EXHIBIT 10.11(a)
CONTRACT OF SALE
IMPAC Commercial Holdings, Inc. fdba IMH Commercial Holdings, Inc., a
Maryland corporation, herein called "Buyer" and IMPAC Mortgage Holding, Inc.
fdba Imperial Credit Mortgage Holding, Inc., a Maryland corporation, herein
called " Seller", hereby agree as follows:
RECITALS
WHEREAS, Buyer and Seller were the sole members of a California Limited
Liability Company by the name of IMH/ICH Dove Street, LLC (herein called
"Limited Liability Company") which was created on August 25, 1997;
WHEREAS, Buyer and Seller have entered into a Limited Liability Operating
Agreement dated August 25, 1997 (herein called "Operating Agreement", a copy of
which is attached hereto as Exhibit "N');
WHEREAS, Buyer and Seller have entered into an agreement to distribute from the
Limited Liability Company to the members the real property owned by the Limited
Liability Company, commonly known as 0000 Xxxx Xxxxxx, Xxxxxxx Xxxxx.
WHEREAS, Seller and Buyer will have a fifty percent (50%) interest in the real
property previously owned by the Limited Liability Company hereinafter referred
to as "Asset".
WHEREAS, Buyer is desirous of purchasing Seller's interest in the Asset;
WHEREAS, Seller is desirous of selling Buyer's interest in the Asset.
ARTICLE 1.
PURCHASE AND SALE
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OF PARTIAL INTEREST OF SELLER
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IN ASSET
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Partial Interest Being Purchased
Section 1.01. Seller shall sell to Buyer and Buyer shall purchase from
Seller on the terms specified in this contract fifty percent (50%) interest in
the Asset from Seller.
Purchase Price
Section 1.02. Buyer shall pay to Seller on October 31, 1998, $6,000,000.00
less one half of the present principal due on the property's first mortgage in
cash in lawful money of the United States in full payment of the purchase price.
Conditions of Sale
Section 1.03. The purchase and sale described in and covered by this
contract shall be conducted and consummated in full compliance with all the
requirements of the laws of the State of California.
ARTICLE 2
WARRANTIES BY SELLER
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Due Organization
Section 2.01. Seller warrants to Buyer that it, Seller, is a corporation
duly organized and existing under the General Corporation Law of the State of
Maryland and that its powers as a corporation have never been and are not now
suspended or limited in anyway.
Title to Assets
Section 2.02. Seller warrants it will convey good and marketable title to
Seller of the Asset covered by this contract. Seller further warrants that its
title to its interest in the Asset is free and clear of any liens, encumbrances,
or other defects except for an existing first mortgage.
Authority to Sell
Section 2.03. Seller warrants and represents it has complied with all the
requirements of the laws of the State of California relative to the sale of its
interest in the Asset described in this contract and that the principal terms of
the sale as set forth in this contract were duly approved by Seller's board of
directors on October 19, 1998. Seller shall transfer title and interest in the
Asset, including all leases, income or revenue of any nature generated by the
Asset after delivery of the Quitclaim Deed, attached hereto as Exhibit "B".
Survival of Warranties
Section 2.04. Seller agrees that all warranties made by it in this
contract shall survive the consummation of the sale.
ARTICLE 3
WARRANTIES BY BUYER
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Due Organization
Section 3.01. Buyer warrants to Seller that it, Buyer, is a corporation
duly organized and existing under the General Corporation Law of the State of
Maryland and that its power as a corporation has never been and is not now
suspended.
Authority to Buy
Section 3.02. Buyer further warrants to Seller that this contract has been
approved by its Board of Directors and that Buyer has full power and authority
to both execute and perform this contract.
Section 3.03. Buyer agrees that all warranties made by it in this contract
shall survive the consummation of the sale.
ARTICLE 4
ASSUMPTION OF LIABILITIES
-------------------------
Acknowledgment of Assumption of Liability
Section4.01. Buyer hereby acknowledges and agrees to assume all of the
expenses and costs associated with the Asset and in the sale set forth in this
contract. This assumption of liability will be effective upon execution of this
contract. However, this shall not include the costs of completing the current
modifications and capital improvements being made to the building. Seller shall
remain responsible for 1/2 the costs of completing the exterior modifications
and the interior improvements needed to make the building ready under the IMPAC
Funding Corp. lease.
Section 4.02. All costs and expenses of the sale described in this contract
shall be borne by Buyer and Seller in equal proportions.
ARTICLE 5
MISCELLANEOUS PROVISIONS
------------------------
Indemnity Agreement
Section 5.01. The Buyer shall indemnify and hold Seller free and harmless
from any and all claims, liability, loss, damage, or expense resulting from the
Buyer's ownership of the Asset , including any claim, liability, loss or damage
arising by reason of the injury to or death of any person or persons, or the
damage of any property, caused by the Buyer's use of said Asset, including the
cost of defense, for any claim arising after execution of this contract.
Section 5.02. This instrument with its attachment constitutes the entire
agreement between Buyer and Seller respecting the sale of the Asset to the
Seller and any agreement or representation respecting said sale by Seller to
Buyer not expressly set forth in this instrument is null and void.
Notices
Section 5.03. Any and all notices or other communications-required or
permitted by this contract or by law to be served on or given to either party
hereto, Buyer or Seller, by the other party shall be, unless otherwise required
by law, in writing and deemed duly served and given when personally delivered to
the party to whom directed or any of its officers or, in lieu of such personal
service, when deposited in the United States mail, first class postage prepaid,
addressed to
Buyer at X Xxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
or
Seller at 00000 Xxxxxx Xxx.
Xxxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attorney's Fees
Section 5.04. Should any litigation be commenced between the parties
hereto, Buyer and Seller, concerning this contract, the sale and purchase
described in this contract or the rights and duties of either in relation to
this contract, the party Buyer or Seller, prevailing in that litigation shall be
entitled, in addition to any other relief that may be granted, to a reasonable
sum as and for its attorneys' fees in that litigation which shall be determined
by the court in that litigation or in a separate action brought for that
purpose.
Cooperation in Execution of Documents
Section 5.05 Buyer and Seller agree to execute any documents necessary to
carry out the terms of this contract, including but not limited to, assignment
of leases, assignment of deposits, change of ownership declaration, or other
documents required by any governmental agency.
Assignment
Section 5.06. Neither this contract nor any right or interest in it may be
assigned by either party to any other person or corporation without the express
written consent of the other party to this contract.
Governing Law
Section 5.07. This contract shall be governed and all rights and liabilities
under it determined in accordance with the laws of the State of California in
effect on this date.
EXECUTED on October 27, 1998, at Orange County, California.
"BUYER"
IMPAC COMMERCIAL HOLDINGS, INC.
fdba IMH COMMERCIAL HOLDINGS, INC.
by: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxx, President
"SELLER"
IMPAC MORTGAGE HOLDING, INC.
fdba IMPERIAL CREDIT MORTGAGE HOLDING,
INC.
by: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxx, President
IMH/ICH DOVE STREET
LIMITED LIABILITY OPERATING AGREEMENT
This Operating Agreement (this "Agreement") is entered into this 25th day of
August, 1997 by and among Imperial Credit Mortgage Holdings, Inc., a Maryland
corporation and IMH Commercial Holdings, Inc., a Maryland corporation.
Explanatory Statement
The parties have agreed to organize a limited liability company in
accordance with the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement have the meanings specified in this
Article or elsewhere in this Agreement and when not so defined shall have the
meanings set forth in California Corporations Code section 17001.
1. 1. "Act" means the Xxxxxxx-Xxxxxx Limited Liability Company Act
(California Corporations Code (S) (S) 17000-17705), including amendments
from time to time.
1.2. "Adjusted Capital Contribution" is defined in Article IV, Section
4.6(a).
1.3. "Affiliate" of a Member means (1) any Person directly or indirectly,
through one or more intermediaries, controlling, controlled by, or under
common control with the Member. The term "control" (including the terms
"controlled by" and "funder common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through membership, ownership
of voting securities, by contract, or otherwise.
1.4. "Agreement" means this operating agreement, as originally executed
and as amended from time to time.
1.5. "Articles of Organization" is defined in Corporations Code section
17001(b) as applied to this Company.
1.6. "Assignee" means a person who has acquired a Member's Economic
Interest in the Company, by way of a Transfer in accordance with the terms
of this Agreement, but who has not become a Member.
1.7. "Assigning Member" means a Member who by means of a Transfer has
transferred an Economic Interest in the Company to an Assignee.
1.8. "Available Cash" means all net revenues from the Company's
operations, including net proceeds from all sales, refinancings, and other
dispositions of Company property that the Manager, in the Manager's sole
discretion, deems in excess of the amount reasonably necessary for the
operating requirements of the Company, including debt reduction and
Reserves.
1.9. "Capital Account" means, with respect to any Member, the account
reflecting the capital interest of the Member in the Company, consisting of
the Member's initial Capital Contribution maintained and adjusted in
accordance with Article III, Section 3.6.
1.10. "Capital Contribution" means, with respect to any Member, the amount
of the money and the Fair Market Value of any property (other than money)
contributed to the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take "subject to"
under IRC section 752) in consideration of a Percentage Interest held by
such Member. A Capital Contribution shall not be deemed a loan.
1.11. "Capital Event" means a sale or disposition of any of the Company's
capital assets, the receipt of insurance and other proceeds derived from
the involuntary conversion of Company property, the receipt of proceeds
from a refinancing of Company property, or a similar event with respect to
Company property or assets.
1.12. "Code" or "IRC' means the Internal Revenue Code of 1986, as amended,
and any successor provision.
1.13. "Company" means the company named in Article II, Section 2.2 of this
Agreement.
1.14. "Corporations Code" ("Corp C") means the California Corporations
Code.
1.15. "Economic Interest" means a Person's right to share in the income,
gains, losses, deductions, credit or similar items of, and to receive
distributions from, the Company, but does not include any other rights of a
Member, including the right to vote or to participate in management.
1.16. "Encumber" means the act of creating or purporting to create an
Encumbrance, whether or not perfected under applicable law.
1.17. "Encumbrance" means, with respect to any Membership Interest, or any
element thereof, a mortgage, pledge, security interest, lien, proxy coupled
with an interest (other than as contemplated in this Agreement), option, or
preferential right to purchase.
1.18. "Fair Market Value" means, with respect to any item of property of
the Company, the item's adjusted basis for federal income tax purposes,
except as follows:
(a) The Fair Market Value of any property contributed by a Member to
the Company shall be the value of such property, as mutually agreed by
the contributing Member and the Company;
(b) The Fair Market Value of any item of Company property distributed
to any Member shall be the value of such item of property on the date
of distribution as mutually agreed by the distributes Member and the
Company; and
(c) The Fair Market Value for purposes of Article VIII, Section 8.7,
shall be as determined in that section.
1.19. "Initial Members" means those Persons whose names are set forth in
the first sentence of this Agreement. A reference to an "Initial Member"
means any of the Initial Members.
1.20. "Involuntary Transfer' means, with respect to any Membership
Interest, or any element thereof, any Transfer or Encumbrance, whether by
operation of law, pursuant to court order, foreclosure of a security
interest, execution of a judgment or other legal process, or otherwise,
including a purported transfer to or from a trustee in bankruptcy,
receiver, or assignee for the benefit of creditors.
1.21. "Losses. " See Article IV, Section 4.2.
1.22. "Majority of Members" means a Member or Members whose Percentage
Interests represent more
than 50 percent of the Percentage Interests of all the Members.
1.23. "Manager" or "Managers" means the Person(s) named as such in Article
H or the Persons who from time to time succeed any Person as a Manager and
who, in either case, are serving at the relevant time as a Manager.
1.24. "Member" means an Initial Member or a Person who otherwise acquires a
Membership Interest, as permitted under this Agreement, and who remains a
Member.
1.25. "Membership Interest" means a Member's rights in the Company,
collectively, including the Member's Economic Interest, any right to Vote
or participate in management, and any right to information concerning the
business and affairs of the Company.
1.26. "Notice" means a written notice required or permitted under this
Agreement. A notice shall be deemed given or sent when deposited, as
certified mail or for overnight delivery, postage and fees prepaid, in the
United States mails; when delivered to Federal Express, United Parcel
Service, DHL WorldWide Express, or Airborne Express, for overnight
delivery, charges prepaid or charged to the sender's account; when
personally delivered to the recipient; when transmitted by electronic
means, and such transmission is electronically confirmed as having been
successfully transmitted; or when delivered to the home or office of a
recipient in the care of a person whom the sender has reason to believe
will promptly communicate the notice to the recipient.
1.27. "Percent of the Members" means the specified total of Percentage
Interests of all the Members.
1.28. "Percentage Interest" means a fraction, expressed as a percentage,
the numerator of which is the total of a Member's Capital Account and the
denominator of which is the total of all Capital Accounts of all Members.
1.29. "Person" means an individual, partnership, limited partnership,
trust, estate, association, corporation, limited liability company, or
other entity, whether domestic or foreign.
1.30. "Profits" and "Losses" are defined in Article IV, Section 4.2.
1.31. "Proxy" has the meaning set forth in the first paragraph of Corp C
1001(ai). A Proxy may not be transmitted orally.
1.32. "Regulations" ("Reg") means the income tax regulations promulgated by
the United States Department of the Treasury and published in the Federal
Register for the purpose of interpreting and applying the provisions of the
Code, as such Regulations may be amended from time to time, including
corresponding provisions of applicable successor regulations.
1.33. "Reserves" means the aggregate of reserve accounts that the Manager,
in the Manager's sole discretion, deems reasonably necessary to most
accrued or contingent liabilities of the Company, reasonably anticipated
operating expenses, and working capital requirements.
1.34. "Successor in Interest" means an Assignee, a successor of a Person by
merger or otherwise by operation of law, or a transferee of all or
substantially all of the business or assets of a Person.
1.35. "Tax Item" means each item of income, gain, loss, deduction, or
credit of the Company.
1.36. "Transfer" means, with respect to a Membership Interest or any
element of a Membership interest, any sale, assignment, gift, Involuntary
Transfer, Encumbrance, or other disposition of such a Membership Interest
or any element of such Membership Interest, directly or indirectly, other
than an Encumbrance that is expressly permitted under this Agreement.
1.37. "Triggering Event" is defined in Article VIII, Section 8.4.
1.38. "Vote" means a written consent or approval, a ballot cast at a
meeting, or voice vote.
1.39. "Voting Interest" means, with respect to a Member, the right to Vote
or participate in management and any right to information concerning the
business and affairs of the Company provided under the Act, except as
limited by the provisions of this Agreement. A Member's Voting Interest
shall be directly proportional to that Member's Percentage Interest.
ARTICLE II
ARTICLES OF ORGANIZATION
2.1 The Articles of Organization were filed with the California Secretary
of State on August 25, 1997, File Number 101997237028. A copy of the
Articles of Organization as filed is attached to this Agreement as Exhibit
"A".
2.2 The name of the Company is IMH/ICH Dove Street, LLC.
2.3. The principal executive office of the Company shall be at 0000 Xxxx
Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000, or such other place or places as
may be determined by the Manager from time to time.
2.4. The initial agent for service of process on the Company shall be
Xxxxxxx X. Xxxxx, whose address is 0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx
Xxx, Xxxxxxxxxx 00000. The Managers may from time to time change the
Company's agent for service of process.
2.5 The Company will be formed for the purposes of engaging in the
business of managing and operating the real property owned by the Company.
2.6. The Members intend the Company to be a limited liability company
under the Act. Neither the Manager nor any Member shall take any action
inconsistent with the express intent of the parties to this Agreement.
2.7. The term of existence of the Company shall commence on the effective
date of filing of Articles of Organization with the California Secretary of
State, and shall continue until August 25, 2047 unless sooner terminated by
the provisions of this Agreement or as provided by law.
2.8. The names and addresses of the Initial Members are as follows:
Imperial Credit Mortgage Holding, Inc.
00000 Xxxxxx Xxx.
Xxxxx Xxx Xxxxxxx, XX 00000
and
IMH Commercial Holdings, Inc.
00000 Xxxxxx Xxx.
Xxxxx Xxx Xxxxxxx, XX 00000
2.9. The Members shall be the Managers of the Company.
ARTICLE III
CAPITAL AND CAPITAL CONTRIBUTIONS
3.1. Each Member shall, contribute to the capital of the Company as the
Member's initial Capital Contribution the money and property specified in
Exhibit 'B'. If a Member fails to make the initial Capital Contributions
specified in this Section within 30 days after the effective date of this
Agreement, that Member's entire Membership Interest shall terminate, and
that Member shall indemnify and hold the Company and the other Members
harmless from any loss, cost, or expense, including reasonable attorney
fees caused by the failure to make the initial Capital Contribution.
3.2. The Manager may determine from time to time that Capital
Contributions in addition to the Members' initial Capital Contributions are
needed to enable the Company to conduct its business. On making such a
determination, the Manager shall give notice to all Members in writing at
least 90 days before the date on which such additional Capital Contribution
is due. The Notice shall set forth the amount of additional Capital
Contribution needed, the purpose for which it is needed, and the date by
which the Members shall contribute. Each Member shall be required to make
an additional Capital Contribution in an amount that bears the same
proportion to the total additional Capital Contribution that such Member's
Capital Account balance bears to the total Capital Account balances of all
Members. No Member may voluntarily make any additional Capital
Contribution.
3.3 If a Member fails to make an additional Capital Contribution required
under Section 3.2 above within 30 days after it is required to be made (a
Defaulting Member), the Manager shall within five days after said failure
notify each other Member (a Nondefaulting Member) in writing of the total
amount of Defaulting Member Capital Contributions not made (the Additional
Capital Shortfall), and shall specify a number of days within which each
Nondefaulting Member may make an additional Capital Contribution, which
shall not be less than an amount bearing the same ratio to the amount of
Additional Capital Shortfall as the Nondefaulting Member's Capital Account
balance bears to the total Capital Accounts of all Nondefaulting Members.
If the total amount of Additional Capital Shortfall is not so contributed,
the Manager may use any reasonable method to provide Members the
opportunity to make additional Capital Contributions, until the Additional
Capital Shortfall is as fully contributed as possible. Following the
Nondefaulting Members' making of such additional Capital Contributions,
each Member's Percentage Interest shall be adjusted to reflect the ratio
that the Member's Capital Account bears to the total Capital Accounts of
all of the Members.
3.4. If a Member fails for 30 days to make an additional Capital
Contribution required under Section 3.2 (a Defaulting Member): (a) The
Defaulting Member shall indemnify and hold the Company and the other
Members harmless from any loss, cost, or expense, including reasonable
attorney fees caused by the failure to make the additional Capital
Contribution. Such additional Capital Contributions that are not made by a
Defaulting Member are referred to as Additional Capital Shortfall. A
Member who makes the respective required additional Capital Contributions
(Nondefaulting Member) shall have the right, but not the obligation, to
advance an amount bearing the same ratio to the total amount of the
Additional Capital Shortfall as a Nondefaulting Member's Capital Account
bears to the total Capital Accounts of all Nondefaulting Members. A Member
advancing an additional a Defaulting Member under this Section 3.4(a)
shall: (1) be paid interest by the Defaulting Member on the amount of such
advance at an annual rate, from the date of the advance until paid, equal
to the floating rate of three percent (3%) over the prime rate charged by
Imperial Bank or the highest rate permitted by applicable law, whichever
rate is lower; and (2) receive all distributions that the Defaulting Member
would otherwise be entitled to receive under the provisions of this
Agreement as though the advances by the Nondefaulting Member were Capital
Contributions made by such Nondefaulting Member, which distributions shall
be applied first to attorneys' fees, costs, and expenses, if any; then to
accrued and unpaid interest, and, finally, in reduction of the principal
amount of such advance.
The Defaulting Member grants any Nondefaulting Members who make advances to
the Company in accordance with this Subsection 3.4(a) a security interest
in the Defaulting Member's Membership Interest to secure the Defaulting
Member's obligations under this Subsection 3.4(a). The Defaulting Member
shall, within five days of written notice, execute any documents or
instruments reasonably necessary to enable Nondefaulting Members who make
advances hereunder to perfect the foregoing security interests. Each Member
irrevocably appoints each other Member, and any one of them acting alone,
as his, her, or its attorney-in-fact for the limited purpose of executing,
on behalf of such Member, if such Member becomes a Defaulting Member, any
of the foregoing documents or instruments.
3.5 An individual Capital Account for each Member shall be maintained in
accordance with the requirements of Reg 1.704-1(b)(2)(iv) and adjusted in
accordance with the following provisions:
(a) A Member's Capital Account shall be increased by that Member's
Capital Contributions, that Member's share of Profits, and any items
in the nature of income or gain that are specially allocated to that
Member pursuant to Article IV.
(b) A Member's Capital Account shall be increased by the amount of any
Company liabilities assumed by that Member subject to and in
accordance with the provisions of Reg 1.704-1(b)(2)(iv)(c).
(c) A Member's Capital Account shall be decreased by (a) the amount of
cash distributed to that Member; (b) the Fair Market Value of any
property of the Company so distributed, net of liabilities secured by
such distributed property that the distributes Member is considered to
assume or to be subject to under IRC section 752; and (c) the amount
of any items in the nature of expenses or losses that are specially
allocated to that Member pursuant to Article IV.
(d) A Member 's Capital Account shall be reduced by the Member's share
of any expenditures of the Company described in IRC section
705(a)(2)(B) or which are treated as IRC section 705(a)(2)(B)
expenditures pursuant to Reg section 1.704l(b)(2)(iv)(i) (including
syndication expenses and losses nondeductible under IRC sections
267(a)(1) or 707(b)).
(e) If any Economic Interest (or portion thereof) is transferred, the
transferee of such Economic Interest or portion shall succeed to the
transferor's Capital Account attributable to such interest or portion.
(f) The principal amount of a promissory note that is not readily
traded on an established securities market and that is contributed to
the Company by the maker of the note shall not be included in the
Capital Account of any Person until the Company makes a taxable
disposition of the note or until (and to the extent) principal
payments are made on the note, all in accordance with Reg section
1.704-1 (b)(2)(iv)(d)(2).
(g) Each Member's Capital Account shall be increased or decreased as
necessary to reflect a revaluation of the Company's property assets in
accordance with the requirements of Reg sections 1.704-1(b)(2)(iv)(f)
and 1.704-1(b)(2)(iv)(g), including the special rules under Reg
section 1.701-1(b)(4), as applicable. The provisions of this
Agreement respecting the maintenance of Capital Accounts are intended
to comply with Reg section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with those Regulations.
3.6. A Member shall not be entitled to withdraw any part of the Member's
Capital Contribution or to receive any distributions, whether of money or
property, from the Company except as provided in this Agreement.
3.7 No interest shall be paid on Capital Contributions or on the balance
of a Member's Capital Account.
3.8 A Member shall not be bound by, or be personally liable for, the
expenses, liabilities, or obligations of the Company except as otherwise
provided in the Act or in this Agreement.
3.9. Except as otherwise provided in this Agreement, no member shall have
priority over any other Member with respect to the return of a Capital
Contribution or distributions or allocations of income, gain, losses,
deductions, credits, or items thereof.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
4.1. The Profits and Losses of the Company and all items of Company
income, gain, loss, deduction, or credit shall be allocated, for Company
book purposes and for tax purposes, to a Member in accordance with the
Member's Percentage Interest.
4.2 As used in this Agreement, "Profits and Losses" means, for each
fiscal year or other period specified in this Agreement, an amount equal to
the Company's taxable income or loss for such year or period, determined in
accordance with IRC section 703(a), including all Tax Items required to be
stated separately pursuant to IRC section 703(a)(1), with the following
adjustments:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in IRC section
705(a)(2)(B) or treated as IRC section 705(a)(2)(8) expenditures
pursuant to Reg section 1.704-l(b)(2)(iv)(i) and not otherwise taken
into account in computing Profits or Losses shall be subtracted from
such taxable income or shall increase such loss;
4.3. In any fiscal year of the Company, Profits in excess of Losses of the
Company resulting from a Capital Event in that Fiscal Year shall be
allocated to the Members in the following order:
(a) To Members whose Adjusted Capital Contributions are in excess of
their Capital Accounts, in proportion to those excesses, until all of
those excesses have been eliminated. "Adjusted Capital Contributions"
means, with respect to each Member, the excess of such Member's
contribution to the capital of the Company over all prior
distributions to the Member that have resulted from Capital Events.
(b) Among the Members in the proportion that the Capital Contribution
of each Member bears to the total Capital Contributions of all
Members.
4.4 In any fiscal year of the Company, Losses in excess of Profits of the
Company, resulting from a Capital Event in that fiscal year, shall be
allocated to the Members with positive Capital Accounts, in proportion to
their positive Capital Account balances, until no Member has a positive
Capital Account. For this purpose, Capital Accounts shall be reduced by
the adjustments set forth in Reg sections 1.704-1(b)(2)(ii)(d)(4), (5), and
(6).
4.5. Any unrealized appreciation or unrealized depreciation in the values
of Company property distributed in kind to Members shall be deemed to be
Profits or Losses realized by the Company immediately prior to the
distribution of the property and such Profits or Losses shall be allocated
to the Capital Accounts in the same proportions as Profits are allocated
under Section 4. 1. Any property so distributed shall be treated as a
distribution to the Members to the extent of the Fair Market Value of the
property, less the
amount of any liability secured by and related to the property. Nothing
contained in this Agreement is intended to treat or cause such
distributions to be treated as sales for value. For the purposes of this
Section 4.5 "unrealized appreciation" or "unrealized depreciation" shall
mean the difference between the Fair Market Value of such property and the
Company's federal adjusted tax basis for such property.
4.6. In the case of a Transfer of an Economic Interest during any fiscal
year of the Company, the Assigning Member and Assignee shall each be
allocated Profits or Losses based on the number of days each held the
Economic Interest during that fiscal year. If the Assigning Member and
Assignee agree to a different proration and advise the Manager of the
agreed proration before the date of the Transfer, Profits or Losses from a
Capital Event during that fiscal year shall be allocated to the holder of
the Interest on the day such Capital Event occurred. If an Assignee makes
a subsequent Assignment, said Assignee shall be considered an "Assigning
Member" with respect to the subsequent Assignee for purposes of the
aforesaid allocations.
4.7. It is the intent of the Members that each Member's allocated share of
Company Tax Items be determined in accordance with this Agreement to the
fullest extent permitted by IRC sections 704(b) and 704(c).
Notwithstanding anything to the contrary contained in this Agreement, if
the Company is advised that, as a result of the adoption of new or amended
regulations pursuant to IRC sections 704(b) and 704(c), or the issuance of
authorized interpretations, the allocations provided in this Agreement are
unlikely to be respected for federal income tax purposes, the Manager is
hereby granted the power to amend the allocation provisions of this
Agreement, on advice of accountants and legal counsel, to the minimum
extent necessary to cause such allocation provisions to be respected for
federal income tax purposes.
4.8. All available cash, other than revenues or proceeds from a Capital
Event or the dissolution of the Company, shall be distributed among the
Members in the same manner as Profits. The parties intend that Available
Cash shall be distributed as soon as practicable following the Manager's
determination that such cash is available for distribution. The parties
acknowledge that no assurances can be given with respect to when or whether
said cash will be available for distributions to the Members.
4.9. All Available Cash resulting from a Capital Event (as distinguished
from normal business operations or the dissolution of the Company) shall be
distributed to the Members in accordance with their respective Percentage
Interests as soon as practicable following the Manager's determination that
such cash is available for distribution.
4.10. If the proceeds from a sale or other disposition of an item of
Company property consist of property other than cash, the value of that
property shall be as determined by the Manager. If such noncash proceeds
are subsequently reduced to cash, such cash shall be taken into account by
the Manager in determining Available Cash and the Manager shall determine
whether such cash has resulted from operations or from a Capital Event.
4.11. Notwithstanding any other provisions of this Agreement to the
contrary, when there is a distribution in liquidation of the Company, or
when any Member's interest is liquidated, all items of income and loss
first shall be allocated to the Members' Capital Accounts under this
Article IV, and other credits and deductions to the Members' Capital
Accounts shall be made before the final distribution is made. The final
distribution to the Members shall be made as provided in Article IX,
Section 9.2(d) of this Agreement. The provisions of this Section 4. 11 and
Article IX, Section 9.2(d) shall be construed in accordance with the
requirements of Reg section 1.704-1(b)(2)(ii)(b)(2).
ARTICLE V
MANAGEMENT
5.1. The business of the Company shall be managed by all the Members. A
Member shall be a Manager only during the time the Member is a Member of
the Company. AU decisions concerning the management of the Company's
business shall be made by the Vote of a Majority of Members.
5.2. Each manager shall serve until the earlier of (1) the Manager's
resignation; (2) the Manager's removal by the Members; and (3) the
expiration of the Manager's term as Manager, if a term has been designated
by a Majority of Members. A new Manager shall be appointed by a Majority
of Members on the occurrence of any of the foregoing events.
5.3. Each Manager shall be appointed by a Majority of Members for (a) a
term expiring with the appointment of a successor, or (b) a term expiring
at a definite time specified by a Majority of Members in connection with
such an appointment. A Manager who is not also a Member may be removed
with or without cause at any time by action of a Majority of Members. A
Manager who is a Member may be removed only on the Vote of all other
Members and the execution and filing of a Certificate of Amendment of the
Articles of Organization of the Company in conformity with Corp C section
17054, if necessary, to provide that the Company is to be managed by
managers.
5.4. The Managers shall be the chief executive officers of the Company and
shall have the powers and duties described in Section 5.8 hereof and such
other powers and duties as may be prescribed in this Agreement or by the
Members. Notwithstanding the foregoing, the Manager shall not take any of
the following actions on behalf of the Company unless all Members has
consented to the taking of such action:
(a) Any act that would make it impossible to carry on the ordinary
business of the Company;
(b) Any confession of a judgment against the Company;
(c) The dissolution of the Company;
(d) The disposition of all or a substantial part of the Company's
assets not in the ordinary course of business;
(e) The incurring of any debt not in the ordinary course of business;
A change in the nature of the principal business of the Company;
(g) The incurring of any contractual obligation or the making of any
capital expenditure with a total cost of more than $100,000.00;
(h) The filing of a petition in bankruptcy or the entering into of an
arrangement among creditors; and
(i) The entering into, on behalf of the Company, of any transaction
constituting a "reorganization" within the meaning of Corp C 17600.
5.5. Actions of the Managers shall be taken at meetings or as otherwise
provided in this Section 5.5 by a majority. No regular meetings of the
Managers need be held. The President or any two Managers may call a meeting
of the Managers by giving Notice of the time and place of the meeting at
least 48 hours prior to the time of the holding of the meeting. The Notice
need not specify the purpose of the meeting, nor the location if the
meeting is to be held at the principal executive office of the Company.
A majority of Managers shall constitute a quorum for the transaction
of business at any meeting of the Managers. The transactions of the
Managers at any meeting, however called or noticed, or wherever held, shall
be as valid as though transacted at a meeting duly held after call and
notice if a quorum is present and if, either before or after the meeting,
each Manager not present signs a written waiver of notice or a consent to
the holding of such meeting or an approval of the minutes of such meeting.
Any action required or permitted to be taken by the Managers under
this Agreement may be taken without a meeting if a majority of the Managers
individually or collectively consent in writing to such action.
Managers may participate in the meeting through the use of a
conference telephone or similar communications equipment, provided that all
Managers participating in the meeting can hear one another.
The Managers shall keep or cause to be kept with the books and records
of the Company full and accurate minutes of all meetings, notices and
waivers of notices of meetings, and all written consents to actions of the
Managers.
5.6. It is acknowledged that the Manager has other business interests to
which the Manager devotes part of the Manager's time. The Manager shall
devote such time to the conduct of the business of the Company as the
Manager, in the Manager's own good faith and discretion, deems necessary.
5.7. The Manager shall be entitled to compensation for the Manager's
services as determined by the Members, and to reimbursement for all
expenses reasonably incurred by the Manager in the performance of the
Manager's duties.
5.8 The Company shall have a President, who shall be a Manager. The
President shall have general supervision of the business and affairs of the
Company, shall preside at all meetings of Members and of Managers, and
shall have such other powers and duties usually vested in a president. A
Majority of the Members may provide for additional officers of the Company,
may alter the powers and duties of the President, and shall establish the
powers and duties of all other officers and the compensation of all company
officers.
5.9. The Manager shall cause all assets of the Company, whether real or
personal, to be held in the name of the Company.
5.10. All funds of the Company shall be deposited in one or more accounts
with one or more recognized financial institutions in the name of the
Company, at such locations as shall be determined by the Manager.
Withdrawal from such accounts shall require only the signature of the
Manager or such other person or persons as the Manager may designate.
ARTICLE VI
ACCOUNTS AND ACCOUNTING
6.1. Complete books of account of the Company's business, in which each
Company transaction shall be fully and accurately entered, shall be kept at
the Company's principal executive office and at such other locations as the
Manager shall determine from time to time and shall be open to inspection
and copying on reasonable Notice by any Member or the Member's authorized
representatives during normal business hours. The costs of such inspection
and copying shall be borne by the Member.
6.2. Financial books and records of the Company shall be kept on the
accrual/cash method of accounting, which shall be the method of accounting
followed by the Company for federal income tax purposes. The financial
statements of the Company shall be prepared in accordance with generally
accepted accounting principles and shall be appropriate and adequate for
the Company's business and for carrying out the provisions of this
Agreement. The fiscal year of the Company shall be January 1 through
December 31.
6.3. At all times during the term of existence of the Company, and beyond
that term if the Manager deems it necessary, the Manager shall keep or
cause to be kept the books of account referred to in Section 6.2, together
with:
(a) A current list of the full name and last known business or
residence address of each Member, together with the Capital
Contribution and the share in Profits and Losses of each Member;
(b) A current list of the full name and business or residence address
of each Manager;
(c) A copy of the Articles of Organization, as amended;
(d) Copies of the Company's federal, state, and local income tax or
information returns and reports, if any, for the six most recent
taxable years;
(e) An original executed copy or counterparts of this Agreement, as
amended;
(f) Any powers of attorney under which the Articles of Organization or
any amendments to said articles were executed;
(g) Financial statements of the Company for the six most recent fiscal
years; and
(h) The books and Records of the Company as they relate to the
Company's internal affairs for the current and past four fiscal years.
If the Manager deems that any of the foregoing items shall be kept
beyond the term of existence of the Company, the repository of said items
shall be as designated by the Manager.
6.4 All Members shall receive not less frequently than at the end of each
calendar quarter, copies of such financial statements regarding the
previous calendar quarter, as may be prepared in the ordinary course of
business, by the Manager or accountants selected by the Manager. The
Manager shall deliver to each Member, within 120 days after the end of the
fiscal year of the Company, a financial statement that shall include:
(a) A balance sheet and income statement, and a statement of changes
in the financial position of the Company as of the close of the fiscal
year;
(b) A statement showing the Capital Account of each Member as of the
close of the fiscal year and the distributions, if any, made to each
Member during the fiscal year. Members representing at least 30
percent of the Members, by number, may request interim balance sheets
and income statements, and may, at their own discretion and expense,
obtain an audit of the Company books, by certified public accountants
selected by them; provided, however, that not more than one such audit
shall be made during any fiscal year of the Company.
6.5. Within 90 days after the end of each taxable year of the Company the
Manager shall send to each of the Members all information necessary for the
Members to complete their federal and state income tax or information
returns and a copy of the Company's federal, state, and local income tax or
information returns for such year.
ARTICLE VII
MEMBERSHIP MEETINGS, VOTING, INDEMNITY
7.1. There shall be only one class of membership and no Member shall have
any rights or preferences in addition to or different from those possessed
by any other Member except as specifically provided for in
Article IV. Members shall have the right and power to appoint, remove, and
replace Managers and officers of the Company and the right to Vote on all
other matters with respect to which this Agreement or the Act requires or
permits such Member action. Each Member shall Vote in proportion to the
Member's Percentage Interest as of the governing record date, determined in
accordance with Section 7.2. If a Member has assigned all or part of the
Member's Economic Interest to a person who has not been admitted as a
Member, the Assigning Member shall Vote in proportion to the Percentage
Interest that the Assigning Member would have had, if the assignment had
not been made.
Without limiting the foregoing, all of the following acts shall
require the unanimous Vote of the Members:
(a) A decision to continue the business of the Company after any event
mentioned in Article IX, Section 9. 1;
(b) The Transfer of a Membership Interest and the admission of the
Assignee as a Member of the Company;
(c) Any amendment of the articles of organization or this Agreement;
and
(d) A compromise of the obligation of a Member to make a Capital
Contribution under Article III.
7.2. The record date for determining the Members entitled to receive
Notice of any meeting, to Vote, to receive any distribution, or to exercise
any right in respect of any other lawful action, shall be the date set by
the Manager or by a Majority of Members; provided that such record date
shall not be more than 60, or less than ten calendar days prior to the date
of the meeting and not more than 60 calendar days prior to any other
action. In the absence of any action setting a record date, the record
date shall be determined in accordance with Corp C section 17104(k).
7.3. The Company may, but shall not be required, to issue certificates
evidencing membership Interests (Membership Interest Certificates) to
Members of the Company. Once Membership Interest Certificates have been
issued, they shall continue to be issued as necessary to reflect current
Membership Interests held by Members. Membership Interest Certificates
shall be in such form as may be approved by the Manager, shall be manually
signed by the Manager, and shall bear conspicuous legends evidencing the
restrictions on Transfer and the purchase rights of the Company and Members
set forth in Article VIII. All issuances, reissuances, exchanges, and
other transactions in Membership Interests involving Members shall be
recorded in a permanent ledger as part of the books and records of the
Company.
7.4. Meetings of the Members may be called at any time by the Manager, or
by Members representing more than 10 percent of the Interests of the
Members for the purpose of addressing any matters on which the Members may
Vote. If a meeting of the Members is called by the Members, Notice of the
call shall be delivered to the Manager. Meetings may be held at the
principal executive office of the Company or at such other location as may
be designated by the Manager. Following the call of a meeting, the Manager
shall give Notice of the meeting not less than ten, or more than 60
calendar days prior to the date of the meeting to all Members entitled to
Vote at the meeting. The Notice shall state the place, date, and hour of
the meeting and the general nature of business to be transacted. No other
business may be transacted at the meeting. A quorum at any meeting of
Members shall consist of a Majority of Members, represented in person or by
Proxy. The Members present at a duly called or held meeting at which a
quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of a sufficient number of Members to leave
less than a quorum, if the action taken, other than adjournment, is
approved by the requisite Percentage of Members as specified in this
Agreement or the Act.
7.5. A meeting of Members at which a quorum is present may be adjourned to
another time or place and any business which might have been transacted at
the original meeting may be transacted at the adjourned meeting. If a
quorum is not present at an original meeting, that meeting may be adjourned
by the Vote of
a majority of Voting Interests represented either in person or by Proxy.
Notice of the adjourned meeting need not be given to Members entitled to
Notice it the time and place of the adjourned meeting are announced at the
meeting at which the adjournment is taken, unless (a) the adjournment is
for more than 45 days, or (b) after the adjournment, a new record date is
fixed for the adjourned meeting. in the situations described in clauses (a)
and (b), Notice of the adjourned meeting shall be given to each Member of
record entitled to Vote at the adjourned meeting
7.6. The transactions of any meeting of Members, however called and
noticed, and wherever held, shall be as valid as though consummated at a
meeting duly held after regular call and notice, it (a) a quorum is present
at that meeting, either in person or by Proxy, and (b) either before or
after the meeting, each of the persons entitled to Vote, not present in
person or by Proxy, signs either a written waiver of notice, a consent to
the holding of the meeting, or an approval of the minutes of the meeting.
Attendance of a Member at a meeting shall constitute waiver of notice,
unless that Member objects, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting was not lawfully
called or convened. Attendance at a meeting is not a waiver of any right
to object to the consideration of matters required to be described in the
notice of the meeting and not so included, if the objection is expressly
made at the meeting.
7.7. At all meetings of Members, a Member may Vote in person or by Proxy.
Such Proxy shall be filed with the Manager before or at the time of the
meeting, and may be filed by facsimile transmission to the Manager at the
principal executive office of the Company or such other address as may be
given by the Manager to the Members for such purposes.
7.8. Members may participate in a meeting through use of conference
telephone or similar communications equipment, provided that all Members
participating in such meeting can hear one another. Such participation
shall be deemed attendance at the meeting.
7.9. Any action that may be taken at any meeting of the Members may be
taken without a meeting if a consent in writing, setting forth the action
so taken, is signed by Members having not less than the minimum number of
Votes that would be necessary to authorize or take that action at a meeting
at which all Members entitled to Vote thereon were present and voted. If
the Members are requested to consent to a matter without a meeting, each
Member shall be given notice of the matter to be voted upon in the manner
described in Section 7.4. Any action taken without a meeting shall be
effective when the required minimum number of Votes have been received.
Prompt Notice of the action taken shall be given to all Members who have
not consented to the action.
7.10. No Member acting solely in the capacity of a Member is an agent of
the Company, nor can any Member acting solely in the capacity of a Member
bind the Company or execute any instrument on behalf of the Company.
Accordingly, each Member shall indemnify, defend, and save harmless each
other Member and the Company from and against any and all loss, cost,
expense, liability or damage arising from or out of any claim based upon
any action by such Member in contravention of the first sentence of this
Section 7. 10.
ARTICLE VIII
TRANSFERS OF MEMBERSHIP INTERESTS
8.1. A Member may withdraw from the Company at any time by giving Notice
of withdrawal to all other Members at least 180 calendar days before the
effective date of withdrawal. Withdrawal shall not release a Member from
any obligations and liabilities under this Agreement accrued or incurred
before the effective date of withdrawal. A withdrawing Member shall divest
the Member's entire Membership Interest before the effective date of
withdrawal in accordance with and subject to the provisions of this Article
VIII.
8.2. Except as expressly provided in this Agreement, a Member shall not
transfer any part of the Member's Membership Interest in the Company,
whether now owned or later acquired, unless (a) the other Members
unanimously approve the transferee's admission to the Company as a Member
upon such Transfer, which approval shall be given or withheld by each
Member in its sole and absolute discretion, and (b) the Membership Interest
to be transferred, when added to the total of all other Membership
Interests transferred in the preceding 12 months, will not cause the
termination of the Company under the Code. No Member may Encumber or
permit or suffer any Encumbrance of all or any part of the Member's
Membership Interest in the Company unless such Encumbrance has been
approved in writing by the Manager. Such approval may be granted or
withheld in the Manager's sole discretion. Any Transfer or Encumbrance of
a Membership Interest without such approval shall be void. Notwithstanding
any other provision of this Agreement to the contrary, a Member who is a
natural person may transfer all or any portion of his or her Membership
Interest to any revocable trust created for the benefit of the Member, or
any combination between or among the Member, the Member's spouse, and the
Member's issue; provided that the Member retains a beneficial interest in
the trust and all of the Voting Interest included in such Membership
Interest. A Transfer of a Member's beneficial interest in such trust, or
failure to retain such Voting Interest, shall be deemed a Transfer of a
Membership Interest.
8.3. If a Member wishes to transfer any or all of the Member's Membership
Interest in the Company pursuant to a Bona Fide Offer (as defined below),
the Member shall give Notice to all other Members at least 30 days in
advance of the proposed sale or Transfer, indicating the terms of the Bona
Fide Offer and the identity of the offeror. The Company and the other
Members shall have the option to purchase the Membership Interest proposed
to be transferred at the price and on the terms provided in this Agreement.
If the price for the Membership Interest is other than cash, the fair value
in dollars of the price shall be as established in good faith by the
Company. For purposes of this Agreement, "Bona Fide Offer" means an offer
in writing setting forth all relevant terms and conditions of purchase from
an offeror who is ready, willing, and able to consummate the purchase and
who is not an Affiliate of the selling Member. For 30 days after the
Notice is given, the Company shall have the right to purchase the
Membership Interest offered, on the terms stated in the Notice, for the
lesser of (a) the price stated in the Notice (or the price plus the dollar
value of noncash consideration, as the case may be) and (b) the price
determined under the appraisal procedures set forth in Section 8.8.
If the Company does not exercise the right to purchase all of the
Membership Interest, then, with respect to the portion of the Membership
Interest that the Company does not elect to purchase, that right shall be
given to the other Members for an additional 30-day period, beginning on
the day that the Company's right to purchase expires. Each of the other
Members shall have the right to purchase, on the same terms, a part of the
interest of the offering Member in the proportion that the Member's
Percentage Interest bears to the total Percentage Interests of all of the
Members who choose to participate in the purchase; provided, however, that
the Company and the participating Members may not, in the aggregate,
purchase less than the entire interest to be sold by the offering Member.
If the Company and the other Members do not exercise their rights to
purchase all of the Membership Interest, the offering Member may, within 90
days from the date the Notice is given and on the terms and conditions
stated in the Notice, sell or exchange that Membership Interest to the
offeror named in the Notice. Unless the requirements of Section 8.2 are
met, the offeror under this section shall become an Assignee, and shall be
entitled to receive only the share of Profits or other compensation by way
of income and the return of Capital Contribution to which the assigning
Member would have been entitled.
8.4. On the happening of any of the following events (Triggering Events)
with respect to a Member, the Company and the other Members shall have the
option to purchase the Membership Interest in the Company of such Member
(Selling Member) at the price and on the terms provided in Section 8.7 of
this Agreement:
(a) The bankruptcy or withdrawal of a Member, or the winding up and
dissolution of a corporate Member, or merger or other corporate
reorganization of a corporate Member as a result of which the
corporate Member does not survive as an entity; provided that the
remaining Members have elected to continue the business of the Company
as provided in Article IX, Section 9. l (a).
(b) The occurrence of any other event that is, or that would cause, a
Transfer in contravention of this Agreement.
Each member agrees to promptly give Notice of a Triggering Event to
all other Members. 8.5. On the receipt of Notice by the Manager and the
other Members as contemplated by Sections 8.1 or 8.3, and on receipt of
actual notice of any Triggering Event as determined in good faith by the
Manager, the Company shall have the option, for a period ending 30 calendar
days following the determination of the purchase price as provided in
Section 8.8, to purchase the Membership Interest in the Company to which
the option relates, at the price and on the terms set forth in Section 8.7
of this Agreement, and the other Members, pro rata in accordance with their
prior Membership Interests in the Company, shall then have the option, for
a period of 30 days thereafter, to purchase the Membership Interest in the
Company not purchased by the Company, on the same terms and conditions as
apply to the Company. If all other Members do not elect to purchase the
entire remaining Membership Interest in the Company, then the Members
electing to purchase shall have the right, pro rata in accordance with
their prior Membership Interest in the Company, to purchase the additional
Membership Interest in the Company available for purchase. The transferee
of the Membership Interest in the Company that is not purchased shall hold
such Membership Interest in the Company subject to all of the provisions of
this Agreement.
8.6 Neither the Member whose interest is subject to purchase under this
Article, nor such Member's Affiliate, shall participate in any Vote or
discussion of any matter pertaining to the disposition of the Member's
Membership Interest in the Company under this Agreement.
8.7. The purchase price of the Membership Interest that is the subject of
an option under Section 8.5 shall be the "Fair Option Price" of the
interest as determined under this Section 8.7. "Fair Option Price" means
the cash price that a willing buyer would pay to a willing seller when
neither is acting under compulsion and when both have reasonable knowledge
of the relevant facts on the date the option is first execrable (the Option
Date). Each of the selling and purchasing parties shall use his, her, or
its best efforts to mutually agree upon the Fair Option Price. If the
parties are unable to so agree within 30 days of the Option Date, the
selling party shall appoint, within 40 days of the Option Date, one
appraiser, and the purchasing party shall appoint within 40 days of the
Option Date, one appraiser. The two appraisers shall within a period of
five additional days, agree upon and appoint an additional appraiser. The
three appraisers shall, within 60 days after the appointment of the third
appraiser, determine the Fair Option Price of the Membership Interest in
writing and submit their report to all the parties.
The Fair Option Price shall be determined by disregarding the
appraiser's valuation that diverges the greatest from each of the other two
appraisers' valuations, and the arithmetic mean of the remaining two
appraisers' valuations shall be the Fair Option Price. Each purchasing
party shall pay for the services of the appraiser selected by it, plus one
half of the fee charged by the third appraiser, and one half of all other
costs relating to the determination of Fair Option Price. The Fair Option
Price as so determined shall be payable in cash.
8.8. Except as expressly permitted under Section 8.2, a prospective
transferee (other than an existing Member) of a Membership Interest may be
admitted as a Member with respect to such Membership Interest (Substituted
Member) only (a) on the unanimous Vote of the other Members in favor of the
prospective transferee's admission as a Member, which approval shall be
given or withheld by each Member in its sole and absolute discretion, and
(b) on such prospective transferee executing a counterpart of this
Agreement as a party hereto. Any prospective transferee of a Membership
Interest shall be deemed an Assignee, and, therefore, the owner of only an
Economic Interest until such prospective transferee has been admitted as a
Substituted Member. Except as otherwise permitted in the Act, any such
Assignee shall be entitled only to receive allocations and distributions
under this Agreement with respect to such Membership Interest and shall
have no right to Vote or exercise any rights of a Member until such
Assignee has been admitted as a Substituted Member. Until the Assignee
becomes a Substituted Member, the Assigning Member will continue to be a
Member and to have the power to exercise any rights and powers of a Member
under this Agreement, including the right to Vote in proportion to the
Percentage Interest that the Assigning Member would have had in the event
that the assignment had not been made.
8.9 Any person admitted to the Company as a Substituted Member shall be
subject to all the provisions of this Agreement that apply to the Member
from whom the Membership Interest was assigned, provided, however, that the
assigning Member shall not be released from liabilities as a Member solely
as a result of the assignment, both with respect to obligations to the
Company and to third parties, incurred prior to the assignment.
8.10. The initial sale of Membership Interests in the Company to the
Initial Members has not been qualified or registered under the securities
laws of any state, including California, or registered under the Securities
Act of 1933, in reliance upon exemptions from the registration provisions
of those laws. Notwithstanding any other provision of this Agreement,
Membership Interests may not be Transferred unless registered or qualified
under applicable state and federal securities law unless, in the opinion of
legal counsel satisfactory to the Company, such qualification or
registration is not required. The Member who desires to transfer a
Membership Interest shall be responsible for all legal fees incurred in
connection with said opinion.
ARTICLE IX
DISSOLUTION AND WINDING UP
9.1. The Company shall be dissolved upon the first to occur of the
following events:
(a) The bankruptcy, withdrawal, or dissolution of a Member, provided,
however, that the remaining Members may by the Vote of a Majority of
Members within 90 days of the happening of that event Vote to continue
the business of the Company, in which case, the Company shall not
dissolve. If the remaining Members fail to so Vote, the remaining
Members shall wind up the Company. For purposes of this Paragraph
(a), in determining a Majority of Members, the Percentage Interest of
the Member who has died, become incapacitated, withdrawn, or who has
become bankrupt or dissolved shall not be taken into account.
(b) The expiration of the term of existence of the Company.
(c) The written agreement of all Members to dissolve the Company.
(d) The sale or other disposition of substantially all of the
Company's assets.
(e) Entry of a decree of judicial dissolution under Corp C section
17351.
9.2. On the dissolution of the Company, the Company shall engage in no
further business other than that necessary to wind up the business and
affairs of the Company. The Managers who have not wrongfully dissolved the
Company or, if there is no such Manager, the Members, shall wind up the
affairs of the Company. The Delegates winding up the affairs of the
Company shall give Notice of the commencement of winding up by mail to all
known creditors and claimants against the Company whose addresses appear in
the records of the Company. After paying or adequately providing for the
payment of all known debts of the Company (except debts owing to Members),
the remaining assets of the Company shall be distributed or applied in the
following order:
(a) To pay the expenses of liquidation.
(b) To the establishment of reasonable reserves by the Delegate for
contingent liabilities or obligations of the Company. Upon the
Delegate's determination that such reserves are no longer necessary,
said reserves shall be distributed as provided in this Section 9.2. -
(c) To repay outstanding loans to Members. If there are insufficient
funds to pay such loans in full, each Member shall be repaid in the
ratio that the Member's loan, together with interest accrued and
unpaid thereon, bears to the total of all such loans from Members,
including all interest accrued and unpaid thereon. Such repayment
shall first be credited to unpaid principal and the remainder shall
be credited to accrued and unpaid interest.
(d) Among the Members with Positive Capital Account Balances as
provided in Article IV.
9.3. Each Member shall look solely to the assets of the Company for the
return of the Member's investment, and if the Company property remaining
after the payment or discharge of the debts and liabilities of the Company
is insufficient to return the investment of each Member, such Member shall
have no recourse against any other Members for indemnification,
contribution, or reimbursement, except as specifically provided in this
Agreement.
ARTICLE X
INDEMNIFICATION AND ARBITRATION
10.1. The Company shall have the power to indemnify any Person who was or
is a party, or who is threatened to be made a party, to any Proceeding by
reason of the fact that such Person was or is a Member, Manager, officer,
employee, or other agent of the Company, or was or is serving at the
request of the Company as a director, officer, employee, or other Agent of
another limited liability company, corporation, partnership, joint venture,
trust, or other enterprise, against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred by such
Person in connection with such proceeding, if such Person acted in good
faith and in a manner that such Person reasonably believed to be in the
best interests of the Company, and, in the case of a criminal proceeding,
such Person had no reasonable cause to believe that the Person's conduct
was unlawful. The termination of any proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contenders or its
equivalent, shall not, of itself, create a presumption that the Person did
not act in good faith and in a manner that such Person reasonably believed
to be in the best interests of the Company, or that the Person had
reasonable cause to believe that the Person's conduct was unlawful. To the
extent that an agent of the Company has been successful on the merits in
defense of any Proceeding, or in defense of any claim, issue, or matter in
any such Proceeding, the agent shall be indemnified against expenses
actually and reasonably incurred in connection with the Proceeding. In all
other cases, indemnification shall be provided by the Company only if
authorized in the specific case by a Majority of Members.
"Agent," as used in this Section 10.1, shall include a trustee or
other fiduciary of a plan, trust, or other entity or arrangement described
in Corp C section 207(f).
"Proceeding," as used in this Section 10.1, means any threatened,
pending, or completed action or proceeding, whether civil, criminal,
administrative, or investigative.
Expenses of each Person indemnified under this Agreement actually and
reasonably incurred in connection with the defense or settlement of a
proceeding may be paid by the Company in advance of the final disposition
of such proceeding, as authorized by the Managers who are not seeking
indemnification or, if there are none, by a Majority of the Members, upon
receipt of an undertaking by such Person to repay such amount unless it
shall ultimately be determined that such Person is entitled to be
indemnified by the Company. "Expenses," as used in this Section 10.1,
includes, without limitation, attorney fees and expenses of establishing a
right to indemnification, if any, under this Section 10. 1
10.2. Any action to enforce or interpret this Agreement, or to resolve
disputes with respect to this Agreement as between the Company and a
Member, or between or among the Members, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association.
Arbitration shall be the
exclusive dispute resolution process in the State of California, but
arbitration shall be a nonexclusive process elsewhere. Any party may
commence arbitration by sending a written demand for arbitration to the
other parties. Such demand shall set forth the nature of the matter to be
resolved by arbitration. The Manager shall select the place of arbitration.
The substantive law of the State of California shall be applied by the
arbitrator to the resolution of the dispute. The parties shall share
equally all initial costs of arbitration. The prevailing party shall be
entitled to reimbursement of attorney fees, costs, and expenses incurred in
connection with the arbitration. AR decisions of the arbitrator shall be
final, binding, and conclusive on all parties. Judgment may be entered upon
any such decision in accordance with applicable law in any court having
jurisdiction thereof. The arbitrator (if permitted under applicable law) or
such court may issue a writ of execution to enforce the arbitrator's
decision.
ARTICLE XI
ATTORNEY-IN-FACT AND AGENT
11.1. Each Member, by execution of this Agreement, irrevocably constitutes
and appoints each Manager and any of them acting alone as such Member's
true and lawful attorney-in-fact and agent, with full power and authority
in such Member's name, place, and stead to execute, acknowledge, and
deliver, and to file or record in any appropriate public office: (a) any
certificate or other instrument that may be necessary, desirable, or
appropriate to qualify the Company as a limited liability company or to
transact business as such in any jurisdiction in which the Company conducts
business; (b) any certificate or amendment to the Company's articles of
organization or to any certificate or other instrument that may be
necessary, desirable, or appropriate to reflect an amendment approved by
the Members in accordance with the provisions of this Agreement; (c) any
certificates or instruments that may be necessary, desirable, or
appropriate to reflect the dissolution and winding up of the Company; and
(d) any certificates necessary to comply with the provisions of this
Agreement. This power of attorney will be deemed to be coupled with an
interest and 'will survive the Transfer of the Member's Economic Interest.
Notwithstanding the existence of this power of attorney, each Member agrees
to join in the execution, acknowledgment, and delivery of the instruments
referred to above if requested to do so by a Manager. This power of
attorney is a limited power of attorney and does not authorize any Manager
to act on behalf of a Member except as described in this Article XI.
ARTICLE XII
GENERAL PROVISIONS
12.1. This Agreement constitutes the whole and entire agreement of the
parties with respect to the subject matter of this Agreement, and it shall
not be modified or amended in any respect except by a written instrument
executed by all the parties. This Agreement replaces and supersedes all
prior written and oral agreements by and among the Members and Managers or
any of them.
12.2. 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.
12.3. This Agreement shall be construed and enforced in accordance with
the internal laws of the State of California. If any provision of this
Agreement is determined by any court of competent jurisdiction or
arbitrator to be invalid, illegal, or unenforceable to any extent, that
provision shall, if possible, be construed as though more narrowly drawn,
if a narrower construction would avoid such invalidity, illegality, or
unenforceability or, if that is not possible, such provision shall, to the
extent of such invalidity, illegality, or
unenforceability, be severed, and the remaining provisions of this
Agreement shall remain in effect.
12.4. This Agreement shall be binding on and inure to the benefit of the
parties and their heirs, personal representatives, and permitted successors
and assigns
12.5. Whenever used in this Agreement, the singular shall include the
plural and the plural shall include the singular, and the neuter gender
shall include the male and female as well as a trust, firm, company, or
corporation, all as the context and meaning of this Agreement may require.
12.6. The parties to this Agreement shall promptly execute and deliver any
and all additional documents, instruments, notices, and other assurances,
and shall do any and all other acts and things, reasonably necessary in
connection with the performance of their respective obligations under this
Agreement and to carry out the intent of the parties.
12.7. Except as provided in this Agreement, no provision of this Agreement
shall be construed to limit in any manner the Members in the carrying on of
their own respective businesses or activities.
12.8. Except as provided in this Agreement, no provision of this Agreement
shall be construed to constitute a Member, in the Member's capacity as
such, the agent of any other Member.
12.9. Each Member represents and warrants to the other Members that the
Member has the capacity and authority to enter into this Agreement.
12.10. The article, section, and paragraph titles and headings contained
in this Agreement are inserted as matter of convenience and for ease of
reference only and shall be disregarded for all other purposes, including
the construction or enforcement of this Agreement or any of its provisions.
12.11. This Agreement may be altered, amended, or repealed only by a
writing signed by all of the Members.
12.12. Time is of the essence of every provision of this Agreement that
specifies a time for performance.
12.13. This Agreement is made solely for the benefit of the parties to
this Agreement and their respective permitted successors and assigns, and
no other person or entity shall have or acquire any right by virtue of this
Agreement.
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement on the day and year first above written.
IMPERIAL CREDIT
MORTGAGE HOLDING, INC.
by: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
XXXXXX X. XXXXXXXXX, CEO
IMH COMMERCIAL
HOLDINGS, INC.
by: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
XXXXXXX X. XXXXXXX, President
EXHIBIT "A"
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
SPACE ABOVE THIS LINE FOR RECORDER'S USE
================================================================================
State of California [SEAL]
Xxxx Xxxxx
Secretary of State
SACRAMENTO
I, XXXX XXXXX, Secretary of State of California., hereby certify:
That the annexed transcript of 1 page(s) was prepared by and in this office from
the record on file, of which it purports to be a copy, and that it is full, true
and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great
Seal of the State of California
[SEAL]
AUG 26 1997
----------------------------------
/s/ Xxxx Xxxxx
Secretary of State
SEC STATE FORM LP-222A (Rev 5/95)
[SEAL]
State of California
Xxxx Xxxxx
Secretary of State
LLC-1
LIMITED LIABILITY COMPANY
ARTICLES OF ORGANIZATION
IMPORTANT - Read the instructions before completing the form.
---------
This document is presented for filing pursuant to Section 17050 of the
California Corporations Code.
--------------------------------------------------------------------------------
1. Limited liability company name:
IMH/ICH DOVE STREET, LLC
-----------
--------------------------------------------------------------------------------
2. Latest date (month/day/year) on which the limited liability company is to
dissolve:
AUGUST 25, 2047
--------------------------------------------------------------------------------
3. The purpose of the limited liability company is to engage in any lawful act
or activity for which a limited liability company may be organized under the
Xxxxxxx-Xxxxxx Limited Liability Company Act.
--------------------------------------------------------------------------------
4. Enter the name of initial agent for service of process and check the
appropriate provision below:
XXXX XXXXX, ESQ. , which is
-----------------------------------------------------------------------------
[X] an individual residing in California. Proceed to Item 5.
[_] a corporation which has filed a certificate pursuant to Section 1505
of the California Corporations Code. Skip Item 5 and proceed to Item 6.
--------------------------------------------------------------------------------
5. If the initial agent for service of process is an individual, enter a
----------
business or residential street address in California:
Street Address: 0 XXXXXX XXXXXX XXXXX, XXX 000
Xxxx: XXXXX XXX Xxxxx: CALIFORNIA Zip Code: 92707
--------------------------------------------------------------------------------
6. The limited liability company will be managed by: (check one)
[_] one manager [_] more than one manager [X] limited liability company
members
--------------------------------------------------------------------------------
7. If other matters are to be included in the Articles of Organization attach
one or more separate pages. Number of pages attached, if any.
--------------------------------------------------------------------------------
8. It is hereby declared that I am the person who For Secretary of State Use
executed this instrument, which execution is
my act and deed.
101997237028
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Signature of organizer
FILED
In the office of the Secretary of State
of the State of California
Xxxxxxx X. Xxxxxxxx
--------------------------------
Type or print name of organizer AUG 25 1997
Date: August 25, 1997 /s/ Xxxx Xxxxx
--------------------------
XXXX XXXXX, Secretary Of State
--------------------------------
LLC-1 Approved by the Secretary of State
Filing Fee$70 1/96
EXHIBIT "B"
MEMBER CONTRIBUTION
------ ------------
IMPERIAL CREDIT
MORTGAGE HOLDINGS, INC. $ 3,862,500.00
IMH COMMERCIAL
HOLDINGS, INC. $ 3,862,500.00
