Glacial Lakes Energy Exports Holdings, Llc


APPENDIX BGLACIAL LAKES ENERGY EXPORTS HOLDINGS,LLCA South Dakota Limited Liability CompanyOPERATING AGREEMENT(Contains Restrictions OnTransfer Of Interests)Dated Effective September 30, 2015DOCS-#4798182-v5

TABLE OF CONTENTSPageSECTION 1 THE LIMITED LIABILITY 131.14Formation .1Name .1Purpose.1Powers .1Principal Place of Business .1Term .2Filings .2Title to Property .2Payments of Individual Obligations .2Independent Activities .2Unit Holder Authority .3Access to and Confidentiality of Information .3Limited Liability .4Definitions.4SECTION 2 CAPITALIZATION; UNITS . Holders .10Authorized Units; Designation of Classes of Units .10Issuance and Redemption of Units.10Capital Accounts .11SECTION 3 ALLOCATIONS . and Losses .13Special Allocations in Year of Liquidation.13Special Allocations .14Curative Allocations .15Loss Limitation .16Other Allocation Rules .16Tax Allocations: Code Section 704(c) .16SECTION 4 DISTRIBUTIONS . Cash Flow.17Amounts Withheld .17Limitations on Distributions .17SECTION 5 MANAGEMENT AND OPERATIONS .175.15.2Management by the Manager .17Reliance on Authority .18DOCS-#4798182-V5i Manager .18Duties and Obligations of Manager .18Officers .18Limitation of Liability; Indemnification of the Manager and Officers .19Unit Holder and Manager Compensation; Expenses; Loans .19Contracts with Manager or Affiliates.20SECTION 6 UNIT HOLDERS . Holders; Rights and Powers Generally .20Continuation of the Company .21No Obligation to Purchase Unit Holder’s Interest .22Waiver of Dissenters’ Rights .22SECTION 7 ACCOUNTING, BOOKS AND RECORDS ., Books and Records .22Financial Statements .22Tax Matters .22Delivery to Unit Holders and Inspection .23SECTION 8 AMENDMENTS; UNIT HOLDER MEETINGS .238.18.2Amendments .23Meetings. .24SECTION 9 TRANSFERS . on Transfers .25Prohibited Transfers .25Rights of Unadmitted Assignees .25Admission of Substituted Unit Holders .26Representations Regarding Transfers; Legend .26Distributions and Allocations in Respect of Transferred Units .27Sale of Units .27SECTION 10 DISSOLUTION AND WINDING UP .2810.110.210.310.410.510.610.710.8Dissolution Events .28Winding Up .28Rights of Unit Holders .28Notice of Dissolution/Termination .29Allocations During Period of Liquidation .29Character of Liquidating Distributions .29The Liquidator.29Form of Liquidating Distributions .29DOCS-#4798182-V5ii

SECTION 11 DISPUTE RESOLUTION .30SECTION 12 MISCELLANEOUS 2.12Notices .30Binding Effect .31Construction .31Time .31Headings .31Severability .31Incorporation by Reference .31Variation of Terms .31Governing Law .32Waiver of Jury Trial .32Counterpart Execution .32Specific Performance .32DOCS-#4798182-V5iii

OPERATING AGREEMENTOFGLACIAL LAKES ENERGY EXPORTS HOLDINGS, LLCTHIS DECLARATION AND OPERATING AGREEMENT is hereby adopted andentered into effective as of the Effective Date (as defined below) by GLACIAL LAKES CORNPROCESSORS, a South Dakota cooperative (“GLCP”), the holder of 100% of the issued andoutstanding Interests (as defined below) and sole Unit Holder (as defined below) of GlacialLakes Energy Exports Holdings, LLC (the “Company”) as of the Effective Date, andGLACIAL LAKES ENERGY, LLC, a South Dakota limited liability company (“GLE”), thesole Manager (as defined below) of the Company as of the Effective Date, pursuant to theprovisions of the Act (as defined below), on the terms and conditions set forth herein.SECTION 1THE LIMITED LIABILITY COMPANY1.1Formation. The sole Unit Holder has caused the Company to be formed as amanager-managed South Dakota limited liability company pursuant to the provisions of the Act.The sole Unit Holder hereby agrees that this Agreement constitutes an “operating agreement”within the meaning of Section 47-34A-103 of the Act and replaces and supersedes all prioroperating agreements entered into or adopted by the sole Unit Holder. To the extent that therights or obligations of any Unit Holder are different by reason of any provision of thisAgreement than they would be in the absence of such provisions, this Agreement, to the extentpermitted by the Act, shall control.1.2Name. The name of the Company is Glacial Lakes Energy Exports Holdings,LLC and all business of the Company will be conducted in this name. The Manager may changethe name of the Company from time to time in accordance with the Act.1.3Purpose. The purposes of the Company are to hold an investment in thecommon stock of Glacial Lakes Energy Exports, Inc., a South Dakota corporation (“IC-DISC”),to engage in any activity connected with or related to any such purposes, and to engage in anyand all other lawful purposes or business for which a limited liability company organized underthe Act may conduct or is authorized to perform by law.1.4Powers. This Company may perform every act and thing necessary, proper,incidental or convenient to or in furtherance of the conduct of its business or the accomplishmentof its purposes. This Company shall have all powers, privileges and rights conferred upon it byapplicable law.1.5Principal Place of Business. The registered office address and principal placeof business of the Company is 301 20th Avenue SE, Watertown, South Dakota, 57201. Therecords required by the Act will be maintained at the Company’s principal place of business.DOCS-#4798182-V5B-1

1.6Term. The term of the Company began on the date the Articles were filed withthe Secretary of State of the State of South Dakota, and shall continue until the winding up andliquidation of the Company and its business is completed following a Dissolution Event, asprovided in Section 10 hereof.1.7Filings.(a)The organizer has caused the necessary organizational documents to befiled in the office of the Secretary of State of the State of South Dakota in accordance with theAct. The Company shall take any and all other actions reasonably necessary to perfect andmaintain the status of the Company as a limited liability company under the laws of the State ofSouth Dakota. The Manager shall cause amendments to the Articles to be filed wheneverrequired by the Act.(b)Upon the dissolution and completion of the winding up and liquidation ofthe Company in accordance with Section 10, the Manager shall promptly execute and fileCertificate of Dissolution in accordance with the Act and the laws of any other jurisdictions inwhich the Manager deems such filing necessary or advisable.1.8Title to Property. All Property owned by the Company is owned by theCompany as an entity and no Unit Holder or Manager has any ownership interest in suchProperty in its individual name. Each Unit Holder’s interest in the Company is personal propertyfor all purposes. The Company shall hold title to all of its Property in the name of the Companyand not in the name of any Unit Holder or Manager.1.9Payments of Individual Obligations. The Company’s credit and assets shallbe used solely for the benefit of the Company, and no asset of the Company may be Transferredor encumbered for, or in payment of, any individual obligation of any Unit Holder or Manager.1.10Independent Activities.(a)The Manager shall be required to devote only such time to the affairs ofthe Company as may be necessary to manage the business and affairs of the Company inaccordance with Section 5, and shall be free to serve any other Person or enterprise in anycapacity that the Manager may deem appropriate in his discretion.(b)Neither this Agreement nor any activity undertaken pursuant hereto shall:(i) prevent any Unit Holder, Manager or its Affiliates, acting on their own behalf, from engagingin whatever activities they choose, whether the same are competitive with the Company orotherwise, and any such activities may be undertaken without having or incurring any obligationto offer any interest in such activities to the Company or any other Unit Holder; or (ii) requireany Unit Holder or Manager to permit the Company or other Unit Holder or its Affiliates toparticipate in any such activities, and as a material part of the consideration to hold Unitsgoverned by this Agreement by each Unit Holder, each Unit Holder hereby waives, relinquishes,and renounces any such right or claim of participation.DOCS-#4798182-V5B-2

1.11 Unit Holder Authority. Each Unit Holder represents and warrants to theCompany and to the other Unit Holders that:(a)the Unit Holder, if not an individual, is duly organized, validly existingand in good standing under the laws of its state of organization and is duly qualified and in goodstanding as a foreign organization in the jurisdiction of its principal place of business if notorganized therein; and, in all instances:(b)the Unit Holder has full corporate, limited liability company, partnership,trust or other applicable power and authority to execute and agree to this Agreement and toperform its obligations hereunder and all necessary actions by the board, shareholders, managers,members, partners, trustees, beneficiaries, or other Persons necessary or appropriate for the dueauthorization and performance of this Agreement by the Unit Holder have been taken.1.12Access to and Confidentiality of Information.(a)In addition to the other rights specifically set forth in this Agreement, eachUnit Holder is entitled to all information to which the Unit Holder is entitled to have accesspursuant to the Act under the circumstances and subject to the conditions therein stated, whichconditions include but are not limited to such reasonable standards governing what informationand documents are to be furnished at what time and location and at whose expense as may be setforth herein or otherwise established by the Manager. However, except as otherwise provided bylaw, the Manager may determine, due to contractual obligations, business concerns or otherconsiderations, that certain information regarding the business, affairs, properties, and financialcondition of the Company should be kept confidential and not provided to some or all of the UnitHolders or that it is not just or reasonable for some or all of the Unit Holders or their assignees orrepresentatives to examine or copy any such information.(b)Each Unit Holder acknowledges that the Unit Holder may receiveinformation from or regarding the Company in the nature of trade secrets or that is otherwiseconfidential, the release of which may be damaging to the Company or Persons with whom itdoes business. Each Unit Holder agrees to hold in strict confidence any information it receivesregarding the Company that is identified as being confidential (and if such information isprovided in writing, is so marked) and may not disclose such information to any Person, exceptfor disclosures: (i) to another Unit Holder having the right to such information; (ii) compelled bylaw, provided the Unit Holder must promptly notify an officer of the Manager of any request ordemand for such information, to the extent reasonably possible; (iii) to advisors orrepresentatives of the Unit Holder, or to Persons (and their advisors or representatives) seeking toacquire all or any portion of the Unit Holder’s Interest through a Transfer in accordance with thisAgreement, but only if in each case such Person has agreed to be bound by the provisions of thissection; or (iv) of information that the Unit Holder has also received from a source independentof the Company that the Unit Holder reasonably believes has the legal right to disclose suchinformation to the Unit Holder.Each Unit Holder acknowledges that a breach of the provisions of this section may causethe Company irreparable harm and injury for which monetary damages are inadequate or difficultDOCS-#4798182-V5B-3

to calculate or both. Accordingly, each Unit Holder specifically agrees that the Company shallbe entitled to injunctive relief to enforce the provisions of this section, that such relief may begranted without the necessity of proving actual damages, and that such injunctive or equitablerelief shall be in addition to, not in lieu of, the right to recover monetary damages for any breachof this section by the Unit Holder. The obligations referred to in this section shall survive thetermination of a Unit Holder’s Interest in the Company.1.13 Limited Liability. Except as otherwise expressly provided by the Act, thisAgreement, or agreed to under another written agreement, the debts, obligations and liabilities ofthe Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligationsand liabilities of the Company, and no Unit Holder or Manager of the Company shall beobligated personally for any such debt, obligation or liability of the Company solely by reason ofbeing a Unit Holder or acting as a Manager of the Company. The failure of the Company toobserve any formalities or requirements relating to the exercise of its powers or management ofits business or affairs under this Agreement or the Act shall not be grounds for imposing liabilityon the Unit Holders or the Manager for any debt, obligation or liability of the Company.1.14 Definitions. Capitalized words and phrases used in this Agreement have thefollowing meanings:“Act” means the South Dakota Limited Liability Act set forth in Chapter 47-34A ofSouth Dakota Statutes, as amended from time to time (or any corresponding provision orprovisions of any succeeding law).“Adjusted Capital Account Deficit” means, with respect to any Unit Holder, the deficitbalance, if any, in the Unit Holder’s Capital Account as of the end of the relevant Fiscal Year,after giving effect to the following adjustments: (i) Credit to the Capital Account any amountswhich such Unit Holder is deemed to be obligated to restore pursuant to the next to the lastsentences in §§1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and (ii) Debit to such CapitalAccount the items described in §§1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.7041(b)(2)(ii)(d)(6) of the Regulations. The foregoing definition is intended to comply with theprovisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistentlytherewith.“Affiliate” means, with respect to any Person: (i) any Person directly or indirectlycontrolling, controlled by or under common control with the Person; (ii) any officer, Manager,general partner, member or trustee of such Person; or (iii) any Person who is an officer, Manager,general partner, member or trustee of any Person described in clauses (i) or (ii) of this sentence.For purposes of this definition, the terms “controlling,” “controlled by” or “under commoncontrol with” means the possession, direct or indirect, of the power to direct or cause thedirection of the management and policies of a Person or entity, whether through the ownership ofvoting securities, by contract or otherwise, or the power to elect at least 50% of the board,officers, members, or persons exercising similar authority with respect to such Person or entities.“Articles” means the Articles of Organization and related documents filed with the SouthDakota Secretary of State for the purpose of the Company becoming subject to the Act.DOCS-#4798182-V5B-4

“Assignee” means a transferee of Units who is not admitted as a substituted memberpursuant to Section 9.4.“Agreement” mean this Declaration and Operating Agreement of Glacial Lakes EnergyExports Holdings, LLC, as amended from time to time. Words such as “herein,” “hereinafter,”“hereof,” “hereto” and “hereunder” refer to this Agreement as a whole, unless the contextotherwise requires.“Bylaws” means the Bylaws of GLCP, as amended, modified or supplemented from timeto time.“Capital Account” means the capital account maintained for each Unit Holder inaccordance with Section 2.4.“Capital Contributions” means, with respect to any Unit Holder, the amount of moneyand the initial Gross Asset Value of any contributed assets (other than money) contributed to theCompany with respect to the Units in the Company held or purchased by such Unit Holder,including additional Capital Contributions.“Code” means the United States Internal Revenue Code of 1986, as amended from timeto time.“Company Minimum Gain” has the meaning given the term “partnership minimumgain” in §§1.704-2(b)(2) and 1.704-2(d) of the Regulations.“Company” means the Glacial Lakes Energy Exports Holdings, LLC, a South Dakotalimited liability company.“Debt” means (i) any indebtedness for borrowed money or the deferred purchase price ofproperty as evidenced by a note, bonds, or other instruments, (ii) obligations as lessee undercapital leases, (iii) obligations secured by any mortgage, pledge, security interest, encumbrance,lien or charge of any kind existing on any asset owned or held by the Company whether or notthe Company has assumed or become liable for the obligations secured thereby, (iv) anyobligation under any interest rate swap agreement, (v) accounts payable, and (vi) obligationsunder direct or indirect guarantees of (including obligations (contingent or otherwise) to assure acreditor against loss in respect of) indebtedness or obligations of the kinds referred to in clauses(i), (ii), (iii), (iv) and (v) above, provided that Debt shall not include obligations in respect of anyaccounts payable that are incurred in the ordinary course of the Company’s business and are notdelinquent or are being contested in good faith by appropriate proceedings.“Depreciation” means, for each Fiscal Year, an amount equal to the depreciation,amortization, or other cost recovery deduction allowable with respect to an asset for such FiscalYear, except that if the Gross Asset Value of an asset differs from its adjusted basis for federalincome tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount whichbears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation,amortization, or other cost recovery deduction for such Fiscal Year bears to such beginningDOCS-#4798182-V5B-5

adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposesof an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined withreference to such beginning Gross Asset Value using any reasonable method selected by theManager.“Dissolution Event” has the meaning set forth in Section 10.1.“Effective Date” means September 30, 2015.“Fiscal Year” for the fiscal year of the Company for tax purposes means (i) the periodcommencing with the Effective Date and ending on December 31, 2015, (ii) any subsequenttwelve-month period commencing on January 1 and ending on December 31, and (iii) the periodcommencing on the immediately preceding January 1 and ending on the date on which allProperty is distributed to the Unit Holders pursuant to Section 10, or, if the context requires, anyportion of a Fiscal Year for which an allocation of Profits or Losses or a distribution is to bemade. “Fiscal Year” for the fiscal year of the Company for book purposes means (i) the periodcommencing with the Effective Date and ending on August 31, 2016, (ii) any subsequent twelvemonth period commencing on September 1 and ending on the following August 31, and (iii) theperiod commencing on the immediately preceding September 1 and ending on the date on whichall Property is distributed to the Unit Holders pursuant to Section 10.“GAAP” means generally accepted accounting principles in effect in the United States ofAmerica from time to time.“GLCP” has the meaning set forth in the introductory paragraph of this Agreement.“GLCP Articles” means the Articles of Incorporation of GLCP, as amended, modified orsupplemented from time to time.“GLCP Governing Documents” means the GLCP Articles, Bylaws, membershipagreement, transfer policies and any other documents of GLCP relating to or governingmembership in GLCP or Transfers of the Stapled Interests.“Gross Asset Value” means with respect to any asset, the asset’s adjusted basis forfederal income tax purposes, except as follows:(i) The initial Gross Asset Value of any asset contributed by a Unit Holder to theCompany shall be the gross fair market value of such asset, as determined by the Manager. TheManager shall establish the initial Gross Asset Values of all Company assets as of the EffectiveDate;(ii) The Gross Asset Values of all Company assets shall be adjusted to equal theirrespective gross fair market values (taking Code Section 7701(g) into account) as determined bythe Manager as of the following times: (A) the acquisition of an additional interest in theCompany by any new or existing Unit Holder in exchange for more than a de minimis CapitalContribution; (B) the distribution by the Company to a Unit Holder of more than a de minimisamount of Company property as consideration for an interest in the Company; (C) the liquidationDOCS-#4798182-V5B-6

of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (D) suchother times as the Regulations may permit, provided that an adjustment described in clauses (A),(B) and (D) of this paragraph shall be made only if the Manager determines that such adjustmentis necessary to reflect the relative economic interests of the Unit Holders in the Company;(iii) The Gross Asset Value of any item of Company assets distributed to any Unit Holdershall be adjusted to equal the gross fair market value (taking Code Section 7701(g) into account)of such asset on the date of distribution as determined by the Manager; and(iv) The Gross Asset Values of Company assets shall be increased (or decreased) toreflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) orCode Section 743(b), but only to the extent that such adjustments are taken into account indetermining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) andsubparagraph (vi) of the definition of “Profits” and “Losses” or Section 3.3(g) hereof; provided,however, that Gross Asset Values shall not be adjusted

DOCS-#4798182-V5 B-1OPERATING AGREEMENT OF GLACIAL LAKES ENERGY EXPORTS HOLDINGS, LLC THIS DECLARATION AND OPERATING AGREEMENT is hereby adopted and entered into effective as of the Effective Date (as defined below) by GLACIAL LAKES CORN PROCESSORS, a South Dakota cooperative ("GLCP"), the holder of 100% of the issued and outstanding Interests (as defined below) and sole Unit Holder (as .