AMENDMENT TO THE
OPERATING AGREEMENT
OF
SATTEL COMMUNICATIONS LLC
THIS AMENDMENT to the Operating Agreement of Sattel
Communications LLC dated as of April 1, 1996 (the "Operating
Agreement") is entered into as of the date of consent specified
below. All terms used herein which are not otherwise defined
shall have the meaning set forth in the Operating Agreement.
1. Exhibit A - Definitions.
(a) Modifications.
(i) The definition of "Capital Contribution"
contained in Exhibit A of the Operating Agreement is
modified by adding the following sentence at the end of
the definition:
Notwithstanding the foregoing, the amount of the
initial Capital Contribution of Sattel is $637,949.
(ii) The definition of "Cash Available for
Distribution" contained in Exhibit A of the Operating
Agreement is deleted and replaced with the following:
"Cash Available for Distribution" for any Fiscal
Period means Cash Flow less the sum of (a) distribu-
tions of the Priority Return, (b) Tax Distributions and
(c) distributions of Unreturned Capital, for that
Fiscal Period.
(iii) The definition of "Tax Distribution"
contained in Exhibit A of the Operating Agreement is
deleted and replaced with the following:
"Tax Distribution" means the amount distributed to
Members pursuant to Section 4.1(b) and (c).
(iv) The definition of "Tax Distribution
Dates" contained in Exhibit A of the Operating
Agreement is deleted and replaced with the following:
"Tax Distribution Dates" means, except as provided
in Section 4.1(c), January 15, April 15, June 15 and
September 15 of each Fiscal Year commencing with
June 15, 1996.
(v) For purposes of clarification, in the
definition of "Majority Consent" contained in Exhibit A
of the Operating Agreement, the phrase "holders of more
than fifty percent (50%) of all Units" is modified to
read "Members holding more than fifty percent (50%) of
all Units (with Units held by a transferee of a Class B
Member who is a permitted transferee under the
agreement governing the Class B Units between the
Company and the Member treated as held by the Member,
unless the transferee is admitted as a Member)".
(b) Additions. The following definitions are
added to Exhibit A of the Operating Agreement:
"Priority Return" means a sum equal to an annual
rate of eight percent (8%), compounded annually, for
the actual number of days occurring in the period for
which the Priority Return is being determined, of the
average daily balance of the Class A Member's Unre-
turned Capital from time to time during the period to
which the Priority Return relates, commencing on the
date any Class A Member first makes a Capital
Contribution after June 1, 1996, other than for
additional Class A Units.
"Unreturned Capital" means, as of any date, the
excess, if any, of (a) the aggregate Capital
Contributions of such Class A Member after June 1,
1996, other than for additional Class A Units, over (b)
the aggregate distributions as of such date to such
Class A Member pursuant to Sections 4.1(d) and 4.2(b)
of this Agreement.
3. Articles IV and V. Articles IV and V of the
Operating Agreement are hereby deleted in their entirety and are
replaced with the following:
ARTICLE IV
Distributions
4.1. Current Distributions. To the extent permitted
by law and consistent with the Company's obligations to its
creditors as determined by the Board of Directors, the Company
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shall make the following distributions from Cash Flow in the
order of priority set forth herein.
(a) Priority Return. First, the Company shall
distribute to each Class A Member an amount equal to the
excess, if any, of (i) the Priority Return of the Class A
Member from the date such Class A Member first has Unre-
turned Capital to the date of such distribution, over (ii)
the sum of all prior distributions to such Class A Member
pursuant to this Section 4.1(a) and Section 4.2(a). If less
than the total amount distributable to all Class A Members
under this Section 4.1(a) is to be distributed, the amount
distributed shall be allocated among the Class A Members in
proportion to the then unsatisfied amounts owing to them.
(b) Current Tax Distributions. Second, the
Company shall make Tax Distributions on or before the Tax
Distribution Dates. The aggregate amount of the Tax
Distribution made with respect to any given Tax Distribution
Date shall be the product of (i) the estimated federal
taxable income of the Company under the provisions of the
Code, for the Fiscal Period ending on the last day of the
calendar month immediately preceding the Tax Distribution
Date and commencing on the first day of the calendar month
that includes the immediately previous Tax Distribution
Date, multiplied by (ii) the Tax Rate. Notwithstanding the
foregoing, to the extent the Company has had an estimated
federal taxable loss for any prior Fiscal Period in that
Fiscal Year, the amount in clause (i) above shall be reduced
by that portion of the loss remaining after reducing taxable
income for prior Fiscal Periods in such Fiscal Year for the
loss. Each Member shall receive a Tax Distribution propor-
tional with the amount of federal taxable income to be
allocated to such Member pursuant to Article V hereof.
(c) Additional Tax Distributions. Third, in the
event any income tax return of the Company, as a result of
an audit or otherwise, reflects items of income, gain, loss,
or deduction which are different from the amounts estimated
pursuant to Section 4.1(b) above with respect to the Fiscal
Year of such return in a manner that results in additional
income or gain of the Company being allocated to the
Members, an additional Tax Distribution shall be made under
the principles of Section 4.1(b) above, except that (i) the
last day of the calendar month in which such adjustment
occurs shall be treated as a Tax Distribution Date, and (ii)
the amount of such additional income or gain shall be
treated as the federal taxable income of the Company.
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(d) Return of Unreturned Capital. Fourth, the
Company shall distribute to each Class A Member an amount
equal to the Member's Unreturned Capital. If less than the
total amount distributable to all Class A Members under this
Section 4.1(d) is to be distributed, the amount distributed
shall be allocated among the Class A Members in proportion
to the then unsatisfied amounts owing to them.
(e) Cash Available for Distribution. Finally,
Cash Available for Distribution shall be distributed to the
Members in proportion to the number of Units held by each
Member.
4.2. Distributions of Cash Available from a Capital
Event. Cash Available from a Capital Event shall be distributed
among the Members in the following priority:
(a) Priority Return. First, the Company shall
distribute to each Class A Member an amount equal to the
excess, if any, of (i) the Priority Return of the Class A
Member from the date such Class A Member first has Unre-
turned Capital to the date of such distribution, over (ii)
the sum of all prior distributions to such Class A Member
pursuant to Section 4.1(a) and this Section 4.2(a). If less
than the total amount distributable to all Class A Members
under this Section 4.2(a) is to be distributed, the amount
distributed shall be allocated among the Class A Members in
proportion to the then unsatisfied amounts owing to them.
(b) Return of Unreturned Capital. Second, the
Company shall distribute to each Class A Member an amount
equal to the Member's Unreturned Capital. If less than the
total amount distributable to all Class A Members under this
Section 4.2(b) is to be distributed, the amount distributed
shall be allocated among the Class A Members in proportion
to the then unsatisfied amounts owing to them.
(c) Special Distribution. Third, the Company
shall distribute to Sattel an amount equal to $2,500,000
less the sum of all prior distributions made pursuant to
this Section 4.2(c); and
(d) Other Distributions. The Company shall
distribute the balance of any Cash Available from a Capital
Event to the Members in proportion to the number of Units
held by each Member.
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4.3. Liquidating Distribution. In the event the
Company is liquidated pursuant to Article IX, below, distribu-
tions pursuant to Section 8.3(d), below, shall be distributed to
the Members in accordance with their Capital Account balances,
after making the adjustments for allocations under Article V,
below, up to and including the date of the liquidating distribu-
tion.
ARTICLE V
Allocation of Profits and Losses
5.1. Allocation of Profits. Except as provided in
Exhibit D hereto, Profits for any Fiscal Period shall be
allocated among the Members in accordance with the following
provisions:
(a) First, to the Class A Members, to the extent
of the excess, if any, of (1) the cumulative Priority Return
distributions the Class A Members have received pursuant to
Sections 4.1(a) and 4.2(a) hereof (regardless of when made)
over (ii) the cumulative items of income and gain allocated
to such Class A Members pursuant to this Section 5.1(a) for
all prior Fiscal Periods;
(b) Second, 99% to the Class A Units and 1% to
the Class B Units, in proportion to the number of Units held
by the respective classes of Members, until the Class A
Units have been allocated Profits equal to the amount of
Losses allocated to the Class A Members pursuant to Section
5.2 hereof (expressed as a positive number);
(c) Third, 99% of Sattel and 1% to the Class B
Units, in proportion to the number of Units held by the
Class B Members, until Sattel has been allocated Profits
under this Section 5.1(c) equal to $2.5 million less the
initial Capital Contribution of Sattel; and
(d) The balance among the Members in proportion
to the Units held by each Member.
5.2. Allocation of Losses. Except as provided in
Exhibit D hereto, Losses for any Fiscal Period shall be allocated
among the Members in proportion to the Units held by each Member,
except that to the extent Losses exceed all prior Profits reduced
by prior distributions pursuant to Article IV hereof, such Losses
shall be allocated among the Members holding Class A Units in
proportion to the Units held by each Class A Member, provided,
however, that no allocation shall be made to any Member to the
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extent that such allocation would violate the Treasury
Regulations promulgated under Section 704(b) of the Code.
3. Other Amendments.
(a) Section 9.2. For purposes of clarification,
in the first sentence of Section 9.2 of the Operating
Agreement, regarding amendments, the phrase "holders of
Class B Units shall be entitled to vote" is modified to read
"Members holding Class B Units shall be entitled to act."
(b) Section 2.5. Section 2.5 of the Operating
Agreement is modified by adding the following sentence at
the end of such section.
Notwithstanding the foregoing, an existing Class A
Member may at any time make a Capital Contribution
without the issuance of any additional Units, upon
approval of the Board of Directors.
4. Effect of Amendment. Except as otherwise modified
by this Amendment, the Operating Agreement shall remain in full
force and effect.
The undersigned, constituting the holders of all of the
outstanding Class A Units and a majority of the outstanding
Class B Units (a total of 1,650 B Units are outstanding as of the
date of this consent), hereby consent to the foregoing Amendment
as of June 5, 1996. This consent may be executed in
counterparts, all of which when taken together shall constitute
one and the same instrument.
SATTEL COMMUNICATIONS CORP.
(8,000 Class A Units)
By: /s/ Xxxxxxx X. Xxxxxx, President
/s/ Xxxxx X. Xxxxxxx
(250 Class B Units)
___________________________________
Xxxxxx X. Xxxxxx
(150 Class B Units)
(signatures continued on next page)
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/s/ Xxxx Xxxxxxx (450 Class B Units)
___________________________________
Xxxxx X. Xxxxxx (250 Class B Units)
___________________________________
Xxxxx Xxxx (250 Class B Units)
___________________________________
Xxxxxx X. Xxxxxx (100 Class B Units)
/s/ Xxxxx X. Xxxxxxx
(100 Class B Units)
/s/ Sydney X. Xxxxx
(100 Class B Units)
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