Rights and Obligations of Members; Meetings

Question 1

How are meeting of the members called?

Answer 1

Manager and any member may call a meeting.

Question 2

When is a meeting held?

Answer 2

Manager will determine when to hold a meeting.

Question 3

Where can meetings be held?

Answer 3

Any place manager may determine.

Question 4

What are the notice requirements for a meeting?

Answer 4

Notice by mail not more than 10 days or less than 1 day. Notice personally, fax or email not more than 1 day.

Question 5

How does a member waive notice?

Answer 5

In writing, signed by Member or If a member is present at a meeting.

Question 6

What is a quorum?

Answer 6

Members holding a majority of votes entitled to vote on a matter are a quorum.

Question 7

How many votes does a member have?

Answer 7

A member has the right to vote in their percentage interest.

Question 8

How many votes constitute approval of an action?

Answer 8

Generally, over 50% of the percentage interest.

Question 9

Can members participate by phone?

Answer 9

Yes, so long as all members can hear each other.

Question 10

Can the parties take action by written consent?

Answer 10

Yes. Can be taken without notice and without a vote. Must be signed by the members with the Percentage Interest required and the writings are filed with the minutes.

Question 11

Are proxies permitted?

Answer 11

Yes.

Question 12

Can members bind the company?

Answer 12

Generally no. A member must act by resolution expressly authorizing the action, duly “adopted” by the manager, and approved by the members needing to approve

Question 13

Are the Members’ liabilities limited?

Answer 13

Yes, except to the extent provided under the Delaware Act. A Member will have no liability of the debts, obligations and liabilities of the Company.

Question 14

Is a Member’s liability to the other Members or the Company limited?

Answer 14

Yes. A Member’s obligations cannot exceed the amount of the Member’s Capital Contributions.

Question 15

What actions require the approval of the Local Member?

Answer 15

(i) Amendment of the Agreement (except to the extent the Manager has the right under the Agreement to amend)
(ii) Redeem or repurchase any Units
(iii) Increase the number of Authorized Units
(iv) Authorize or issue any new class of Units (except in connection with the sale of the Company)
(v) Make any new Investment
(vi) Change the nature of the Company’s business
(vii) Enter into any Affiliate Transaction (with exceptions)
(viii) Voluntary liquidation or dissolution

Question 16

What are the exceptions to Affiliate Transactions that can be entered into without a Local Member’s approval?

Answer 16

(i) Transactions with the Local Operating Company and PDC permitted under the Agreement
(ii) Sale of the Company pursuant to drag-along rights
(iii) Any Capital Contribution or Advance
(iv) An agreement for the provision of services in connection with an Investment.
(v) Affiliate Transactions already approved.

Question 17

Can a Member voluntarily withdraw?

Answer 17

No, not so long as a Member holds any Units.

Question 18

Under what circumstances will a Member be deemed withdrawn?

Answer 18

Dissolution of a Member, death of a Member; the Member becoming insolvent.

Question 19

What happened to a Withdrawn Member?

Answer 19

Such a Member is deemed disassociated with the Company and will be treated as an “Assignee”

Question 20

What are the rights and obligations of a Withdrawn Member?

Answer 20

(i) The Assignee is entitled to receive Distributions and to transfer it Units.
(ii) The assign is NOT entitle to redemption or repurchase of the Units, or any payment in connection with the “Withdrawal Event”
(iii) An Assignee’s rights are derived only from the rights associated with the Units on or prior to the Withdrawal.
(iv) An Assignee does not have any constructive interest in the Company.
(v) An Assignee does not have any non-economic rights, such as the right to vote, bind the Company, etc.
(vi) The Assignee is still bound to the obligations under the Agreement that inure to the benefit of the Company or any Member.

Question 21

Is an Assignee of a Withdrawn Member’s interest responsible for Capital Contributions and return of distributions or other payment?

Answer 21

Yes. An assignee is subject to the liabilities and obligations of the transferor Member.