thereon, unless the Managers determine otherwise. All checks drawn upon any bank
accounts as well as charges made upon supplier or trade accounts must be executed by both
managers.
4.07 Indemnity of the Managers, Employees, and Other Agents: To the maximum extent
permitted under section 53-624 of the act, the Company shall indemnify the Managers. The
Company shall indemnify its employees and other agents who are not Managers to the fullest extent
permitted by law, provided that such indemnification in any given situation is approved by Members
owning a Majority Interest.
4.08 Resignation: Any Manager of the Company may resign at any time by giving written
notice to the Members of the Company. The resignation of any Manager shall take effect upon
receipt of notice thereof or at such later time as shall be specified in such notice; and, unless
otherwise specified therein, the acceptance of such resignation shall not be necessary to make it
effective. The resignation of a Manager who is also a Member shall not affect the Manager's rights
as a Member.
4.09 Removal: At any meeting of the Members called as provided herein, all or any lesser
number of Managers may be removed, with or without cause, by the affirmative vote of Members
holding a Majority Interest. The removal of a Manager who is also a Member shall not affect the
Managers rights as a Member and shall not constitute a withdrawal of a Member.
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4.10 Vacancies: Vacancy(ies) shall be filled by the affirmative vote of Members holding a
Majority Interest. A Manager elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office and shall hold office until the expiration of such term and until his successor
shall be elected and shall qualify or until his earlier death, resignation, or removal. A Manager
chosen to fill a position resulting from an increase in the number of Managers shall hold office until
the next meeting of Members and until his successor shall be elected and shall qualify, or until his
earlier death, resignation, or removal.
4.11 Salaries: The draws/distributions of the Managers shall be fixed from time to time by an
affirmative vote of Members holding at least a Majority Interest, and no Manager shall be
prevented from receiving such salary by reason of the fact that he is also a Member of the Company.
Notwithstanding the above, the members may enter into a Members Agreement which sets forth
certain duties and obligations which restrict the salary of the Managers during the first year of
operation of the Company's business.
ARTICLE V
RIGHTS AND OBLIGATIONS OF MEMBERS
5.01 Limitation of Liability: Each Member's liability shalt be limited as set forth in this
Operating Agreement, the Member Agreement, the Act, and other applicable law.
5.02 Company Debt Liability: A Member will not be personally liable for any debts or
losses of the Company beyond his respective Capital Contribution and any obligation of the Member
under section 7.01 or 7.02 to make Capital Contributions, except as otherwise required by law.
5.03 List of Members: Upon written request of any Member, the Manager shall provide to
such requesting Member a list showing the names, addresses, and Economics Interest of all Interest
Holders.
5.04 Approval of Sale of All Assets: The Members shall have the right, by the affirmative
vote of Members holding at least a Majority Interest, to approve the sale, exchange, or other
disposition of all, or substantially all, of the Company's assets (other than in the ordinary course of
the Company's business) which is to occur as part of a single transaction or plan.
5.05 Company Books: The Managers shall maintain and preserve, during the term of the
Company, and for seven (7) years thereafter, all accounts, books, and other relevant Company
documents. Upon reasonable request, each Member shall have the right, during ordinary business
hours, to inspect and copy such Company documents at the requesting Member's expense.
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5.06 Priority and Return of Capital: Except as may be expressly provided in Article XII,
no Interest Holder shall have priority over any other Interest Holder, either as to the return of Capital
Contributions or as to Profits, Losses, or distributions; provided that this section shall not apply to
loans (as distinguished from Capital Contributions) which an Interest Holder has made to the
Company.
ARTICLE VI
MEETINGS OF MEMBERS
6.01 Meetings: Any Manager or any Member or Members holding at least twenty five
percent (25%) of the units held by Members, may call a meeting of Members for the purpose of
conducting any lawful business.
6.02 Notice of Meetings: Except as provided in section 6.05, written notice stating the place,
day, and hour of the meeting and the purpose or purposes for which the meeting is called shall be
delivered not less than seven (7) and no more than fifty (50) days before the date of the meeting,
either personally or by mail, by or at the direction of the Manager(s) or the person calling the
meeting, to each Member entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered two calender days after being deposited in the United States mail, addressed to the
Member at his address as it appears on the books of the Company, with postage thereon prepaid.
6.03 Meeting of all Members: If all of the Members shall meet at any time and place, either
within or outside the State of Idaho, and consent to the holding of a meeting at such time and place,
such meeting shall be valid without call or notice, and at such meeting a lawful action may be taken.
Meetings may take place by conference call providing a majority of the Members consent in writing
either before the conference call takes place or within a reasonable time following a telephone
conference meeting.
6.04 Record Date: For the purpose of determining Members entitled to notice of, or to vote
at, any meeting of Members or any adjournment thereof, or Members entitled to receive payment of
any distribution, or in order to make a determination of Members for any other purpose, the date on
which notice of the meeting is mailed or the date on which the resolution declaring such distribution
is adopted, as the case may be, will be the record date for such determination of Members. When a
determination of Members entitled to vote at any meeting of Members has been made as provided in
this section, such determination shall apply to any adjournment thereof.
6.05 Quorum: Members holding at least a Majority Interest, represented in person or by
proxy, shall constitute a quorum at any meeting of Members. In the absence of a quorum at any such
meeting, a majority of the Units so represented may adjourn the meeting from time to time for a
period not to exceed 60 days without further notice_ However, if the adjournment is for more than 60
days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of
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the adjourned meeting shall be given to each Member of record entitled to vote at the meeting. At
such adjourned meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally noticed. The Members
present at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during such meeting of that number of units held by Members whose
absence would cause less than a quorum.
6.06 Manner of Acting: If a quorum is present, the affirmative vote of Members holding a
Majority Interest shall be the act of the Members, unless the vote of a greater or lesser proportion or
number is otherwise required by the Act, by the Articles of Organization, or by this Operating
Agreement. Unless otherwise expressly provided herein or required under applicable law, Members
who have an interest (economic or otherwise) in the outcome of any particular matter upon which the
Members vote or consent may vote or consent on any such matter and their units, vote, or consent,
as the case may be, shall be counted in the determination of whether the requisite matter was
approved by the Members.
6.07 Proxies: At all meetings of Members a Member may vote in person or by proxy
executed in writing by the Member or by a duly authorized attorney-in-fact. Such proxy shall be filed
with the Managers of the Company before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution.
6.08 Action by Members Without a Meeting: Action required or permitted to be taken at a
meeting of Members may be taken without a meeting if the action is evidenced by one or more
written consents describing the action taken, signed by each Member entitled to vote, and delivered
to the Managers of the Company for inclusion in the minutes or for filing with the Company records.
Action taken under this section is effective when all Members entitled to vote have signed the
consent, unless the consent specifies a different effective date. The record date for determining
Members entitled to take action without a meeting shall be the date the first Member signs a written
consent.
6.09 Waiver of Notice: When any notice is required to be given to any Member, a waiver
thereof in writing signed by the person entitled to such notice, whether before, at, or after the time
started therein, shall be equivalent to the giving of such notice.
ARTICLE VII
CONTRIBUTION TO THE COMPANY AND CAPITAL ACCOUNTS
7.01 Members' Capital Contributions: Each Member shall make the contributions set forth
in Exhibit "A" hereto as its share of the Initial Capital Contribution set forth on Exhibit "A". Each
Member shall be entitled to the number of Units of Economic Interest set forth on Exhibit "A."
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7.02 Additional Contributions: Except as set forth in section 7.01, no Member shall be
required to make any Capital Contributions. To the extent approved by the Managers, from time to
time, the Members may be permitted to make additional Capital Contributions if, and to the extent,
the Managers determine such additional Capital Contributions are necessary or appropriate in
connection with the conduct of the Company's business (including, without limitation, expansion or
diversification). In such event, all Members shall have the opportunity (but not the obligation) to
participate in such additional Capital Contributions on a pro rated basis in accordance with their
Units. Any additional Capital Contributions shall entitle the Member to additional Units of
Economic Interest as determined by the Managers.
7.03 Capital Accounts: A separate Capital Account will be maintained for each Interest
Holder as more fully set forth in the attached Appendix A, which, by this reference, is incorporated
herein and made a part hereof.
ARTICLE VIII
ALLOCATIONS
8.01 Profits: Unless special allocations are agreed in writing, Profits for any Fiscal Year shall
be allocated among the Interest Holders in proportion to the number of Units held by each.
8.02 Losses: Unless special allocations are agreed in writing, losses for any Fiscal Year shall
be allocated among the Interest Holders in proportion to the number of Units held by each.
ARTICLE IX
DISTRIBUTIONS
9.01 All cash and other property distributions to Interest Holders shall be made at such times
and in such amounts as determined by Members holding a majority interest, provided, however,
that all distributions shall be made pro rata to each Interest Holder based upon the number of Units
held by each Interest Holder,
ARTICLE X
TRANSFERABILITY
10.01 General: Except as otherwise specifically provided herein, neither a Member nor an
Economic Interest Owner shall have the right to:
10.01,01 sell, assign, pledge, hypothecate, transfer, exchange, or otherwise transfer for
consideration (hereinafter collectively referre to as "sell"), or
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10.01.02 gift, bequeath, or otherwise transfer for no consideration (whether or not by
operation of law, except in the case of bankruptcy) all or any part of its Membership interest or
Economic Interest.
10.02 Right of first Refusal:
10.02.01 A Selling Member which desires to sell all or any portion of its Membership Interest
or Economic interest in the Company to a third party purchaser shall obtain from such third party
purchaser a bona fide, reasonable, written offer to purchase such interest, stating the terms and
conditions upon which the purchase is to be made and the consideration offered therefor. The selling
Member shall give written notification to the remaining Members, by certified mail or personal
delivery, of its intention to so transfer such interest, furnishing to the remaining Members a copy of
the aforesaid written offer to purchase such interest.
10.02.02 The remaining Members, and each of them, shall, on a basis pro rata to their Units
held or on a basis pro rata to the Units held of those remaining Members exercising their right of first
refusal, have the right to exercise a right of first refusal to purchase all (but not less than all) of the
interests purposed to be sold by the selling Member upon the same terms and conditions as stated in
the aforesaid written offer to purchase by given written notification to the selling Member, by
certified mail or personal delivery, of their intention to do so within ten (10) days after receiving
written notice from the Selling Member. The failure of one or more of the remaining Members to
so notify the Selling Member of their desire to exercise this right of first refusal within said ten (1 0)
day period shall result in the termination of the right of first refusal and the Selling Member shall be
entitled to consummate the sale of its interest in the Company, or such portion of its interest, if any,
with respect to which the right of first refusal has not been exercised, to such third party purchaser.
If one or more of the remaining Members give written notice to the Selling Member of their
desire to exercise this right of first refusal and to purchase all of the Selling Member's interest in the
Company which the Selling Member desires to sell upon the same terms and conditions as are stated
in the aforesaid written offer to purchase, the remaining Members shall have the right to designate
the time, date and place of closing, provided that the date of closing shall be within thirty (30) days
after receipt of written notification from the Selling Member of the third party offer the purchase.
10.02.03 In the event of either the purchase of the Selling Member's interest in the Company
by a third party purchaser or the gift of an interest in the Company (including an Economic Interest),
and as a condition to recognizing the effectiveness and binding nature of any such sale or gift and
(subject to section 10.03, below) substitution of a new Member, the remaining Members may require
the Selling Member, Gifting Member, and/or the proposed purchaser, donee, or successor -in -interest,
as the case may be, to execute, acknowledge, and deliver to the Company, the Managers, or the
remaining Members such instruments of transfer, assignment, and assumption and such other
certificates, representations, and documents, and to perforin all such other acts which the Company,
the Managers, or the remaining Members may deem necessary or desirable to:
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(i) constitute such purchaser as a Member, donee, or successor -in -interest as such; confirm
that the person desiring to acquire an interest or interests in the Company, or to be admitted as a
Member, has accepted, assumed, and agreed to be subject and bound by all of the terms, obligations,
and conditions of the Operating Agreement, as the same may have been further amended (whether
such Person is to be admitted as a new Member or will be an Economic Interest Owner);
(ii) preserve the Company after the completion of such sale, transfer, assignment, or
substitution under the law of each jurisdiction in which the Company is qualified, organized, or does
business;
(iii) maintain the status of the company as a partnership for federal tax purposes; and
(iv) assure compliance with any applicable state and federal laws including securities
laws and regulations.
10.02.04 Any sale or gift of a Membership Interest or Economic Interest or admission of a
Member in compliance with this Article X shall be deemed effective as of the last day of the calendar
month in which the remaining Members' consent thereto was given, or, if no such consent was
required pursuant to section 10.02.05, then on such date that the donee or successor interest complies
with the provisions hereof. The Selling Member agrees, upon request of the remaining Members, to
execute such certificates or other documents and to perforin such other acts as may be reasonably
requested by the remaining Members from time to time in connection with such sale, transfer,
assignment, or substitution. The Selling Member hereby indemnifies the Company and the remaining
Members against any and all loss, damage, or expense (including, without limitation, tax liabilities or
loss of tax benefits) arising directly as a result of any transfer or purported transfer in violation of
this Article X-
10.02.05 Subject to section 10.02.03, a Transferring Member may gift all or any portion of its
Membership Interest and Economic Interest (without regard to section 10.02.0 1 and 10.02.02)
provided that the donee or other successor -in -interest (hereinafter collectively referred to as "donee")
complies with section 10.02.03 and further provided that the donee is either the Gifting Member's
spouse, former spouse, lineal descendent (including adopted children), or to any trusts of which the
Member or any family member is a beneficiary regardless of age. In the event of the gift of all or
any portion of a Gifting Member's Membership Interest or Economic Interest to one or more donees
who are under 18 years of age, one or more trusts shall be established to hold the gifted interest (s)
for the benefit of such donee (s) until all of the donee(s) reach the age of at least 18 years.
1.0,03 Transferee Not Member in Absence of Consent:
10.03.0 1 Notwithstanding anything containing herein to the contrary (including, without
limitation, section 10.02 hereof), if the Managers and a Majority Interest of the remaining Members
do not approve by written consent the proposed sale or the Transferring Member's Membership or
Economic Interest to a transferee or donee which is not a Member immediately before the sale or
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gift, then the proposed transferee or donee shall have no right to vote or otherwise participate in the
management of the business and affairs of the Company of to become a Member. The transferee or
donee shall be an Economic Interest Owner only. No transfer of a Member's interest in the Company
(including any transfer of the Economic Interest or any other transfer which has not been approved as
set forth herein) shall be effective unless and until written notice (including the name and addresses
of the proposed transferee or donee and the date of such transfer) has been provided to the Company
and the nontransferring Member(s).
10.03.02 Upon, and contemporaneously with, any sale or gift of a Transferring Member's
Economic Interest in the Company which does not at the same time transfer the balance of the rights
associated with the Economic Interest transferred by the transferring Member (including, without
limitations, the rights of the transferring Member to participate in the management of the business
and affairs of the Company), the Company shall purchase from the Transferring Member, and the
Transferring Member shall sell to the Company for a purchase price of $10.00, all remaining rights
and interest retained by the Transferring Member which immediately prior to such sale or gift were
associated with the transferred Economic Interest.
10.04 Redemption Upon Death;
10.04.01 Within six (6) months from the date of death of any Member, the remaining
Member shall be obligated to purchase from the estate of the deceased Member any and all of the
units of economic interest ("Units") owned by the deceased Member upon his death.
10.04.02 The purchase price shall be based upon the net value of the Company (the
"Redemption Valuation") pro -rated by the amount of the deceased Member's Units to the current
outstanding Units of the Company. The Redemption Valuation of the Company (as determined for
the purpose of this Section only) shall be performed or determined by the Members at least annually,
or at such other time mutually agreed upon by the Members.
10.04.03 The initial Redemption Valuation is stated in Exhibit A.
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10,05 gut/Call Option:
10.05.01 Put/Call Rights. Notwithstanding any other provision of this Agreement, either
Member shall have the right and option at any time during the term of this Operating Agreement (the
"Put/Call Option"), exercisable by written notice (the "Put/Call Notice") delivered to the other
member (the "Other Member") by registered mail or by overnight courier stating that the Member
initiating the Put/Call Option (the "Offering Member") intends to exercise his right, pursuant to this
Section, to sell to or purchase from the other current Member (the "Other Member") and to cause
the Other Member to either (1) purchase any or all of the units of economic interest ("Units") owned
by the Offering Member in the Company or (2) sell to the Offering Member any or all of the Units
held by the Other Member in the Company for an aggregate purchase price equal to the Put/Call
Price (as hereinafter defined). The Put/Call Notice shall also specify the Put/Call Date (as hereinafter
defined). The Put/Call Notice shall be deemed to have been delivered (i) five business days after
being mailed by registered mail (return receipt requested and postage prepaid) to the recipient or (ii)
one business day after being sent by overnight courier (receipt confirmation requested).
10.05.02 For purposes hereof, the term "Put/Call Price" shall mean the Price Per Unit offered
by the Offering Member multiplied by the number of Put/Call Units involved.
10.05.03 The Offering Member shall fix the date (a "Put/Call Date") for the exercise and the
closing of a Put/Call Option no less than one hundred twenty (120) days after the Put/Call Notice is
deemed to be delivered as set forth above. All other terms of the purchase shall be dictated by the
Put/Call Notice.
10,05.04 Upon the closing of this Put/Call Option, the Member which is required to sell his
Units will deliver the certificates representing the Put/Call Units, duly endorsed for transfer to the
Member which is required to purchase his Units.
1.0.05.05 The delivery of a Put/Call Notice by the Offering Member shall irrevocably commit
the Parties to the sale or purchase, as the case may be, of the applicable Put/Call Units, subject to the
terms and provisions of this Agreement.
ARTICLE XI
ADDITIONAL MEMBERS
11.01 From the date of the formation of the Company, any Person or Entity acceptable to a
Majority Interest of Members may become a Member in this Company either by the Company of
Units for such consideration as the Managers shall determine, or as a transferee of a Member's
Membership Interest or any portion thereof, subject to the terms and conditions of this Operating
Agreement. No new Members shall be entitled to any retroactive allocation of losses, income, or
Operating Agreement - Page -13
expense deductions incurred by the Company. The Manager or Manager(s) may, at his or their
option, at the time a Member is admitted, close the Company books (as though the Company's tax
year had ended) or make pro rata allocations of loss, income, and expense deduction a new Member
for that portion of the Company's tax year in which a Member was admitted in accordance with the
provisions of section 706(d) of the Code and the Regulations promulgated there under.
ARTICLE XII
DISSOLUTION AND TERMINATION
12.01 Dissolution:
12.01.01 The Company shall be dissolved upon the occurrence of any of the
following events:
(1) when the period fixed for the duration of the Company, pursuant to section 1.05
hereof, expires;
(2) affirmative vote of Members holding a Majority Interest.; or
(3) upon a Withdrawal Event, unless the business of the Company is continued by the
consent of a Majority Interest of the remaining Members within 90 days after the withdrawal Event
and there are at least two remaining Members.
12.01.02 If a Member dies or a court of competent jurisdiction adjudges him
to be incompetent to manage his person or his property, the Member's executor, administrator,
guardian, conservator, or other legal representative may exercise all of the Member's rights for the
purpose of settling his estate or administering his property.
12.02 Winding Up, Liquidation, and Distribution of Assets:
12.02.01 Upon dissolution, an accounting shall be made by the Company's
independent accountants of the accounts of the Company and of the Company's assets, liabilities,
and operations, from the date of the last previous accounting until the date of dissolution. The
Manager(s) shall immediately proceed to wind up the affairs of the Company.
12.02.02 If the Company is dissolved and its affairs are to be wound up, the
Manager(s) shall:
(1) Sell or otherwise liquidate all of the Company's assets as promptly as practicable
(except to the extent the Manager(s) may determine to distribute any assets to the Members in kind),
Operating Agreement - Page -1.4
(2) Allocate any profit or loss resulting from such sales to the Members' and
Economic. Interest Owners' Capital Accounts in accordance with Article V111 hereof,
(3) Discharge all liabilities of the Company, including liabilities to Members and
Economic Interest Owners who are creditors, to the extent otherwise permitted by law, other than
liabilities to Members and Economic Interest Owner(s) for distributions, and establish such Reserves
as may be reasonably necessary to provide for contingent liabilities of the Company (for purposes of
determining the Capital Accounts of the Members and Economic Interest Owners, the amounts of
such Reserves shall be deemed to be an expense of the Company).
(4) Distribute the remaining assets in the following order:
(i) If any assets of the Company are to be distributed in kind, the net fair
market value of such assets as of the date of dissolution shall be determined by independent appraisal
or by agreement of the Members_ Such assets shall be deemed to have been sold as of the date of
dissolution for their fair market value, and the Capital Accounts of the Members and Economic
Interest Owners shall be adjusted pursuant to the provisions of Appendix A to this Operating
Agreement to reflect such deemed sale.
(ii) The positive balance (if any) of each Member's Economic Interest
Owner's Capital Account (as determined after taking into account all Capital Account adjustments for
the Company's taxable year during which the liquidation occurs) shall be distributed to the
Member(s), either in cash or in kind, as determined by the Member(s), with any assets distributed in
kind being valued for this purpose at their fair market value. Any such distributions to the Members
in respect of their Capital Accounts shall be made in accordance with the time requirements set
forth in section 1.704-1 (b)(2)(ii)(b)(2) of the Regulations.
12,02.03 Notwithstanding anything to the contrary in this Operating _Agreement, upon a
liquidation within the meaning of section 1.704-1 (b)(2)(ii)(g) of the Regulations, if any Member has
a Deficit Capital Account (after giving effect to all contributions, distributions, allocations and other
Capital Account adjustments for all taxable years, including the year during which such liquidation
occurs), such Member shall have no obligation to make any Capital Contribution, and the negative
of such Member's Capital Account shall not be considered a debt owed by such Member to the
Company or to any other person for any purpose whatsoever.
1.2.02.04 Upon completion of the winding up, liquidation and distribution of the
assets, the Company shall be deemed terminated.
12.02.05 The Manager(s) shall comply with any applicable requirements of applicable
law pertaining to the winding up of the affairs for the Company and the final distribution of its
assets.
Operating Agreement - Page -15
12.03 Articles of Dissolution: When all debts, liabilities and obligations have been paid and
discharged or adequate provisions have been made therefore and all of the remaining property and
assets have been distributed to the Member(s), articles of dissolution shall be executed in duplicate
and verified by the person signing the articles, which articles shall set forth the information required
by the Idaho Act. Duplicate originals of such Articles of Dissolution shall be delivered to the Idaho
Secretary of State.
12.04 Distributions Upon Dissolution: Upon the filing of Articles of Dissolution, the
existence of the Company shall cease, except for the purpose of suits, other proceedings and
appropriate action as provided in the Act. The Manager(s) shall have authority to distribute any
Company property discovered after dissolution, convey real estate, and take such other action as may
be Necessary on behalf of and in the name of the Company.
Return of Contribution Nonrecourse to Other Member: Except as provided by law or as
expressly provided in this Operating Agreement, upon dissolution, each Member shall look solely to
the assets of the Company for the return of its Capital Contribution. If the Company property
remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to
return the cash contribution of one or more Members, they shall have no recourse against any other
Member.
ARTICLE XIII DEFINITIONS
The following terms used in this Operating Agreement (including Appendix A hereto)shall
have the following meanings (unless otherwise expressly provided herein):
13.01 "Act" shall mean the Idaho Limited Liability Company Act as set forth in chapter 6,
Title 53, Idaho Code as in effect on the effective date of this Operating Agreement.
13.02 "Articles of Organization" shall mean the Articles of Organization of Reynolds
Properties, LLC, as filed with the Secretary of State of Idaho as the same may be amended from
time to time.
13.03 "Capital Account" as of a given date, shall mean the Capital Contribution of a Member
as adjusted up to the date in question pursuant to the provisions in section I of Appendix A.
13.04 "Capital Contribution" shall mean any contribution to the capital of the Company in
cash, property or service by a Member whenever made.
13.05 "Capital Interest" shall mean the proportion that a Person's positive Capital Accounts
bears to the aggregate positive Capital Accounts of all Persons whose Capital Accounts have positive
balances as may be adjusted from time to time.
Operating Agreement - Page -16
13.06 "Code" shall mean the Internal Revenue Code of 1986 as in effect on the effective date
of this Operating Agreement.
13.07 "Company" shall refer to Reynolds Properties, LLC.
13.08 "Defcit Capital Accounts" shall mean, with respect to any Member, the deficit
balance, if any, in such Member's Capital Account as of the taxable year, after giving effect to the
following adjustments:
(i) credit to such Capital Account any amount which such Member is treated as
obligated to restore under section 1.704-1 (b)(2)(ii)(c) of the regulations, as well as any addition
thereto pursuant to the penultimate sentences of sections 1 .704-2(g)( 1 )and(l)(5) of the Regulations,
after taking into account thereunder any changes during such year in partnership minimum gain (as
determined in accordance with section 1 .704-2(d)of the Regulations) and in the minimum gain
attributable to any member(s) nonrecourse debt (as determined under section 1 .704-2(1)(3) of the
Regulations); and
(ii) debit to such Capital Account the items described in sections 1.704-1
(b)(2)(ii)(d)(4), (5)and(6) of the Regulations.
This definition of Deficit Capital Account is intended to comply with the provisions of Regulations
section 1.704-2, and will be interpreted consistently with those provisions.
13.09 "Economic Interest" shall mean a Member's or Economic Interest Owner's Capital
Interest and share of one or more of the Company's Net Profits, Net Losses, and Distributions of the
Company's assets pursuant to this Operating Agreement and the Act, but shall not include any right
to participate in the management or affairs of the Company, including, the right to vote on, consent
to, or otherwise participate in, any decision of the Members or Managers. If elected by the Managers,
an Economic Interest in the Company shall be evidenced by a certificate in the form approved by the
Managers and setting forth the number of Units of Economic Interest evidenced thereby. The
possession of a duly executed certificate of Economic Interest in the name of the holder shall be
prima facie evidence of the right of the holder to participate in the profits and distributions of the
Company. Each certificate shall bear a unique number and a record shall be kept by the Managers of
each certificate issued and the name of the holder to whom the certificate was issued. Except as
otherwise limited in this Operating Agreement, a certificate of Economic Interest may be sold, gifted,
or otherwise transferred by an Economic Interest holder by executing the certificate on the reverse
side and submitting it to the Manager(s) for transfer on the Company's book. Upon transfer upon the
Company's books, the Managers shall cancel the submitted certificate of Economic Interest and shall
issue a new certificate in the name of the new holder of an Economic Interest. In making any
distribution or report, the Managers shall be entitled to rely upon the Economic Interests as set forth
in the books and records of the Company at the time the distribution or report is authorized. Upon
evidence sufficient in the Managers' judgment to establish that a certificate has been lost, stolen,
destroyed, or otherwise made unavailable, the certificate shall be canceled and a replacement issued.
Operating Agreement - Page -17
13.10 '`Economic Interest Owner" shall mean the owner of an Economic Interest who is
not a Member.
13.11 "Entity" shall mean any general partnership, limited partnership, limited liability
company, corporation, joint venture, trust, business trust, cooperative, or association or any foreign
trust or foreign business organization.
13.12 "Fiscal Year" shall mean the Company's fiscal year, which shall be the calender year.
13.13 "Gifting Member" shall mean any Member or Economic Interest Owner who gifts,
bequeaths, or otherwise transfers for no consideration (by operation of law or otherwise, except with
respect to bankruptcy) all or any part of its Membership Interest or Economic Interest.
13.14 "Initial Capital. Contribution" shall mean the initial contribution to the capital of the
Company pursuant to this Operating Agreement.
13,15 "Interest Holder" shall mean a person who has an Economic Interest, whether or not
a Member.
13.16 "Interest Holder Nonrecourse Debt" has the same meaning given to the terra
"Partner Nonrecourse Debt" in section 1.704-2 (b) (4) of the Regulations.
13.17 "Interest Holder Nonrecourse Debt Minimum Gain" means an amount, with respect
to each Interest Holder Nonrecourse Debt, equal to the Minimum Gain that would result if such
Interest Holder Nonrecourse Debt was treated as a Nonrecourse Liability, determined as if each
Interest Holder were a partner in a partnership in accordance with section 1.704-2 (i)(3) of the
Regulations.
13.18 "Majority Interest" shall mean one or more Units held by Members which, taken
together, exceed 50% of the aggregate of all Units held by Members.
13.19 "Manager" shall mean a person so appointed pursuant to section 4.01.
13.20 "Member" shall mean each of the parties who executes a counterpart of this Operating
Agreement as a Member and each of the parties who may hereafter become Members. To the extent
a Manager has purchased Membership Interests in the Company, he will have all the rights of a
Member with respect to such Membership Interests and the term "Member" as used herein shall
include a Manager to the extent he has purchased such Membership Interests in the Company.
13.21 "Membership Interest" shall mean a Member's entire interest in the Company
including such Member's Economic Interest and the right to participate in the management of the
business and affairs of the Company, including the right to vote on, consent to, or otherwise
participate in any decision or action of or by the Members granted pursuant to this Agreement and
Operating Agreement - Page -18
the Idaho Act.
13.22 "Minimum Gain" has the same meaning as "Partnership Minimum Gain" in sections 1
704-2(b)(2) and 1.704-2(d) of the Regulations.
13.23 `"Nonrecourse Deductions' has the meaning set forth in section 1 .704-2(b)(1) of the
Regulations.
13.24 "Nonrecourse Liability" has the meaning set forth in section 1 .704-2(b)(3) of the
Regulations.
13.25 "Operating Agreement" shall mean this Operating Agreement as originally executed
and as amended from time to time.
13.26 "Person" shall mean any individual or entity, and the heirs, executors, administrators,
legal representatives, successors, and assigns of such "Person" where the context so permits.
13.27 "Profits" and "Losses" means, for each Fiscal Year, an amount equal to the
Company's taxable income or loss for such Fiscal. Year, 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:
13.27.01 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 section 13.27 shall be
added to such taxable income or loss;
13.27.02 Any expenditures of the Company described in section 705(a)(2)(B) of the
Code or treated as section 705(a)(2)(B)of the Code 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 section 13.28 shall be subtracted from such taxable income or loss;
13.27.03 If the book value of the Company property is adjusted as provided for in
section 1.02 of Appendix A, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or Losses;
13.27.04 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 book
value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs
from its book value;
Operating Agreement - Page -19
13.27.05 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
and amortization for such fiscal Year, computed in accordance with generally accepted accounting
principles;
13.27.06 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)(4) or to be taken into account in determining Capital Accounts as a result of a
distribution other than in complete liquidation of an Interest Holder's Economic Interest, 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 the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Profits or Losses; and
13.27.07 Notwithstanding any other provision of this section 13.27, any items which
are specially allocated pursuant to section 2.02 or section 2.03 of Appendix A shall not be taken into
account in computing Profits and Losses.
The amounts of the items of Company income, gain, loss, or deduction available to be
specially allocated pursuant to sections 2.02 and 2.03 of Appendix A shall be determined by applying
rules analogous to those set forth in sections 13.27.01 through 13.27.07 above.
13.28 "Regulations" shall include proposed, temporary, and final regulations promulgated
by the Treasury Department under the Code in effect as of the effective date of this Operating
Agreement.
13.29 "Reserve" shall mean, with respect to any fiscal period, funds set aside or amounts
allocated during such period to reserves which shall be maintained in amounts deemed sufficient by
the Managers for working capital and to pay taxes, insurance, debt service, or other costs or expenses
incident to the ownership or operation of the Company's business.
13.30 "Selling Member" shall mean any Member or Economic Interest Owner which sells,
assign, pledges, hypothecates, or otherwise transfers for consideration all or any portion of its
Membership Interest or Economic Interest.
both. 13,31 "Transferring Member" means either a Selling Member or a Gifting Member, or
13.32 "Units" or "Unit" shall mean units or unit of Economic Interest as evidence by a
Certificate of Economic Interest.
13.33 "Withdrawal Events" means the death, insanity, bankruptcy, retirement, resignation,
expulsion, or other event of disassociation or withdrawal, of any Member.
Operating Agreement - Page -20
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.01 Notice: Any notice, demand, or communication required or to be permitted to be given
by any provision of this Operating Agreement shall be deemed to have been sufficiently given or
served for all purposes if delivered personally to the party or to an executive officer of the party to
whom the same is directed or, if sent by registered or certified mail, postage and charges prepaid,
addressed to the Member's and/or company's address, as appropriate, which is set forth in this
Operating Agreement. Except as otherwise provided herein, any such notice shall be deemed to be
given three business days after the date on which the same was deposited in a regularly maintained
receptacle for the deposit of United States mail, addressed and sent as aforesaid.
14.02 Books of Account and Records: Proper and complete records and books of account
shall be kept or shall be caused to be kept by the Managers in which shall be entered fully and
accurately all transactions and other matters relating to the Company's business in such details and
completeness as is customary and usual for businesses of the type engaged in by the Company. Such
books and records shall at all times be retained at the principal executive office of the Company and
shall be open to the reasonable inspection and examination by the Members or their duly authorized
representatives during reasonable business hours.
14.03 Application of Idaho Law: This Operating Agreement, and the application or
interpretations thereof, shall be governed exclusively by its terms and by the laws of the State of
Idaho, and specifically the Act.
14.04 Classification for Federal Income Tax Purposes: It is the intent of the Members that
the Limited Liability Company hereby formed is to be taxed as a partnership for federal income tax
purposes. To this end, the Members have executed this agreement with the understanding that the
provisions hereof will cause the Company to be classified as a partnership for federal income tax
purposes. Thus, notwithstanding any other provisions hereof, all provisions hereof shall be
interpreted consistent with this intent and, if any provisions hereof would cause the Company to be
taxed as an association taxable as a corporation for federal income tax purposes, then said provisions
shall be void and this agreement shall be construed to contain provisions similar to said void
provision or provisions to the extent that said inclusion does not cause the Company to be taxed
other than as a partnership for federal income tax purposes. The Managers and the Members agree
that they may change any provisions hereof retroactively to effectuate the intent as set forth herein
and agree to be bound thereby, without giving rise to any cause of action by any person or entity, in
law or equity, even if they acted in reliance on said void provision or provisions.
14.05 Waiver of Action for Partition: Each Member and Economic Interest Owner
irrevocably waives, during the term of the Company, any right that it may have to maintain any
action for partition with respect to the property of the Company.
Operating Agreement - Page -21
14.06 Amendments: This Operating Agreement may not be amended except by the
unanimous written agreement of all of the Members.
14.07 Execution of Additional Instruments: Each Member hereby agrees to execute such
other and further statements of interest and holdings, designations, power of attorney and other
instruments necessary to comply with any laws, rules or regulations.
14.08 Construction: Whenever the singular number is used in this Operating Agreement and
when required by the context, the same shall include the plural and vice versa, and the masculine
gender shall include the feminine and neuter genders and vice versa.
14.09 Headings: The headings in this Operating Agreement are inserted for convenience
only and are in no way intended to describe, interpret, define, or limit the scope, or extent of this
Operating Agreement or any provisions hereof.
14.10 Waivers: The failure of any -party to seek redress for violation of or to insist upon the
strict performance of any covenant or condition of this Operating Agreement shall not prevent a
subsequent act, which would have originally constituted a violation, from having the effect of an
original violation.
14.11 Rights and Remedies Cumulative: The rights and remedies provided by this
Operating Agreement are cumulative and the use of any one right or remedy by any party shall not
preclude or waiver the right to use any or all other remedies. Said rights and remedies are given in
addition to any other rights a party may have by law, statute, ordinance, or otherwise.
14.12 Severability: If any provision of this Operating Agreement, or the application thereof,
to any person or circumstance shall be invalid, illegal, or unenforceable to any extent, the remainder
of this Operating Agreement, and the application thereof, shall not be affected and shall be
enforceable to the fullest extent permitted by law.
1413 Heirs, Successors, and Assigns: Each and all of the covenants, terms, provisions, and
agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and,
to the extent permitted by this Operating Agreement, their respective heirs, legal representatives,
successors, and assigns.
14.14 Creditors: None of the provisions of this Operating Agreement shall be for the benefit
of or enforceable by any creditors of the Company.
14.15 Counterparts: This Operating Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the same instrument.
Operating; Agreement - Page -22
14.16 Rule Against Perpetuities: The parties hereto intend that the Rule Against
Perpetuities (and any similar rule of law) not be applicable to any provisions of this Operating
Agreement. However, notwithstanding anything to the contrary in this Operating Agreement, it
would be invalid or unenforceable because of the Rule Against Perpetuities or any similar rule of law
but for this section 14.16, the parties hereto hereby agree that said interest shall vest in full on the
last day so limited.
14.17 Investment Representations: The undersigned Members and Economic Interest
Owners, if any, understand (1) that the Membership Interest and Economic Interest evidenced by this
Operating Agreement have not been registered under the Securities Act of 1933, the Idaho Securities
Act or any other state securities law (the "Securities Act") because the Company believes that such
interests are not required to be so registered. In the alternative, the Company is issuing these
Membership Interests and Economic Interests in reliance upon the exemptions from the registration
requirements of the Securities Act providing for issuance of securities not involving a public offering
(2) that the Company has relied upon the fact that the Membership Interests and Economic Interests
are to be held by each Member for investment, and (3) that exemption from registrations under the
Securities Acts would not be available if the Membership Interests and Economic Interests were
acquired by a Member with a view to distribution.
Accordingly, each Member and Economic Interest Owner hereby confirms to the Company
that such Members and Economic Interest Owner are acquiring the Membership Interests and
Economic Interests for such own Member's and Economic Interest Owner's account, for investment,
and not with a view to the resale or distribution thereof. Each Member and Economic Interest Owner
agrees not to transfer, sell, or offer for sale any portion of the Membership Interests or Economic
Interests unless there is an effective registration or other qualification relating thereto, under the
Securities Act of 1933 and under any applicable state securities laws or unless the holder of
Membership Interests or Economic Interests delivers to the Company an opinion of counsel,
satisfactory to the Company, that such registration or other qualification under such Act and
applicable state securities laws is not required in connection with such transfer, offer, or sale. Each
Member and Economic Interest Owner understands that the Company is under no obligation to
register the Membership Interests or Economic Interests or to assist such Member or Economic
Interest Owner in complying with any expectation under the Acts if such Member or Economic
Interest Owner should at a later date, wish to dispose of the Membership Interest or Economic
Interest. Furthermore, each Member realizes that the Membership Interests and Economic Interests
are unlikely to qualify for disposition under Rule 144 of the Securities and Exchange Commission
unless such Member is not an "affiliate" of the Company and the Membership Interest or Economic
Interest has been beneficially owned and fully paid for by such Member or Economic Interest Owner
for at least three years.
Operating Agreement - Page -23
Prior to acquiring the Membership Interests and Economic Interests, each Member and
Economic Interest Owner has made an investigation of the Company and its business and the
Company has made available to each such Member and Economic Interest Owner all information
with respect thereto which such Member needed to make an infortned decision to acquire the
Membership Interest or Economic Interest_ Each Member and Economic Interest Owner, together
with their respective legal and investment advisors, considers himself or itself to possess experience
and sophistication as an investor which are adequate for the evaluation of the merits and risks of such
Member's or Economic Interest Owner's investment in the Membership Interest or Economic
Interest.
14.17 Investment Representations: Should any discrepancies between this operating
agreement and the Members Agreement occur, the Members Agreement shall be controlling.
CERTIFICATE
The undersigned hereby agree, acknowledge, and certify that the foregoing Operating Agreement,
consisting of 24 pages, excluding the Exhibits, constitutes, the Operatin Agreement of Reynolds
Properties, LLC, adopted by the Members of the Company as of the 18` day of September, 2008.
MEMBERS:
Jeff Reynolds Curtis Fern�
Operating Agreement - Page -24
EXHIBIT "A"
Member Nance Initial Capital Number of Units of
and Address Contribution Economic Interest
Jeff Reynolds Ninety percent (90%) 90%a
4520 North State Road 37 of Initial Assets
Orleans, Indiana 47452 Valued at $15,750,000=
Curtis Ferney Ten Percent (10%) 10%
2481 North 2000 West of Initial Assets
Rexburg, Idaho 83440 Valued at $15,750,000*
Total.- 100% Total: 100%
*Schedule of Values as of 9/15/09:
1 - Grizzly Creek Ranch
+ or — 6400 acres
Including some improvements.
Adams County, Idaho
2 - Lava Hot Springs
+ or — 650 acres
No improvements
Bannock County, Idaho
3 - Jensen Farm
60 acres development land
No improvements
Madison County, Idaho
4 - Pine Brook Estates Sub Division
83 acres of development land including
Including some improvements
Madison County, Idaho
Operating Agreement Page -25
$ 5,000,000.00
$ 950,000.00
$ 4,400,000.00
$ 5,400,000.00