Member Control Agreement (2012)Full Document 

Start of Preview

 

 

AMENDED AND RESTATED

 

MEMBER CONTROL AGREEMENT

 

OF

 

TWIN CITIES POWER HOLDINGS, LLC

 

THIS AMENDED AND RESTATED MEMBER CONTROL AGREEMENT (this “Agreement”) dated as of the 18th day of July, 2012 and effective July 1, 2012, is by and among Twin Cities Power Holdings, LLC, a Minnesota limited liability company (the “Company”), and the persons listed on Exhibit A hereto who are all of the current Members of the Company. Capitalized terms not otherwise defined herein shall have the meanings set forth in Exhibit B hereof, which definitions are fully incorporated herein by reference.

 

RECITALS

 

A.Pursuant to that certain Agreement and Plan of Reorganization, dated November 14, 2011, Timothy Krieger, Michael J. Tufte and DBJ 2001 Holdings, LLC (the “Original Members”) contributed their respective ownership interests in each of Twin Cities Power, LLC (“TCP”), Cygnus Partners, LLC and Twin Cities Energy, LLC (the “Primary Operating Companies”) to the Company in exchange for Membership Interests in the Company in order to consolidate the management of such companies under one holding company.

 

B.The Original Members and the Company entered into a Member Control Agreement, dated November 14, 2011 (the “Original Agreement”).

 

C.Pursuant to that certain Membership Unit Purchase Agreement, dated December 31, 2011, as amended, Michael J. Tufte’s Financial Rights were redeemed, effective January 1, 2012, and his Governance Rights were acquired by the Company upon FERC approval, effective April 30, 2012.

 

D.Pursuant to that certain Membership Unit Purchase Agreement, dated effective as of January 31st, 2012, as amended (the “TCP Unit Purchase Agreement”), by and between TCP and John O. Hanson (“Hanson”), TCP issued to Hanson certain financial rights to 496 units of TCP (the “Hanson TCP Units”) within the meaning set forth in the TCP Unit Purchase Agreement, in exchange for Hanson's payment of the Purchase Price of $2,745,000.00.

 

E.Pursuant to that certain Assignment of Membership Unit Purchase Agreement, entered into on July 18, 2012 and effective July 1, 2012, among the Company, TCP and Hanson, Hanson assigned the Hanson TCP Units to TCP and the Company issued to Hanson certain Financial Rights to 496 Units (the “Hanson Financial Units”).

 

F.Accordingly, the Company and the Members desire to Amend and Restate the Original Agreement to reflect the foregoing transactions and to set forth the rights associated with the Hanson Financial Units, which the Company also refers to as Preferred Units.

 

 
 

 

NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises hereinafter contained, the Members and the Company do hereby agree as follows:

 

ARTICLE I. Purpose

 

1.01. Purpose. The purpose and character of the business of the Company shall be to develop, own, operate and manage the businesses of the Operating Companies and such additional direct and indirect subsidiaries of the Company as may be organized in the future in the areas of energy trading and energy futures trading and activities incidental thereto (the “Business”), and any such other lawful business, purpose, or activity permitted under the Act.

 

ARTICLE II. CAPITAL

 

2.01. Capital Contributions. Contemporaneously with the execution and delivery of the Original Agreement, and pursuant to the Reorganization Agreement, the Original Members contributed their respective membership interests in the Primary Operating Companies to the Company in exchange for Membership Interests in the Company. The Members and the Company acknowledge that, effective April 1, 2012, Hanson contributed $2,745,000.00 to the Capital of the Company in exchange for the Hanson Financial Units, and the Capital Account of Hanson was credited with said Capital Contribution pursuant to Section 2.06 and Treasury Regulation Section 1.704-1(b)(2)(iv).

 

2.02 Allocation for Income Tax Purposes. The Members understand that for income tax purposes, the Company’s adjusted basis for the interest in the Property contributed to the capital of the Company pursuant to Sections 2.01 and 2.06 hereof may differ from the value at which the interest was accepted by the Company at the time of its contribution. Nevertheless, the Members intend that allocations shall be governed by Section 704(b) of the Code, to the extent permitted by Section 704(c) of the Code and the regulations thereunder as hereinafter set forth in Section 2.08 hereof.

 

2.03 No Interest on Capital Contribution. Other than the Hanson Guaranteed Payments (as hereinafter defined), no interest or guaranteed payment shall be paid on the capital contributions of the Members and assignees of Financial Rights or upon any undrawn profits of any Member or assignee of Financial Rights which are credited to his, her, or its Capital Account.

 

2.04 Withdrawal of Capital Contributions. A Member or an assignee of Financial Rights shall not be entitled to withdraw any part of his, her, or its capital contribution, to receive repayment of his, her, or its capital contribution, or to receive any distribution from the Company except as specifically provided herein.

 

2.05 Additional Capital Contributions. No Member shall at any time have any obligation to make any cash capital contributions to the Company and those provided for in a Contribution Agreement; provided however, the Members may agree to contribute additional capital to the Company, subject to requirements and restrictions contained in the Act.

 

-2-
 

 

2.06 Capital Accounts.

 

(a) A separate Capital Account shall be established and maintained on the books and records of the Company for each Member and assignee of Financial Rights in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). For example, by way of illustration rather than limitation, the Capital Account of each Member and assignee of Financial Rights shall be credited (increased) with the amount of such Member’s or assignee’s capital contributions to the Company (which shall include the money and the fair market value of any property, net of any liabilities to which such property is subject, contributed to the capital of the Company); increased, from time to time, by each Member’s or assignee’s share of net income, including any income exempt from federal income tax, as allocated to such Member or assignee; and decreased by any distributions of cash and the fair market value of any property distributed to such Member or assignee (net of any liabilities secured by such property), and by each Member’s or assignee’s share of net loss as allocated to such Member or assignee. The amount of expenditures of the Company which are neither deductible nor properly chargeable to the Capital Accounts of the Members and assignees of Financial Rights under Code Section 705(a)(2)(B) or which are treated as such expenditures under Treasury Regulation Section 1.704-1(b)(2)(iv)(b) shall reduce the Capital Accounts and shall be allocated among the Members or assignees of Financial Rights pro rata in accordance with their Percentage Interests in the Company.

 

(b) Any Member, including any substitute Member, or assignee of Financial Rights, who shall receive a Membership Interest or Financial Rights in the Company or whose Membership Interest or Financial Rights shall be increased by means of the transfer to him, her, or it of a Membership Interest or Financial Rights of another Member or assignee of Financial Rights shall have a Capital Account that has been appropriately adjusted to reflect such transfer, in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(l),

End of Preview