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VA200500009 Correspondence 2006-03-09
Page 1 of 1 Ana Kilmer From: Melton McGuire [verulamfarm©msn.com] Sent: Thursday, March 09, 2006 3:10 PM To: Ana Kilmer Cc: William I. McKechnie Subject: Mechum's Trestle OA Attachments: Operating Agreement Mechum Trestle LLC.pdf Ana: Attached is an electronic copy of the Operating Agreement with the typo corrected. You have the executed signature page which is unaffected. Thanks for you help, Melton McGuire 3/9/2006 Albemarle County, VA Shelby Marshall Clerk Circuit Court 501 E. Jefferson St. Charlottesville, VA 22902 Phone Number: (434)972-4083 DEEDS Receipt Official Receipt: 2004-00016100 Printed on 07/22/2004 at 03:50:19 PM RECEIVED OF LECLAIR RYAN Date Recorded: 07/22/2004 Instrument ID Recorded Time Amount Bk 2802 Pg 383 03:49:46 PM $858.00 Instrument:200400016496 DBS- DEED OF BARGAIN AND SALE GRANTOR:COOPER, RICHARD A EX:N GRANTEE:MECHUMS TRESTLE LLC EX:N Address1 :99 BLOOMFIELD ROAD Address2: City/State/Zip:CHARLOTTESVILLE VA 22903 Description: 4294 THREE NOTCH'D ROAD, ALBEMARLE COUNTY, VIRGINIA Consideration:$275,000.00 Assumption:$0.00 Locality:CO Percent:100.00% Pages:2 Names:0 Accounts Amount 035 - OPEN SPACE PRESERVATION $1 .00 036 DEED PROCESSING FEE $10.00 038- DEEDS OF CONVEYANCE $137.50 039- DEEDS & CONTRACTS $412.50 106- TECHNOLOGY TRUST FUND FEE $5.00 145- VSLF $1 .50 212- TRANSFER FEES $1 .00 213- COUNTY GRANTEE TAX $137.50 220- GRANTOR TAX $137.50 301- DEEDS $14.50 Itemized Check Listing Check # 1037 $858.00 Total Due: $858.00 Paid By Check: $858.00 Change Tendered: $0.00 . I • Instrument Control Number 0 1 0 7 0 1 Commonwealth of Virginia Land Record Instruments Cover Sheet - Form A IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Doc ID: 000791390003 Type: DEE [ILS VLR Cover Sheet Agent 1.0.66j Recorded: 07/22/2004 at 03:49:46 PM Fee Amt: $858.00 Pape 1 of 3 Albemarle County, VA T C Date of Instrument: [7/22/2004 ] Shelby Marshall Clerk Circuit Court File# 2004-00013701 XR Instrument Type: [DBS ] BK2802 PG383-385 E Number of Parcels [ 1] x Number of Pages [ 2] City L_]County x [Albemarle County ] (Box for Deed Stamp Only) T — First and Second grantors Last Name First Name Middle Name or Initial Suffix [Cooper ][Richard ][A ][ — ] [ ][ ][ ][ First and Second Grantees Last Name First Name Middle Name or Initial Suffix — -x- [Mechum's Trestle, LLC ][ ][ ][ [ ][ ][ ][ Grantee Address (Name) [Mechum's Trestle, LLC (Address 1) [99 Bloomfield Road (Address 2) (City,State,Zip) [Charlottesville ] [VA ] [22903 Consideration [275,000.00 ] Existing Debt[0.00 ] Assumption Balance [0.00 Prior Instr. Recorded at: City County [ ] Percent. in this Juris. [ 100 Book [ ] Page [ ] Instr. No [ Parcel Identification No (PIN) Tax Map Num. (if different than PIN) [05700-00-00-031A0 Short Property Description [4294 Three Notch'd Road, Albemarle County, Virginia [ Current Property Address (Address 1) [4294 Three Notch'd Road (Address 2) [ (City,State,Zip) [Crozet ][VA ][22932 Instrument Prepared by [Boyle, Bain, Reback & Slayton Recording Paid for by [LeClair Ryan Return Recording to (Name) [LeClair Ryan (Address 1) [123 E. Main Street (Address 2) [8th Floor (City,State,Zip) [Charlottesville ][VA ][22902 Customer Case ID [11222.0004 ] [ ][ 111 ', r � 'iI 11 Cover Sheet Page# 1 of 1 '� 0I3 -101 Prepared by: Boyle, Bain, Reback& Slayton 420 Park Street Charlottesville,VA 22902-4738 Tax Map No. 05700-00-00-031A0 THIS DEED,made this 8th day of July, 2004,by and between RICHARD A. COOPER, unmarried, Grantor, and MECHUM'S TRESTLE, LLC, a Virginia limited liability company, Grantee, whose address is 99 Bloomfield Road, Charlottesville, Virginia 22903. WITNESSETH : That for and in consideration of the sum of TWO HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($275,000.00), cash in hand paid, the receipt of which is hereby acknowledged, the Grantor does hereby GRANT, BARGAIN, SELL, and CONVEY with GENERAL WARRANTY and ENGLISH COVENANTS OF TITLE unto Mechum's Trestle, LLC the following described property: All that certain lot or parcel of land with the improvements thereon and the rights, privileges and appurtenances thereto pertaining, situated on the north side of State Route 240 in the White Hall Magisterial District of Albemarle County, Virginia, at Mechums River, containing 1.387 acres, according to the plat of a survey made by Thomas D. Blue, Civil Engineer and Land Surveyor, dated March 8, 1997 of record in the Clerk's Office of the Circuit Court of Albemarle County, Virginia in Deed Book 618,page 20; TOGETHER WITH easements for a forced main sewer line connecting said property to the Rivanna Water& Sewer Authority sewer line at or near the Lickinghole Creek Pump Station as set forth in four deeds of easement granted by Abell, Clayton, Shifflett and Keyes, recorded in Deed Book 1364, page 108, Deed Book 1364,page 115, Deed Book 1364, page 120, and Deed Book 1364,page 124, respectively. BEING the same property conveyed to Richard A. Cooper by deed from Donald A. Nilsen, dated November 30, 1993, and recorded November 30, 1993 in the Clerk's Office of the Circuit Court of Albemarle County, Virginia in Deed Book 1364, page 132. This conveyance is made expressly subject to easements, restrictions, conditions, and reservations contained in duly recorded deeds, plats, and other instruments constituting 1 constructive notice in the chain of title to the property hereby conveyed, which have not expired by limitation of time contained therein or have not otherwise become ineffective. WITNESS the following signature and seal: (SEAL) Richar A. Cooper COMMONWEALTH OF VIRGINIA CITY OF CHARLOTTESVILLE: The foregoing Deed was acknowledged before me this q-44) day of July, 2004, by Richard A. Cooper. My commission expires: Oa' 3/, 2°' 7 Cetal,p Notary Publig K.1HomelDiana\My Documents\Cooper,Richard Deed to Erewhon doc RECORDED IN CLERKS OFFICE ALBEMARLE ON OF July 22,2004 AT 3:49.46 PM $275.00 GRANTOR TAX PD AS REQUIRED BY VA CODE§37'S0 02 STATE:$137•50 LOCAL:$ ALBEMARLE OUN DC 2 OPERATING AGREEMENT OF MECHUM'S TRESTLE, LLC a Virginia limited liability company THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED, NOR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE,SOLD OR TRANSFERRED UNLESS REGISTERED AND QUALIFIED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF SECURITIES REPRESENTED BY THIS AGREEMENT IS FURTHER SUBJECT TO OTHER RESTRICTIONS, THE TERMS AND CONDITIONS OF WHICH ARE SET FORTH IN THIS AGREEMENT. Page 1 of 23 C&D #208548 OPERATING AGREEMENT OF MECHUM'S TRESTLE,LLC A VIRGINIA LIMITED LIABILITY COMPANY This Operating Agreement("Agreement")of Mechum's Trestle, LLC, a Virginia limited liability company(the"Company"), is made as of March 9, 2006(the"Effective Date"), among the undersigned members of the Company(each, a"Member"and together,the "Members"). RECITALS A. The Company was formed as a limited liability company pursuant to the Virginia Limited Liability Company Act, Va. Code §§ 13.1-1000 to 13.1- 1063 (as amended from time to time,the "Act")by virtue of Articles of Organization recorded on July 2004 with the Virginia State Corporation Commission. B. The Members who initially formed the Company were Verulam Farm Conservation Group LLC("Verulam")and William I. McKechnie ("WIM"). C. The Company will acquired a tract of land consisting of approximately 1.4 acres located at the intersections of Route 250 and Route 240 in Albemarle County,Virginia,known as Tax Map 57, Parcels 31A and 79B1 (the "Land"). D. The Members desire to formalize their agreement reached on the Effective Date in this Agreement. NOW,THEREFORE, in consideration of the premises and other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged,the Members agree: ARTICLE I FORMATION AND PURPOSE 1.1 Formation. The Members: (a) agree that the Company was formed pursuant to engage in any lawful act; and; (b) confirm and agree to their status as Members of the Company upon the terms and conditions set forth in this Agreement; and Page 2 of 23 C&D #208548 (c) execute and adopt this Agreement as an Operating Agreement of the Company pursuant to § 13.1-1023 of the Act. 1.2 Name. The name of the Company shall be"Mechum's Trestle, LLC." 1.3 Governing Law. The Act and other applicable laws of the Commonwealth of Virginia shall govern this Agreement and all questions with respect to the rights and obligations of the parties,the construction, enforcement, and interpretation hereof and the formation, administration, and termination of the Company. 1.4 Defined Terms. Except when the context may otherwise require, each capitalized term used in this Agreement shall have the meaning specified in the Section where such capitalized term is defined. 1.5 Purposes. The Company has been formed to transact any lawful business not required to be stated specifically in this Agreement and for which limited liability companies may be formed under the Act. Unless the Manager determines otherwise,the principal purpose of the Company shall be the long-term appreciation of the Land. MEMBERS - STATUS,RIGHTS AND OBLIGATIONS 2.1 Members. The name and notice address of each Member of the Company is set forth on Exhibit 4.1, as amended from time to time. 2.2 Membership Interests and Percentage Interests. The entire interest of a Member in the management,profits,losses and capital of the Company is hereinafter referred to as such Member's"Membership Interest." For purposes of making certain computations under this Agreement, each Member shall have a percentage interest(a"Percentage Interest")as set forth on Exhibit 4.1, as amended from time to time. 2.3 Duties and Limitations. (a) Except as otherwise provided herein,any Member may engage in or possess any interest in another business or venture of any nature and description, independently or with others. These ventures may compete directly with the business of the Company, and neither the Company nor any Member shall have any rights in,or to, any such independent ventures or the income or profits derived. (b) Except as otherwise provided herein or required by law,voting power shall be vested jointly in the Members in proportion to their respective Percentage Interests. No Member,other than the Manager, shall take part in the management of the business or transact any business for the Company in his capacity as a Member. Furthermore, no Member, other than the Manager, shall have the power to sign for, or to bind,the Company;provided, however,that all Members shall have the right as provided herein to approve or consent to certain matters. Page 3 of 23 C&D #208548 2.4 Voting. Members holding more than 66% of the Percentage Interests then held by all Members(a "Supermajority") shall be required to approve or disapprove of the following actions of the Manager with respect to the Company: (a) Merger into,or with, any other business or conversion of the Company into any other form of entity; and (b) Sale, exchange,transfer or other disposition of the Land or any substantial portion thereof. ARTICLE II MANAGEMENT AND BUSINESS AFFAIRS OF THE COMPANY 3.1 Management of Operations. Verulam and WIM shall together be the initial Manager of the Company and,as Manager, shall have sole responsibility for managing the business and affairs of the Company. The Managers,who shall always be a Member, shall have the complete power and authority to make decisions affecting the business and affairs of the Company,which shall include any decision not enumerated in Section 2.4. The Manager shall also be the President of the Company and may designate any other officers as he determines appropriate and delegate responsibilities to them consistent with their offices. 3.2 Term; Election of Replacement Manager. The initial Manager shall serve until his death,permanent incapacity,or withdrawal from the Company. Upon the death,permanent incapacity, or withdrawal of the initial Manager,the legal representative or transferee of the Manager shall serve as Manager(unless the Manager designates otherwise in writing)and shall serve until his death,permanent incapacity,or withdrawal. Thereafter, a Supermajority of the remaining Members may elect to appoint another Manager or to govern through the vote of Members holding more than 50%of the Percentage Interests entitled to vote(a"Majority")for matters other than as enumerated in Section 2.4. Except as otherwise provided by the Act,no person dealing with the Company shall be required to inquire into the authority of a Manager to take any action or to make any decision. 3.3 Fees to Members. The Manager, in his reasonable discretion,may set the terms and amount of any fee payable to him for his services as Manager,based on reasonable market equivalents. 3.4 Limitation on Liability; Fiduciary Standard. The Manager or any officer shall not be liable,responsible, or accountable to the Company or any other Member in damages or otherwise for any acts, or for any failure to act,performed or omitted in good faith;provided, however,that the Manager or any officer shall not be relieved of his fiduciary obligations to any other Member and the Company imposed by law,or of his liability for fraud,bad faith,or gross negligence. Pursuant to Section 1.5,the Manager is not compelled to manage the Land for short- term gain or profit but for long-term appreciation. Unless the Act requires another fiduciary standard, the Manager shall manage the Company, and may deal with himself and affiliates,in his sole and absolute discretion;provided, that he does not commit fraud or acts or omissions of bad faith or gross negligence. Page 4 of 23 C&D #208548 3.5 Reimbursement and Indemnification. All expenses incurred with respect to the organization, operation, and management of the Company shall be borne by the Company. The Manager shall be entitled to reimbursement or indemnification from the Company for expenses (including reasonable attorneys' fees) or losses incurred by him and allocable to the organization, operation, or management of the Company;provided,he is not liable for the loss or expense in Section 3.4. The Members intend that only the assets of the Company be exposed for the liabilities of the Company pursuant to the Act. 3.6 Loans to Members and Affiliates. The Manager shall have the right to cause the Company to make loans to Members or their affiliates so long as the interest rates are at least equal to the applicable federal rates for loans of like maturity under Section 1274 of the Internal Revenue Code of 1986, as amended(the"Code"). 3.7 Accountant. Accountant shall mean the independent certified public accounting firm that the Manager selects. ARTICLE III CAPITAL CONTRIBUTIONS AND FINANCIAL OBLIGATIONS OF MEMBERS 4.1 Capital Contributions. The Members have made or agreed to make the capital contributions set forth on Exhibit 4.1, as amended from time to time(their respective"Capital Contributions"). The Manager is authorized, and directed, to amend or replace Exhibit 4.1 as necessary to maintain its accuracy including upon the admission of any new Members under Section 8.3. 4.2 Capital Account Deficits. Except as provided in this Section 4.2,no Member shall be required to restore any deficit in such Member's Capital Account. This Agreement contains a qualified income offset in accordance with Treasury Regulations ("Regulations") under Section 704(b) of the Code. If a Member(other than the Manager)has a personal liability resulting from a loan to the Company after all the assets of the Company have been exhausted, the Manager will indemnify and hold such Member harmless for this personal liability. Payment of this indemnity will be deemed to be a capital contribution by the Manager to the Company and a distribution by the Company to such indemnitee. 4.3 No Interest On Contributions. No Member shall be entitled to receive interest on any capital contribution to the Company. 4.4 Return of Capital Contributions. No Member shall be entitled to withdraw any part of such Member's Capital Contributions or Capital Account or, except as provided in this Agreement,to receive any distribution from the Company. Except as provided in Section 10.3, the Company shall have no obligation to return to any Member or withdrawn Member any part of such Member's Capital Contributions so long as the Company continues in existence. Page 5 of 23 C&D #208548 4.5 Loans Not to be Treated as Capital Contributions. Loans or advances by any Member to the Company shall not be considered capital contributions and shall not increase the Capital Account of the lending or advancing Member. A Member shall have no obligation or right to make a loan to the Company without the written consent of, and upon the terms agreed upon by,the Manager. 4.6 Additional Contributions. (a) Whenever the reasonable demands of the Company business require the contribution of additional capital, the Manager shall determine the amount so required and shall send notice of his determination to all Members("Additional Capital Calls"). Each Member shall have the opportunity,but not the obligation,to contribute ratably in accordance with such Member's respective Percentage Interest within 10 days after such Additional Capital Call. If all Members do not make such contribution within the stated period,then each Member who does contribute will be considered to have made a loan to the Company at the end of the 10-day period("Origination Date"),bearing an interest rate of Prime plus two percent. Unless the lenders agree otherwise,these loans will be repaid proportionally and completely extinguished before any further distributions are made to Members under this Agreement. (b) For purposes herein,"Prime"means the prime rate(or base rate)reported in the"Money Rates"column or section of Wall Street Journal, Eastern Edition as being the base rate on corporate loans at larger US Money Center banks on the Origination Date or,if not so published, on the last date so published before the Origination Date. That rate as so determined shall apply during the period such loan is outstanding. If such Wall Street Journal ceases publication of such rate, then Prime shall mean the "prime rate"or"base rate"announced on similar dates by Bank of America in Richmond, Virginia(whether or not such rate has actually been charged by that bank). If that bank discontinues the practice of announcing that rate,Prime shall mean the highest rate charged by that bank on short-term, unsecured loans to its most credit-worthy large corporate borrowers. ARTICLE IV TAX COMPLIANCE ADDENDUM Certain provisions and definitions regarding distributions and allocations of the Company's income, as well as other tax-related matters, are set forth in the Tax Compliance Addendum("TCA")attached as Exhibit 5. The provisions of the TCA are hereby incorporated in their entirety into this Agreement. Section references in the TCA shall be to Sections of the TCA unless specified otherwise. ARTICLE V TERM AND TERMINATION OF THE COMPANY 5.1 Term of the Company. The term of the Company shall continue in perpetuity unless sooner terminated as provided in Section 5.2. 5.2 Events of Dissolution. The Company shall be dissolved upon the occurrence of the following events: Page 6 of 23 C&D #208548 (a) The determination in writing of the Manager to dissolve the Company; (b) Unless the Manager elects to continue the business of the Company within six months of the following events, in which case the Company shall not be dissolved, and the Company and the business of the Company shall be continued,upon: (i) The sale,transfer,or other disposition of substantially all of the non-cash assets of the Company; (ii) The adjudication of the Company as insolvent, or the entry of any order of relief with respect to the Company, under any applicable insolvency or bankruptcy laws, or the filing of an involuntary petition in bankruptcy against the Company(which is not dismissed within 90 days) or the filing against the Company of a petition for reorganization under the Federal Bankruptcy Code or any state statute(which is not dismissed within 90 days), or a general assignment by the Company for the benefit of creditors,or the voluntary claim(by the Company)that it is insolvent or entitled to relief under any provisions of the Federal Bankruptcy Code (or any state insolvency statute),or the appointment for the Company of a temporary or permanent receiver, trustee, custodian or sequestrator if such receiver,trustee, custodian, or sequestrator is not dismissed within 90 days; (iii) When so required in accordance with other provisions of this Agreement;or (iv) As the Act otherwise requires. 5.3 Conclusion of Affairs. Upon the dissolution of the Company for any reason, if the Company is not continued as permitted by this Agreement, the Manager shall proceed promptly to wind up the affairs of the Company. Except as otherwise provided in this Agreement,the Members and their successors in interest shall continue to share distributions and allocations during the period of winding up in the same manner as before the dissolution. The Manager or, alternatively, a representative appointed by the Manager(the"Liquidating Representative") shall have reasonable discretion to determine the time,manner, and terms of any sale or sales of Company property pursuant to such winding up,having due regard to the activity and the condition of the Company and relevant market and financial and economic conditions,and consistent with his obligations to the Members. 5.4 Liquidating Distributions. After paying or providing for the payment of all debts and liabilities of the Company and all expenses of winding up, and subject to the right of the Manager or the Liquidating Representative, as the case may be,to set up such reserves as he may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company,the proceeds of the liquidation, and any other remaining assets of the Company,shall be distributed to, or for the benefit of,the Members(and their successors in interest) in accordance with their respective Capital Accounts. No Member shall have any right to demand or receive property other than cash upon dissolution and winding up of the Company. However, the Manager or the Liquidating Representative, as the case may be,may determine whether and to whom property should be distributed in kind rather than liquidated. The Value of property distributed in kind shall be determined as set forth in this Section. Any property distributed in Page 7 of 23 C&D #208548 kind shall be treated as though the property was sold for its Value at the time of the distribution, and the cash proceeds were distributed. The difference between the Value of property distributed in kind and its previous value for purposes of maintenance of the Capital Accounts shall be treated as profits or losses on sale of the property and shall be credited or charged to Members' Capital Accounts in accordance with their interest in such profits or losses pursuant to the TCA. The"Value" of an asset of the Company shall be: in the case of assets other than intangibles(including contract rights), securities,real estate and improvements,book value as determined by the certified public accountant for the Company in accordance with the Company's accounting method applied on a consistent basis; and, in the case of intangibles, securities,real estate and improvements,their fair market value as determined pursuant to the following provisions: the fair market value of securities shall be determined in accordance with the then current Regulations for federal estate tax purposes concerning valuation. The Manager or the Liquidating Representative,as the case may be, shall select a qualified, independent appraiser to appraise intangibles and any real estate and improvements and such appraised value shall be its fair market value. The Company shall pay the cost of any appraisal required in this Section. 5.5 Termination. Within a reasonable time following the completion of the winding up of the Company, the Manager or the Liquidating Representative, as the case may be, shall supply to each Member a statement. This statement shall set forth the assets and the liabilities of the Company as of the date of completion of the winding up and each Member's portion of the distributions pursuant to this Agreement. Upon completion of such winding up,the Company shall terminate,and the Members shall execute and record a Certificate of Cancellation of the Company, as well as any and all other documents required to effectuate the dissolution and termination of the Company. ARTICLE VI TRANSFERS AND THE ADDITION, SUBSTITUTION,AND WITHDRAWAL OF MEMBERS 6.1 Transfer, Substitution, & Withdrawal. Except as otherwise provided herein,a Membership Interest may be assigned in whole or in part only as follows: (a) A Member may transfer all or a portion of his Interest to another Member, a charitable organization described in Section 501(c)(3)or 170(c) of the Code, or a trust or an entity solely for the benefit of one or more of such organizations. With the consent of the Manager, a Member may transfer his Interest to any entity or person. Other than as provided in this Section 6.1(a), a Member may not transfer all or a portion of his Interest. (b) Any transfer of a Membership Interest, other than to an existing Member, shall be effective only to give the transferee("Transferee")the right to receive the share of allocations and distributions to which the transferor would otherwise be entitled. Any Transferee who is not a Member before the transfer shall not have the right to become a substituted Member without the written consent of the Manager,which approval may be granted or denied in the exercise of the sole and absolute discretion of the Manager, and only if the Transferee agrees to be bound by all of the terms and conditions of this Agreement as then in effect. If the transfer is from the Manager, the consent to admission shall be conclusively inferred unless the instrument Page 8 of 23 C&D #208548 of transfer states otherwise. Unless and until a Transferee is admitted as a substituted Member, the Transferee shall have no right to exercise any of the powers,rights, and privileges of a Member hereunder. A Member who has assigned his Membership Interest shall cease to be a Member upon assignment of the Member's entire Membership Interest and thereafter shall have no further powers,rights, and privileges as a Member hereunder,but shall, unless otherwise relieved of such obligations by agreement of all of the other Members or by operation of law, remain liable for all obligations and duties incurred as a Member. A Transferee who becomes a substitute Member is liable for any obligations of his transferor to make or retain capital contributions as provided in this Agreement and by the Act;provided, however, such Transferee shall not be obligated for liabilities of his transferor unknown to him at the time he became a Member. (c) The Manager may,in his reasonable discretion, charge a fee to cover the additional administrative expenses(including attorney's fees)incurred in connection with, or as a consequence of the transfer of, all or part of a Membership Interest. (d) The Company, each Member, and any other Person having business with the Company need deal only with Members who are admitted as Members or as substituted Members of the Company,and they shall not be required to deal with any other Person by reason of assignment by a Member or by reason of the death of a Member, except as otherwise provided in this Agreement. In the absence of the substitution(as provided herein)of a Member for an assigning or a deceased Member,any payment to a Member or to a Member's executors or administrators shall release the Company and the Manager from all liability to any other Persons who may be interested in such payment by reason of an assignment by, or the death of, such Member. (e) No Person shall have a perfected lien or security interest in an Interest unless the creation of such security interest is in accordance with the provisions of this Agreement and the Company is notified of such security interest and provided a copy of all documentation with respect thereto, including financing statements,before execution and filing. (f) Any transfer not in accord with this Agreement shall be void, except to give rise to a cause of action against the purported transferor for breach of this Agreement. (g) Each Member agrees not to transfer all or any part of such Member's Membership Interest(or take or omit to take any action, filing, election, or other action which could result in a deemed transfer)if such transfer(either considered alone or in the aggregate with prior transfers by other Members)would result in the termination of the Company for federal income tax purposes and,in the sole discretion of the Manager, such termination would have a material adverse effect on the Company and the remaining Members. Such a transfer is void ab initio. 6.2 Additional Members. The Manager in his sole and absolute discretion may admit new Members on such terms and conditions as he determines. 6.3 New Members. No new Members shall be entitled to any retroactive allocation of income, losses, or expense deductions the Company incurs. The Manager may, at his option, Page 9 of 23 C&D #208548 at the time a new Member is admitted,close the Company's books(as though the Company's tax year had ended)or make pro rata allocations of income,loss, and expense deductions to a new Member for that portion of the Company's tax year in which the new Member was admitted in accordance with the provisions of Code Section 706(d) and its Regulations. 6.4 Single Member. A Termination Event shall mean any pending or completed transaction, action, event, or transfer or redemption of a Membership Interest(including without limitation any transfer or redemption under the other provisions in this Article 8),which will have the effect, in the absence of this Section, of causing the Company to have one Member. Upon a Termination Event, the Member("Continuing Member")that would remain or remains as the sole Member shall be entitled, immediately before,or simultaneously with, the consummation or occurrence of the Termination Event, or within any period of time thereafter as is permitted under the Act,to (i)transfer any portion of such Continuing Member's Membership Interest to any other Person,and(ii)consent to the admission of such Person as a Member as required by Section 13.1-1040(A)of the Act. This Section shall enable the Continuing Member to avoid any termination or dissolution of the Company that might otherwise result from the Termination Event. However,any transfer permitted hereunder shall be expressly conditioned upon the pendency of a Termination Event. Furthermore, the Continuing Member may cause the Company to redeem and require the other Member to have redeemed, at least that portion of the other Member's Membership Interest as necessary to avoid a termination of the Company for federal income tax purposes,provided that the after-tax economic return to the other Member in respect of the sale of their Membership Interests would not be diminished. ARTICLE VII ADMINISTRATIVE PROVISIONS 7.1 Principal Office. (a) The initial principal place of business and principal office of the Company shall be 99 Bloomfield Road, located in the County of Albemarle. The Company may relocate the principal place of business and principal office and have such additional offices as the Manager may deem advisable. (b) The name and address of the initial registered agent for purposes of the Act shall be Melton McGuire. The Manager may at any time change the location of the principal office or registered agent;provided,that the Manager gives notice to the Members of any such change. 7.2 Bank Accounts; Investments. (a) Funds of the Company shall be deposited in such account or accounts as the Manager shall determine. Funds may be withdrawn from such accounts only for bona fide and legitimate Company purposes. Company funds may from time to time be invested in such securities,money market funds,certificates of deposit,or other liquid assets as the Manager deems prudent. The Company may also make such investments in land and in stocks and derivatives of publicly traded companies as the Manager deems to be reasonable in light of the long term goals and needs of the Company. Page 10 of 23 C&D #208548 (b) The Manager shall not be accountable or liable for any loss of Company funds resulting from failure or insolvency of the depository institution, so long as the deposit of such funds was in compliance with this Agreement. 7.3 Books and Records. (a) At all times during the term of the Company, the Manager shall keep, or cause to be kept, full and accurate books of account,records, and supporting documents,which shall reflect, completely, accurately and in reasonable detail, each transaction of the Company (including,without limitation,transactions with the Members or affiliates). The books of account shall be maintained and tax returns prepared and filed based on the method of accounting as the Manager shall determine. The books of account,records, and all documents and other writings of the Company shall be kept and maintained at the principal office of the Company. Members or their designated representatives shall have access to such financial books,records, and documents during reasonable business hours and may inspect and make copies of any of them at their own expense. (b) The Manager shall cause the Company to keep at its principal office all books and records required to be maintained by the Act and the other laws of the Commonwealth of Virginia. 7.4 Notices. Any offer, acceptance, election, approval, consent, certification,request, waiver,notice, or other communication required or permitted to be given hereunder(hereinafter collectively referred to as a"Notice"), shall be given by enclosing the same in an envelope addressed to the Member to whom the Notice is to be given at the appropriate address set forth on the attached Exhibit 4.1 or at such other address as any Member hereafter may designate to the others in accordance with the provisions of this Section or, if to the Company, to its principal place of business, and delivered in person or deposited in the US Mail postage prepaid. The Company(care of its Manager) shall be sent a copy of all Notices related to this Agreement by certified or registered mail,return receipt requested. The date at which notice shall be deemed received shall be the date of the receipt of the copy of such notice is first received by a Manager. ARTICLE VIII MISCELLANEOUS 8.1 Amendment. This Agreement may be amended only with the written consent of a Supermajority of the Members,provided,that no such amendment shall be effective to reduce the value of any Member's Membership Interest without such Member's prior written consent. Notwithstanding the provisions of the preceding sentence,the Manager has the right to amend Exhibit 4.1 as provided in Section 4.1. 8.2 Interpretation. Whenever the context may require, any noun or pronoun used herein shall include the corresponding masculine, feminine,or neuter forms. The singular form of nouns,pronouns, and verbs shall include the plural, and vice versa. 8.3 Severability. Each provision of this Agreement shall be considered severable, and if for any reason any provision or provisions hereof are determined to be invalid, such Page 11 of 23 C&D #208548 invalidity shall not impair the operation of,or affect,those portions of this Agreement which are valid, and this Agreement shall remain in full force and effect and shall be construed and enforced in all respects as if such invalid or unenforceable provision or provisions had been omitted. 8.4 Burden and Benefit Upon Successors. Except as expressly otherwise provided herein,this Agreement is binding upon and inures to the benefit of, Members and their respective heirs, executors, administrators,personal and legal representatives, successors, and permitted assigns. 8.5 Third Parties. The agreements,covenants, and representations contained in this Agreement are for the benefit of the Members and are not for the benefit of any third parties, including,without limitation, any creditors of the Company or of a Member. 8.6 Further Assurances. This Agreement and the other documents executed contemporaneously set forth the Members' entire agreement with respect to the subject matter hereof and supercede and restate any prior oral or written agreements with respect thereto. Each Member shall hereafter execute and deliver such further instruments,provide all information and take or forbear such further acts and things as may be reasonably required to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof. 8.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which together shall constitute one instrument,binding upon all parties,notwithstanding that all of such parties may not have executed the same counterpart. [Signature Page Follows] Page 12 of 23 C&D #208548 IN WITNESS WHEREOF, the parties have executed this Assignment. ASSIGNOR: ERE HONK, INC.� �� Cal , By: William I. McKechnie, ASSIGNEE: HUM'S TRESTLE, LLC By: William I. McKechnie, Manager By: Melton M. McGuire, Manager EXHIBIT 4.1 Member Information Members' Names and Percentage Initial Second Business and Notice Address Interest Contribution Contribution Contributions Verulam Farm Conservation 50% $150,000 $250,000 Group LLC 99 Bloomfield Road Charlottesville, Virginia 22903 William McKechnie 50% $150,000 $250,000 36 Old Farm Road Charlottesville, Virginia 22902 TOTAL 100% $300,000 $500,000 Page 14 of 23 C&D #208548 EXHIBIT 5 TAX COMPLIANCE ADDENDUM 1.1 Capital Accounts. (a) A separate capital account ("Capital Account") shall be maintained for each Member. A Member's Capital Account shall be maintained in accordance with the following provisions: (i) Each Member's Capital Account shall be credited: (A) with all capital contributions made by such Member (at initial Value(as defined in Section 1.12) in the case of property other than cash, as such Value is determined as of the date the contribution is made to the Company); (B) with such Member's allocable share of Profits (as determined under Section 1.4); (C) with any items in the nature of income or gain that are specially allocated to such Member pursuant to the Regulatory Allocations (as defined in Section 1.5); and (D) with the amount of any Company liabilities assumed by such Member or that are secured by any Company property distributed to such Member. (ii) Each Member's Capital Account shall be debited: (A) with the amount of cash and the Value of any Company property distributed to such Member pursuant to any provision of this Agreement (as such Value is determined as of the date the distribution is made to the Member); (B)with such Member's allocable share of Losses (as determined under Section 1.4); (C) with any items in the nature of expenses or losses that are specially allocated to such Member pursuant to the Regulatory Allocations (as defined in Section 1.5); and (D) with the amount of any liabilities of such Member that are assumed by the Company or that are secured by any property contributed by such Member to the Company. (iii) If any Interest in the Company is transferred (whether by gift, sale, or otherwise) in accordance with the terms of this Agreement to any Person(the "Transferee"), the Transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest in the Company. (b) In determining the amount of any liability for purposes of this TCA, there shall be taken into account Section 752 of the Code and any other applicable provisions of the Code and the Regulations. The Members acknowledge that any debt incurred by the Company in connection with the acquisition of the Land will be allocated under Section 752 of the Code to that Member guaranteeing the obligation. (c) Except as determined below and pursuant to Section 1.12, for purposes of maintenance of the Capital Accounts, the term"Value" means, with respect to any asset,the asset's adjusted tax basis for federal income tax purposes; however: Page 15 of 23 C&D #208548 (1) The Value of any asset contributed by a Member to the Company or distributed by the Company to any Member, shall be the asset's Value on the date of the contribution or distribution, as the case may be, as determined pursuant to Section 1.12; (ii) As permitted by section 1.704-1(b)(2)(iv)(f) of the Regulations, the Values of all Company assets shall be adjusted to equal their respective Values (and the Capital Accounts of the Members shall be restated) as of the following dates: (A) the date of this Agreement; (B)the date of the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution to the Company; (C) the date of the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company; and (D)the date of the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; provided, however, that an adjustment in either Section 1.1(c)(ii)(B) or(C) shall be made only if the Manager determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; (iii) When required, the determination of Value shall be made pursuant to Section 1.12; and (iv) The Value of a Company asset shall be adjusted by the depreciation, amortization, or other adjustment, if any, taken into account with respect to such asset for purposes of computing Profits and Losses. 1.2 Distributions of Cash Flow. (a) Operating Cash Flow. (i) The Manager shall cause the Company to distribute: (A) On a quarterly basis (or in the Manager's reasonable discretion, more frequently) an amount not to exceed Operating Cash Flow for such part of the fiscal year to the Members based on their respective Percentage Interests; and (B) Within 100 days following the end of each fiscal year (or in the Manager's discretion, more frequently) an amount not to exceed Operating Cash Flow for such fiscal year(or any part of such fiscal year)to the Members in proportion to their relative Percentage Interests. (ii) For purposes of this Agreement, the term"Cash Flow" for a fiscal year of the Company shall mean the Profits and Losses of the Company(after all guaranteed payments to Members)but subject to the following adjustments: (A) In determining Cash Flow for any year, there shall be added depreciation, amortization, and other non-cash charges and, as the Manager determines, reductions in cash reserves. (B) In determining Cash Flow for any year, there shall be subtracted the following amounts: Page 16 of 23 C&D #208548 (I) Principal payments on Company indebtedness, including indebtedness to a Member; (II) Increases in working capital, capital, maintenance, and contingency reserves; (III) Payments for capital expenditures; and (IV) Fees, interest payments on the Company's indebtedness, and other expenses to the extent paid or accrued by the Company in such year, but not reflected in the computation of Profits and Losses. (iii) Whether Cash Flow constitutes Operating Cash Flow, Capital Cash Flow, or Terminating Cash Flow depends upon whether the Manager in its reasonable discretion determines that the revenue that creates the Cash Flow came from normal operations, a Material Capital Transaction(including the net proceeds from a material refinancing but excluding a Terminating Capital Transaction), or a Terminating Capital Transaction, respectively. (b) Capital Cash Flow. The Manager shall distribute Capital Cash Flow as soon as practical after a Material Capital Transaction in proportion to their relative Percentage Interests, at such times and in such amounts as the Manager determines in his sole discretion; provided, however, that the Manager shall not make a distribution of Capital Cash Flow to any Member if and to the extent such distribution would cause such Member's Capital Account (increased by any portion of the Company's liabilities for which such Member has personal and ultimate responsibility) to fall below zero. 1.3 Distribution of Terminating Cash Flow. The Manager shall distribute Terminating Cash Flow, net of payment, or adequate provision for, debts of the Company and any Company reserves in the following order of priority: (a) First, towards the satisfaction of all outstanding debts and other obligations of the Company(including to Members) in the priority required by law; and (b) The balance, pro rata among the Members with credit (positive) Capital Accounts, after all adjustments for the above distributions and tax allocations for the current fiscal year to the extent of such respective balances. The Profits and Losses incurred in the winding up of the affairs of the Company will be credited or charged to the Members' Capital Accounts in accordance with Section 1.4(b). The Manager may determine whether and to whom properties should be distributed in kind rather than liquidated. The Value of property distributed in kind shall be determined under Section 1.12. Any property distributed in kind shall be treated as though the property was sold for its Value at the time of distribution and the cash proceeds were distributed. The difference between the Value of property distributed in kind and its previous Value shall be treated as Profits or Losses on sale of the property and shall be credited or charged to the Members' Capital Accounts in accordance with their interests in such Profits or Losses pursuant to Section 1.4(b). The Manager may determine that it would not be prudent to distribute assets in co-tenancy. If so, the Page 17 of 23 C&D #208548 Company will assign such assets to a trustee who shall collect all-sums that may become due and payable with respect to such assets who shall have full power to vote and dispose of such assets in such manner as it deems in its sole good faith business judgment is in the best interest of the Members receiving the proceeds of the dissolution. 1.4 Allocation of Profits and Losses. (a) Except as otherwise provided in this Agreement, Profits and Losses shall be allocated as follows: (i) Profits for any fiscal year shall be allocated among the Members based on their respective Percentage Interests. (ii) Losses for any fiscal year shall be allocated among the Members: (A) first, to the Members (other than the Manager) with positive(credit)balances in their respective Capital Accounts and in proportion thereto, until all such Members' Capital Accounts have been reduced to zero; and (B) thereafter,to the Manager. (b) Notwithstanding Section 1.4(a)(i), the Company will allocate Profits from Material Capital Transactions to the Members in proportion to their respective Percentage Interests. (c) For purposes of this TCA, a Material Capital Transaction means the sale or other transfer(actual or hypothetical, including in connection with a revaluation of the Company's assets under Section 1.704-1(b)(2)(iv)(f) of the Regulations or in connection with a grant of a charitable conservation easement)of the Land or of any substantial portion of the Land; a merger of the Company with, or into, another entity or similar merger or consolidation; or such other event as the Manager reasonably determines should be deemed a Material Capital Transaction. (d) If a net decrease occurs in partnership minimum gain (as such term is defined in Section 1.704-2(d)of the Regulations)during any Company fiscal year or other period, each Member shall be allocated items of income and gain for such fiscal year or other period to the extent, in the manner, and at the time required under Section 1.704-2(f) of the Regulations. This Section is intended to comply with the minimum gain chargeback requirements under Section 1.704-2(f) of the Regulations and shall be interpreted consistently with such intent. (e) Any item of Company loss, deduction, or nondeductible expenditure under Section 705(a)(2)(B)of the Code("Nondeductible Expenditure") that is attributable to a partner nonrecourse debt pursuant to Section 1.704-2(i)(2)of the Regulations shall be allocated to the Member or Members who bear the economic risk of loss for such debt in the time and manner described in Section 1.704-2(i) of the Regulations. If a net decrease occurs in partnership minimum gain attributable to a partner nonrecourse debt pursuant to Section 1.704-2(i)(4) of the Page 18 of 23 C&D #208548 Regulations, then any Member with a share in such minimum gain shall be allocated items of Company income and gain for such fiscal year or other period or, if necessary, for the next fiscal years or periods to the extent required under Section 1.704-2(i) of the Regulations. This Section is intended to comply with requirements regarding partner nonrecourse debt in Section 1.704-2(i) of the Regulations and shall be interpreted consistently with such intent. (f) If any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), or(6), then the Company shall specially allocate to such Member items of Company income and gain in an amount and manner sufficient to eliminate, to the extent required by such Treasury Regulations, such Member's deficit in his Modified Capital Account as quickly as possible. For purposes of this Agreement, Modified Capital Account shall mean the Capital Account of a Member(i) increased for the amount a Member is deemed obligated to restore under the penultimate sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations and (ii) adjusted for the adjustments required under Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations. This Section is intended to constitute a"qualified income offset" within the meaning of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently with such intent. (g) If the Company makes an election under Section 754 of the Code, to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code is required pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain(if the adjustment increases basis) or loss (if the adjustment decreases basis). Such gain or loss shall be allocated specially to the Members in a manner consistent with the manner in which Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. 1.5 Compliance with the Regulations. The allocations set forth in Section 1.4(d), (e), (1), and (g) of this Agreement (the "Regulatory Allocations") are intended to comply with certain requirements of the Regulations including Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations may not be consistent with the manner in which the Members intend to divide Company distributions. Accordingly, the Manager is authorized to cause the Company to allocate future Profits, Losses, and other items among the Members so as to prevent the Regulatory Allocations from distorting the manner in which Company distributions will be divided among the Members pursuant to this Agreement to the extent permitted under the Regulations. 1.6 Proration of Allocations. If additional Members are admitted to the Company on different dates during any fiscal year or other period, the Profits or Losses allocated to the Members for such fiscal year or other period shall be allocated during such fiscal year in accordance with Section 706 of the Code using a proration method unless the Manager determines another permitted convention would give materially more equitable results. 1.7 Accrual of Items. For purposes of determining the Profits, Losses, or any other items allocable to any period, Profits, Losses, and any other items shall be determined on a daily, monthly, or other basis, as the Manager shall determine using any permissible method under Section 706 of the Code and its Regulations. Page 19 of 23 C&D #208548 1.8 Separate Items. Except as otherwise provided in this Agreement, all items of Company income, gain, loss, deduction, and any other allocations not otherwise provided for shall be divided among the Members in the same proportions as they share Profits or Losses, as the case may be, for the fiscal year or other period. 1.9 Recapture and Other Section 751 Items. Once Profits are allocated pursuant to the other provisions of this Tax Compliance Addendum, the character of such Profits as ordinary income or capital gain shall be determined by allocating the recapture of capital cost recovery deductions required by Section 751, 1245,or 1250 of the Code, and any other items required by Section 751 of the Code to be recaptured as ordinary income, to the Members to the extent and in chronological order based upon the allocations of the tax items giving rise to the recapture or other items. 1.10 Installment Sales. If the Company sells any asset for an installment obligation (other than a de minimis obligation) and the Manager determines to retain and collect the obligation in the Company, the Company shall account for obligations as if it distributed out the present value of the obligation as the Manager determines. Any interest on such obligation shall be allocated to the Members in accordance with their share received in the deemed distribution. Thus, if such sale occurs in conjunction with the dissolution of the Company, the note shall be treated as Terminating Cash Flow, and the principal and interest payments with respect to it shall be distributed in accordance with Section 1.3 based on such computed present value. 1.11 Section 704(c) Allocations. Income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its Value(as computed in accordance with Section 1.1(c). If the Value of any Company asset is adjusted pursuant to that Section, later allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted tax basis of such asset for federal income tax purposes and its Value in the same manner as under Section 704(c) of the Code and the Regulations under Sections 704(c) and 704(b) of the Code. The Manager shall make any elections or other decisions relating to such allocations in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or his share of Profits, Losses, or distributions pursuant to any provision of this Agreement. Except as otherwise set forth in this Agreement or required by the Code or the Regulations, tax items shall be allocated in the same manner as book items. 1.12 Value. The"Value" of an asset of the Company shall be: in the case of other than intangibles (including contract rights), securities, real estate, and improvements, book value as determined by the certified public accountant for the Company in accordance with the Company's accounting method applied on a consistent basis; and, in the case of intangibles, securities, real estate, an improvements, their fair market value as determined pursuant to the following provisions: the fair market value of securities shall be determined in accordance with the then current Regulations for federal estate tax purposes concerning valuation. The Manager or the Liquidating Representative, as the case may be, shall select a qualified, independent Page 20 of 23 C&D li 208548 appraiser to appraise intangibles and any real estate and improvements and such appraised value shall be its fair market value. The Company shall pay the cost of any appraisal required in this Section; provided, however, if the Land has had a qualified appraisal (as defined in Section 10.3 of the Agreement) within three months of the date of the determination, the Manager may use the resulting appraisal as the Value of the Land. 1.13 Compliance with the Regulations. Section 1.1 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with the requirements of Section 1.704-1(b)of the Regulations and shall be interpreted and applied in a manner consistent with such Regulations. If the Manager determines that it is prudent to modify the manner in which the Capital Accounts are computed to comply with such Regulations, or any debits or credits to the Capital Accounts (including, without limitation, debits or credits relating to liabilities that are secured by contributed or distributed property or that are assumed by the Company or the Members), the Manager may make such modifications;provided, that the Manager determines such modifications to these allocations are not likely to have a material effect on the amounts distributable to any Member. The Manager shall also make any appropriate modifications if unanticipated events might otherwise cause this Agreement not to comply with Section 1.704-1(b)of the Regulations. 1.14 Definitions of"Profits and Losses". Profits and Losses shall mean, for each fiscal year or other period of the Company, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code including the deduction for the guaranteed payments under Section 1.2 (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1)of the Code shall be included in taxable income or loss), with the following adjustments: (a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses pursuant to this Section shall be added to such taxable income or loss; (b) Any expenditures of the Company described in Section 705(a)(2)(B)of the Code or which are deemed expenditures under such Section pursuant to Section 1.704- 1(b)(2)(iv)(i) of the Regulations and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be deducted in computing Profits or Losses; (c) If the Value of any Company asset is adjusted pursuant to Section 1.1(c), 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; (d) Gain or loss resulting from any disposition of Company assets with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Value of such Company assets, notwithstanding that the adjusted tax basis of such property differs from its Value; (e) In lieu of the depreciation, amortization, and other cost recovery deductions, if any, taken into account in computing such taxable income or loss, there shall be taken into account such deductions multiplied by the ratio of(A) the Value of each Company Page 21 of 23 C&D #208548 asset at the beginning of the year or other period over(B) the adjusted tax basis of such asset at the beginning of the year or other period; provided, that if such tax basis is zero, the deduction related to that asset shall be as the Manager determines; and (f) Notwithstanding any other provision of this Section, any items that are specially allocated pursuant to the Regulatory Allocations shall not be taken into account in computing Profits or Losses. 1.15 Tax Year and Accounting Matters. The tax year of the Company shall be the calendar year. The Company shall adopt methods of accounting as the Manager determines. 1.16 Tax Elections. The Manager may cause the Company to make, refrain from making, or revoke all tax elections provided for under the Code and the Regulations. 1.17 Tax Matters Member. The Manager shall be the "Tax Matters Partner" as defined in Section 6231(a)(7)of the Code (if that Section is relevant to the Company) with full and complete power to act in that capacity. 1.18 Tax Classification. The Members intend that the Company be classified for federal and state income tax purposes as a partnership. The Members agree to execute, and direct the Manager to execute on behalf of the Company, any and all documents necessary to qualify the Company as a partnership for federal and state tax purposes. Furthermore, the Members agree to make such allocations as are reasonably necessary to ensure such classification; provided, that such actions do not alter the economic returns and risks associated with the Company's business. Page 22 of 23 C&D #208548