Dorchester Minerals(DMLP)2024-10-31 20:06Membership and Governance - The membership interests have not been registered under the Securities Act of 1933, indicating potential limitations on their sale or transfer[1] - The company has established provisions for initial and subsequent capital contributions, ensuring financial stability and member commitment[4] - The agreement outlines the powers, duties, and obligations of members, emphasizing the importance of governance and accountability[5] - The company has a structured approach to meetings, including annual and special meetings, to facilitate member engagement and decision-making[6] - The agreement includes detailed sections on indemnification, ensuring protection for members and officers against liabilities incurred in their roles[24] - The company has established a clear process for the transfer of interests, which includes restrictions to maintain control over membership[27] - Members cannot resign or withdraw from the Company without prior written consent, ensuring stability in membership[69] - The Members have the right to make decisions on specific matters, requiring a two-thirds majority for significant actions such as equity issuance and mergers[70] - The Board of Managers consists of five appointed Managers and three independent Managers, ensuring diverse governance[82] - Annual meetings of Members are held on March 1 each year, allowing for the election of Independent Managers and other business transactions[74] - Special meetings can be called by the Chairman or any two Members, ensuring flexibility in decision-making[76] - A quorum for meetings requires a majority of Members present, either in person or by proxy, to conduct business[78] - Members can take actions without a meeting if a written consent is signed by the required number of Members, streamlining decision processes[79] - The Company must establish a succession plan to ensure continuity in management as Membership changes[73] - The Company cannot take significant actions, such as asset sales or bankruptcy filings, without Member Consent, protecting Member interests[72] - The Board of Managers has the authority to manage the Company's affairs, but individual Managers cannot bind the Company without Board approval[81] - Appointment Rights allow specific Members to nominate Independent Managers, ensuring representation in governance[83] - Each Appointed Manager serves until death, resignation, or removal, with vacancies filled by the Appointing Member[84] - Independent Managers on the Advisory Committee serve until the next annual meeting of limited partners, with vacancies filled by written notice[86] - A Change in Control of any Member results in the loss of appointment and removal rights unless unanimously consented by other Members[88] - Managers are not required to be residents of Delaware or Members of the Company[87] - Compensation for Managers includes reimbursement for expenses, but Appointed Managers do not receive compensation for their service[91] - The Board of Managers may designate a Chairman, who presides over meetings and serves until death, resignation, or removal[92] - A quorum for the Board of Managers consists of five Managers, with at least four being Member Appointed Managers[94] - Significant actions, such as mergers or asset sales, require a two-thirds consent of the Appointed Managers[95] - Managers may participate in meetings via conference telephone, which counts as presence at the meeting[100] Financial Performance and Projections - The company reported a revenue increase of 15% year-over-year, reaching 1.3 billion and 50 million in annual revenue[4] - The company is investing 200 million in R&D for new technologies aimed at enhancing user experience[5] - Market expansion efforts are underway in Europe, with a target to increase market share by 5% within the next year[6] - The company completed a strategic acquisition of a smaller competitor for 300 million, expected to enhance its product offerings[7] - A new marketing strategy was introduced, focusing on digital channels, aiming to increase customer engagement by 30%[8] - The company reported a net profit margin of 20%, up from 18% in the previous quarter[9] - Cash flow from operations improved by 12%, totaling $250 million for the quarter[10] Tax and Financial Reporting - The Company reported a net profit for the fiscal year, with taxable income adjustments as per Code Section 703(a) [45] - Ownership percentages among members are as follows: Vaughn 20.5%, SAM 20.5%, SAOG 20.0%, Peak LP 19.5%, and Raley GP 19.5% [47] - The Company is classified as a partnership for federal and state income tax purposes, ensuring no treatment as a corporation [57] - The Company intends to maintain Capital Accounts in accordance with Treasury Regulations Section 1.704-1(b) to ensure compliance with tax allocation requirements[145] - Each Member consents to the allocation of Company income, gain, loss, deduction, and credit for federal income tax purposes as per their Ownership Percentages[126] - Net Profit and Net Loss will be allocated among Members pro rata according to their Ownership Percentages[128] - Adjustments to Capital Accounts will reflect the manner in which unrealized Net Profit or Net Loss inherent in property would be allocated upon disposition at fair market value[142] - The Company will maintain a separate Capital Account for each Member, credited with cash contributions and share of Gross Income and Net Profit[140] - Any adjustments to the tax basis of Company property will be reflected as adjustments to the Capital Accounts of the Members[141] - A deficit in a Member's Capital Account is not considered an asset of the Company, and Members are not obligated to restore negative balances[147] - "Net Cash Flow" is defined as all Company cash revenues minus expenses, reserves, and obligations, plus proceeds from sales and refinancing[148] - Net Cash Flow, if any, will be distributed to Members pro rata according to their Ownership Percentages as determined by the Board of Managers[149] - The Company will keep full and accurate books of account for all transactions and provide monthly unaudited profit and loss statements to Members[156] - The fiscal year of the Company ends on December 31, and the accounting method used is cash basis[156] - The Company will prepare and file income tax returns in compliance with the Agreement and provide necessary documentation to Members[158] - SAM is designated as the "Tax Matters Partner" to manage administrative proceedings with the IRS regarding Company income and tax items[161] - Funds of the Company will be deposited in interest-bearing accounts or invested in approved financial instruments as selected by the Board of Managers[162] Indemnification and Liability - The Company may indemnify its Members, Managers, and officers against legal proceedings to the fullest extent permitted by law[117] - The right to indemnification includes the advance of reasonable expenses incurred by covered persons in legal proceedings[118] - The Company may indemnify employees and agents to the same extent as Members and Managers, ensuring broad protection[120] - The right to indemnification is non-exclusive, allowing for additional rights under other laws or agreements[121] - The Company may purchase and maintain insurance to protect itself and its partners against any expense, liability, or loss as deemed reasonable by the Board of Managers[122] - Any indemnification or advance of expenses to a person must be reported in writing to the Members within a 30-day period following the indemnification or advance[123] - Covered Persons are not subject to personal liability due to indemnification under this Agreement[124] - The provisions of Article XII are for the benefit of Covered Persons and their heirs, successors, and assigns, and cannot be amended to diminish their rights without consent[125] - If any portion of Article XII is invalidated, the Company will still indemnify any Person to the fullest extent permitted by applicable law[124] Dissolution and Liquidation - Events of Dissolution include Member consent for dissolution, lack of Members, or judicial decree for dissolution[164] - The Board of Managers is responsible for expeditiously dissolving and liquidating the Company upon dissolution, ensuring liabilities to creditors are paid first[165] - A final certified statement of the Company's assets and liabilities will be prepared and provided to Members within 90 days after dissolution[166] - If liquidation is impractical, assets may be distributed in-kind to Members, with adjustments to Capital Accounts reflecting unrealized taxable income[167] - In the event of deemed liquidation without an Event of Dissolution, the Company's assets will be contributed in-kind to a new limited liability company[169] Dispute Resolution - Disputes will first be attempted to be resolved through good faith negotiation among executives, followed by mediation if unresolved[178] - Arbitration will be conducted in Dallas, Texas, under the American Arbitration Association rules if disputes are not resolved within specified timeframes[179] - The arbitrators will not award damages exceeding compensatory damages, and their decisions will be final and binding[182] - The Agreement is governed by the internal laws of the State of Delaware, excluding any conflict of law rules[177] - Each party shall pay its own arbitration expenses, with arbitrators' expenses shared equally, unless claims are deemed unreasonable[185] - Members waive the right to commence any court action regarding disputes under the agreement, with actions to be brought in Dallas, Texas[186] - Any monetary references in the agreement are in U.S. dollars[186]