Exhibit 3.3
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DELTA FUNDING RESIDUAL EXCHANGE COMPANY, LLC
Dated as of July __, 2001
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................2
1.1 Definitions..................................................2
1.2 Other Definitions............................................8
ARTICLE II GENERAL PROVISIONS..............................................8
2.1 Formation....................................................8
2.2 Name.........................................................8
2.3 Authorized Units.............................................8
2.4 Purpose......................................................8
2.5 Principal Place of Business..................................8
2.6 Term.........................................................8
2.7 Ownership of Company Property................................9
2.8 Registered Office; Registered Agent..........................9
2.9 No State Law Partnership.....................................9
2.10 Certificate of Formation.....................................9
2.11 Powers.......................................................9
2.12 Nature of Interest in the Company............................9
ARTICLE III CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS.....................9
3.1 Capital Contributions........................................9
3.2 Capital Accounts............................................10
3.3 Return of Capital Contributions; Interest...................10
ARTICLE IV COMPANY EXPENSES...............................................10
ARTICLE V ALLOCATIONS.....................................................11
5.1 Profits.....................................................11
5.2 Losses......................................................11
5.3 Other Rules.................................................12
5.4 Changes in Membership Interest..............................12
5.5 Reconciliation Allocation...................................12
ARTICLE VI DISTRIBUTIONS..................................................12
6.1 Available Cash..............................................12
ARTICLE VII MANAGEMENT OF THE COMPANY.....................................13
7.1 Rights and Powers of the Board and Officers.................13
7.2 Liability of the Managing Member............................15
7.3 Duties of the Managing Member...............................15
7.4 Indemnification.............................................15
ARTICLE VIII MEMBERS......................................................16
8.1 Limited Liability...........................................16
8.2 No Agency or Authority......................................16
8.3 Transfers of Membership Interests...........................17
8.4 No Resignation, Withdrawal or Borrowing.....................18
8.5 Further Assurances..........................................18
8.6 No Acquisition of Membership Interests by the Company.......18
ARTICLE IX ACCOUNTS.......................................................19
9.1 Books.......................................................19
9.2 Reports, Returns and Audits.................................19
9.3 Fiscal Year.................................................19
9.4 Method of Accounting........................................19
9.5 Tax Returns.................................................19
9.6 Bank Accounts...............................................20
9.7 Other Information...........................................20
ARTICLE X VALUATION OF ASSETS.............................................20
ARTICLE XI DISSOLUTION OF THE COMPANY.....................................20
11.1 Dissolution.................................................20
11.2 Liquidation of Company Interests............................20
11.3 Liability for Return of Capital Contributions...............21
ARTICLE XII AMENDMENTS....................................................22
ARTICLE XIII NOTICES......................................................22
ARTICLE XIV MISCELLANEOUS.................................................22
14.1 Entire Agreement............................................22
14.2 Governing Law...............................................22
14.3 Binding Effect..............................................22
14.4 Counterparts................................................22
14.5 Separability................................................22
14.6 Headings....................................................23
14.7 Gender and Number...........................................23
14.8 No Third Party Beneficiaries................................23
14.9 Tax Matters Partner.........................................23
14.10 Conflicts of Interest.......................................23
14.11 Counterpart Execution, Telecopies...........................23
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DELTA FUNDING RESIDUAL EXCHANGE COMPANY, LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of Delta
Funding Residual Exchange Company, LLC (the "COMPANY") is made and entered into
to be effective for all purposes as of July , 2001 by and among Delta Financial
Corporation, Inc., a Delaware corporation (the "INITIAL MEMBER"), Delta
Financial Residual Management, Inc., a Delaware corporation ("DFRM"), and the
Class A Voting Members (as hereinafter defined) listed on SCHEDULE 1 HERETO.
WITNESSETH:
WHEREAS, the Company was formed as a limited liability company
pursuant to the Delaware Limited Liability Company Act, Title 6 of the Delaware
Code, Section 18-101 et seq., as amended from time to time (the "ACT"), by the
filing of a Certificate of Formation for the Company (the "CERTIFICATE OF
FORMATION") with the Secretary of State of the State of Delaware, pursuant to
Section 18-201 of the Act.
WHEREAS, the Company and the Initial Member are parties to that
certain Reorganization and Exchange Agreement dated as of June ___, 2001 (the
"REORGANIZATION AGREEMENT") pursuant to which, among other things: (i) the
Company has made an offer to exchange (the "EXCHANGE OFFER") to the holders of
the Initial Member's 9 1/2% Senior Secured Notes due 2004 (the "NEW SENIOR
NOTES") and the holders of the Initial Member's 9 1/2% Senior Notes due 2004
(the "OLD SENIOR NOTES") and, collectively with the New Senior Notes, the
"Senior Notes") to exchange (A) one Class A Voting Membership Unit (as
hereinafter defined), (B) one share of Delta Preferred Stock (as hereinafter
defined) and (C) one share of DFRM Common Stock (as hereinafter defined) for
each $1,000 principal amount of Senior Notes; (ii) provided that the holders of
at least 95% of the Senior Notes accept the Exchange Offer and properly tender
such Senior Notes to the Company (the "MINIMUM TENDER CONDITION"), the Company
has agreed to deliver to the Initial Member Senior Notes in the aggregate
principal amount of $75,000,000 in exchange for the delivery by the Initial
Member of (A) the certificates listed on SCHEDULE 2 attached hereto (the
"RESIDUAL CERTIFICATES") representing the residual and BIO interests (the
"SECURITIZATION RESIDUALS") listed on SCHEDULE 2 hereto1 in the securitizations
listed on SCHEDULE 2 hereto, (B) the ownership/residual interest in the Delta
Financial Non-Performing Loan Trust 2000-1 more fully described on SCHEDULE 3
attached hereto (the "NON-PERFORMING LOAN TRUST RESIDUAL"),and (C) the property
and assets listed on SCHEDULE 4 attached hereto (the "OTHER CONSIDERATION")
(item (A), (B) and (C) shall collectively be referred to as the "INITIAL MEMBER
EXCHANGE"); and (iii) the Company has agreed to make NIM Trust Residual Tax
Loans to Delta Funding Residual NIM Company, Inc., a Delaware limited liability
company corporation (the "NIM TRUST RESIDUAL OWNER").
----------------------
1 Will not include the 0.000001% Certificates.
WHEREAS, the Minimum Tender Condition has been satisfied and the
Company and the Initial Member desire that (i) the Company accept the tenders of
Senior Notes and consummate the Exchange Offer and (ii) the Company and the
Initial Member consummate the Initial Member Exchange; and
WHEREAS, in order to consummate the Exchange Offer and the Initial
Member Exchange, the Company and the Initial Member desire to amend and restate
the Limited Liability Company Agreement of the Company executed and delivered by
the Initial Member on June__, 2001 (the "INITIAL AGREEMENT") to, among other
things, (i) authorize the issuance of 150,000 Class A Voting Membership Units to
the holders of the Senior Notes, (ii) authorize the issuance of Class B
Non-Voting Membership Unit (as hereinafter defined) to DFRM , (iii) convert the
membership interests owned by the Initial Member pursuant to the Initial
Agreement into one Class C Non-Voting Membership Unit (as hereinafter defined)
and (iv) appoint DFRM as the Managing Member (as hereinafter defined).
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms used in this Agreement have the
following meanings:
"ACT" has the meaning set forth in the first recital of this
Agreement.
"ACTIONS" has the meaning set forth in Section 7.4. of this Agreement.
"AFFILIATE" of any Person (the "SPECIFIED PERSON") means any other
Person (a) that directly or indirectly controls, is controlled by or is under
common control with such Specified Person, (b) who is an officer, director,
employee or agent of, partner in, or trustee of, or serves in a similar capacity
with respect to, the Specified Person (or any of the Persons named in clause (a)
above), (c) of which the Specified Person is an officer, director, employee,
agent, partner or trustee, or serves in a similar capacity, or (d) who is a
member of the Specified Person's family. For purposes of this definition, the
term "CONTROL" means the direct or indirect possession of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of securities, by contract or otherwise.
"AGREEMENT" means this Limited Liability Company Agreement, including
the EXHIBITS and Schedules hereto, all as the same may be amended, supplemented
or restated from time to time.
"ASSET VALUE" with respect to any Company asset means:
(i) The Fair Market Value when contributed of any asset contributed to
the Company by any Member;
(ii) The Fair Market Value on the date of distribution of any asset
distributed by the Company to any Member as consideration for an interest in the
Company;
(iii) The Fair Market Value of all Property at the time of the
happening of any of the following events: (A) the admission of a Member to, or
the increase of an interest of an existing Member in, the Company in exchange
for a Capital Contribution; or (B) the liquidation of the Company under
Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) The Basis of the asset in all other circumstances.
"ASSIGN" means to sell, transfer, assign, pledge, hypothecate,
mortgage or otherwise dispose of a Membership Interest in the Company, whether
voluntarily or by operation of law.
"ASSIGNOR," "ASSIGNEE" and "ASSIGNMENT" have meanings corresponding to
the foregoing definition of "Assign."
"AVAILABLE CASH" means, at the time of determination, cash received by
the Company from all sources, after provision has been made for (x) all Company
Expenses and (y) such amounts as the Managing Member shall deem reasonable in
order to provide for any anticipated, contingent or unforeseen expenditures or
liabilities of the Company.
"BANKRUPTCY" means, with respect to any Person, the occurrence of any
of the following events: (a) the filing by such Person of a petition commencing
a voluntary case in bankruptcy under applicable bankruptcy laws; (b) entry
against such Person of an order for relief under applicable bankruptcy laws, if
such order has not been vacated or stayed within 90 days after such entry; (c)
written admission by such Person of its inability to pay its debts as they
mature, or an assignment by such Person for the benefit of creditors; or (d) the
appointment of a receiver for the property or affairs of such Person.
"BASIS" with respect to an asset means the adjusted basis from time to
time of such asset for federal income tax purposes.
"CAPITAL ACCOUNT" of a Member means an account maintained by the
Company for each Member pursuant to Section 3.2 of this Agreement.
"CAPITAL CONTRIBUTION" of a Member means the amount of money and the
Asset Value of any property other than money contributed to the Company by a
Member with respect to such Member's interest in the Company.
"CERTIFICATE OF FORMATION" has the meaning set forth in the first
recital of this Agreement.
"CLASS A PERCENTAGE INTEREST" means with respect to each Class A
Voting Member the percentage reflected by a fraction, the numerator of which is
the number of Class A Voting Membership Units then outstanding owned by such
Class A Voting Member and the denominator of which is the number of Class A
Voting Membership Units then outstanding owned by all Class A Voting Members.
"CLASS A VOTING MEMBER" means a Member holding a Class A Voting
Membership Unit.
"CLASS A VOTING MEMBERSHIP UNIT" means a Membership Interest entitled
to the right to receive distributions as set forth in Section 6.1 of this
Agreement, liquidation payments as set forth in Section 11.2 of this Agreement
and voting rights as set forth in Section __ hereof.
"CLASS B NON-VOTING MEMBER" means a Member holding a Class B
Non-Voting Voting Membership Unit.
"CLASS B NON-VOTING MEMBERSHIP UNITS" means a Membership Interest
entitled to the right to receive distributions as set forth in Section 6.1 of
this Agreement, and liquidation payments as set forth in Section 11.2 of this
Agreement.
"CLASS C NON-VOTING MEMBERSHIP UNITS" means a Membership Interest
entitled to the right to receive distributions as set forth in Section 6.1 of
this Agreement and liquidation payments as set forth in Section 11.2 of this
Agreement, but without voting rights hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Delta Funding Residual Exchange, LLC, a Delaware
limited liability company.
"COMPANY EXPENSES" means all reasonable fees, expenses, costs,
liabilities and obligations of the Company [(including the current portion of
long-term debt)] [QUERY; DO WE WANT TO PROHIBIT COMPANY FROM INCURRING ANY
DEBT?], whether accrued or unaccrued or financial obligations otherwise
reasonably incurred by the Managing Member or its agents or representatives on
behalf of the Company. Company Expenses shall include, but shall not be limited
to, the following: (i) all fees and expenses of custodians, outside counsel,
accountants and other third party professionals, as well as out-of-pocket
expenses incurred in connection with the operations or activities of the
Company, provided that such persons shall not be deemed third party
beneficiaries of this provision, (ii) all taxes, fees and governmental charges
levied against the Company, (iii) expenses incurred in connection with convening
and holding meetings of Members, and (iv) all indemnification expenses of the
Company, including expenses incurred by or on behalf of any Indemnified Party in
seeking indemnification from the Company pursuant to this Agreement.
"DELTA PREFERRED STOCK" means the shares of Series A Preferred Stock,
par value $0.01 per share, of the Initial Member.
"DFRM" has the meaning set forth in the introductory paragraph of this
Agreement.
"DFRM COMMON STOCK" means the shares of Common Stock, par value $0.001
per share, of DFRM.
"EFFECTIVE DATE" means July __, 2001.
"EFFECTIVE TAX RATE" means an assumed rate of 45%.
"EXCESS INCLUSION INCOME" means income from the Residual Certificates
(including residual certificates that may be owned through a NIM Trust) that is
excess inclusion income as defined in Code Section 860E.
"EXCESS INCLUSION LOSSES" means losses from the Residual Certificates
(including residual certificates that may be owned through a NIM Trust).
"EXCESS INCLUSION TAXES" means the Effective Tax Rate multiplied by
the Excess Inclusion Income.
"EXCESS PROFITS AMOUNT" has the meaning set forth in Section 5.2(b) of
this Agreement.
"EXCESS NY OBLIGATION" means [________].
"EXCHANGE OFFER" has the meaning set forth in the second recital of
this Agreement.
"FAIR MARKET VALUE" of any asset means the value of such asset
determined in accordance with Article X.
"FAMILY MEMBER" means, with respect to a natural person, (x) a member
of such person's immediate family, which shall include his or her spouse,
siblings, descendants, parents or spouses (or surviving spouses) of descendants,
or (y) a trust, corporation, limited liability company, Company or other entity,
all of the beneficial interests in which shall be held directly or indirectly by
such natural person or one or more natural persons described in the preceding
clause (x).
"FISCAL YEAR" of the Company has the meaning set forth in Section 9.3
of this Agreement.
"INDEMNIFIED COSTS" has the meaning set forth in Section 7.4 of this
Agreement.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7.4 of this
Agreement.
"INITIAL AGREEMENT" has the meaning set forth in the fourth recital to
this Agreement.
"INITIAL MEMBER" has the meaning set forth in the introductory
paragraph of this Agreement.
"INITIAL MEMBER EXCHANGE" has the meaning set forth in the second
recital of this Agreement.
"LIQUIDATOR" has the meaning set forth in Section 11.2 of this
Agreement.
"LOAN AGREEMENT" means that certain loan agreement dated the date
hereof by and between the Company and the NIM Trust Residual Owner.
"MAJORITY IN INTEREST" of the Class A Voting Members means Class A
Voting Members whose aggregate Class A Percentage Interests represent more than
50% of the aggregate Class A Percentage Interests of all Class A Voting Members.
"MANAGING MEMBER" means DFRM or any replacement thereof or successor
thereto appointed by a Majority in Interest of the Class A Voting Members
pursuant to Section 8.3(a) of this Agreement to manage the overall activities of
the Company.
"MEMBER" and "MEMBERS" means any or all of the Initial Member, any
Class A Voting Member or any Class B Non-Voting Member.
"MEMBERSHIP INTEREST" of a Member at any time means the legal and/or
beneficial ownership interest of such Member in the Company.
"MINIMUM TENDER CONDITION" has the meaning set forth in the second
recital to this Agreement.
"NEW SENIOR NOTES" has the meaning set forth in the secnd recital to
this Agreement.
"NY OBLIGATION" means [________].
"NIM TRUST RESIDUAL" means [_______] .
"NIM TRUST RESIDUAL OWNER" has the meaning set forth in the second
recital to this Agreement.
"NIM TRUST RESIDUAL TAX LOANS" means the loans to be made to the NIM
Trust Residual Owner pursuant to and in accordance with the Loan Agreement.
"NON-PERFORMING LOAN TRUST RESIDUAL" has the meaning set forth in the
second recital to this Agreement.
"OLD SENIOR NOTES" has the meaning set forth in the second recital to
this Agreement.
"OTHER CONSIDERATION" has the meaning set forth in the second recital
to this Agreement.
"PERCENTAGE INTEREST" means with respect to each Member the percentage
reflected by a fraction, the numerator of which is the number of Units owned by
such Member and the denominator of which is the number of Units then
outstanding.
"PERSON" means any individual, sole proprietorship, partnership,
Company, joint venture, limited liability company, limited liability Company,
trust, estate, unincorporated organization, association, corporation,
institution or other entity.
"PROFITS" and "LOSSES" for any Fiscal Year or other period means an
amount equal to the Company's taxable income for federal income tax purposes for
such year or period determined in accordance with Code Section 703(a) and the
Regulations thereunder, with the following adjustments:
(i) all items of income, gain, loss, and deduction of the Company
required to be stated separately shall be included in taxable income or loss;
(ii) income of the Company exempt from federal income tax shall be
treated as taxable income;
(iii) expenditures of the Company described in Code Section
705(a)(2)(B) or treated as such expenditures under Regulations Section
1.704-1(b)(2)(iv)(i) shall be subtracted from taxable income;
(iv) the difference between Basis and Asset Value shall be treated as
gain or loss upon the happening of any event described in clauses (ii) or (iii)
under the definition of "Asset Value;"
(v) gain or loss resulting from the disposition of Property from which
gain or loss is recognized for federal income tax purposes shall be determined
with reference to the Asset Value of such property.
"PROPERTY" means all real and personal property, tangible and
intangible, owned by the Company.
"QUALIFIED INSTITUTIONAL BUYER" has the meaning given to such term in
Rule 144A promulgated pursuant to the Securities Act of 1933, as amended.
"REGULATIONS" means the federal income tax regulations, including
temporary regulations, promulgated under the Code.
"REORGANIZATION AGREEMENT" has the meaning set forth in the third
recital to this Agreement.
"RESIDUAL CERTIFICATES" has the meaning set forth in the second
recital to this Agreement.
"RESIDUALS" means the Securitization Residuals and the Non-Performing
Loan Trust Residuals.
"SECURITIZATION RESIDUALS" has the meaning set forth in the second
recital to this Agreement.
"SENIOR NOTES" has the meaning set forth in the second recital to this
Agreement.
"SUBSTITUTED MEMBER" means a Person that is admitted as a Member to
the Company pursuant to Section 8.3 of this Agreement.
"TAX MATTERS PARTNER" has the meaning set forth in Section 14.9 of
this Agreement.
"UNITS" means the Class A Voting Membership Units, the Class B
Non-Voting Membership Units and the Class C Non-Voting Membership Units.
1.2 OTHER DEFINITIONS. Certain additional defined terms used in this
Agreement have the meanings specified throughout the Agreement.
ARTICLE II
GENERAL PROVISIONS
2.1 FORMATION. The parties agree to continue the Company under and
pursuant to the Act. The Company was organized as a limited liability company by
the filing of the Certificate of Formation pursuant to the Act with the
Secretary of State of the State of Delaware.
2.2 NAME. The name of the limited liability company is "Delta Funding
Residual Exchange, LLC" or such other name as may from time to time be selected
by the Managing Member; PROVIDED, HOWEVER, that the Managing Member shall
provide notice of such change of name to the Members as promptly as practicable
after such change.
2.3 AUTHORIZED UNITS. The number of authorized Units of the Company is
150,002, comprised of: (i) 150,000 Class A Voting Membership Units to be owned
initially by the holders of the Senior Notes that tender such Senior Notes in
the Exchange Offer and whose tender is accepted by the Company in accordance
with the terms of the Exchange Offer; (ii) one Class B Non-Voting Membership
Units to be owned initially by DFRM; and (iii) one Class C Non-Voting Membership
Units to be owned initially by the Initial Member.
2.4 PURPOSE. The Company is being formed for the purpose of engaging
in any lawful act or activity for which a limited liability company may be
formed under the Act and engaging in any and all activities necessary,
incidental or convenient to the foregoing.
2.5 PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Company shall be located at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 or
such other location as the Managing Member may determine from time to time;
PROVIDED, HOWEVER, that the Managing Member shall provide notice of such change
of the principal place of business to the Members as promptly as practicable
after such change.
2.6 TERM. The existence of the Company as a legal entity commenced
with the filing of the Certificate of Formation with the office of the Secretary
of State of the State of Delaware and shall continue until cancellation of the
Certificate of Formation as provided by in the Act.
2.7 OWNERSHIP OF COMPANY PROPERTY. All Property acquired by the
Company shall be owned by the Company as an entity, and no Member, individually,
shall have any ownership interest therein.
2.8 REGISTERED OFFICE; REGISTERED AGENT. The registered agent and
office of the Company in the State of Delaware shall be the Corporation Trust
Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000. At any time, the Managing Member may designate another
registered agent and/or office.
2.9 NO STATE LAW PARTNERSHIP. The Members intend that the Company not
be a partnership (including, without limitation, a limited partnership) or joint
venture for any purposes other than federal and state tax purposes, and that no
Member be an agent, partner or joint venturer of any other Member, and this
Agreement shall not be construed to suggest otherwise.
2.10 CERTIFICATE OF FORMATION. Xxxxx Xxxxxx is hereby designated as an
"authorized person" within the meaning of the Act, and has executed, delivered
and filed the Certificate of Formation with the Secretary of State of the State
of Delaware. All actions taken by Xxxxx Xxxxxx in connection with the formation
of the Company are hereby adopted and ratified. Upon the filing of the
Certificate of Formation with the Secretary of State of the State of Delaware,
her powers as an "authorized person" ceased, and the Initial Member thereupon
became the designated "authorized person" and shall continue as the designated
"authorized person" within the meaning of the Act. Upon the Effective Date, the
Initial Member's powers as an "authorized person" shall cease, and the Managing
Member shall automatically be designated as the "authorized person" within the
meaning of the Act. The Managing Member (or such other person as may from time
to time be designated by the Managing Member for such purpose) is hereby
designated as an authorized person, within the meaning of the Act, to execute,
deliver and cause to be filed any amendments and/or restatements of the
Certificate of Formation and any other certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business and to obtain a
taxpayer identification number on behalf of the Company.
2.11 POWERS. The Managing Member shall have and exercise all powers
necessary, incidental or convenient to accomplish the purpose set forth in
Section 2.4 of this Agreement.
2.12 NATURE OF INTEREST IN THE COMPANY. The interest of the Members in
the Company shall be personal property for all purposes.
ARTICLE III
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
3.1 CAPITAL CONTRIBUTIONS. On or prior to the Effective Date, the
Initial Member, the Class B Non-Voting Member and each of the Class A Voting
Members shall have made its Capital Contribution to the capital of the Company
in the amount of cash or other property set forth in the first column opposite
such Member's name on SCHEDULE 1 in exchange for such Person's Membership
Interest as set forth in the third, fourth or fifth columns opposite such
Member's name on SCHEDULE 1. Any Capital Contributions made in any property
other than cash shall have the value attributed thereto as set forth on SCHEDULE
1.
3.2 CAPITAL ACCOUNTS. A separate Capital Account shall be maintained
for each Member in accordance with the following provisions:
(i) There shall be credited to each Member's Capital Account (A) such
Member's Capital Contributions; (B) such Member's distributive share of Profits;
(C) any items of income or gain not otherwise included in Profits which are
specially allocated to such Member under this Agreement; and (D) the amount of
any Company liabilities (determined as provided in Code Section 752(c) and the
Regulations thereunder) assumed by such Member or to which Property distributed
to such Member is subject;
(ii) There shall be debited to each Member's Capital Account (A) the
amount of money and the Asset Value of any Property distributed to such Member
pursuant to this Agreement; (B) such Member's distributive share of Losses; (C)
any items of expense or loss not otherwise included in Losses which are
specially allocated to such Member under this Agreement, and (D) the amount of
liabilities (determined as provided in Code Section 752(c) and the Regulations
thereunder) of such Member assumed by the Company or to which Property
contributed to the Company by such Member is subject;
(iii) The Capital Account of any transferee Member shall include the
appropriate portion of the Capital Account of the Member from whom the
Transferee Member's interest was obtained.
The foregoing provisions and other provisions of this Agreement
relating to maintenance of member Capital Accounts are intended to comply with
Regulations Sections 1.740-1(b) and -2, and shall be interpreted and applied in
a manner consistent with such regulations. To accomplish that purpose the
Managing Member is authorized to modify the manner in which the Capital Accounts
are maintained and adjustments thereto are computed, and to make any appropriate
adjustments thereto, provided that such modifications and adjustments will not
materially affect the amount distributed to any Member upon dissolution of
Company.
3.3 RETURN OF CAPITAL CONTRIBUTIONS; INTEREST. No Member will have the
right to the return of its Capital Contribution, except as expressly provided in
this Agreement. No Member will have the right to receive a return of interest on
its Capital Contributions or the balance in its Capital Account, or to receive
any distributions or payments from the Company, except as expressly provided in
this Agreement.
ARTICLE IV
COMPANY EXPENSES
The Company, and not the Members, shall be responsible for all Company
Expenses, which shall be paid only out of funds of the Company and shall be paid
if, when and as determined in good faith by the Managing Member.
ARTICLE V
ALLOCATIONS
5.1 PROFITS. Subject to the special allocation provisions of this
Article V, Profits for any Fiscal Year or other period shall be allocated among
the Members as follows:
(a) First, Excess Exclusion Income in respect of the Residual
Certificates (including residual certificates held through a NIM Trust) shall be
allocated to the Class B Non-Voting Member;
(b) Second, any remaining Profits shall be allocated to the Class A
Voting Members in proportion to, and to the extent of, any Losses allocated to
them pursuant to Section 5.2(c);
(c) Third, any remaining Profits shall be allocated to the Initial
Member until such time as the Initial Member has been allocated an aggregate
amount of Profits under this Section 5.1(c) for the current Fiscal Year and all
prior Fiscal Years equal to the aggregate amount of Available Cash that has been
distributed to it or paid on its behalf pursuant to Section 6.1(d) for all
periods;
(d) Fourth, 15% of any remaining Profits in respect of any period
ending on or before the end of the 36th full calendar quarter following the
Effective Date, and 10% of any such remaining Profits in respect of any period
thereafter, shall be allocated to the Initial Member;
(e) Fifth, any remaining Profits shall be allocated to the Initial
Member until such time as the Initial Member has been allocated an aggregate
amount of Profits under this Section 5.1(e) for the current Fiscal Year and all
prior Fiscal Years equal to the aggregate amount of Available Cash that has been
distributed to it or paid on its behalf pursuant to Section 6.1(f) for all
periods;
(f) Sixth, any remaining Profits shall be allocated to the Class A
Voting Members in proportion to their Class A Percentage Interests.
5.2 LOSSES. Subject to the special allocation provisions of this
Article V, Losses for any Fiscal Year or other period shall be allocated among
the Members as follows:
(a) First, Excess Inclusion Losses, if any, from Residual Certificates
(including residual certificates held through a NIM Trust) shall be allocated to
the Class B Non-Voting Member to the extent of the positive balance, if any, in
its Capital Account;
(b) Second, Losses shall be allocated to the Initial Member and the
Class A Voting Members in proportion to, and to the extent of, each such
Member's Excess Profits Amount. The Initial Member's Excess Profits Amount shall
equal the excess, if any, of (x) the aggregate amount of Profits allocated to
the Initial Member pursuant to Section 5.1(d) for all periods over (y) the sum
of (i) the aggregate amount of Losses allocated to the Initial Member pursuant
to this Section 5.2(b) for all prior periods plus (ii) the aggregate amount of
Available Cash that has been distributed to the Initial Member pursuant to
Section 6.1(e) for all periods. Each Class A Voting Member's Excess Profits
Amount shall equal the excess, if any, of (x) the aggregate amount of Profits
allocated to such Class A Voting Member pursuant to Section 5.1(f) for all
periods over (y) the sum of (i) the aggregate amount of Losses allocated to such
Class A Voting Member pursuant to this Section 5.2(b) for all prior periods plus
(ii) the aggregate amount of Available Cash that has been distributed to such
Class A Voting Member pursuant to Section 6.1(g) for all periods;
(c) Third, any remaining Losses shall be allocated to the Class A
Voting Members in proportion to their Class A Percentage Interests.
5.3 OTHER RULES. Allocations under this Article V shall be made
pursuant to the principles of Sections 704(b) and 704(c) of the Code, and in
conformity with Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4)(i) and
1.704-3(e) promulgated thereunder, as applicable, or the successor provisions to
such Section and Regulations. Notwithstanding anything to the contrary in this
Agreement, there shall be allocated to the Members such gains or income as shall
be necessary to satisfy the "qualified income offset" requirement of Regulations
Section 1.704-1(b)(2)(ii)(d).
5.4 CHANGES IN MEMBERSHIP INTEREST. Upon the transfer of a Membership
Interest in the Company, the proper allocation of Profits, Losses, and items
thereof to the periods before and after such admission or transfer shall be
based on the Member's relative Membership Interest using any method permitted
under Code Section 706 and the Regulations thereunder.
5.5 RECONCILIATION ALLOCATION. If the Capital Account balances of the
Members determined on a tentative basis (after giving effect to all
contributions, distributions and allocations for all periods) upon the
liquidation of the Company differ from the amounts that would be distributed to
them pursuant to the provisions of Article VI (other than Sections 6.1(a) and
6.1(c) thereof), then, notwithstanding anything to the contrary herein, items of
income, gain, loss and deduction shall be specially allocated among the Members
for the Fiscal Year in which the dissolution of the Company occurs (and, if
necessary, prior Fiscal Years) in order to conform the Capital Account balances
of the Members to the amounts that would be distributed to them pursuant to the
provisions of Article VI (other than Sections 6.1(a) and 6.1(c)).
ARTICLE VI
DISTRIBUTIONS
6.1 AVAILABLE CASH. At the end of each quarter of each Fiscal Year,
the Managing Member shall determine and distribute, pay or loan the Available
Cash for such quarter to the Members in the following order and priority:
(a) First, Available Cash will be distributed to the Class B
Non-Voting Member until the Class B Non-Voting Member has received aggregate
distributions of Available Cash under this Section 6.1(a) for the current
calendar quarter and all prior periods equal to the aggregate amount of Company
Expenses incurred by it on behalf of the Company in its capacity as the Managing
Member for the current calendar quarter and all prior periods;
(b) Second, Available Cash will be distributed to the Class B
Non-Voting Member until the Class B Non-Voting Member has received aggregate
distributions of Available Cash under this Section 6.1(b) for the current
calendar quarter and all prior periods equal to the Excess Inclusion Taxes
payable by it on the Excess Inclusion Income allocated to it pursuant to Section
5.1(a) of this Agreement for or in respect of the current calendar quarter and
all prior periods;
(c) Third, Available Cash will be used to make the NIM Trust Residual
Tax Loans to the NIM Trust Residual Owner pursuant to and in accordance with the
Loan Agreement;
(d) Fourth, for so long as the Initial Member is a Member of the
Company, Available Cash will be distributed to the Initial Member or paid on its
behalf until the Initial Member has received or there has been paid on its
behalf aggregate amounts of Available Cash under this Section 6.1(d) for the
current calendar quarter and all prior periods equal to the Excess NY Obligation
for the current calendar quarter and all prior periods;
(e) Fifth, until the end of the 36th full calendar quarter following
the Effective Date, 15% of any remaining Available Cash will be distributed to
the Initial Member, and after the end of such 36th full calendar quarter, 10% of
any remaining Available Cash will be distributed to the Initial Member;
(f) Sixth, for so long as the Initial Member is a Member of the
Company, Available Cash will be distributed to the Initial Member or paid on its
behalf until the Initial Member has received or there has been paid on its
behalf aggregate amounts of Available Cash under this Section 6.1(f) for the
current calendar quarter and all prior periods equal to the NY Obligation for
the current calendar quarter and all prior periods;
(g) Seventh, the balance, if any, of Available Cash will be
distributed to the Class A Voting Members in proportion to their Class A
Percentage Interests.
ARTICLE VII
MANAGEMENT OF THE COMPANY
7.1 RIGHTS AND POWERS OF THE BOARD AND OFFICERS.
(a) The Company will be managed, except as otherwise specifically
provided for herein, by the Managing Member. The Managing Member shall have sole
responsibility for managing the business and affairs of the Company and shall
have full power to do any and all acts necessary, incidental or convenient to or
for the furtherance of the purposes described herein. The Managing Member shall
have full power to execute and deliver all agreements, instruments and other
documents in the name of and on behalf of the Company which it may deem
necessary or desirable. [ISSUE: ANY LIMITS ON AUTHORITY OF MANAGING MEMBER?]
(b) The Managing Member may appoint officers, including a President,
one or more Vice Presidents, a Treasurer and a Secretary. The officers shall be
responsible for the day-to-day operations of the Company, including, but not
limited to, all duties and responsibilities authorized by the Managing Member to
be performed by the officers.
(i) Each officer shall hold office until his or her successor
shall have been duly appointed by the Managing Member or until his or
her death or until he or she shall resign or shall have been removed
in the manner hereinafter provided.
(ii) Any officer appointed by the Managing Member may be removed
by the Managing Member in its sole discretion, but such removal shall
be without prejudice to the contract rights, if any, of the person so
removed.
(iii) The President, if any, shall be the principal executive
officer of the Company. Subject to the direction and control of the
Managing Member, he or she shall be in charge of the business of the
Company; he or she shall see that the directions of the Managing
Member are carried into effect except in those instances in which that
responsibility is specifically assigned to some other person by the
Managing Member and, in general, he or she shall discharge all duties
incident to the office of President and such other duties as may be
prescribed by the Managing Member from time to time. Except in those
instances in which the authority to execute is expressly delegated to
another officer or agent of the Company or a different mode of
execution is expressly prescribed by the Managing Member or this
Agreement, he or she may execute for the Company any contracts, deeds,
mortgages, bonds or other instruments.
(iv) Subject to the direction and control of the Managing Member,
and in conjunction with the President, each Vice President shall see
that the directions of the Managing Member or President are carried
into effect except in those instances in which that responsibility is
specifically assigned to some other person by the Managing Member and,
in general, he or she shall discharge all duties incident to the
office of Vice President and such other duties as may be prescribed by
the Managing Member or President from time to time.
(v) The Treasurer, if any, shall be the principal accounting and
financial officer of the Company. He or she shall: (a) have charge of
and be responsible for the maintenance of adequate books of account
for the Company; (b) have charge and custody of all funds and
securities of the Company and be responsible therefor and for the
receipt and disbursement thereof; and (c) perform all the duties
incident to the office of Treasurer and such other duties as from time
to time may be assigned to him or her by the President or by the
Managing Member.
(vi) The secretary, if any, shall: (a) record the minutes of the
Managing Member's meetings; (b) see that all notices are duly given as
required by law; (c) be custodian of the Company records; (d) sign any
certificates for Membership interests of the Company, the issue of
which shall have been authorized by the Member and any contracts,
deeds, mortgages, bonds, or other instruments which the Managing
Member authorized to be executed, according to the requirements of the
form of the instrument, except when a different mode of execution is
expressly prescribed by the Managing Member; (e) have general charge
of the Membership interests transfer books of the Company; (f) have
authority to certify documents of the Company as true and correct
copies thereof; and (g) perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned
to him or her by the President or by the Managing Member.
(vii) The salaries of the officers may be fixed from time to time
by the Member.
(c) The Managing Member shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any of the officers,
employees, or committees of the Company, or by any other Person as to matters
the Managing Member reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company, including, without limitation, information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits or losses of the Company or any other facts pertinent to
the existence and amount of assets from which distributions to Members might
properly be paid.
7.2 LIABILITY OF THE MANAGING MEMBER. Neither the Managing Member, nor
any of the Managing Member's agents, partners, employees, counsel or Affiliates
(other than professionals employed by the Company who shall be held to the usual
standards of professional practice), shall be liable, responsible or accountable
in damages or otherwise to the Company or any Member for any action taken or
failure to act (even if such action or failure to act constituted negligence,
other than gross negligence, on such Person's part) on behalf of the Company
unless such act or failure to act was fraudulent, performed or omitted, in bad
faith or constituted gross negligence.
7.3 DUTIES OF THE MANAGING MEMBER. The Managing Member and the
officers of the Company shall take all actions that may be necessary or
appropriate for the conduct of the Company's business in accordance with the
provisions of this Agreement and applicable laws and regulations. The Managing
Member and the officers of the Company shall act at all times in good faith and
in such manner as each believes in good faith to be in the best interest of the
Company and the Members.
7.4 INDEMNIFICATION. The Company shall indemnify and hold harmless, to
the fullest extent permitted by law, the Managing Member and each officer of the
Company and any of the Managing Member's Affiliates (individually, an
"INDEMNIFIED PARTY") with respect to such Indemnified Party's activities with
respect to the Company, as follows:
(a) The Company shall indemnify and hold harmless, to the fullest
extent permitted by law, any Indemnified Party from and against any and all
losses, claims, damages, liabilities, expenses (including reasonable legal fees
and expenses), judgments, fines, settlements and other amounts ("INDEMNIFIED
COSTS") arising from all claims, demands, actions, suits or proceedings
("ACTIONS"), whether civil, criminal, administrative or investigative, in which
the Indemnified Party may be involved, or threatened to be involved, as a party
or otherwise arising as a result of such Person's status as an Indemnified
Party, regardless of whether the Indemnified Party continues in such capacity at
the time any such liability or expense is paid or incurred, and regardless of
whether any such Action is brought by a third party, a Member, or by or in the
name of the Company; PROVIDED, HOWEVER, no Indemnified Party shall be
indemnified hereunder for any Indemnified Costs that proximately result from
such party's fraud, gross negligence or willful misconduct, or a material breach
of this Agreement.
(b) The Company shall pay or reimburse, to the fullest extent allowed
by law, in advance of the final disposition of the proceeding, Indemnified Costs
as incurred by the Indemnified Party in connection with any Action that is the
subject of Section 7.4(a) of this Agreement (other than those arising under the
proviso contained in Section 7.4(a) of this Agreement); PROVIDED, HOWEVER, that
such Indemnified Party shall repay all amounts received from the Company
pursuant hereto if it shall ultimately be determined at the final disposition of
the proceeding that such Indemnified Party is not entitled to be indemnified by
the Company as authorized in Section 7.4(a) of this Agreement.
(c) Notwithstanding any other provision of this Section 7.4 of this
Agreement, the Company shall pay or reimburse Indemnified Costs incurred by an
Indemnified Party in connection with such Person's appearance as a witness or
other participation in a proceeding involving or affecting the Company at a time
when the Indemnified Party is not a named defendant or respondent in the
proceeding.
(d) The Managing Member may cause the Company to purchase and maintain
insurance or other arrangements on behalf of the Indemnified Parties and/or the
Company against any liability asserted against any Indemnified Party and
incurred by any Indemnified Party in such Person's capacity as such or arising
out of the Indemnified Party's status in such capacity, regardless of whether
the Company would have the power to indemnify the Indemnified Party against that
liability under this Section 7.4, to the extent that such insurance is available
on commercially reasonable terms. The indemnification provided by this Section
7.4 shall be in addition to any other rights to which the Indemnified Parties
may be entitled under any agreement, vote of the Members, as a matter of law, or
otherwise, and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnified Parties.
(e) An Indemnified Party shall not be denied indemnification in whole
or in part under this Section 7.4 because the Indemnified Party had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
ARTICLE VIII
MEMBERS
8.1 LIMITED LIABILITY. Except as otherwise expressly provided by the
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be the debts, obligations and liabilities
solely of the Company, and neither the Members nor the officers shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member or an officer of the Company.
8.2 NO AGENCY OR AUTHORITY. No Member is an agent of the Company
solely by virtue of being a Member, and no Member has the authority to act for
or bind the Company solely by virtue of being a Member, other than the Managing
Member and officers, whose rights and obligations are governed by Article VII of
this Agreement. Any Member who takes any action or purports or attempts to bind
the Company in violation of this Section 8.2 shall be solely responsible for any
loss and/or expense incurred by the Company or the Managing Member or other
Member as a result of such unauthorized action, and such Member shall indemnify
and hold harmless the Company and the Managing Member or other Member with
respect to such loss and/or expense.
8.3 TRANSFERS OF MEMBERSHIP INTERESTS.
(a) The Class B Non-Voting Member may not Assign all or any part of
its Membership Interest to any Person. Notwithstanding the foregoing, the
holders of a Majority in Interest of the Class A Voting Membership Interests may
require the Class B Non-Voting Member to Assign all, but not less than all, of
its Class B Non-Voting Membership Interests to another Person, which Person
shall thereupon become the Managing Member hereunder; PROVIDED, HOWEVER, that no
such Assignment shall be permitted unless the Class B Non-Voting Member and its
Assignee shall comply with the provisions of clauses (i), (ii) and (iii) of
Section 8.3(d) of this Agreement.
(b) The Initial Member may not Assign all or any portion of its
Membership Interest to any Person.
(c) No Class A Voting Member may Assign all or any part of its
Membership Interest in the Company to a Person unless (i) the Managing Member
consents thereto in writing prior to such Assignment, (ii) the Assignee is a
Qualified Institutional Buyer, (iii) the Assignee expressly agrees in writing to
be bound by the terms and conditions hereof by executing a counterpart to this
Agreement or any other document or instrument acceptable to the Managing Member
and (iv) such Class A Voting Member also Assigns to such Assignee all or a
corresponding PRO RATA number of the shares of DFRM Common Stock owned by such
Class A Voting Member. Any Substituted Member admitted to the Company will
succeed to all rights and be subject to all the obligations of the Assignor
Member with respect to the Membership Interest to which the Assignee Member was
substituted.
(d) Without limiting the generality of the Managing Member's ability
under Section 8.3(c) of this Agreement to withhold consent to an Assignment by a
Member, the Managing Member shall not consent to any such Assignment unless all
of the following conditions are satisfied:
(i) such Assignor Member furnishes evidence satisfactory to the
Managing Member or the Managing Member is otherwise satisfied that:
(A) the Assignment would not affect the Company's existence
or qualification as a limited liability company under the Act or
under any other law or regulation that is applicable to the
Company; and
(B) the Assignment would not (x) jeopardize the
classification of the Company as a partnership under federal
income tax principles, (y) cause a termination of the Company for
purposes of Code Section 708, or (z) otherwise have adverse
federal income tax consequences to the Company or any Member;
(ii) in the opinion of the Assignor Member's counsel, which
counsel shall be reasonably acceptable to the Company, such Assignment
would not subject the Company or the Members to any additional
regulatory requirements, result in the violation of any law or
regulation that is or might be applicable to the Company or the
Members or otherwise materially and adversely affect the interests of
the Company or the Members, as such; and
(iii) the Assignee executes and delivers a counterpart of this
Agreement.
(e) The Assignor and Assignee will be jointly and severally obligated
to reimburse the Company for all reasonable expenses (including legal fees) in
connection with any Assignment or proposed Assignment of a Member's Membership
Interest. As a condition to any Assignment of a Membership Interest in the
Company, the Assignor and the Assignee shall provide such legal opinions and
documentation as the Managing Member shall reasonably request.
8.4 NO RESIGNATION, WITHDRAWAL OR BORROWING. Except as otherwise
expressly provided in this Agreement, no Member may (a) withdraw as a Member of
the Company or with such Member's Membership Interest, (b) be required to
withdraw as a Member or be required to withdraw its Membership Interest or (c)
borrow or withdraw any portion of its Capital Contribution or Capital Account
from the Company.
8.5 FURTHER ASSURANCES. The Members shall from time to time execute or
cause to be executed all other documents or cause to be done all filing,
recording, publishing, or other acts as may be necessary or desirable to comply
with the requirements for the operation of a limited liability company under the
laws of the State of Delaware and all other jurisdictions in which the Company
may from time to time conduct business.
8.6 NO ACQUISITION OF MEMBERSHIP INTERESTS BY THE COMPANY. Except as
expressly contemplated in this Agreement, without the prior written consent of
the Managing Member, the Company shall not acquire, by purchase, redemption or
otherwise, all or any part of the Membership Interests of any Member in the
Company. Notwithstanding the immediately preceding sentence, in the event that
(i) the Initial Member's Class C Non-Voting Membership Interest shall be
Assigned by operation or law or other means not involving a voluntary act on the
part of the Initial Member, (ii) the Initial Member shall breach any obligation
of the Initial Member to the Company arising pursuant to this Agreement, the
Exchange Agreement or any other written agreement between the Initial Member and
the Company, and such breach shall not be cured within 30 days of receipt of
notice thereof delivered by the Company to the Initial Member (unless such
breach is not capable of being cured within 30 days, in which case the Initial
Member shall have a reasonable period of time to cure provided that it is using,
and continues to use, all commercially reasonable efforts to cure such breach as
promptly as practicable), or (iii) a Bankruptcy event shall occur with respect
to the Initial Member or the Initial Member shall otherwise be dissolved, then
in any such event the Company shall have the right to redeem the Initial
Member's Class C Non-Voting Membership Interest for an amount, in cash, equal to
the positive balance, if any, in the Initial Member's Capital Account.
ARTICLE IX
ACCOUNTS
9.1 BOOKS. The Managing Member shall maintain or cause to be
maintained complete and accurate books of account of the Company's affairs at
the Company's principal office, including a list of the names and addresses of
all Members and the aggregate Capital Contributions of each Member. Each Member
shall have the right to inspect the Company's books and records at any
reasonable time upon advance written request to the Company.
9.2 REPORTS, RETURNS AND AUDITS. The Tax Matters Partner will furnish
or will cause to be furnished to each Member:
(a) within 90 days after the end of each calendar year, an Internal
Revenue Service Schedule K-1 with respect to such Member;
(b) within 120 days after the end of each Fiscal Year of the Company,
a consolidated balance sheet of the Company as at the end of such year and
statements of income and cash flow of the Company for such year; and
(c) within 15 days after receipt thereof, any notice of audit from the
Internal Revenue Service.
All information obtained by a Member pursuant to this Section 9.2
shall be deemed proprietary and confidential to the Company and will not be
disclosed by a Member to any person or entity without the prior written consent
of the Company. This restriction shall not apply to information which (i) is
previously, or becomes, known to the public, except by breach of this Agreement
by such Member or other similar agreement by such Member regarding confidential
information, (ii) was in the Member's possession at the time of disclosure
without obligation of confidentiality, (iii) was received by the Member from a
third party without similar restrictions and, to the knowledge of such Member,
without breach of any obligation of confidentiality owed to the disclosing
party, (iv) was developed independently by the Member without reference to the
Company's confidential information, or (v) which is disclosed pursuant to a
governmental regulation or order, provided that prior to disclosure the
disclosing party notifies the Company of such proposed disclosure in order to
permit the Company to seek confidential treatment of such information.
9.3 FISCAL YEAR. The "FISCAL YEAR" of the Company for both financial
reporting and tax purposes shall be the calendar year.
9.4 METHOD OF ACCOUNTING. The books and accounts of the Company shall
be maintained using the cash method of accounting for financial reporting
purposes and tax purposes.
9.5 TAX RETURNS. The Tax Matters Partner shall cause to be prepared
and filed on a timely basis all federal, state and local tax returns required of
the Company.
9.6 BANK ACCOUNTS. All funds of the Company will be deposited in its
name in an account or accounts maintained with such bank or banks selected by
the Managing Member. The funds of the Company will not be commingled with the
funds of any other Person. Checks will be drawn upon the Company account or
accounts only for the purposes of the Company and shall be signed by authorized
officers of the Company.
9.7 OTHER INFORMATION. The officers of the Company and Managing Member
may release such information concerning the operations of the Company to such
sources as is customary in the industry or required by law or regulation or by
order of any regulatory body. For the term of the Company and for a period of
four years thereafter, the Managing Member shall cause to be maintained and
preserved all books of account and other relevant documents.
ARTICLE X
VALUATION OF ASSETS
For purposes of this Agreement, the "FAIR MARKET VALUE" of any asset
of the Company shall be determined by the Managing Member in its reasonable
discretion. The Managing Member, in its discretion, may engage any Person,
acceptable to the Managing Member, to perform an appraisal to determine the Fair
Market Value of any Company asset.
ARTICLE XI
DISSOLUTION OF THE COMPANY
11.1 DISSOLUTION. Subject to the Act, the Company shall be dissolved
and its affairs shall be wound up upon the earliest to occur of:
(a) the expiration of the term of the Company as provided in Section
2.6 of this Agreement;
(b) the sale or distribution by the Company of all or substantially
all of its assets; or
(c) the written consent of (i) Class A Voting Members whose Class A
Percentage Interests represent not less than two-thirds of the Class A
Percentage Interest of all Class A Voting Members and (ii) the Initial Member.
Any other provision of this Agreement to the contrary notwithstanding,
no withdrawal, assignment, removal, Bankruptcy, insolvency, death, incompetency,
termination, dissolution or distribution with respect to any Member or any
Membership Interest will effect a dissolution of the Company.
11.2 LIQUIDATION OF COMPANY INTERESTS.
(a) LIQUIDATION. Upon dissolution, the Company will be liquidated in
an orderly manner. The Managing Member will serve as the liquidator to wind up
the affairs of the Company pursuant to this Agreement; PROVIDED, HOWEVER, that
if there is no Managing Member, a Majority in Interest of the then remaining
Voting Class A Members shall select a Person or Persons to serve as liquidator.
The Person or Persons who act as the liquidator under this Section 11.2 are
referred to herein as the "LIQUIDATOR."
(b) LIQUIDATION PROCEDURE. Promptly following dissolution, the
Liquidator shall within a reasonable period of time cause the Company's assets
and properties to be liquidated for cash in an orderly and businesslike manner
so as not to involve undue sacrifice (which liquidation shall not involve any
material sale or disposition of assets or properties of the Company to any
Member or any Affiliate of a Member unless, in any such case, such sale or
disposition is on terms that are no less favorable to the Company than would be
reasonably available in an arm's length transaction).
(c) FINAL ALLOCATION AND DISTRIBUTION. Upon dissolution of the Company
(whether or not an early dissolution) and liquidation of its assets and
properties as set forth above, a final allocation of all items of income, gain,
loss and deduction will be made in accordance with Article V, and proceeds
arising from such liquidation, shall be distributed or used as follows and in
the following order and priority (which order shall be without prejudice to the
liability of the Members to creditors of the Company under the Act in the event
of the insolvency of the Company):
(i) for the payment of the Company's liabilities and obligations
to its creditors other than Members, and the expenses of liquidation;
(ii) for the payment of the Company's liabilities and obligations
to its creditors who are also Members;
(iii) to the setting up of any reserves that the Liquidator may
deem reasonably necessary for any contingent or unforeseen liabilities
or obligations of the Company;
(iv) any balance to the Members pro rata in accordance with the
balances in their Capital Accounts.
11.3 LIABILITY FOR RETURN OF CAPITAL CONTRIBUTIONS. Each Member, by
its execution of this Agreement, agrees that liability for the return of its
Capital Contribution is limited to the Company's assets and, in the event of an
insufficiency of such assets to return the amount of its Capital Contribution,
hereby waives any and all claims whatsoever, including any claim for additional
contributions that it might otherwise have, against any of the Company's agents
or representatives (in each case unless there has been fraud, gross negligence
or willful misconduct) by reason thereof. Each Member shall look solely to the
Company and its assets for all distributions with respect to the Company and his
or its Capital Contribution thereto, and shall have no recourse therefor (upon
dissolution or otherwise) against any of the Company's agents or representatives
(in each case unless there has been fraud, gross negligence or willful
misconduct).
ARTICLE XII
AMENDMENTS
This Agreement may be amended with (but only with) the written consent
of the Initial Member, a Majority in Interest of the Class A Voting Members and
the Class B Non-Voting Member. The Managing Member shall send each Member a copy
of any amendment adopted pursuant to this Article XII.
ARTICLE XIII
NOTICES
All notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be deemed duly given or made (a) when
personally delivered to the intended recipient (or an officer of the intended
recipient) or when sent by telecopy or facsimile followed by the mailing of a
copy as set forth in clause (b) or (c) below; (b) on the business day after the
date sent when sent by a nationally recognized overnight courier service; or (c)
four business days after it is sent by registered or certified mail, return
receipt requested, postage prepaid if to the Company, to its address set forth
in Section 2.5, and if to any Member, to the address set forth in the register
of Members. Any party may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving
the other parties notice in the manner herein set forth.
ARTICLE XIV
MISCELLANEOUS
14.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter of this Agreement,
and supersedes any prior agreement or understanding among the parties hereto
with respect to the subject matter of this Agreement.
14.2 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of Delaware, without regard
to principles of conflicts of law.
14.3 BINDING EFFECT. Except as otherwise provided herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, heirs, successors and
permitted assigns.
14.4 COUNTERPARTS. This Agreement may be executed either directly or
by an attorney-in-fact, in any number of counterparts of the signature pages,
each of which shall be considered an original and all of which together shall
constitute one instrument.
14.5 SEPARABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions of this Agreement or affecting the validity
or enforceability of such provision in any other jurisdiction.
14.6 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
14.7 GENDER AND NUMBER. Whenever required by the context of this
Agreement, all pronouns and any variations thereof will be deemed to refer to
the masculine, feminine and neuter, singular and plural.
14.8 NO THIRD PARTY BENEFICIARIES. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any creditor of the
Company or by any creditor of the Members. Nothing in this Agreement shall be
deemed to create any right in any person or entity (other than indemnified
persons as set forth in Section 7.4 of this Agreement) not a signatory hereto or
who becomes a Substituted Member pursuant to Section 8.3 of this Agreement, and
this Agreement shall not be construed in any respect to be a contract in whole
or in part for the benefit of any third Person.
14.9 TAX MATTERS PARTNER. The Managing Member shall be the "tax
matters partner" for purposes of Code Section 6231(a)(7).
14.10 CONFLICTS OF INTEREST. Nothing in this Agreement will restrict
the business activities and operations of any Member for its own account, or its
agents, representatives or any of their respective Affiliates.
14.11 COUNTERPART EXECUTION, TELECOPIES. This Agreement may be
executed in any number of counterparts, each of which, when so executed and
delivered, shall be an original, but all of which together shall constitute one
agreement binding on the parties hereto. Transmission by telecopier of an
executed counterpart of this Agreement shall be deemed to constitute due and
sufficient delivery of such counterpart.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Limited Liability Company Agreement as their act and deed, either
directly or by an attorney-in-fact, to be effective as of the day and year first
above written.
INITIAL MEMBER:
DELTA FINANCIAL CORPORATION, INC.
By:
--------------------------------------------
[Name], [Title]
CLASS A VOTING MEMBERS:
[LIST TO COME]
CLASS B NON-VOTING MEMBER:
DELTA FINANCIAL RESIDUAL MANAGEMENT, INC.
By:
--------------------------------------------
[Name], [Title]
SCHEDULE 1
CAPITAL CONTRIBUTIONS; MEMBERSHIP INTERESTS
CAPITAL CONTRIBUTION CLASS A VOTING CLASS B CLASS C
MEMBER MEMBERSHIP UNITS NON-VOTING NON-VOTING
MEMBERSHIP UNITS MEMBERSHIP UNITS
Delta Financial [__________]2 0 0 [________]
Corporation, Inc.
Delta Financial Residual [__________]3 0 [_________] 0
Management, Inc.
[Bondholders] [__________]4 [_________] 0 0
----------------------------- ----------------------- --------------------- --------------------- --------------------
Totals $[__________] [____________] [____________] [____________]
-----------------------
2 To be equal to _____________?
3 To be equal to _____________?
4 To be equal to the principal amount of Senior Notes tendered in the Exchange Offer.
SCHEDULE 2
RESIDUAL CERTIFICATES
[TO BE PROVIDED]
