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HomeMy WebLinkAboutLimited Liability Company AgreementLIMITED LIABILITY COMPANY AGREEMENT OF ARTESIAN ASSETS, LLC (a Texas Limited Liability Company) THIS LIMITED LIABILITY COMPANY AGREEMENT (this "A Bement") of Artesian Assets, LLC (the "Company"), dated to be effective as of Septembers 2007, is executed, agreed to and adopted, for good and valuable consideration, by the undersigned members (the "Members'. ARTICLE L Formation of Limited Liability Company Section 1.1. Formation. The Company has been organized as a Texas limited liability company by the filing of a Certificate of Formation (the "Certificate'D with the Secretary of State of Texas under and pursuant to the Texas Business Organizations Code (such Code and any successor statute, as amended from time to time, being herein called the "Code"). Section 1.2. Name. The name of the Company is "Artesian Assets, LLC". All Company business shall be conducted in that name or such other names that comply with the Code as the Members may select from time to time. Section 1.3. Purpose. The purpose for which the Company is formed is to transact any and all lawful business of every Idnd and character for which limited liability companies may be organized under the Code. Section 1.4. Registered Office; Registered Agent; Principal Place of Business; Other Offices. The registered office of the Company required by the Code to be maintained in the State of Texas shall be the initial registered office named in the Certificate or such other office (which need not be a place of business of the Company) as the Managers may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Texas shall be the initial registered agent named in the Certificate or such other person or persons as the Managers may designate from time to time in the manner provided by law. The principal place of business and mailing address of the Company shall be 301 Congress Avenue, Suite 555, Austin, Texas 78701. The Managers, at any time and from time to time, may change the location of the Company's principal place of business and may establish such additional place or places of business of the Company as the Manager shall determine to be necessary or desirable. Actions of the Managers under this Section 1.4 shall require the written approval of all Members. Section 1.5. Term. The Company shall commence on the date of filing of the Certificate, and shall continue in existence for the period fixed in the Certificate for the duration of the Company or such earlier time as this Agreement may specify. Section 1.6. No State -Law Partnership. The Company shall not be considered a partnership (including, without limitation, a limited partnership) or joint venture, and no Member shall be a partner or joint venturer of any other Member for any purposes other than federal and state tax purposes, and this Agreement shall not be construed to suggest otherwise. Section 1.7. Title to Company Property. All assets and property owned by the Company, whether real or personal, tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually, shall have any ownership of such property. All the Company's assets and properties shall be recorded as the property of the Company on its books and records. ARTICLE IL Definitions Section 2.1. Defined Terms. In addition to the capitalized terms defined elsewhere in this Agreement, the following terms shall have the respective meanings assigned to them in this Section 2.1: "Capital Contributions" shall mean for any Member at the particular time in question the aggregate of the dollar amounts of any cash or the fair market value of any property contributed to the capital of the Company, or, if the context in which such term is used so indicates, the dollar amounts of cash or the fair market value of any property agreed to be contributed, or requested to be contributed, by such Member to the capital of the Company. "Certificate" shall have the meaning assigned to such term in Section 1.1. "Code" shall have the meaning assigned to such term in Section 1.1. "Company" shall mean Artesian Assets, LLC, the Texas limited liability company governed by this Agreement "Internal Revenue Code" shall mean the Internal Revenue Code of 1986 and any comparable successor statute or statutes thereto, as amended from time to time. "Manager" shall mean the initial manager as set forth in the Certificate, each of the persons named herein as Manager, and any person or persons selected as a Manager by the Members and serving as such in accordance with this Agreement "Members" shall initially mean the members executing this Agreement, and upon assignment of its Membership Interest, the person or persons to whom such Membership Interest is assigned in accordance with the terms of this Agreement. "Membership Interest" shall mean the interest of a Member in the Company stated as a percentage, and for all Members aggregating 100%. ARTICLE M. Members Section 3.1. Members. The name, address and Membership Interest of the initial Member of the Company are set forth on Schedule A hereto. . Section 3.2. Additional Members and Membership Interests. Additional persons may be admitted to the Company as Members and Membership Interests may be created and issued to such persons on such terms and conditions as approved by all of the Members and as shall be reflected in an appropriate amendment to Schedule A to this Agreement, which amendment shall be approved by all of the Members. Section 3.3. Liability of Members. No Member shall be liable for the debts, liabilities, contracts or other obligations of the Company except to the extent of any unpaid Capital Contributions such Member has agreed to make to the Company and such Member's share of the assets (including undistributed revenues) of the Company; and in all events, a Member shall be liable and obligated to make payments of his Capital Contributions only as and when such payments are due in accordance with the terms of this Agreement. No Member shall be required to make any loans to the Company. The Company shall indemnify and hold harmless a Member in the event a Member becomes liable, notwithstanding the preceding sentence, for any debt, liability, contract or other obligation of the Company except to the extent expressly provided in the first sentence of this Section 3.3. Section 3.4. Limitations on Members. Other than as specifically provided for in this Agreement or the Code, no Member shall: (i) be permitted to take part in the business or control of the business or affairs of the Company; (ii) have any voice in the management or operation of any Company property; or (iii) have the authority or power to act as agent for or on behalf of the Company or any other Member, to do any act which would be binding on the Company or any other Member, or to incur any expenditures on behalf of or with respect to the Company. ARTICLE IV. Capitalization Section 4.1. Initial Contributions. The Members have made an initial Capital Contribution as is set forth on Schedule A attached hereto. Notwithstanding anything to the contrary herein, such initial Capital Contribution shall be the maximum contribution to the Company that such Member shall be required to make. Section 4.2. Additional Capital Contributions. The Managers, acting unanimously, at any time and from time to time, may request that the Members make additional Capital Contributions to the capital of the Company, but in no event shall the Members be required to make additional Capital Contributions. Section 4.3. Advances by Members. If the Company does not have sufficient cash to pay its obligations or is otherwise in need of working capital, any Member that may agree to do so may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section 4.3 constitutes a loan from such Member to the Company and shall bear interest from the date of the advance until the date of payment at a rate per annum agreed to by the Managers and such Member and shall not constitute a part of such Member's Capital Contribution. Section 4.4. Withdrawal and Return of Capital Contribution. No Member shall be entitled to (a) withdraw from the Company, (b) transfer or assign the Member's interest in the Company except in accordance with Article VIII, or (c) the return of the Member's Capital Contributions except to the extent, if any, that distributions made pursuant to the express terms of this Agreement may be considered as such by law or as expressly provided for in this Agreement. No interest shall accrue on any Capital Contributions. ARTICLE V. Allocations and Distributions Section 5.1. Allocations of Profits and Losses. Except as may otherwise be required by applicable Treasury Regulations (including Treasury Regulations applicable to allocations attributable to Company indebtedness), all profits and losses and all related items of income, gain, loss, deduction, and credit of the Company shall be allocated, charged, or credited among the Members in proportion to their respective Membership Interests. Section 5.2. Distributions. The Company may distribute funds to the Members at such times and in such amounts as the Managers shall determine to be appropriate, consistent with the applicable duties owed by the Managers to the Members under the Code and under Texas law. Any such distributions shall be made to the Members in proportion to their respective Membership Interests at the time of the distribution with no priority as to any Member. In determining the amounts to be distributed pursuant to the foregoing sentence, the Managers shall give due regard to the current and reasonably foreseeable obligations of the Company, taking into account working capital needs, any capital requirements and any contingent liabilities in connection with any of the Company's business or investment activities. Section 5.3. Liquidating Distributions. Distributions made in the course of liquidating the Company shall be made in accordance with Section 10.2. ARTICLE VI. Meetings of Members Section 6.1. Meetings. Any Manager may call meetings of the Members at such times and locations and for such purposes as it shall determine to be appropriate and in the best interests of the Company. ARTICLE VIL Management Section 7.1. Manager Managed. The Company hereby acknowledges the appointment of Alexander B. Long as the initial Manager of the Company. The Manager shall manage the business and affairs of the Company. The Manager shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all determinations regarding those matters, and to perform any and all other acts or activities customary or incident to the management of the Company's business. Section 7.2. Officers. The Manager may elect such officers of the Company as they may determine to be necessary from time to time. All officers shall serve at the pleasure of the Manager and shall hold their offices for such terms and shall exercise such power and perform such duties as shall be determined from time to time by the Manager. Section 7.3. Number and Qualifications of Managers. There shall be one Manager of the Company, which number may be increased or decreased from time to time by the vote or consent of all of the Members. No decrease in the number of Managers shall have the effect of shortening the term of any incumbent Manager unless approved by the vote or consent of the Members. A Manager need not be a Member of the Company or a resident of the State of Texas. Section 7.4. Election and Term of Service. Each Manager elected shall serve as Manager until his or her successor shall have been elected by the Members and qualified or until his or her earlier death, resignation, retirement, disqualification or removal in accordance with this Agreement. Section 7.5. Removal; Filling of Vacancies. Any or all of the Managers may be removed, either for or without cause, by a vote of all of the Members (excluding the Managers). Any vacancy occurring in the Managers resulting from the death, resignation, retirement, disqualification or removal from office of any Manager, as the result of an increase in the number of Managers, or otherwise, may be filled by the Members. Section 7.6. Action Without a Meeting. Unless otherwise restricted by this Agreement, any action required or permitted to be taken at any meeting of the Managers may be taken without a meeting, if the Managers consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Company. Section 7.7. Liability for Actions. No Manager shall be liable, responsible or accountable in damages or otherwise to the Company for any action or failure to act (even if such action or failure to act constituted the simple negligence of such person), provided such Manager was not guilty of a material breach of this Agreement, fraud, gross negligence or willful or intentional misconduct with respect to such act or failure to act. Section 7.& Indemnification. The Company shall, to the full extent permitted by applicable law, indemnify, defend and hold harmless any person (or the estate_ of any person) who was or is a party to, or is threatened to be made a party to, a threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Company, whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a Manager from and against any and all claims, demands, liabilities (including strict liability), losses, damages, costs or expenses (including attorneys' fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred by such person in connection with such action, suit or proceeding. The Company may, to the full extent permitted by law, purchase and maintain insurance on behalf of any such person against any liability that may be asserted against such person. Any expenses covered by the foregoing indemnification shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the person seeking indemnification to repay such amounts if it is ultimately determined that such person is not entitled to be indemnified. The indemnification provided in this Section 7.8 shall not be deemed exclusive of any other rights to which any person seeking indemnification from the Company may be entitled under any agreement, action by the Members or otherwise, both as to action in such person's official capacity and as to action in another capacity while serving as a Manager. The Company may, to the full extent permitted by applicable law, indemnify, defend, hold harmless and advance expenses of such other persons not identified above (or the estate of any such other persons) on such terns as it deems necessary, desirable or advisable from time to time. ARTICLE VIIL Assignments of Membership Interests Section 8.1. Assignment by Members. A Member's Membership Interest shall not be sold, transferred, pledged, assigned or otherwise disposed of, in whole or in part, without complying with the applicable terms of this Article VIII. Unless a transferee becomes a substituted Member in accordance with the provisions set forth below, such transferee shall not be entitled to any of the rights or powers granted to a Member hereunder, other than the right to receive allocations of income, gain, loss, deduction, credit, and similar items and distributions to which the assignor would otherwise be entitled to the extent such items are assigned. Section 8.2. Substitution of Members. In addition to compliance with the provisions of Section 8.1, to the extent applicable, a transferee of the interest of a Member may become a substituted Member subject to the following terms, conditions and limitations: (a) The transferor has given the transferee the right to become a substituted _. Member; (b) Approval of all of the Members and the written consent to the substitution of the transferee as a Member by all of the Members; (c) The transferee has paid to the Company all costs and expenses incurred in connection with such transferee's substitution as a Member, which costs and expenses will include, without limitation, all legal and accounting fees and expenses incurred by the Company or its counsel and all costs incurred in amending this Agreement and in preparing, filing, recording and publishing any certificates and instruments necessary or appropriate in connection therewith; and (d) The transferee shall have executed and delivered such instruments and documents, in form and content satisfactory to the Managers, as the Managers may deem necessary, advisable or appropriate to effect the substitution of such transferee as a Member. The Company and the Managers will be entitled to consider the owner of any Membership Interest in the Company as set forth in the records of the Company as the absolute owner thereof for all purposes. Neither the Company nor any Manager will incur any liability for distributions of cash or other property made in good faith to the owner of an interest in the Company as reflected on the Company's records until such time as a written assignment of such interest has been received and accepted by the Managers and recorded on the books of the Company. No Member shall under any circumstances sell, pledge, transfer, assign or otherwise dispose of its interest in the Company to a minor or incompetent or to any other person not qualified to become a Member pursuant to this Agreement and; in the event any such action should be attempted, such will be null, void and ineffectual and will not bind the Company or the Managers. In no event will any, purported transfer of a Membership Interest in the Company, by operation of law or otherwise, require the Managers to account to more than one person with respect to such transferred interest. In the event of a transfer by a Member, for purposes of allocations between the transferor and the transferee of deductions, credits and income of the Company for federal, state and local income tax purposes, the transfer shall be recognized by the Company effective as of the first day of the month following the date of the transfer. ARTICLE IX. Accounting and Tax Matters; Banking Section 9.1. Books and Records. The Manager shall maintain or cause the Company to maintain books and records as required by, and in accordance with the Code. Such books shall be kept at the principal office of the Company and shall be maintained in accordance with the terms of this Agreement The fiscal year of the Company shall be the calendar year, and the Manager or officers, at the direction of the Manager, shall keep the books of account of the Company on such basis. Section 9.2. Tax Status. Any provision hereof to the contrary notwithstanding, solely for United States income tax purposes the Members hereby recognize and agree that the Company shall be disregarded as an entity separate from the sole Member. In the event that additional persons are admitted to the Company as Members, the Company shall thereupon be treated as a partnership for federal income tax purposes. Section 9.3. Bank Accounts. The Manager shall cause one or more accounts to be maintained in a bank (or banks), which accounts shall be used for the payment of the expenditures incurred by the Company in connection with the business of the Company, and in which shall be deposited any and all receipts of the Company. The Manager shall determine the number of and the persons who will be authorized as signatories on each such bank account. The Manager, acting unanimously, may invest the Company funds in such money market accounts or other investments as the Manager shall determine to be necessary or appropriate. ARTICLE X. Dissolution, Liquidation and Termination Section 10.1. Dissolution. The Company shall be dissolved upon the occurrence of any of the following: (a) The written consent of all of the Members. (b) The adjudication of bankruptcy or insolvency of the Company or the assignment by the Company for the benefit of creditors. (c) The occurrence of any other event that under the Code causes the dissolution of a limited liability company. Section 10.2. Liquidation and Termination. Upon dissolution of the Company, the Members shall appoint in writing one or more liquidators who shall have full authority to wind up the affairs of the Company and make final distribution as provided herein. The liquidator shall continue to operate the Company properties with all of the power and authority of the Manager. The steps to be accomplished by the liquidator are as follows: (a) As promptly as possible after dissolution, the liquidator shall cause a proper accounting to be made of the Company's assets, liabilities and operations through the end of the day on which the dissolution occurs or the final liquidation is completed, as appropriate. (b) The liquidator shall pay all of the debts and liabilities of the Company (including all expenses incurred in liquidation) or otherwise make adequate provision therefor (including without limitation the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidator may reasonably determine). After making payment or provision for all debts and. liabilities of the Company, all remaining assets shall be distributed to the Members in proportion to their Membership Interests. Such a distribution shall be in cash or in kind as determined by the liquidator. (c) Except as expressly provided herein, the liquidator shall comply with any applicable requirements of the Texas Business Organizations Code, including without limitation Sections 11.051-11.055, 11.101-11.102 and 101.551-101.552 thereof, and all other applicable laws pertaining to the winding up of the affairs of the Company and the final distribution of its assets. (d) Notwithstanding any provision in this Agreement to the contrary, no Member shall be obligated to restore a deficit balance in his or her capital account at any time. (e) Upon completion of the distribution of Company assets as provided herein, the Company shall be terminated and the Manager shall cause a Certificate of Termination to be prepared and filed with the Secretary of State of Texas, and take such other actions as may be necessary to terminate the Company. The distribution of cash or property to the Members in accordance with the provisions of this Section 10.2 shall constitute a complete return to the Members of their respective Membership Interests and all Company property. ARTICLE M. Amendments Section 11.1. Amendments. The Certificate and this Agreement may be amended or repealed, or a new certificate or limited liability company agreement may be adopted, only by the written consent of all of the Members. ARTICLE M Miscellaneous Section 12.1. Notices. Except as otherwise expressly provided in this Agreement, all notices, demands, requests, or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be given either (a) in person, (b) by United States mail, (c) by fax or similar means (with signed confirmed copy to follow by mail in the same manner as prescribed by clause (b) above) or (d) by expedited delivery service (charges prepaid) with proof of delivery.. The Company's address for notice shall be the principal place of business of the Company. Each Member's address for notices and other communications shall, be that set forth with such Member's name on Schedule A hereto. Any Member may change his address for notices and communications by giving notice in writing, stating his new address for notices, to the other Members. For purposes of the foregoing, any notice required or permitted to be given shall be deemed to be delivered and given on the date actually delivered to the address specified in this Section 12.1. Section 12.2. Partition. Each of the Members hereby irrevocably waives for the term of the Company any right that such Member may have to maintain any action for partition with respect to the property of the Company. Section 12.3. Entire Agreement. The Certificate and this Agreement constitute the full and complete agreement of the parties hereto with respect to the subject matter hereof and supersede all prior contracts or agreements with respect to the Company, whether oral or written. Section 12.4. No Waiver. The failure of any Member to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective of the length of time for which such failure continues, shall not be a waiver of such Member's right to demand strict compliance in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation hereunder shall constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation hereunder. Section 12.5. Binding Effect. This Agreement shall be binding on and inure to the benefit of the Members and their respective heirs, legal representatives, successors and permitted assigns. Section 12.6. Governing Law; Severability. This Agreement is governed by and shall be construed in accordance with the laws of the State of Texas. [Signature Page Follows] IN WITNESS WHEREOF, the undersigned Members of the Company have executed this Agreement to be effective as of the date first set forth above. ALADDIN ENERGY, LLC By: Eric Dee Long, Manager SERENDIPITY HOLDINGS, LLC i Long,Susan B. ,i� Alex Long Schedule A Names, Addresses, Capital Contributions and Membership Interests of Members Names and Addresses: Capital Contributions Membership Interest Aladdin Energy, LLC $75,000.00 33.33% P. O. Box 2043 Austin, TX 78768-2043 Serendipity Holdings, LLC $75,000.00 33.33% P. O. Box 164254 Austin, TX 78716-4254 Alexander B. Long $10.00 33.34% 208 Foch Street Bryan, TX 77801