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On December 7, 1995, A.J. Hackl contributed the Putnam and
McIntosh County Farms to Treeco. Thereafter, on December 11,
1995, petitioners each recorded a capital contribution to Treeco
of $500 in exchange for 50,000 voting and 450,000 nonvoting units
in the LLC, thereby becoming the initial members of the entity
and each holding 50-percent ownership. They also on that date,
in their capacities as initial members, executed an Operating
Agreement to govern the Treeco enterprise.
The Operating Agreement provided that “Management of the
Company’s business shall be exclusively vested in a Manager” and
specified that such manager “shall perform the Manager’s duties
as the Manager in good faith, in a manner the Manager reasonably
believes to be in the best interests of the Company, and with
such care as an ordinarily prudent person in a like position
would use under similar circumstances.” The document designated
A.J. Hackl as the initial manager to serve for life, or until
resignation, removal, or incapacity, and also conferred on him
the authority to name a successor manager during his lifetime or
by will.
As regards distributions, the Agreement stated that the
manager “may direct that the Available Cash, if any, be
distributed to the Members, pro rata in accordance with their
respective Percentage Interests.” Available cash was defined as
cash funds on hand after payment of or provision for all
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Last modified: May 25, 2011