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OPERATING AGREEMENTOFSWINE STRONGHOLD, L.L.C.(Manager-Managed LLC)THIS AGREEMENT is made among Kauile P. Ukininkas, Zhu P. Nongmin and Porcus P.Agricola (the “Initial Members”), Swine Stronghold, LLC, an Iowa limited liability company (the“Company”), and other persons who hereafter become additional or substitute members under theterms of this Agreement.RECITALSThe Company is a limited liability company formed under the Iowa Limited LiabilityCompany Act. The other parties to this Agreement are the Company and the holders of ownershipinterest in the Company (the “Members”). The parties intend by this Agreement to define theirrights and obligations with respect to the Company’s governance and financial affairs and to adoptregulations and procedures for the conduct of the Company’s activities. Accordingly, with theintention of being legally bound, they agree as follows:ARTICLE ITHE COMPANY1.01Status. The Company is an Iowa limited liability company organized under theIowa Limited Liability Company Act. (“Act”).1.02Name. The Company’s name is Swine Stronghold, L.L.C.1.03Term The Company shall have perpetual existence unless sooner dissolved bylaw or as provided in this Agreement.1.04Principal Office. The Company’s principal and registered office is located at2468 Sus Scrofa Ln., Mechanicsville , 50511. The agent for service of process at that address isJennifer Harrington. The Company may change its registered agent or office at any time inaccordance with the Act.ARTICLE IICHARACTER AND PURPOSE OF COMPANY BUSINESS2.01 The Business. The business of the Company shall be to engage in anylawful act or activity for which a limited liability company may be organized under theAct.2.02 The Purpose. The Members may take any action permitted by thisAgreement and the Act to accomplish the Company Purpose. The “Company Purpose”is to engage in the activities described above in section 2.01 and to engage in any businessthat a limited liability company may carry on, except banking or insurance, and to carry onPage 1 of 15
any activity not prohibited by law. If the Company qualifies to do business in a foreignjurisdiction, then it may transact all business permitted in that jurisdiction. There is nojurisdictional restriction upon the property or activity of the Company.2.03 Units. Ownership in the Company shall be represented by units of ownershipinterest (“Units”) which shall be issued to the initial Members and to any new or additionalMember. The Units may be represented by certificates issued by the Company. The initialMembers shall be issued Units in the Company as indicated on Exhibit A.ARTICLE IIIRIGHTS AND OBLIGATIONS OF MEMBERS3.01 Voting. Each Member shall be entitled to one vote for each Unit held. In the eventa Member is an entity, that Member shall designate in writing to the Company the name of onenatural person who is authorized to act as the representative of that Member, with legal authorityto vote and otherwise act on behalf of such Member (the “Designated Representative”).3.02Enumerated Approvals.(a)Units outstanding:The following acts require the unanimous approval of Members holding the(i)Reorganization. The merger, combination, consolidation, or anyother reorganization of the Company;(ii)Dissolution. The dissolution or winding up of the Company;(iii) Disposition. The sale, exchange, or other disposition of all, orsubstantially all, of the Company’s assets which is to occur as part of a singletransaction or plan;(iv)Amendment. The amendment of this Agreement;(b)The following acts require the approval of Members holding no less thanSeventy-five percent (75%) of the Units outstanding:(v)New Members. The transfer of Units in accordance with section8.01 and the admission of new or substitute Members;and(vi)Purchase of Units. The redemption of any Units of the Company(vii)Manager. Removal of the Manager.3.03 Funds. All Company funds shall be deposited in the Company’s name and shallbe subject to withdrawal only as provided in this Agreement.Page 2 of 15
3.04 Limitation of Liability. No Member shall be personally liable for any debts orobligations of the Company unless otherwise required by the Act.3.05 Limitation on Individual Authority. A Member acting alone, without eitherspecific authority under the terms of this Agreement or the prior authorization of the Membersacting in accordance with section 4.07 below, has no authority to bind the Company. A Memberwhose unauthorized act obligates the Company to a third party shall indemnify the Company forany costs or damages the Company incurs as a result of the unauthorized act.ARTICLE IVMEETINGS OF MEMBERS4.01Meetings. Any Member or combination of Members whose Units equal orexceed twenty-five percent (25%) may call a meeting of Members. Meetings shall be held no lessfrequently than once per year.4.02 Place of Meetings. The Members may designate any place, either within or outsidethe State of Iowa, as the place of meeting for any meeting of the Members. If no designation ismade, or if a special meeting be otherwise called, the place of meeting shall be at the offices of theCompany.4.03 Notice of Meetings. Except as provided in section 4.04, written notice stating theplace, day and hour of the meeting and the purpose or purposes for which the meeting is calledshall be delivered not less than ten (10) nor more than thirty (30) days before the date of themeeting, by mail, fax or in person, at the direction of the Member or Members calling the meeting,to each Member whether or not entitled to vote at such meeting. If mailed, such notice shall bedeemed to be delivered as provided in section 11.03. A Member may waive notice of a meetingof Members orally, in writing or by attendance at the meeting.4.04 Meeting of all Members. If all of the Members are present at a meeting held atany time and place, either within or outside of the State of Iowa, then, consent to the holding of ameeting at such time and place shall be presumed. Such meeting shall be valid without a notice,and at such meeting lawful action may be taken.4.05 Record Date. For the purpose of determining Members entitled to notice of or tovote at any meeting of Members or any adjournment thereof, or Members entitled to receivepayment of any distribution, or in order to make a determination of Members for any other purpose,the date on which notice of the meeting is mailed or the date on which the resolution declaringsuch distribution is adopted, as the case may be shall be the record date for such determination ofMembers. When a determination of Members entitled to vote at any meeting of Members has beenmade as provided in this section, such determination shall apply to any adjournment thereof.4.06 Quorum. Members holding at least a majority of all Units in the Company capital,represented in person or by proxy, shall constitute a quorum at any meeting of Members. In theabsence of a quorum at any such meeting, a majority of the Units so represented may adjourn thePage 3 of 15
meeting from time to time for a period not to exceed forty-five (45) days without further notice.However, if the adjournment is for more than forty-five (45) days, or if after the adjournment anew record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall begiven to each Member of record.At such adjourned meeting at which a quorum shall be present or represented, any businessmay be transacted which might have been transacted at the meeting as originally noticed. TheMembers present at a duly organized meeting may continue to transact business until adjournment,notwithstanding the withdrawal during such meeting of that number of Units whose absence wouldcause less than a quorum.4.07 Manner of Acting. If a quorum is present, the affirmative vote of Membersholding at least a majority of all Units in the Company capital, as adjusted from time to time, andentitled to vote on the subject matter shall be the act of the Members, unless the vote of a greateror lesser proportion or number is otherwise required by the Act or by this Agreement.4.08 Proxies. At all meetings of Members, a Member may vote in person or by proxyexecuted in writing by the Member or by a duly authorized attorney-in-fact. Such proxy shall befiled with the Company at its principal place of business before or at the time of the meeting. Noproxy shall be valid after eleven (11) months from the date of its execution, unless otherwiseprovided in the proxy.4.09 Action by Members Without a Meeting. Action required or permitted to be takenat a meeting of Members may be taken without a meeting if the action is evidenced by one or morewritten consents describing the action taken, signed by Members holding at least a majority of allUnits in the Company capital, as adjusted from time to time, and entitled to vote on the subjectmatter and delivered to the Company for inclusion in the minutes or for filing with the Companyrecords. Action taken under this section is effective when holders of a majority of all Units entitledto vote have signed the consent, unless the consent specifies a different effective date.The record date for determining Members entitled to take action without a meeting shallbe the date the first Member signs a written consent, unless otherwise provided in the writtenconsent.4.10 Waiver of Notice. When any notice is required to be given to any Member, awaiver thereof in writing signed by the person entitled to such notice, whether before, at, or afterthe time stated therein, shall be equivalent to the giving of such notice.4.11 Indemnification of Members. The Company shall indemnify each Member forall expenses, losses, liabilities and damages the Member actually and reasonably incurs inconnection with the defense or settlement of any action arising out of or relating to the conduct ofthe Company 's activities or the payment of any fine leveled against a Member because of suchMember’s status as an organizer of the Company or such Member’s actions with respect to theCompany, except to the extent such sum relates to a matter with respect to which the Member isadjudged to be liable for breach of a fiduciary duty owed to the Company or the other Membersunder the Act or this Agreement.Page 4 of 15
ARTICLE VMANAGEMENT5.01Representative Management. The Company shall be managed by a manager.The initial manager is Kiaule P. Ukininkas (the “Manager”).5.02Powers and Authority.(a)General Scope. Except for matters on which the Members’ approval isrequired by the Act or this Agreement, the Manager has full power, authority and discretion tomanage and direct the Company’s business, affairs and properties, including, without limitation,the specific powers referred to in Section 5.02(b).(b)Specific Powers.(1)Subject to the limitations set forth in subsections (3) and (4) below,the Manager is authorized on the Company’s behalf to make all decisions as to (i) the managementof all or any part of the Company’s assets and business; (ii) the development or lease of theCompany’s assets; (iii) the purchase or other acquisition of other assets of all kinds; (iv) theborrowing of money and the granting of security interests in the Company’s assets (including loansfrom Members); (v) the prepayment, refinancing or extension of any mortgage affecting theCompany’s assets; (vi) the compromise or release of any of the Company’s claims or debts; (vii)the employment or retention of Persons for the operation and management of the Company’sbusiness; and (viii) all elections available to the Company under any federal or state tax law orregulation.(2)Subject to the limitations in subsection (3) below, the Manager onthe Company’s behalf may execute and deliver (i) all contracts, conveyances, assignments, leases,subleases, franchise agreements, licensing agreements, management contracts and maintenancecontracts covering or affecting the Company’s assets; (ii) all promissory notes, mortgages, deedsof trust, security agreements and other similar documents; (iii) all articles, certificates and reportspertaining to the Company’s organization, qualification and dissolution; (iv) all tax returns andreports; and (v) all other instruments of any kind or character relating to the Company’s affairs.(3)The Manager on the Company’s behalf may execute and deliverall contracts and all checks, drafts, and other orders for the payment of the Company’s funds tothe extent such contracts (or series of contracts) do not obligate the Company in an amount inexcess of Twenty Thousand Dollars ( 20,000.00) or such orders (or series of orders) do not exceedthe amount of Twenty Thousand Dollars ( 20,000.00).(4)The Manager will not decide who the Company will contract withto procure swine for any swine rearing facility of the Company’s. Instead, the Members will voteaccording to Section 3.01 and Article 4 to decide which swine contractor to engage and contractwith.Page 5 of 15
5.04Fiduciary Duties.(a)Standard of Care.(1)Exculpation. The Manager shall not be liable to the Company orany Member for an act or omission done in good faith to promote the Company’s best interests,unless the act or omission constitutes gross negligence, intentional misconduct or a knowingviolation of law.(2)Justifiable Reliance. The Manager may rely on the Company’srecords maintained in good faith and on information, opinions, reports or statements received fromany Person pertaining to matters the Manager reasonably believes to be within the Person’sexpertise or competence.(b)Self-Dealing. The Manager may enter into a business transaction with theCompany if the terms of the transaction are no less favorable to the Company than those of asimilar transaction with an independent third party. Approval or ratification by Members holdinga majority of all Units of the Company’s capital, excluding all Units held by Members having aninterest in the transaction, shall constitute conclusive evidence that the terms satisfy the foregoingcondition.5.05Indemnification of Manager. The Company shall indemnify the Manager forexpenses, losses, liabilities and damages in accordance with the provisions of the Articles ofOrganization.5.06 Compensation. The Members may compensate the Manager for services renderedto or on behalf of the Company.5.07Tenure.(a)Term. The Manager shall serve until the earlier of: (1) the Manager’sresignation; (2) the Manager’s removal in accordance with Section 3.02 above; (3) the Manager’sBankruptcy; (4) as to a Manager who is a natural person, the Manager’s death or adjudication ofincompetency; and (5) as to a Manager that is an entity, the Manager’s dissolution.(b)Resignation. The Manager at any time may resign by written noticedelivered to the Members at least 30 days prior to the effective date of the resignation.ARTICLE VICAPITAL CONTRIBUTIONS6.01 Members. The Company’s initial capital shall consist of cash to be contributed bythe initial Members in the amounts indicated on Exhibit A. No Member shall be obligated tomake any additional capital contribution to the Company or to pay any assessment to the Company,other than any unpaid amounts of such Member’s original capital contribution, and no Units shallbe subject to any calls, requests or demands for capital.Page 6 of 15
6.02 Payments with Respect to Capital Contributions. Except as otherwise providedin this Agreement, no Member shall receive any interest, salary or draw for services rendered onbehalf of the Company in the capacity as a Member, except if the Member is an employee orindependent contractor of the Company.6.03No Return of Capital Contribution. A Member is not entitled to demand orreceive the return of any capital contribution prior to the Company's dissolution and winding up.In the event of a dissolution and winding-up, no Member shall receive out of the Company’sproperty any part of its capital contribution until all liabilities of the Company, except liabilities toMembers on account of their capital contributions, have been paid or there remains property in theCompany sufficient to make such payments.6.04Loans to Company. Nothing in this Agreement shall prevent any Member frommaking secured or unsecured loans to the Company.6.05Reports.(a) Members. As soon as practicable after the close of each taxable year, theCompany shall prepare and send to the Members such reports and information as are reasonablynecessary to (1) inform the Members of the results of the Company's operations for the taxableyear and (2) enable the Members to completely and accurately reflect their distributive shares ofthe Company's income, gains, deductions, losses and credits in their federal, state and local incometax returns for the appropriate year.(b) Entities. As to a Member who is an entity, reports provided under thissection 6.05 shall be sent to such member’s designated representative as designated in writing tothe Company.6.06 Tax Matters Member. Porcus P. Agricola shall be designated as the Tax MattersMember and shall serve as the “Partnership Representative” of the Company pursuant to section6223 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company may removeany Tax Matters Member, with or without cause, and designate a successor to any Tax MattersMember who for any reason ceases to act. The Tax Matters Member shall inform the Members ofall administrative and judicial proceedings pertaining to the determination of the Company's taxitems and shall provide the Members with copies of all notices received from the Internal RevenueService regarding the commencement of a Company-level audit or a proposed adjustment of anyof the Company's tax items. The Tax Matters Member may extend the statute of limitations forassessment of tax deficiencies against the Members attributable to any adjustment of any tax item.The Company shall reimburse the Tax Matters Member for reasonable expenses properly incurredwhile acting within the scope of the Tax Matters Member's authority. Furthermore, the Companyshall indemnify the Tax Matters Member, to the full extent permitted by law, from and against anydamages or losses (including attorney’s fees) arising out of or incurred in connection with anyaction taken or omitted to be taken by him/her in carrying out his/her duties as the Tax MattersMember, provided such action taken or omitted to be taken does not constitute fraud, grossnegligence or willful misconduct.Page 7 of 15
6.07 Withholding. If the Company is required by law or regulation to withhold and payover to a governmental agency any part or all of a distribution or allocation of profit to a Member:Member; and(a)Distribution. The amount withheld shall be considered a distribution to the(b) Procedure. If the withholding requirement pertains to a distribution in kindor an allocation of profit, the Company shall pay the amount required to be withheld to thegovernmental agency and promptly take such action as it considers necessary or appropriate torecover a like amount from the Member, including offset against any distributions to which theMember would otherwise be entitled.6.08 Tax Elections. The Tax Matters Member, in its discretion, may elect to adjust thebasis of the assets of the Company in accordance with section 754 of the Code in the event of adistribution of Company property as described in section 734 of the Code or a transfer by anyMember of the Member’s Units, as described in section 743 of the Code. Furthermore, the TaxMatters Member may also make any other tax elections as it deems desirable or necessary in itsdiscretion.ARTICLE VIIPROFIT-SHARING; DISTRIBUTIONS & FINANCE7.01 Expenses. The Company shall pay all of its expenses of operation out of Companyfunds. The Members shall be reimbursed for all direct and indirect expenses incurred on behalf ofthe Company, including expenses incurred in the formation of this Company.7.02 Distributions. When in the opinion of the Manager the cash of the Company is inexcess of that required to meet the anticipated needs of the Company for a reasonable period oftime, including the repayment of any amounts borrowed by the Company, the Company maydistribute all or any portion of such excess cash at such time or times as the Manager may decide;provided, that no party shall be entitled to interest on any amount (except loans) retained by theCompany. Distribution of cash or other property shall be made in the amounts and at the timesdetermined by the Manager. Allocation of distributions among the Members shall be made basedupon the percentage of Units held by each Member of the total Units outstanding.7.03Tax Allocations. For federal income tax purposes, unless the Code otherwiserequires, each item of the Company’s income, gain, loss or deduction shall be allocated to theMembers in proportion to the number of Units owned by each Member.7.04Special Allocations.(a) If a Member unexpectedly receives an adjustment, allocation, or distributiondescribed in sections 1.704-l(b)(2)(ii)(d)(4), (5), or (6) of the Treasury regulations(“Regulations”) that creates or increases a deficit in the Member’s capital account as ofthe end of a taxable year, a pro rata portion of each item of the Company’s income,Page 8 of 15
including gross income and gain for the taxable year and, if necessary, for subsequent yearsshall be allocated to the Member in an amount and manner sufficient to eliminate the deficitin the Member’s capital account as quickly as possible.(b) If a Member would have a deficit in his or her capital account at the end of ataxable year that exceeds the sum of (i) the amount the Member is obligated to restore tothe Company under section 1.704-l(b)(2)(ii)(c) of the Regulations and (ii) the Member’sshare of “Minimum Gain” (as defined in sections 1.704-2(b)(2) and 1.704-2(d)Regulations), a pro rata portion of each item of the Company’s income, including grossincome, and gain for the year shall be allocated to the Member in an amount and mannersufficient to eliminate the deficit in the Member’s capital account as quickly as possible.(c) If there is a net decrease in the Company’s Minimum Gain during a taxableyear, the items of the Company’s income, including gross income and gain for the taxableyear and, if necessary, for subsequent years shall be allocated to the Members in proportionto their shares of the net decrease in Minimum Gain. If the allocation made by this sectionwould cause a distortion in the economic arrangement among the Members and it isexpected that the Company will not have sufficient income to correct that distortion, theCompany may seek to have the Internal Revenue Service waive the requirement for theallocation in accordance with section 1.704-2(f)(4) of the Regulations.(d) Items of the Company’s loss, deductions and expenditures described in Codesection 705(a)(2)(B) that are attributable to the Company’s nonrecourse debt and arecharacterized as Member nonrecourse deductions under section 1.704-2(i) of theRegulations shall be allocated to the Members’ capital accounts in accordance with section1.704-2(i) of the Regulations.(e) Items of income, gain, loss and deduction with respect to property contributedto the Company’s capital shall be allocated between the Members so as to take into accountany variation between book value and basis, to the extent and in the manner prescribed bysection 704(c) of the Code and related Regulations.(f) If the special allocations required by the foregoing provisions of this section7.04 (the “special allocations”) result in capital account balances that are different fromthe capital account balances the Members would have had if the special allocations werenot required, the Company shall allocate other items of income, gain, loss and deductionin any manner it considers appropriate to offset the effects of the special allocations on theMembers’ capital account balances. Any offsetting allocation required by this section shallbe subject to and consistent with the special allocations.(g) This section 7.04 is intended to comply with the Minimum Gain chargebackrequirement in section 1.704-2(i)(4) of the Regulations and the alternate test of economiceffect in section 1.704-1(b)(2)(ii)(d), and shall be interpreted consistently therewith.Page 9 of 15
7.05Capital Accounts.(a)General Maintenance. The Company shall establish and maintain a capitalaccount for each Member. A Member’s capital account shall be:(i) increased by: (i) the amount of any money the Member contributes tothe Company’s capital; (ii) the fair market value of any property the Membercontributes to the Company’s capital, net of any liabilities the Company assumesor to which the property is subject; and (iii) the Member’s share of profits and anyseparately stated items of income or gain; and(ii) decreased by: (i) the amount of any money the Company distributesto the Member; (ii) the fair market value of any property the Company distributesto the Member, net of any liabilities the Member assumes or to which the propertyis subject; and (iii) the Member’s share of losses and any separately stated itemsof deduction or loss.(b)Adjustments for Distributions in Kind. If at any time the Companydistributes property in kind, it shall adjust the Members’ capital accounts to account fortheir shares of any profit or loss the Company would have realized had it sold the propertyat fair market value and distributed the sale proceeds.(c)Adjustments for Acquisitions and Redemptions. If at any time a personacquires a Unit from the Company or the Company redeems a Unit, the Company mayadjust the Members’ capital accounts to reflect any profit or loss the Company would haverealized had it sold all of its assets at fair market value on the date of the acquisition orredemption.(d)Transfer of Capital Account. A transferee of Units succeeds to the portionof the transferor’s capital account that corresponds to the portion of the transferor’s Unitsthat are the subject of the Transfer.(e)Compliance with Code. The requirements of this section 7.05 are intendedand shall be construed to ensure that the allocations of the Company’s income, gain, losses,deductions and credits have substantial economic effect under the Regulations promulgatedunder section 704(b) of the Internal Revenue Code and should be interpreted accordingly.7.06 Accounting. The calendar year of the Company shall be one ending on December31st of each year. The Company books shall be kept on the accrual basis in accordance withgenerally accepted accounting principles.7.07Negative Capital Accounts. No Member shall be obligated to satisfy a negativecapital account balance.Page 10 of 15
ARTICLE VIIIADDITIONAL AND SUBSTITUTE MEMBERS8.01 Additional and Substitute Members. The Company may admit new or substituteMembers only with the affirmative vote of Members holding no less than Seventy-Five percent(75%) of all Units outstanding. If the proposed substitute Member is a transferee, the Units heldby the Member (or former Member) who has transferred Units to such proposed substitute Membershall not be included in this calculation. The Members may withhold approval of the admissionof any person for any or no reason.8.02Rights of Additional or Substitute Members. A person admitted as anadditional or substitute Member has all the rights and powers and is subject to all the restrictionsand obligations of a Member under this Agreement and the Act.8.03 Rights of an Unadmitted Transferee. If a transferee is not admitted as a substituteMember, the rights of a transferee shall be limited to the right to receive allocations anddistributions from the Company with respect to the Units transferred. Such a transferee shall notbe a Member of the Company with respect to such Units, and, without limiting the foregoing, shallnot have the right to vote at any Member meeting and shall not have the right to inspect theCompany’s books or records.8.04 Allocations to Additional and Substitute Members. No additional or substituteMember shall be entitled to any retroactive allocation of losses, income or expense deductionsincurred by the Company. The Company may, at its option, at the time an additional or substituteMember is admitted, close the Company books (as though the Company’s tax year had ended) ormake pro rata allocations of loss, income and expense deductions to an additional or substituteMember for that portion of the Company’s tax year in which an additional or substitute Memberwas admitted, in accordance with the provisions of section 706(d) of the Code and the TreasuryRegulations promulgated thereunder.8.05Disassociation(a)Events of Disassociation. A Member's disassociation from the Companyoccurs upon: (1) the Member’s resignation or withdrawal from the Company; (2) the Member'sTransfer of all of the Member's Units; (3) the Member's Bankruptcy; (4) as to a Member who is anatural person, the Member's death or adjudication of incompetency; (5) as to a Member who holdsUnits as a fiduciary, distribution of such Units to the beneficial owners; (6) as to a Member that isan Entity, the Entity’s dissolution or liquidation or (7) it has become unlawful to carry on theCompany’s business with that Member.(b)Rights of Member Following Disassociation.(1)Upon Company's Dissolution. If a Member's disassociation resultsin the Company's dissolution under section 9.02, the Member shall be entitled to participate in theCompany's winding up to the same extent as any other Member. However, the Company shallPage 11 of 15
have the right to offset against any distribution attributable to the Member's Unit all amounts theMember owes to the Company, including any costs or damages resulting from the Member'sbreach of this Agreement.(2)Upon Company's Continuance. If a Member's disassociation doesnot result in the Company's dissolution under section 9.02, as of the effective date of a Member'sdisassociation: (i) the Member's right to participate in the Company's governance, receiveinformation concerning the Compan
OPERATING AGREEMENT . OF . SWINE STRONGHOLD, L.L.C. (Manager-Managed LLC) THIS AGREEMENT is made among Kauile P. Ukininkas, Zhu P. Nongmin and Porcus P. Agricola (the "Initial Members "), Swine Stronghold, LLC , an Iowa limited liability company (the "Company"), and other persons who hereafter become additional or substitute members .
