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EXHIBIT 10.5
OPERATING AGREEMENT
OF
PARK MORTGAGE COMPANY, LLC
THIS OPERATING AGREEMENT, dated as of February 15, 1995 (this
"Agreement"), is made by and between PARK MERIDIAN BANK, a North Carolina
banking corporation (the "Bank"), XXXX X. XXXXX, III, a resident of North
Carolina ("Chalk"), and XXX X. XXXXXXXXXX, a resident of North Carolina
("Xxxxxxxxxx"), and the other Persons from time to time parties hereto
(collectively, the "Members").
BACKGROUND STATEMENT
The parties desire to operate a limited liability company organized
under the laws of North Carolina on the terms and conditions set forth herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Unless the context requires otherwise, capitalized
terms used in this Agreement shall have the meanings given to them in Annex 1 or
when initially used herein.
1.2 Other Terms. When the context so indicates, all other terms used in
this Agreement shall have the meanings given to them in the Act.
ARTICLE II
ORGANIZATION AND TERM; ACTIVITIES
2.1 Formation. The Company was organized in accordance with and
pursuant to the Act by the filing of the Articles. The Act shall govern the
rights and liabilities of the Members except as otherwise provided in the
Articles or in this Agreement.
2.2 Name. The business of the Company shall be conducted under the name
"Park Mortgage Company, LLC" or such other name as the Managers may designate
from time to time in accordance with applicable law.
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2.3 Purposes. The purposes of the Company shall be to originate,
process, underwrite, fund, close, warehouse and sell both government and
conventional, conforming and nonconforming residential real estate first
mortgage loans, and otherwise to engage in business as a "mortgage banker"
within the meaning of Article 19 of Chapter 53 of the General Statutes of North
Carolina and in any and all business activities related or incidental thereto,
and to engage in any other lawful act or activity for which limited liability
companies may be organized under the Act. The Company shall, as promptly as
reasonably possible after the date hereof and in accordance with applicable laws
and regulations, be duly registered with the Commission as a mortgage banker and
with HUD as an approved loan correspondent.
2.4 Principal Office. The principal office and place of business of the
Company shall be maintained at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx, or at such other place as the Managers may designate from time to
time.
2.5 Registered Agent and Office. The registered agent and office of the
Company in North Carolina shall be as provided in the Articles or as the
Managers may designate from time to time in accordance with the Act.
2.6 Term. The term of the Company commenced on the date of the filing
of the Articles and shall continue until the completion of liquidation and
distribution of the assets of the Company after the occurrence of an Event of
Dissolution.
2.7 Reimbursement of Expenses. The Company shall reimburse each Member
for all fees and expenses, if any, incurred by such Member in connection with
the organization of the Company.
2.8 Independent Activities. Except as may be expressly provided
otherwise herein and subject to applicable law, unless a Member or Manager
agrees otherwise with the Company such Member or Manager may engage in any
activity in addition to the business of the Company, whether or not competitive
with or in conflict with the business of the Company, and shall not be required
to offer any interest in any such activity to the Company or to any other Member
or Manager; provided, however, that no Member, without the consent of the other
Members, may own any interest in any other mortgage banking firm engaged in the
business of making residential real estate mortgage loans in the Charlotte,
North Carolina area (other than the interests held by Chalk and Xxxxxxxxxx in
Mortgage Corporation of the Carolinas).
ARTICLE III
CAPITAL AND CONTRIBUTIONS
3.1 Initial Capital Contributions.
(a) Within twenty (20) days after the date hereof, each Member
executing this Agreement shall make the Capital Contribution described opposite
such Member's name on Exhibit A. Capital contributions may be made in any form
recognized as capital of registered mortgage brokers and bankers under the
regulations of the North Carolina Banking Commission.
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(b) Each Person admitted as a Member after the date hereof shall make
the Capital Contribution, if any, required in connection with such admission.
3.2 Additional Capital Contributions.
(a) In the event that, at any time after the date hereof, any
additional Capital Contributions shall, in the reasonable opinion of the
Managers, be required in order for the Company to satisfy any capital or net
worth requirements of the Commission, HUD or any other governmental authority or
agency applicable to the business of the Company, each Member shall, promptly
upon (and in any event within twenty (20) days after) the request of the
Managers therefor, make an additional Capital Contribution in an amount equal to
the product of (i) the aggregate amount of Capital Contributions requested by
the Managers and (ii) such Member's Sharing Percentage. Each Member may make
such additional Capital Contribution in any combination of (x) cash, (y) a
promissory note having the same terms (other than amount) as the notes
contributed by Chalk and Xxxxxxxxxx under SECTION 3.1(A) and described on
Exhibit A and (z) other tangible personal property having an aggregate fair
market value on the date of contribution (as agreed to by the Company and the
Member making such contribution), together with the amount of any cash or
promissory notes contributed by such Member, equal to such Member's required
Capital Contribution.
(b) Except as provided in subsection (a) above and in SECTION 3.1, no
Member shall be permitted or required to make any Capital Contribution except
pursuant to, and on terms set forth in, the written agreement of all of the
Members.
3.3 Valuation. A noncash Capital Contribution shall be valued at its
fair market value on the date of contribution, as agreed to by the Company and
the Member making such contribution. The agreed fair market value of each
noncash Capital Contribution required under SECTION 3.1(A) is set forth on
Exhibit A.
3.4 Failure to Make Capital Contribution. The Company shall be entitled
to exercise any and all rights and remedies available at law or in equity
against a Member for any failure to make any portion of a Capital Contribution
required to be made hereunder or pursuant hereto. The defaulting Member shall
pay or reimburse the Company, upon demand, (i) the amount of such unpaid Capital
Contribution, together with interest thereon at an interest rate per annum equal
to the Prime Rate plus one percentage points (1%), accruing from the date due
until the date made (subject to reduction to the minimum extent required by any
applicable laws regarding maximum interest rates in order to comply therewith),
and (ii) all costs and expenses (including, without limitation, reasonable
attorneys' fees) paid or incurred by the Company in connection with the exercise
of its rights and remedies against the defaulting Member.
3.5 Capital Contributions: Withdrawal, Distribution, Interest, Return.
Except as otherwise provided herein or by applicable law or pursuant to the
written consent of, and in accordance with terms agreed to by, all of the
Members:
(a) No Member shall be entitled to withdraw any portion of, to receive
any distributions of or against, or to be paid any interest with respect to,
such Member's Capital Contributions; and
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(b) No Member shall be entitled to the return of any portion of such
Member's Capital Contributions.
3.6 Loans. No Member shall be permitted or required to make any loan to
the Company unless the Managers shall have consented in writing. No loan made to
the Company by a Member shall constitute a Capital Contribution or entitle such
Member to an increase in such Member's Sharing Percentage.
3.7 Additional Interests. Subject to the satisfaction of the conditions
set forth in SECTION 14.3, the Company may issue and sell Additional Interests
to any Person.
ARTICLE IV
CAPITAL ACCOUNTS
4.1 Establishment of Capital Accounts. An individual capital account
shall be established and maintained for each Member. Each Member shall have a
single capital account regardless of the time at or manner in which any portion
of such Member's Interest was acquired. Any Member who is a Transferee of an
Interest, or any portion thereof, in accordance with the terms of this
Agreement, shall succeed to the capital account of the Transferring Member to
the extent it relates to the transferred Interest, or portion thereof.
4.2 Nature of Capital Accounts. Except as otherwise provided herein,
all references to "capital accounts" are references to "book" capital accounts
and not to "tax" capital accounts.
4.3 Maintenance of Capital Accounts. The capital account of each Member
shall be (i) increased by the amount of such Member's Capital Contributions and
by such Member's share of the Company's net profits and items of income that are
either nontaxable or otherwise not taken into account for federal income tax
purposes and (ii) decreased by such Member's share of the Company's net losses,
distributions and items of expense or cost that are either nondeductible or
otherwise not taken into account for federal income tax purposes, all in
accordance with and unless otherwise prescribed by Treas. Xxx.xx. 1.704-1(b). In
all cases, capital accounts shall be maintained in accordance with Treas.
Xxx.xx. 1.704-1(b).
ARTICLE V
BOOKS AND RECORDS; ACCOUNTING
5.1 Books and Records. The Company shall keep or cause to be kept, at
all times at its principal office, true and full books of account, minutes of
the meetings of its Members, Managers and committees of Managers, and all other
records necessary for recording the Company's business and affairs. The books of
the Company shall be maintained on the cash (or accrual, if required by law)
basis and in accordance with Treas. Xxx.xx. 1.704-1(b).
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5.2 Information. The Company shall maintain the following at all times
at its principal office:
(a) Promptly after becoming available, a copy of the Company's federal,
state and local income tax returns for each year;
(b) A current list of the name and last known business, residential or
other mailing address of each Member;
(c) Copies of the Articles and this Agreement and all amendments to
each, together with copies of any written powers of attorney pursuant to which
the Articles, this Agreement and all amendments to each have been executed; and
(d) Information regarding the amount of cash, and a description and
statement of the agreed value of any other property or services, contributed to
the Company by each Member and the property and services that each Member has
agreed to contribute in the future, and the date on which each became a Member.
The materials described above, as well as information regarding the status of
the Company's business and financial condition and such other information
regarding the affairs of the Company as is just and reasonable, shall be made
available, during ordinary business hours at the principal office of the
Company, to any Member or such Member's designee for inspection and copying at
the Member's expense.
5.3 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
5.4 Income Tax Returns. The Company shall prepare and file, or cause to
be prepared and filed, all necessary federal and state income tax returns and
reports for the Company, in such form and substance and with such elections as
the Managers shall reasonably deem appropriate. In addition, as soon as
practicable after the end of each fiscal year, the Company shall provide each
Member all information necessary or relevant for the preparation of such
Member's income tax returns, including, without limitation, information with
respect to such Member's distributive share of each class of income, gain, loss,
deduction or credit. Each Member shall, upon request, furnish to the Company all
information available to such Member that the Managers may reasonably deem
necessary or appropriate for the preparation and filing of the Company's income
tax returns and reports.
5.5 Tax Matters Partner. The Managers hereby designate the Bank to
serve as the initial "tax matters partner" of the Company (within the meaning of
Section 6231(a)(7) of the Code) pursuant to the Code.
5.6 Dispute. In the event of any dispute relating to the determination
of any accounting matters in connection with the business of the Company or the
performance or construction of this Agreement, the Company shall engage an
independent certified public accountant (which shall not be any accountant or
firm of accountants then engaged or proposed to be engaged by any Member or by
any company owned by Chalk and Xxxxxxxxxx to provide audit or other services to
a member or such company), selected by the Members in the manner described
below, to resolve the dispute at the Company's expense. In the event of any such
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dispute, the Bank will promptly prepare a list of five such independent
certified public accountants and deliver such list to Chalk and Xxxxxxxxxx, who
shall promptly notify the Bank whether any accountant included on such list is
then engaged or is proposed to be engaged by either of them or any company owned
by them to perform any services and shall select one accountant from those
remaining on the list (in the event that Chalk and Xxxxxxxxxx fail to agree on
the selection of one accountant, the accountant shall be selected in a random
drawing from the one selected by Chalk and the one selected by Xxxxxxxxxx). The
accountant's conclusions with respect to the matters in dispute shall be binding
upon all of the Members.
ARTICLE VI
ALLOCATIONS OF PROFITS AND LOSSES
6.1 General. The net profit or net loss of the Company shall be
credited or charged to the Members at the end of each calendar year in
accordance with their respective Sharing Percentages. The allocation of such
items shall be determined for each calendar year and shall be prorated for any
fractional part of a calendar year. For purposes of this Agreement, "net profit"
or "net loss" shall be determined in accordance with the accrual method of
accounting, consistently applied, and as required by the Treasury Regulations
promulgated under Section 704 of the Code.
6.2 Special Allocations. The following special allocations shall be
made in the following order and priority:
(a) Minimum Gain Charge-Back. Notwithstanding any other provision of
this Article, if there is a net decrease in Company minimum gain during any
fiscal year or other period, prior to any other allocation pursuant hereto, each
Member shall be specially allocated items of Company income and gain for such
year (and, if necessary, subsequent years) in an amount and manner required by
Treas. Reg.ss.ss.1.704-2(f) or 1.704-2(i). The items to be so allocated shall be
determined in accordance with Treas. Reg.ss.1.704-2.
(b) Qualified Income Offset. Any Member who unexpectedly receives an
adjustment, allocation or distribution described in Treas. Reg.
ss.1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes or increases a negative
balance in such Member's capital account (in excess of any amount that Member is
obligated to restore) shall be allocated items of income and gain sufficient to
eliminate such increase or negative balance caused thereby, as quickly as
possible, to the extent required by such Treasury Regulation.
(c) Gross Income Allocation. In the event any Member has a deficit
capital account at the end of any fiscal year that exceeds the sum of (i) the
amount such Member is obligated to restore pursuant to any provision of this
Agreement and (ii) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Treas. Reg. ss.ss.1.704-2(g)(1) and
1.704-2(i)(5), each such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible, provided
that an allocation pursuant to this subsection shall be made only if and to the
extent that such Member would have a deficit capital account in excess of such
sum after all other allocations provided for in this Article have been made as
if this subsection were not in this Agreement.
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(d) Section 704(b) Limitation. Notwithstanding any provision herein to
the contrary, no allocation of any item of income or loss shall be made to a
Member if such allocation would not have "economic effect" pursuant to Treas.
Reg.ss.1.704-1(b)(2)(ii) or otherwise be in accordance with his interest in the
Company within the meaning of Treas. Reg.ss.ss.1.704-1(b)(3) and 1.704-2. To the
extent an allocation cannot be made to a Member because of the application of
this subsection, such allocation shall be made to the other Members entitled to
receive such allocation hereunder.
(e) Curative Allocations. Any allocations of items of income, gain, or
loss pursuant to subsections (A) through (D) above shall be taken into account
in computing subsequent allocations pursuant to this Article, so that the net
amount of any items so allocated and the income, losses, and other items
allocated to each Member pursuant to this Article shall, to the extent possible,
be equal to the net amount that would have been allocated to each Member had no
allocations ever been made pursuant to subsections (A) through (D) above.
(f) Tax Allocations: Section 704(c). In accordance with Section 704(c)
of the Code and the Treasury Regulations promulgated thereunder, income, gain,
loss and deduction with respect to any property contributed to the capital of
the Company shall, solely for tax purposes, be allocated among the Members so as
to take account of any variation between the adjusted basis of such property to
the Company for federal income tax purposes and its fair market value at the
time of its contribution. Allocations pursuant to this subsection are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing, any Member's capital account or share of
income, losses, other items or distributions pursuant to any provision of this
Agreement.
6.3 Adjustment of Sharing Percentages. The Sharing Percentages of the
Members shall be adjusted automatically from time to time on a pro rata basis to
take account of any Transfer and subsequent admission of a Transferee as a
Member or any purchase by the Bank of another Member's Interest pursuant to
ARTICLE XIII, in each case as of the effective date of such Transfer or
purchase.
ARTICLE VII
DISTRIBUTIONS
7.1 Interim Distributions. Except as provided in SECTION 7.2, the net
cash flow of the Company shall be distributed to the Members at such times and
in such amounts as may be determined by Members holding a Required Interest;
provided, however, that the Company shall, without the consent of the Members
and subject to applicable law and the good faith determinations of the Managers
or the Company's accountants, make cash distributions to the Members annually,
pro rata based on their respective Sharing Percentages, in amounts sufficient to
permit the Members to pay their federal and state income taxes on their
respective shares of Company income. All cash distributions shall be made to the
Members pro rata based on their respective Sharing Percentages, except as
otherwise provided in SECTION 7.2.
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7.2 Distributions Upon Dissolution. In connection with the winding up
of the Company after the occurrence of an Event of Dissolution, distributions
shall be made in accordance with SECTION 15.3.
7.3 Nature of Distributions. Unless all of the Members shall decide
otherwise, all distributions shall be made in cash, and no Member shall have the
right to receive any distribution of property other than cash, whether pursuant
to a distribution upon dissolution of the Company or otherwise.
ARTICLE VIII
MEETINGS OF MEMBERS; ACTION BY MEMBERS
8.1 Meetings. Meetings of the Members may be called at any time by the
Managers or any Member. Meetings of Members shall be held at such time and
place, either within or without the State of North Carolina, as shall in each
case be fixed by the Managers or such Member, as the case may be, and designated
in the notice of the meeting.
8.2 Notice of Meetings. Written notice stating the date, time and place
of the meeting shall be given to each Member not less than ten nor more than
sixty days before the date of any meeting of the Members and shall include a
description of the purpose or purposes for which the meeting is called. When a
meeting is adjourned to a different date, time or place, notice need not be
given of the new date, time or place if the new date, time or place is announced
at the meeting before adjournment.
8.3 Waiver of Notice. Any Member may waive notice of any meeting before
or after the meeting. The waiver must be in writing, signed by the Member and
delivered to the Company for inclusion in the minutes or filing with the
Company's records. A Member's attendance, in person or by proxy, at a meeting
(i) waives objection to lack of notice or defective notice of the meeting,
unless the Member or such Member's proxy at the beginning of the meeting objects
to holding the meeting or transacting business at the meeting, and (ii) waives
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Member or such Member's proxy objects to considering the matter before it is
voted upon.
8.4 Quorum. Members may take action on a matter at the meeting only if
a Quorum is present in person or by proxy. Once an Interest is represented for
any purpose at a meeting (other than attendance by a Member solely for the
purpose of objecting to the notice of such meeting), it is deemed present for
Quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
In the absence of a Quorum at the opening of any meeting of Members, such
meeting may be adjourned from time to time by the vote of not less than
fifty-one percent (51%) of the Interests cast on the motion to adjourn; and,
subject to the provisions of SECTION 8.2, at any adjourned meeting any business
may be transacted that might have been transacted at the original meeting if a
Quorum exists with respect to the matter proposed.
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8.5 Proxies. Interests may be voted either in person or by one or more
proxies authorized by a written appointment of proxy signed by the Member or by
a Member's duly authorized attorney-in-fact and delivered to the Company for
inclusion in the minutes or filing with the Company's records. An appointment of
proxy is valid for eleven months from the date of its execution, unless a
different period is expressly provided in the appointment form.
8.6 Voting of Interests. If a Quorum exists, action on any matter
before the meeting is approved if Members holding the Required Interest vote in
favor of the action, except as any greater percentage of Interests may be
expressly required elsewhere herein or in the Articles for approval of any
particular matter.
8.7 Informal Action by Members. Any action that is required or
permitted to be taken at a meeting of the Members may be taken without a meeting
if one or more written consents, describing the action so taken, shall be signed
by all of the Members, and delivered to the Company for inclusion in the minutes
or filing with the Company's records.
ARTICLE IX
MANAGERS; MEETINGS OF MANAGERS
9.1 Managers. Except as otherwise provided herein or pursuant hereto,
the powers of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Managers. Except for situations in which the approval of the Members is
expressly required by this Agreement or by the Act, and subject to the
provisions of the Act, the Managers acting as a group at meetings or otherwise
as provided in SECTION 9.3 shall have full and complete authority and discretion
to manage and operate the business of the Company. Without limiting the
generality of the foregoing, the Managers acting as a group at meetings or
otherwise as provided in SECTION 9.3 shall have the authority:
(a) To negotiate, execute and deliver contracts, and to incur
obligations, for and on behalf of the Company in connection with the business of
the Company;
(b) To borrow money for and on behalf of the Company in connection with
the Company's business and to pledge the credit and property of the Company for
such purposes;
(c) To execute and deliver on behalf of the Company any and all
documents and instruments that are necessary or appropriate in carrying out the
business of the Company; and
(d) To take all other actions, and to cause all things to be done, on
behalf of the Company that are necessary or appropriate to maintain the Company
as a limited liability company under the Act, to comply with the Act in all
other respects and to carry out the business and purposes of the Company.
9.2 Number; Election; Removal; Vacancy.
(a) The number of Managers shall be set from time to time by the vote
of the Members in the manner set forth in ARTICLE VIII, provided, however, that
each of Xxxxxxxxxx
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and Chalk will, so long as he is a Member, serve as a Manager and that all other
Managers shall be designated by the Bank ("Bank-designated Managers"). Each
Member will vote all of such Member's Interest from time to time to cause Chalk,
Xxxxxxxxxx and the designees of the Bank to be elected as Managers.
(b) A Manager may be removed at any time (i) for Cause, upon the vote
of Members holding a Required Interest, and (ii) without Cause, upon the vote of
all Members; provided, however, that a Bank-designated Manager may be removed by
the Bank at any time with or without cause. Additionally, any Manager shall be
deemed automatically removed upon the occurrence of any event that, if such
Manager is or were a Member, would constitute an Event of Withdrawal with
respect to such Manager.
(c) Any Manager may resign at any time upon at least sixty (60) days'
prior notice to the Company (provided that, in the event Chalk or Xxxxxxxxxx
should resign, the Bank shall have the right to purchase his Interest pursuant
to the provisions of SECTION 11.2). A resignation is effective when communicated
unless it specifies in writing a later effective date. If a resignation is made
effective at a later date, the pending vacancy may be filled as provided
hereinbelow before the effective date provided that the successor does not take
office until the effective date.
(d) A vacancy occurring among the Managers may be filled by the vote of
Members holding a Required Interest.
(e) Unless the Articles do not so provide, Managers need not be Members
and need not be residents of the State of North Carolina. The Members hereby
designate the Persons listed on Exhibit B as the initial Managers.
9.3 Meetings.
(a) Meetings of the Managers may be called at any time by the Chairman
or by any two (2) Managers, and may be held at any time and place, either within
or without the State of North Carolina, as shall be specified in the notice of
such meeting. Written notice stating the date, time and place of the meeting
shall be given to each Manager not less than three (3) nor more than thirty (30)
business days before the date of such meeting. For the purposes hereof, a
"business day" shall mean any day other than a Saturday, Sunday or other day on
which the Bank is authorized by law to be closed for business. Such notice need
not specify the purpose for which the meeting is called. When a meeting is
adjourned to a different date, time and place, notice need not be given of the
new date, time or place if the new date, time or place is announced at the
meeting before adjournment.
(b) Any Manager may waive notice of any meeting before or after the
meeting. The waiver must be in writing, signed by the Manager entitled to the
notice and delivered to the Company for inclusion in the minutes or filing with
the Company's records. A Manager's attendance at or participation in a meeting
waives any objection to lack of notice or defective notice of the meeting unless
the Manager at the beginning of the meeting, or promptly upon arrival, objects
to holding the meeting or to transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
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(c) Except as otherwise provided herein, a majority of the number of
Managers fixed by or pursuant to this Agreement shall constitute a quorum for
the transaction of business at any meeting of the Managers, or if no number is
so fixed, the majority of Managers in office immediately before the meeting
begins shall constitute a quorum.
(d) A Manager who is present at a meeting of the Managers or a
committee of Managers when action is taken is deemed to have assented to the
action taken unless (i) such Manager objects at the beginning of the meeting, or
promptly upon arrival, to holding it or to transacting business at the meeting,
or (ii) such Manager's dissent or abstention from the action taken is entered in
the minutes of the meeting, or (iii) such Manager files written notice of a
dissent or abstention with the presiding officer of the meeting before its
adjournment or with the Company immediately after the adjournment of the
meeting. Such right of dissent or abstention is not available to a Manager
voting in favor of the action taken.
(e) Any action that is required or permitted to be taken at a meeting
of the Managers may be taken without a meeting if one or more written consents,
describing the action so taken, shall be signed by all of the Managers, and
delivered to the Company for inclusion in the minutes or filing with the
Company's records.
9.4 Compensation. The Members or the Managers may provide for the
compensation of Managers for their services as such (provided, that all Managers
shall receive the same compensation for their services as such unless all of the
Members otherwise approve differing compensation) and for the payment or
reimbursement of any or all expenses incurred by them in connection with such
services.
9.5 Committees. The Managers may create committees of Managers and
appoint Managers to serve on them. The creation of a committee of Managers and
appointment of members to it must be approved by the greater of (i) a majority
of the number of Managers in office when the action is taken or (ii) the number
of Managers required to take action pursuant to SECTION 9.6(A); provided, that,
each of Xxxxxxxxxx and Chalk, so long as he is a Member, shall be a Member of
each such committee if he so desires and shall receive notice of and have the
right to attend all meetings of such committees. Each committee must have two or
more members and, to the extent authorized by the Act or specified by the
Managers, shall have and may exercise all of the authority of the Managers in
the management of the Company. Each committee member shall serve at the pleasure
of the Managers. The provisions in this Agreement governing meetings, action
without meetings, notice and waiver of notice, and quorum and voting
requirements of the Managers apply to committees established under this Section.
9.6 Action by Managers; Delegation of Authority; Officers.
(a) Except as otherwise provided herein, the affirmative vote of a
majority of the Managers present at a meeting at which a quorum is present shall
be the act of the Managers.
(b) Action required or permitted to be taken at a meeting of the
Managers may be taken without a meeting if the action is taken by all Managers.
The action must be evidenced by
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one or more written consents signed by each Manager before or after such action,
describing the action taken, and included in the minutes or filed with the
Company's records.
(c) Subject to their duties hereunder and under applicable law, the
Managers may from time to time delegate to one or more Persons other than
Managers such authority, powers and duties as the Managers shall deem
appropriate; provided, however, that the Managers may not delegate any authority
to any such person that, pursuant to the terms hereof, would require the
approval of Chalk and Xxxxxxxxxx to be exercised.
(d) The Managers may from time to time designate one or more
individuals who are Managers and, subject to their duties hereunder and under
applicable law, individuals who are not Managers, as officers of the Company. An
officer so designated shall have such authority, powers and duties as the
Managers shall delegate to him. Any two or more offices may be held by the same
individual, but no officer may act in more than one capacity where action of two
or more officers is required. The officers shall serve without compensation in
such capacity unless otherwise determined by the Managers. The designation of an
officer does not itself create contract rights.
(e) Each officer shall hold office until his death, removal,
resignation, retirement or disqualification or until a successor shall have been
appointed. Any officer may be removed as an officer by the Managers at any time
with or without cause. An officer may resign as an officer at any time by
communicating his resignation to the Company, orally or in writing. A
resignation is effective when communicated unless it specifies in writing a
later effective date. If a resignation is made effective at a later date, the
Managers may fill the pending vacancy before the effective date provided that
the successor does not take office until the effective date.
(f) The officers of the Company may include, if appointed by the
Managers, a Chairman, a President, a Secretary, a Treasurer and such
Vice-Presidents, Assistant Secretaries, Assistant Treasurers, and other officers
as may from time to time be appointed. Unless otherwise designated by the
Managers upon the appointment of officers, the officers shall have the following
delegated authority:
(i) Chairman--the Chairman, who shall be elected by the
Managers from their number, shall preside at all meetings of the
Managers and the Members and perform such other duties as may be
directed by the Managers. The Chairman shall be the principal executive
officer of the Company and, subject to the control of the Managers,
shall in general supervise and control all of the business and policies
of the Company.
(ii) President--the President shall be the principal operating
officer of the Company, and, subject to the control of the Managers and
the Chairman, shall in general supervise the day-to-day business and
affairs of the Company.
(iii) Vice-Presidents--in the absence of the President or in
the event of his death, inability or refusal to act, the
Vice-Presidents in the order of their length of service as such, unless
otherwise determined by the Managers, shall perform the duties of the
President, and when so acting shall have all the powers of and be
subject to all the restrictions upon the President.
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(iv) Secretary--the Secretary shall: (a) keep the minutes of
the meetings of Members, of the Managers and of all committees in one
or more books provided for that purpose; (b) see that all notices are
duly given in accordance with the provisions hereof or as required by
law; (c) maintain and authenticate the records of the Company; (d)
attest the signature or certify the incumbency or signature of any
officer of the Company; and (e) in general perform all duties incident
to the office of secretary and such other duties as from time to time
may be prescribed by the Chairman, the President or by the Managers.
(v) Assistant Secretaries--in the absence of the Secretary or
in the event of his death, inability or refusal to act, the Assistant
Secretaries in the order of their length of service as Assistant
Secretary, unless otherwise determined by the Managers, shall perform
the duties of the Secretary, and when so acting shall have all the
powers of and be subject to all the restrictions upon the Secretary.
They shall perform such other duties as may be prescribed by the
Secretary, by the Chairman, by the President or by the Managers.
(vi) Treasurer--the Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
Company; receive and give receipts for moneys due and payable to the
Company from any source whatsoever, and deposit all such moneys in the
name of the Company in such depositories as shall be designated by the
Managers; (b) maintain appropriate accounting records as required by
law; (c) prepare, or cause to be prepared, annual financial statements
of the Company that include a balance sheet as of the end of the fiscal
year and an income and cash flow statement for that year, which
statements, or a written notice of their availability, shall be mailed
to each Member within 120 days after the end of such fiscal year; and
(d) in general perform all of the duties incident to the office of
treasurer and such other duties as from time to time may be prescribed
by the Chairman, by the President or by the Managers.
(vii) Assistant Treasurers--in the absence of the Treasurer or
in the event of his death, inability or refusal to act, the Assistant
Treasurers in the order of their length of service as such, unless
otherwise determined by the Managers, shall perform the duties of the
Treasurer, and when so acting shall have all the powers of and be
subject to all the restrictions upon the Treasurer. They shall perform
such other duties as may be prescribed by the Treasurer, by the
Chairman, by the President or by the Managers.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification of Members, Managers and Officers. The Company
shall indemnify each Member, Manager and officer to the extent required by law
and, in addition, shall indemnify each Manager as specifically provided herein.
10.2 Permitted Indemnification of Managers. Any Person who at any time
serves or has served as a Manager of the Company, or who, while serving as a
Manager of the Company,
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serves or has served, at the request of the Company, as a director, officer,
manager, partner, trustee, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, or as a trustee or administrator under an employee benefit plan,
shall have a right to be indemnified by the Company to the fullest extent
permitted by law against (i) reasonable expenses, including attorneys' fees,
incurred by such Manager in connection with any threatened, pending or completed
civil, criminal, administrative, investigative or arbitrative action, suit or
proceeding (and any appeal therein), whether or not brought by or on behalf of
the Company, seeking to hold such Manager liable by reason of the fact that such
Manager is or was acting in such capacity (provided, however, that the Company
shall not advance expenses of litigation brought against such Manager by any
Member individually or on behalf of the Company), and (ii) reasonable payments
made by such Manager in satisfaction of any judgment, money decree, fine
(including an excise tax assessed with respect to an employee benefit plan),
penalty or settlement for which such Manager may have become liable in any such
action, suit or proceeding.
10.3 Authorization. The Managers shall take all such action as may be
necessary and appropriate to authorize the Company to pay the indemnification
required by this Article, including, without limitation, making a determination
that indemnification is permissible in the circumstances and a good faith
evaluation of the manner in which the claimant for indemnity acted and of the
reasonable amount of indemnity due. The Managers may appoint a committee or
special counsel to make such determination and evaluation. To the extent needed,
the Managers shall give notice to, and obtain approval by, the Members for any
decision to indemnify.
10.4 Nature of Right. Any Person who at any time after the date hereof
serves or has served in the aforesaid capacity for or on behalf of the Company
shall be deemed to be doing or to have done so in reliance upon, and as
consideration for, the right of indemnification provided herein. Such right
shall inure to the benefit of the legal representatives of any such Person and
shall not be exclusive of any other rights to which such Person may be entitled
apart from the provisions of this Article.
ARTICLE XI
WITHDRAWAL
11.1 Withdrawal. Upon the occurrence of an Event of Withdrawal with
respect to a Member (a "Withdrawing Member"), unless all of the Members other
than the Withdrawing Member agree otherwise, the Withdrawing Member shall, as of
the date of the Event of Withdrawal, automatically be deemed to have withdrawn
from the Company and shall cease to be, and to have the authority, rights and
powers of, a Member except as specifically provided herein. Except as a result
of an Event of Withdrawal, a Member may not withdraw from the Company.
11.2 Purchase of Interests Upon Withdrawal.
(a) If an Event of Withdrawal occurs with respect to Chalk or
Xxxxxxxxxx (the "Withdrawing Member"), the other one of them (the
"Non-withdrawing Member") may, but
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shall not be required to, purchase the Interest for an amount equal to its Fair
Market Value as of the date of the Event of Withdrawal, and if the
Non-withdrawing Member does not elect to purchase such Interest as set forth
below, the Bank may, but shall not be required to, purchase the Interest for an
amount equal to its Fair Market Value as of the date of the Event of Withdrawal.
(b) The Non-withdrawing Member shall, if he desires to purchase the
Interest of the Withdrawing Member, elect to purchase it by delivering notice of
his election to purchase the Interest to the Withdrawing Member, or his
executor, administrator, successor or other legal representative (his
"Representative"), within sixty (60) days after the date of such Withdrawing
Member's death (if applicable) or otherwise within sixty (60) days after the
date the Non-withdrawing Member receives written notice from any Person of the
Event of Withdrawal. If the Non-withdrawing Member delivers notice of his
election to purchase the Interest, the Non-withdrawing Member and the
Withdrawing Member or his Representative will each select an appraiser for the
purpose of determining the Fair Market Value of the Interest and will exercise
reasonably diligent efforts to cause the appraisal to be completed as promptly
as reasonably possible.
(c) The Non-withdrawing Member will purchase the Interest by delivering
to the Withdrawing Member or such Member's Representative, or such other Person
as may be required, within thirty (30) days after the delivery of the final
appraisal, cash or a promissory note (a "Note"), or both, in an aggregate amount
equal to the purchase price. Any such Note shall provide (i) for the payment of
the principal sum thereof in eight (8) quarterly installments as nearly equal as
possible, commencing as of the last day of the calendar quarter occurring after
the closing of the purchase, (ii) for the payment of interest on the unpaid
principal balance thereof from the closing date at the Prime Rate and (iii) for
prepayment of the principal sum thereof without penalty in whole or in part at
any time or from time to time (any partial prepayments to be applied in the
inverse order of maturity). The Withdrawing Member's Representative shall be
obligated to recognize and comply in all respects with the Non-withdrawing
Member's election and purchase of the Interest pursuant to the terms hereof.
(d) In the event that the Non-withdrawing Member fails to elect to
purchase the Interest of the Withdrawing Member pursuant to SECTION 11.2(B), the
Bank shall, if it desires to purchase the Interest, elect to purchase it by
delivering notice of its election to purchase the Interest to the Withdrawing
Member, or his Representative, within one hundred twenty (120) days after the
date of such Withdrawing Member's death (if applicable) or otherwise within one
hundred twenty (120) days after the date the Company or the Bank receives
written notice from any Person of the Event of Withdrawal. If the Bank delivers
notice of its election to purchase the Interest, the Bank and the Withdrawing
Member or his Representative will each select an appraiser for the purpose of
determining the Fair Market Value of the Interest and will exercise reasonably
diligent efforts to cause the appraisal to be completed as promptly as
reasonably possible.
(e) The Bank will purchase the Interest by delivering to the
Withdrawing Member or such Member's Representative, or such other Person as may
be required, within thirty (30) days after the delivery of the final appraisal,
cash or a Note, or both, in an aggregate amount equal to the purchase price. Any
such Note shall provide (i) for the payment of the principal sum thereof
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in eight (8) quarterly installments as nearly equal as possible, commencing as
of the last day of the calendar quarter occurring after the closing of the
purchase, (ii) for the payment of interest on the unpaid principal balance
thereof from the closing date at the Prime Rate and (iii) for prepayment of the
principal sum thereof without penalty in whole or in part at any time or from
time to time (any partial prepayments to be applied in the inverse order of
maturity). The Withdrawing Member's Representative shall be obligated to
recognize and comply in all respects with the Bank's election and purchase of
the Interest pursuant to the terms hereof.
ARTICLE XII
TRANSFER OF INTERESTS
12.1 General Restrictions on Transfer. No Transfer by any Member (a
"Transferring Member") shall be effective, and no Person to whom or for whose
benefit a Transfer is made (a "Transferee") shall be recognized as a Transferee
hereunder, unless the conditions set forth in this Article applicable to the
Transfer shall have been satisfied. Any Transfer made other than in accordance
with the terms hereof shall be null and void ab initio.
12.2 Voluntary Transfers. No Transferring Member shall make a Voluntary
Transfer except in accordance with the following:
(a) Upon receipt of a bona fide written offer by a proposed Transferee
to purchase or otherwise acquire an Interest, or any portion thereof, the
Transferring Member shall first offer the Interest, or portion thereof, that is
the subject of the Voluntary Transfer (the "Offered Interest") in writing to the
other Members at the same price and on the same terms as offered to the proposed
Transferee. The offer shall set forth a description of the Offered Interest, the
price and other terms of such offer, and a description of the proposed
Transferee (and, if the proposed Transferee is not an individual, a description
of its owners or beneficiaries). Each other Member shall have a period of thirty
(30) days from the date of delivery of the offer either to reject or accept it.
(b) Each Member who accepts the offer shall be entitled to purchase a
portion of the Offered Interest, calculated pro rata based on the Sharing
Percentages of those Members who have accepted such offer or otherwise as the
accepting Members shall agree.
(c) If no Member elects to purchase the Offered Interest, the
Transferring Member may make the Voluntary Transfer at any time during the
ninety (90) day period following the expiration of all offers to other Members
made pursuant to subsection (A) above, provided that the Voluntary Transfer is
made to the Transferee at a price and on terms no more favorable than the price
and terms offered to the other Members and provided further that the other
Members (other than the Bank) shall have the right to participate in such
Voluntary Transfer and receive a pro rata share (based on their respective
Sharing Percentages) of the aggregate consideration payable in respect of all
Interests, and the Transferring Member shall not consummate any such sale unless
such Member has taken all steps to ensure that such proposed Transferee has made
a binding offer on such terms to purchase the Interests of such other Members.
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(d) If the Transferring Member does not make the Voluntary Transfer
prior to the expiration of such 90-day period, the Transferring Member shall not
make any Voluntary Transfer of any portion of the Offered Interest without first
reoffering it in accordance with this Section.
(e) Notwithstanding the provisions of subsections (A) through (D)
above, any Member may freely make a Voluntary Transfer to a Permitted Transferee
at any time, provided that, prior to making the Voluntary Transfer, the
Transferring Member furnishes to the Company and each other Member a notice
containing the name and address of the Permitted Transferee.
(f) Notwithstanding any other provision hereof, no Member shall pledge
or otherwise hypothecate or grant a security interest in such Member's Interest.
12.3 Involuntary Transfers. No Involuntary Transfer shall be effective
except in accordance with the following:
(a) Upon the occurrence of an Involuntary Transfer with respect to the
Interest of Chalk or Xxxxxxxxxx, the Bank may, but shall not be required to,
purchase the Interest for an amount equal to its Fair Market Value at the time
of the Involuntary Transfer.
(b) The Bank shall, if it desires to purchase the Interest, elect to
purchase it by delivering notice of its election to purchase the Interest to the
Transferring Member or his Representative within sixty (60) days after the date
the Company or the Bank receives written notice from any Person of the event
causing the Involuntary Transfer. If the Bank delivers notice of its election to
purchase the Interest, the Bank and the Transferring Member or his
Representative will each select an appraiser for the purpose of determining the
Fair Market Value of the Interest and will exercise reasonably diligent efforts
to cause the appraisal to be completed as promptly as reasonably possible.
(c) The Bank will purchase the Interests by delivering to the
Transferring Member or his Representative, or such other Person as may be
required, within thirty (30) days after the delivery of the final appraisal,
cash or a Note, or both, in an aggregate amount equal to the purchase price for
his respective Interest. Any such Note shall contain the same terms and
provisions as are provided for Notes delivered under SECTION 11.2.
(d) If the Bank does not elect to purchase the Interest by the end of
such 60-day period or fails to pay the purchase price by the end of the 30-day
period subsequent thereto, the Involuntary Transfer will be deemed effective
immediately, but the Transferee may be admitted as a Member only in accordance
with the provisions of ARTICLE XIV.
(e) A Transferring Member or his Representative shall be obligated to
honor and comply with the provisions of this Agreement, shall not have any
authority, rights or powers with respect to such Transferring Member's Interest
hereunder or under law other than as strictly necessary to enable such Person to
carry out its obligations as set forth herein or as may be required pursuant
hereto, shall be deemed by the Transferee's execution of or consent to be bound
by this Agreement to have consented to the admission as a Member of any
Transferee of the Transferring Member's Interest and to have agreed to deliver
written evidence of such consent pursuant to SECTION 14.2 if requested to do so
by the Managers or the other Members,
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and shall cooperate fully with the Company, the Managers and the other Members
by taking or refraining from taking such actions, including, without limitation,
executing and delivering any instruments or documents that may be required under
or pursuant to SECTION 14.2 or that the Managers or the other Members may deem
necessary or appropriate, in carrying out the provisions of this Agreement.
12.4 Absolute Restrictions on Transfer. Notwithstanding any provision
herein to the contrary, no Transfer shall be made:
(a) That would result in the termination of the Company pursuant to the
Code; and
(b) Except pursuant to registration under all applicable federal and
state securities laws or upon delivery to the Company of either (i) a no-action
letter from each state and federal governmental authority having jurisdiction
thereof or (ii) an opinion of counsel satisfactory to the Company that the
proposed Transfer does not constitute a violation of, or require any
registration, qualification or filing under, any federal or state securities
laws.
12.5 Consequences of a Transfer. After a Transfer is effective in
accordance with the terms hereof:
(a) The Transferee, whether or not admitted as a Member, shall be
subject to all of the provisions of this Agreement; and
(b) Notwithstanding the effectiveness of the Transfer, unless and until
admitted as a Member the Transferee shall have only the Economic Rights in
respect of the Interest, or portion thereof, transferred, and shall have no
other rights of any nature whatsoever hereunder or under the Act, and the
Transferring Member shall, except with respect to such Economic Rights, be
treated as continuing to own the Interest for all purposes, including, without
limitation, for purposes of SECTION 3.4.
12.6 Application to Subsequent Transfers. The provisions of this
ARTICLE XII shall apply to any subsequent Transfer by or with respect to a
Transferee who is not a Member to the same extent and in the same manner as if
the Transferee were a Member.
ARTICLE XIII
BUYOUT PROVISIONS
13.1 Purchase of Interests Upon Change of Control.
(a) In the event that the Bank enters into any consolidation, merger or
other business combination and is not the surviving party, or sells or otherwise
disposes of all or substantially all of its assets, whether in one or a series
of transactions (a "Change of Control"), the Bank may, and upon the election of
Chalk and Xxxxxxxxxx shall, purchase each of the Interests of Chalk and
Xxxxxxxxxx for an amount equal to its Fair Market Value as of the effective date
of the Change of Control. The Bank shall provide Chalk and Xxxxxxxxxx notice of
the occurrence of a Change of Control promptly after such occurrence.
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(b) The Bank shall, if it desires to purchase the Interests, elect to
purchase them by delivering notice of its election to purchase the Interests to
Chalk and Xxxxxxxxxx within sixty (60) days after the effective date of the
Change of Control. Each of Chalk and Xxxxxxxxxx, if he elects to require the
Bank to purchase his Interest, shall deliver notice of such election to the Bank
within sixty (60) days after his receipt of notice from the Bank of the
occurrence of the Change of Control. If the Bank delivers notice of its election
to purchase the Interests, or if Chalk or Xxxxxxxxxx or both (singly and
collectively, the "Demanding Member") delivers notice to the Bank electing to
require the Bank to purchase their respective Interests, the Bank, on the one
hand, and the Demanding Member, on the other, will each select an appraiser for
the purpose of determining the Fair Market Value of the Interests and will
exercise reasonably diligent efforts to cause the appraisal to be completed as
promptly as reasonably possible.
(c) The Bank will purchase the Interests by delivering to Chalk and
Xxxxxxxxxx, or the Demanding Member, as the case may be, or such other Person as
may be required, within thirty (30) days after the delivery of the final
appraisal, cash or a Note, or both, in an aggregate amount equal to the purchase
price for his respective Interest. Any such Note shall contain the same terms
and provisions as are provided for Notes delivered under SECTION 11.2.
13.2 Purchase of Interests Upon Sale of Bank's Interest.
(a) In the event that the Bank sells its Interest to any Person and any
Affiliates of such Person (other than an Affiliate of the Bank), whether in one
or a series of bona fide transactions (other than pursuant to a Change of
Control), the Bank may purchase each of the Interests of Chalk and Xxxxxxxxxx
for an amount equal to the greater of (i) its Fair Market Value or (ii) the
product of (y) the aggregate consideration payable to the Bank in respect of the
sale of its Interest and (z) the Sharing Percentage of Chalk or Xxxxxxxxxx (as
the case may be), in each case as of the effective date of such sale. The Bank
shall provide Chalk and Xxxxxxxxxx notice of an agreement to effect such a sale
promptly after such agreement is made. Each of Chalk and Xxxxxxxxxx shall have
the right to sell his Interest on the same terms as those applicable to the Bank
as set forth in SECTION 12.2(C).
(b) The Bank shall, if it desires to purchase the Interests, elect to
purchase them by delivering notice of its election to purchase the Interests to
Chalk and Xxxxxxxxxx within sixty (60) days after the effective date of such
sale. If the Bank delivers notice of its election to purchase the Interests, the
Bank, on the one hand, and Chalk and Xxxxxxxxxx, on the other, will each select
an appraiser for the purpose of determining the Fair Market Value of the
Interests and will exercise reasonably diligent efforts to cause the appraisal
to be completed as promptly as reasonably possible.
(c) The Bank will purchase the Interests by delivering to Chalk and
Xxxxxxxxxx, or such other Person as may be required, within thirty (30) days
after the delivery of the final appraisal, cash or a Note, or both, in an
aggregate amount equal to the purchase price for his respective Interest. Any
such Note shall contain the same terms and provisions as are provided for Notes
delivered under SECTION 11.2.
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ARTICLE XIV
ADMISSION OF MEMBERS
14.1 General. No Person shall be admitted as a Member or granted any
rights or powers of a Member except as provided in this ARTICLE XIV and except
as may be specifically provided elsewhere in this Agreement.
14.2 Admission of Transferees. The admission as a Member of any
Transferee is subject to the satisfaction of the following conditions:
(a) All of the conditions required hereunder to have been satisfied
prior to the effectiveness of the relevant Transfer, other than the occurrence
of the effective date of the Transfer, shall have been satisfied;
(b) All of the Members (other than the Transferring Member, if such
Transferring Member is transferring all of such Member's Interest) shall have
approved the admission of the Transferee as a Member, subject to the
satisfaction of the other conditions set forth in this Section;
(c) The Transferee shall have executed and delivered to the Company an
instrument, in form and substance satisfactory to the Company, setting forth (i)
the consent of the Transferee to admission as a Member, (ii) the Transferee's
notice address and consent to be bound as a Member by this Agreement, and (iii)
the Transferee's acknowledgement of receipt of a copy of this Agreement as then
in effect (which the Company shall provide to the Transferee); and
(d) The Transferee and the Transferring Member, or such Member's
Representative, shall have executed and delivered, and the Company shall have
received, such other instruments and documents as the Members or the Managers
shall deem necessary or desirable to effect the admission of the Transferee as a
Member, including, without limitation, opinions of counsel to the effect that
such admission is permitted under SECTION 12.4.
14.3 Issuance of Additional Interests. The issuance of an Additional
Interest to any Person (in such capacity, a "Purchaser"), and the admission of
the Purchaser as a Member, is subject to the satisfaction of the following
conditions:
(a) All of the Members shall have approved the issuance of the
Additional Interest and the terms and conditions thereof and, subject to the
satisfaction of the other conditions set forth in this Section, the admission of
the Purchaser as a Member;
(b) The Purchaser shall have executed and delivered to the Company an
instrument, in form and substance satisfactory to the Company, setting forth (i)
the Purchaser's consent to be bound by this Agreement and (ii) the Purchaser's
acknowledgement of receipt of a copy of this Agreement as then in effect (which
the Company shall provide to the Purchaser); and
(c) The Purchaser shall have executed and delivered, and the Company
shall have received, such other instruments and documents as the Members and the
Managers shall deem necessary or desirable to effect the issuance of the
Additional Interest and the admission of the
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Purchaser as a Member, including, without limitation, opinions of counsel to the
effect that such admission is permitted under SECTION 12.4.
ARTICLE XV
DISSOLUTION AND TERMINATION
15.1 Dissolution. The Company shall be dissolved upon the occurrence of
an Event of Dissolution.
15.2 Articles of Dissolution. As soon as practicable after the
occurrence of an Event of Dissolution, the Managers shall file articles of
dissolution of the Company in the office of the North Carolina Secretary of
State, in accordance with the Act.
15.3 Winding Up.
(a) After the occurrence of an Event of Dissolution, the Managers shall
wind up the affairs of the Company and liquidate and distribute its remaining
assets. The Managers shall allow a reasonable time for the orderly conclusion of
the Company's business, the discharge of its liabilities to its creditors and
the liquidation of its assets, in order to minimize the normal losses attendant
upon a liquidation.
(b) The proceeds from the sale or liquidation of the assets of the
Company shall be applied and distributed as follows:
(i) First, to creditors of the Company other than Members, in
satisfaction of the liabilities of the Company in the order of priority
required by law, and to the establishment of a reserve fund for any
unforeseen or contingent liabilities in such amount as the Managers
shall establish in their discretion;
(ii) Second, to Members who have made loans to the Company, in
satisfaction of the full amount of such loans, including all interest
accrued thereon, pro rata based on the respective outstanding amounts
of such loans or as may be otherwise agreed by all such Members who
have made such loans; and
(iii) Third, to the Members in accordance with their
respective capital account balances, after reflecting the gain or loss
on any such sale and any net profit or net loss and all other capital
account adjustments for the year in the capital accounts in accordance
with ARTICLE VI.
ARTICLE XVI
MISCELLANEOUS
16.1 Notices. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed to have been given three (3)
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days after deposit in the United States mails if mailed by first class,
certified or registered mail, postage prepaid, or on the date of delivery if
delivered by overnight delivery service, hand, telegram or facsimile
transmission, addressed to the Company at its principal office or to a Member at
such Member's address then contained in the records of the Company. Any Member
may change such Member's notice address by giving written notice of such change
to the Company.
16.2 Amendments; Agreements with Members.
(a) This Agreement can be modified or amended only with the consent of
Members holding a Required Interest; provided, however, that:
(i) Any amendment that would change a Member's Sharing
Percentage shall require the consent of such Member;
(ii) Any amendment that would (A) modify any provision herein
requiring the approval of all of the Members as to any matter, (B)
increase the number of Managers or (C) modify any provision relating to
the allocation of items of Company income, gain, loss, deduction or
credit or to distributions, shall require the consent of all of the
Members; and
(iii) The Managers may amend this Agreement without the
consent of any Member if, in the good faith judgment of the Managers
and in the opinion of counsel to the Company, amendment is necessary to
preserve the status of the Company as a partnership for purposes of
federal or state tax law or otherwise to cause this Agreement and the
performance hereof to comply with applicable law.
(b) Except to the extent otherwise required under applicable law, (i)
any transaction or agreement between the Bank (and any of its Affiliates) and
the Company (including, without limitation, the Services Agreement), and any
amendments or modifications thereto, may be made only with the consent of
Xxxxxxxxxx and Chalk, such consent not to be unreasonably withheld, and (ii) any
agreement between Xxxxxxxxxx or Chalk (and any of their respective Affiliates)
and the Company (including, without limitation, the Brokerage Agreement), and
any amendments or modifications thereto, may be made only with the consent of
the Bank, such consent not to be unreasonably withheld.
16.3 Governing Law. The execution, interpretation and performance of
this Agreement shall be governed by the internal laws and judicial decisions of
the State of North Carolina.
16.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.5 Binding Effect. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Company, the Members and
their respective successors, heirs, legal and personal representatives and
transferees; provided, however, that nothing in this Section shall be deemed to
modify the provisions of ARTICLE XII, nor is this Agreement intended
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to confer upon any other Person except the Company, the Members and their
respective successors, heirs, legal and personal representatives and transferees
any rights or remedies hereunder. Each Person who becomes a Member after the
date hereof and in accordance with the terms hereof shall be deemed to be a
party to and be bound by this Agreement.
16.6 Cumulative Remedies. Each right, power, and remedy provided for
herein or now or hereafter existing at law, in equity, by statute or otherwise
shall be cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for herein or now or hereafter existing at law,
in equity, by statute or otherwise.
16.7 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, agreement or condition herein may be waived by the party
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, representation, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
16.8 Entire Agreement. This Agreement, including the Annexes, Exhibits
and Schedules hereto, constitutes the entire agreement and understanding of the
parties hereto, and supersedes all prior agreements and understandings, oral and
written, between the parties in respect of the subject matter hereof. The
Annexes, Exhibits and Schedules hereto are an integral part of this Agreement
and are incorporated by reference herein.
16.9 Construction and Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used herein, the singular shall include
the plural and the plural the singular, and the use of any gender shall be
applicable to all genders. All references herein to any statute or regulation
and to particular provisions thereof shall be deemed references to such statute
or regulation (and any successor thereto) as in effect from time to time and to
any corresponding provisions of any such successor statute or regulation.
16.10 Severability. Every provision of this Agreement is intended to be
severable, and if any provision hereof shall be declared to be illegal, invalid
or prohibited under applicable law, such provision shall be ineffective and void
to the extent of such illegality, invalidity or prohibition, and the validity of
the remainder of this Agreement shall not be affected as a result thereof.
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IN WITNESS WHEREOF, the Persons indicated below have caused this
Agreement to be executed under seal as of the day and year first above written.
PARK MERIDIAN BANK
ATTEST: By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx, President
/s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Assistant Secretary
[CORPORATE SEAL]
/s/ Xxxx X. Xxxxx, III (SEAL)
----------------------------------
Xxxx X. Xxxxx, III
/s/ Xxx X. Xxxxxxxxxx (SEAL)
----------------------------------
Xxx X. Xxxxxxxxxx
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ANNEX 1
DEFINED TERMS
"Act" shall mean the North Carolina Limited Liability Company Act,
Chapter 57C of the General Statutes of North Carolina.
"Additional Interest" shall mean any Interest issued by the Company
after the date hereof.
"Affiliate" shall mean, with respect to any Person, each other Person
that directly, or indirectly through one or more intermediaries, owns or
controls, is controlled by or under common control with, such Person. For
purposes of this definition, with respect to any Person "control" shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Articles" shall mean the Articles of Organization of the Company,
filed with the North Carolina Secretary of State on February 14, 1995, as
amended or restated from time to time.
"Brokerage Agreement" shall mean the Brokerage Agreement, dated as of
the date hereof, between the Company and Mortgage Corporation of the Carolinas,
as amended or modified from time to time in accordance with the terms hereof and
thereof.
"Business Corporation Act" shall mean the North Carolina Business
Corporation Act, Chapter 55 of the General Statutes of North Carolina.
"Capital Contribution" shall mean a contribution by a Member to the
capital of the Company in accordance with the terms hereof and with the Act.
"Cause" shall mean, with respect to any Manager, such Manager's (i)
cessation of active participation as a Manager or (ii) conviction of a felony
(other than traffic offenses, including driving-under-the influence offenses) or
of any lesser crime or offense involving fraud, deceit or moral turpitude.
"Change of Control" shall have the meaning given to such term in
SECTION 13.1(A).
"Code" shall mean the Internal Revenue Code of 1986.
"Commission" shall mean the North Carolina Banking Commission and any
successor thereto.
"Company" shall mean Park Mortgage Company LLC, the North Carolina
limited liability company that is the subject of this Agreement.
"Demanding Member" shall have the meaning given to such term in SECTION
13.1(B).
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"Economic Rights" shall mean, with respect to an Interest, the rights
under such Interest to allocations of items of Company income, gain, loss,
deduction or credit and to distributions.
"Event of Dissolution" shall mean any of the following:
(a) The consent of Members with a Required Interest to dissolution of
the Company;
(b) The occurrence of the date specified in the Articles as the latest
date on which the Company is to dissolve;
(c) The occurrence of an Event of Withdrawal with respect to any
Manager who is a Member, or, if no Manager is a Member, the occurrence of an
Event of Withdrawal with respect to the Member having the greatest Sharing
Percentage on the date such Event of Withdrawal occurs; provided, however, that
the occurrence of such an Event of Withdrawal will not constitute an Event of
Dissolution if:
(i) at the time of such Event of Withdrawal there is at least
one remaining Member; and
(ii) either (A) within thirty (30) days after the occurrence
of such Event of Withdrawal, Members holding a Required Interest agree
that the Company shall not be dissolved and that its business shall be
continued, or (B) within ninety (90) days after the occurrence of such
Event of Withdrawal, all of the remaining Members, and the Member with
respect to whom the Event of Withdrawal occurred, agree in writing that
the Company shall not be dissolved and that its business shall be
continued;
(d) The sale or other disposition of all or substantially all of the
assets of the Company; and
(e) The entry of a decree of judicial dissolution, or the filing of a
certificate of administrative dissolution, with respect to the Company pursuant
to the Act, in either case that is not reversed, revoked or rescinded within
sixty (60) days thereafter.
"Event of Insolvency" shall mean, with respect to a Member, any of the
following:
(a) The Member's:
(i) Making an assignment for the benefit of creditors;
(ii) Filing a voluntary petition in bankruptcy;
(iii) Being adjudged bankrupt or insolvent or having entered
against the Member an order for relief in any bankruptcy or insolvency
proceeding;
(iv) Filing a petition or answer seeking for the Member any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation;
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(v) Seeking, consenting to or acquiescing in the appointment
of a trustee or receiver for, or liquidation of, the Member or all or
any substantial part of the Member's properties; and
(vi) Filing an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against the
Member in any proceeding described above; and
(b) The continuation of any proceeding against the Member seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, for 120 days after the
commencement thereof or the appointment of a trustee, receiver or liquidator for
the Member or all or any substantial part of the Member's properties without the
Member's agreement or acquiescence, which appointment is not vacated or stayed
for 120 days or, if the appointment is stayed, for 120 days after the expiration
of the stay during which period the appointment is not vacated.
"Event of Withdrawal" shall mean, with respect to a Member, any of the
following:
(a) The occurrence of an Event of Insolvency with respect to the
Member;
(b) With respect to a Member who is an individual, the Member's death,
adjudication by a court of competent jurisdiction as incompetent to manage his
or her person or property, or conviction of a felony or of any lesser crime or
offense involving fraud, deceit or moral turpitude (and in addition, with
respect to each of Chalk and Xxxxxxxxxx, his cessation of active participation
as a Manager); and
(c) With respect to a Member who is not an individual, the Member's
dissolution, liquidation or termination, or, in the case of a Member that is an
estate, the distribution of the Interest by the estate fiduciary.
"Fair Market Value" shall mean, with respect to any Interest that is
the subject of a Transfer or purchase by the Bank pursuant to ARTICLE XI, XII or
XIII, the fair market value of such Interest as of the date of such Transfer, as
determined by an appraiser or firm of appraisers in the manner set forth below:
Within fifteen (15) days after the transmittal of the notice of any
Event of Withdrawal or Involuntary Transfer with respect to Xxxxxxxxxx or Chalk
delivered by the Bank or any Member to all of the Members or any notice
delivered under ARTICLE XIII of this Agreement, each of the Bank and Messrs.
Xxxxxxxxxx and Chalk (if both Xxxxxxxxxx and Chalk are not then still be
Members, then by the one that is a Member) shall designate one independent
recognized investment banking firm or recognized expert experienced in the
valuation of corporations that is willing and able to perform the services
required of it herein. (If the Member fails to make such designation within such
period, the fair market value of the Interest shall be determined by the
appraiser designated by the other Member, which determination shall be
conclusive and binding upon all Members.) The two designated firms shall, within
a period of thirty (30) days after the designation of the second firm, agree to
designate an independent recognized investment banking firm or recognized expert
experienced in the valuation of corporations willing to perform the appraisal
contemplated hereby. Such third firm so designated shall conduct its
determination of
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the fair market value of the Interest to be transferred (without regard for any
discount or premium applicable to the minority status of such Interest) as
promptly as practicable, and shall notify the Members of its determination, in
no event later than thirty (30) days after its acceptance of appointment. Such
determination shall be final and binding on the Members. The Transferring
Member, Withdrawing Member, Demanding Member, or Xxxxxxxxxx and Chalk with
regard to any transfer effected upon the election of the Bank under ARTICLE XIII
(to the extent he is still a Member), as the case may be, and the Bank shall
each share half the fees and expenses of the appraisal, and each of the
Transferring Member, Withdrawing Member, Demanding Member or Xxxxxxxxxx and
Chalk with regard to any transfer effected upon the election of the Bank under
ARTICLE XIII (to the extent he is still a Member), as the case may be, and the
Bank shall be responsible for any fees and expenses of the firm designated by
it.
"HUD" shall mean the United States of America, Department of Housing
and Urban Development, and any successor thereto.
"Interest" shall mean an interest in the Company as a Member.
"Involuntary Transfer" shall mean a Transfer by a Member that occurs by
reason of or pursuant to the occurrence of an Event of Withdrawal with respect
to the Member or, with respect to a Member who is an individual, the Member's
divorce and distribution of property in connection therewith. For purposes of
this Agreement, with respect to any member who is an individual an Involuntary
Transfer by such Member to such Member's estate or Representative shall be
deemed automatically to occur upon such Member's death or adjudication of
incapacity.
"Manager" shall mean (i) a Person designated as an Initial Manager
hereunder and (ii) a Person hereafter elected as a Manager in accordance with
the terms hereof, in each case until such Person ceases to be a Manager under
the terms hereof.
"Member" shall mean (i) a Person executing this Agreement as of the
date hereof and (ii) a Person hereafter admitted as a Member in accordance with
the terms hereof, in each case until such Person ceases to be a Member under the
terms hereof.
"Note" shall have the meaning given to such term in SECTION 11.2(C).
"Offered Interest" shall have the meaning given to such term in SECTION
12.2(A).
"Permitted Transferee" shall mean a Transferee who is:
(a) With respect to a Member who is an individual, a member of the
Member's immediate family or the trustee of a trust solely for the benefit of
one or more such individuals; and
(b) With respect to a Member who is not an individual, an Affiliate of
such Person; and
(c) With respect to either Chalk or Xxxxxxxxxx, the other one of them.
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"Person" shall mean an individual, a trust, an estate, a corporation, a
partnership, a limited partnership, a limited liability company, an association
or any other entity.
"Prime Rate" shall mean the per annum interest rate publicly announced
from time to time by NationsBank of North Carolina, N.A. to be its "prime rate,"
which may not necessarily be its best lending rate, as adjusted to conform to
changes as of the opening of business on the date of any such change in such
"prime rate."
"Purchaser" shall have the meaning given to such term in SECTION 14.3.
"Quorum" shall mean, with respect to action by the Members, (i) for
action on the admission of any Transferee or Purchaser as a Member, Interests
representing one hundred percent (100%) of the Sharing Percentages, and (ii) for
action on any other matter, any combination of Interests that represent, in the
aggregate, Sharing Percentages totaling in excess of fifty-one percent (51%) of
all Sharing Percentages.
"Representative" shall have the meaning given to such term in SECTION
11.2(B).
"Required Interest" shall mean, with respect to any particular action
to be taken by the Members, any combination of Interests that represent, in the
aggregate, Sharing Percentages totaling in excess of fifty-one percent (51%) of
all Sharing Percentages represented by Interests present at the meeting at which
the action is proposed to be taken.
"Services Agreement" shall mean the Services Agreement, dated as of the
date hereof, between the Company and the Bank, as amended or modified from time
to time in accordance with the terns hereof and thereof.
"Sharing Percentage" shall mean (i) with respect to a Person executing
this Agreement as of the date hereof, the percentage set forth opposite such
Member's name on Exhibit A, and (ii) with respect to a Person hereafter admitted
as a Member in accordance with the terms hereof, the percentage assigned to such
Member as his Sharing Percentage in accordance with the terms of such Member's
admission, in each case as may be adjusted from time to time pursuant to the
terms hereof.
"Transfer" shall mean a sale, assignment, transfer, exchange, mortgage,
grant of a security interest, hypothecation, pledge, attachment or other
disposition or encumbrance of, in or on an Interest or any portion thereof
(including, without limitation, the Economic Rights thereof or any portion
thereof) to a Transferee, whether absolute or conditional, voluntary or
involuntary, or by operation of law or otherwise (but for purposes of this
Agreement, specifically excluding any sale or transfer by Chalk or Xxxxxxxxxx of
his Interest to the Bank pursuant to ARTICLE XIII).
"Transferee" shall have the meaning given to such term in SECTION 12.1.
"Transferring Member" shall have the meaning given to such term in
SECTION 12.1.
"Voluntary Transfer" shall mean any Transfer that is not an Involuntary
Transfer.
"Withdrawing Member" shall have the meaning given to such term in
SECTION 11.2(A).
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EXHIBIT A
CAPITAL CONTRIBUTIONS
Member Contribution
------ ------------
Park Meridian Bank $80,000.00
Xxxx X. Xxxxx, III $10,000.00
Xxx X. Xxxxxxxxxx $10,000.00
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EXHIBIT B
INITIAL MANAGERS
Xxxx X. Xxxxx, III
Xxx X. Xxxxxxxxxx
W. Xxxxx Xxxxxxx
Xxxxx X. Xxxxxxx, III
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxxxx X. Xxxxxx
