OPERATING AGREEMENT
OF
XXXXX CAPITAL PARTNERS, LLC
a Delaware Limited Liability Company
THIS OPERATING AGREEMENT, entered into effective as of the
30th day of November, 1999, by and among the persons listed on Schedule A hereto
(the "Members"), being all of the members of XXXXX CAPITAL PARTNERS, LLC, a
Delaware limited liability company (the Company");
W I T N E S S E T H:
WHEREAS, the Members wish to form the Company for the purpose
of making and holding certain investments and engaging in the other activities
set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto do hereby amend and
restate the Original Agreement to read in its entirety as follows:
SECTION 1
Definitions
The following capitalized terms used in this Agreement shall
have the following meanings:
1.1. "Act" shall mean the Delaware Limited Liability Company Act, as the same
may be amended from time to time.
1.2. "Adjusted Capital Account Balance" shall mean a Member's Capital Account
balance (a) increased by any amount that such Member is obligated to restore
under Treas. Reg. ss. 1.704-1(b)(2)(ii)(c) (including any addition thereto
pursuant to the next to last sentences of Treas. Reg. ss. 1.704-2(g)(1) and
(i)(5) after taking into account thereunder any changes during such Fiscal Year
in Company Minimum Gain and in Member Nonrecourse Debt Minimum Gain) and (b)
decreased by any adjustments, allocations, and distributions specified in Treas.
Reg. ss. 1.704-1(b)(2)(ii)(d)(4), (5), and (6) as are reasonably expected to be
made to such Member. A distribution or allocation will result in a Member having
a deficit Adjusted Capital Account Balance to the extent such distribution or
allocation either will create or increase a deficit balance in such Member's
Capital Account after making the adjustments described in the preceding
sentence.
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1.3. "Affiliate" shall mean, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person (including, if any of the forgoing is a natural Person, the parent,
spouse, child, brother, or sister of such natural Person), (ii) any Person
owning or controlling a majority of the outstanding voting interests of such
Person, (iii) any officer, director, or general partner of such Person, or (iv)
any Person who is an officer, director, general partner, trustee, or holder of a
majority of the voting interests of any Person described in clauses (i) through
(iii) of this sentence. For purposes of this definition, the term "controls,"
"is controlled by," or "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through the ownership of
voting securities, by contract or otherwise.
1.4. "Agreed Value" shall mean, with respect to Property, the fair market value
of that Property on the date it is contributed to the Company, as determined by
the Managing Member in good faith and by reasonable methods.
1.5. "Agreement" shall mean this Operating Agreement, as amended from time to
time.
1.6. "Bankruptcy" shall mean, with respect to any Person, (i) the entry of a
decree or order for relief of such Person by a court of competent jurisdiction
in any involuntary case involving such Person under any bankruptcy, insolvency
or other similar law now or hereafter in effect; (ii) the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar agent for such Person or for any substantial part of such Person's
assets or property; (iii) the ordering of the winding up or liquidation of such
Person's affairs; (iv) the filing with respect to such Person of a petition in
any such involuntary bankruptcy case, which petition remains undismissed for a
period of ninety (90) days or which is dismissed or suspended pursuant to
Section 305 of the U.S. Bankruptcy Code or any successor provision thereto; (v)
the commencement by such Person of a voluntary case under any bankruptcy,
insolvency or other similar law now or hereafter in effect; or (vi) the making
by such Person of any general assignment for the benefit of creditors.
1.7. "Capital Account" shall mean the capital account to be maintained by the
Company for each Member in accordance with Section 4.3.
1.8. "Capital Contributions" shall mean all cash and other property contributed
to the Company by or on behalf of a Member or such Member's predecessor in
interest.
1.9. "Capital Interest" shall mean the percentage of total capital contributions
allocable to a Member, as set forth on Schedule A.
1.10. "Cash Reserve" shall mean any reserve fund which may be established and
maintained by the Managing Member in its reasonable good faith judgment for the
conduct of the Company Business, provided that such fund is in keeping with
generally accepted accounting practices and does not exceed amounts deemed by
the Managing Member reasonably necessary for anticipated debt service, future
capital expenditures, repairs, replacements, taxes, contingent liabilities and
the like. If the Cash Reserve is drawn down it may be replenished in accordance
with the preceding limitations.
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1.11. "Code" shall mean the Internal Revenue Code of 1986, as amended (or any
corresponding provision or provisions of succeeding law).
1.12. "Company" shall mean Xxxxx Capital Partners, LLC, a Delaware limited
liability company.
1.13. "Company Business" shall mean the business in which the Company shall
engage from time to time under Section 2.2 hereof.
1.14. "Company Interest" shall mean the ownership and voting interest of a
Member in the Company at any particular time, including the right of such Member
to any and all distributions and any other benefits to which such Member may be
entitled as provided in this Agreement or the Act, together with the obligations
of such Member to comply with all the provisions of this Agreement and the Act.
1.15. "Company Minimum Gain" shall mean the amount of Company minimum gain,
computed in the manner set forth in Treas. Reg. ss. 1.704-2(d).
1.16. "Company Nonrecourse Deduction" shall mean the amount of nonrecourse
deductions computed in the manner set forth in Treas. Reg. ss. 1.704-2(c).
1.17. "Company Tax Items" shall mean all items of income, gain, loss, and
deduction, and all tax preferences, depreciation, accelerated cost recovery
system deductions, investment interest, and other tax items of the Company for
each Fiscal Year, as allocated among the Members for tax purposes under Section
6.3 hereof.
1.18. "Compliance Manual" shall have the meaning set forth in Section 5.2.
1.19. "Contributing Members" shall mean the Members other than the Special
Member.
1.20. "Default Rule" shall mean a provision of the Act that would apply to the
Company unless otherwise provided in, or modified by, the Agreement.
1.21. "Distributable Amounts" means Net Cash Flow from investments made by the
Company for which J. Xxxxxx Xxxxx, Xx., has served as the Investment Advisor, or
from any reinvestment of proceeds from such investments.
1.22. "Fiscal Year" shall mean an annual accounting period ending December 31 of
each year during the term of the Company; provided, however, that the last such
Fiscal Year shall be the period beginning on January 1 of the calendar year in
which the final liquidation and termination of the Company is completed and
ending on the date such final liquidation and termination is completed. To the
extent any computation or other provision hereof provides for an action to be
taken on a Fiscal Year basis, an appropriate proration or other adjustment shall
be made in respect of the first or final Fiscal Year to reflect that such period
is less than a full calendar year period.
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1.23. "Investment Account" shall mean the investment account to be maintained by
the Company for each Member in accordance with Section 4.4.
1.24. "Investment Advisor" shall mean J. Xxxxxx Xxxxx, Xx., or such other person
as may hereafter be designated as investment advisor to the Company.
1.25. "Majority Vote" shall mean the affirmative vote of Members holding more
than 50% of the total Profits Interests held by the Members.
1.26. "Managing Member" shall have the meaning ascribed thereto in Section 5.1.
1.27. "Member" shall mean the initial Members listed on Schedule A attached
hereto and any Person admitted as a new Member or a Substitute Member in
accordance with the terms of this Agreement. Schedule A may be amended from time
to time to reflect the withdrawal of a Member or the addition of a new Member or
a Substitute Member in accordance with the terms of this Agreement.
1.28. "Member Nonrecourse Debt" shall mean any Company liability to the extent
the liability is nonrecourse for purposes of Treas. Reg. ss. 1.1001-2, and a
Member (or related person (within the meaning of Treas. Reg. ss. 1.752-4(b)))
bears the economic risk of loss under Treas. Reg. ss. 1.752-2 because, for
example, the Member (or related person) is the creditor or a guarantor. The
determination of whether a Company liability constitutes a Member Nonrecourse
Debt shall be made in accordance with Treas. Reg. ss. 1.704-2(b)(4).
1.29. "Member Nonrecourse Debt Minimum Gain" shall mean the amount of partner
nonrecourse debt minimum gain, computed in the manner set forth in Treas. Reg.
ss. 1.704-2(i)(3), with respect to each Member Nonrecourse Debt.
1.30. "Member Nonrecourse Deduction" shall mean the amount of partner
nonrecourse deductions as computed under Treas. Reg. ss. 1.704-2(i)(2).
1.31. "Net Cash Flow" shall mean, for any period, the sum of cash from
operations of the Company Business, from the sale or disposition of Company
Property, or from any other source, for such period after deducting the
following amounts for such period: (i) amounts required to pay the Company's
operating expenses and current liabilities; (ii) amounts required to discharge
any Company debt or obligation, including loans or advances from Members; (iii)
the amount of any additions to Cash Reserve; and (iv) amounts set aside by the
Managing Member for reinvestment. Net Cash Flow shall not be reduced by
depreciation, amortization, cost recovery deductions or similar allowances, but
shall be increased by any reductions of Cash Reserve.
1.32. "Net Income Amount" shall mean, with respect to a Member for a Fiscal
Year, the amount of Company net taxable income allocated to such Member for such
Fiscal Year, reduced by the excess, if any, of (i) the aggregate amount of
Company net taxable loss allocated to such Member for all prior Fiscal Years,
over (ii) the aggregate amount of Company net taxable income allocated to such
Member for all prior Fiscal Years.
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1.33. "Net Market Value" with respect to the Company's assets shall mean the
fair market value of Company's total assets, net of total liabilities, as
determined in good faith by the Managing Member.
1.34. "Person" shall mean any human being, organization, general partnership,
limited partnership, corporation, limited liability company, joint venture,
trust, business trust, association, governmental entity or other legal entity.
1.35. "Portfolio Company" shall mean a Person in which the Company holds a
Portfolio Investment.
1.36. "Portfolio Investment" shall mean an investment in a Person, in the form
of debt, equity, convertible debt, options, warrants, or other instruments
conferring upon the Company a current or future economic interest, with the
exception of Short-Term Investments.
1.37. "Priority Return" shall mean, for each Member for each Fiscal Year, an
amount equal to nine percent (9%) of the average daily Investment Account
balance of such Member over the course of the current Fiscal Year, multiplied,
in the case of a partial Fiscal Year, by the number of days in such partial
Fiscal Year divided by 365.
1.38. "Profits" or "Loss" shall mean, for each Fiscal Year, the Company's
taxable income or taxable loss for such Fiscal Year, as determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be separately stated pursuant to Code Section 703(c)(1)
shall be included in taxable income or loss), but with the following
adjustments:
(a) Items of income, gain, loss and deduction relating to Property contributed
to the Company shall be computed as if the basis of the Property to the Company
at the time of contribution were equal to its fair market value on that date and
the amount of any depreciation, amortization, or other cost recovery deductions
allowable were computed in accordance with the following sentence. For purposes
of the preceding sentence, the amount of any depreciation, amortization, or
other cost recovery deduction allowable for any period with respect to Property
contributed to the Company shall be an amount that bears the same ratio to the
fair market value of the Property on the date of contribution as the federal
income tax depreciation, amortization, or other cost recovery deduction bears to
the adjusted tax basis of the Property on the date of contribution; provided,
however, that if the adjusted tax basis of the Property is zero on the date of
contribution, then the amount of depreciation, amortization, or other cost
recovery deduction shall be determined with reference to the fair market value
of the Property on the date of contribution using any reasonable method selected
by the Managing Member.
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(b) Any tax exempt income and gain, as described in Section 705(a)(1)(B) of the
Code, realized by the Company during such Fiscal Year shall be added to such
taxable income or taxable loss and any related expenses not allowed as a
deduction pursuant to Section 265 of the Code shall be subtracted from such
income or loss.
(c) Any expenditures of the Company described in Sections 705(a)(2)(B) (or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treas. Reg. ss.
1.704-1(b) and not otherwise taken into account under this Section) and 709 of
the Code (except for amounts with respect to which an election is properly made
under Section 709(b)) for such Fiscal Year shall be subtracted from such taxable
income or taxable loss.
(d) Except as otherwise provided in Treas. Reg. ss. 1.704-1(b), amounts
described in this Section shall be computed without taking into account any
basis adjustments created by a Section 754 election under the Code. Profits or
Loss attributable to a basis adjustment resulting from a Section 754 election
shall inure solely to the benefit or detriment of the Member to whom the Section
754 election relates.
(e) If there has been an adjustment to the Members' Capital Accounts pursuant to
Section 4.3(e) to reflect the unrealized income, gain, loss, or deduction
inherent in Company Property: (i) depreciation, amortization, or other cost
recovery deductions with respect to such Property for each Fiscal Year or other
period shall equal an amount which bears the same ratio to the fair market value
of such Property on the date of such adjustment as the federal income tax
depreciation, amortization, or other cost recovery deductions for such Fiscal
Year or other period bears to the adjusted tax basis of such Property on such
date; and (ii) gain or loss resulting from any disposition of such Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed under this sentence as if such Property had an adjusted basis
on the date of such adjustment equal to its fair market value on such date and
all subsequent adjustments for depreciation, amortization, or other cost
recovery deductions were made in accordance with clause (i) of this sentence.
(f) If the Company's taxable income or taxable loss for such Fiscal Year, as
adjusted in the manner provided in paragraphs (a) through (e) of this Section,
and after removing any amounts allocated under the Regulatory Allocations or
Section 6.2(d) (relating to curative allocations), is a positive amount, such
amount shall be the Company's Profits for such Fiscal Year, and if a negative
amount, such amount shall be the Company's Loss for such Fiscal Year.
1.39. "Profits Interest" shall have the meaning set forth in Section 3.1 hereof.
1.40. "Profit Shortfall Account" shall mean, with respect to a Member for a
Fiscal Year, the excess, if any, of (i) the aggregate amount of Net Cash Flow
distributed under Sections 6.1(a)(i), 6.1(a)(iii), 6.1(a)(v), or 6.1(a)(vi) to
such Member for such Fiscal Year and all prior Fiscal Years, over (ii) the
aggregate amount of Profits allocated to such Member under Sections 6.2(a)(iii),
6.2(a)(iv), or 6.2(a)(vi) for all prior Fiscal Years (to the extent that such
Profits have not been offset by allocations of Losses under Sections
6.2(b)(i)(D), 6.2(b)(i)(C), or 6.2(b)(i)(A), respectively).
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1.41. "Property" shall mean all of the Company's right, title and interest in
and to any real or personal property interests (tangible and intangible) owned
by the Company.
1.42. "Regulatory Allocations" shall mean the allocations described in Section
6.2(c).
1.43. "Short-Term Investments" shall mean short-term investments selected by the
Managing Member to provide for appropriate safety of principal, such as
government obligations, certificates of deposit, money market fund investments,
short-term debt obligations, interest-bearing accounts, and non-interest-bearing
accounts, pending investment of the Company's funds.
1.44. "Special Member" shall mean RCP Investments, L.P., a Delaware limited
partnership, and its successors and assigns.
1.45. "Substitute Member" shall mean a transferee of a Company Interest admitted
as a Substitute Member in accordance with Section 7.7 hereof.
1.46. "Supermajority Vote" shall mean the affirmative vote of the Members
holding at least 67% of the total Profits Interests held by the Members.
1.47. "Tax Distribution Amount" shall mean, with respect to a Member for a
Fiscal Year, such Member's Net Income Amount for such Fiscal Year multiplied by
the Tax Rate for such Fiscal Year. The Managing Member shall have authority to
make appropriate adjustments to the Tax Distribution Amounts to more accurately
reflect the actual tax liability of a Member resulting from participation in the
Company, to implement a Member's request to adjust the amount of such Member's
Tax Distribution Amount, or to remedy any unexpected economic disparities that
would otherwise result from the application of the above formula; provided,
however, that no adjustment shall be made under this sentence that is
inconsistent with the basic economic arrangement of the Members under this
Agreement.
1.48. "Tax Matters Member" shall mean the Member designated as the Tax Matters
Member pursuant to Section 10.3.
1.49. "Tax Rate" shall mean, with respect to a Fiscal Year, a tax rate
(expressed as a percentage) equal to the sum of (a) the maximum federal income
tax rate for individuals for such Fiscal Year, plus (b) the maximum Maryland
income tax rate for individuals residing in that State for such Fiscal Year.
1.50. "Transfer" shall mean any sale, transfer, exchange, assignment, pledge,
hypothecation, gift or any contract for the foregoing or any voting trust or
other agreement or arrangement respecting voting rights or any beneficial
interest in a Company Interest.
1.51. "Unpaid Priority Amount" shall mean, with respect to a Member for a Fiscal
Year, the amount, if any, of such Member's Unpaid Priority Return for such
Fiscal Year, reduced by the amount of any Profits previously allocated under
Section 6.2(a)(iv) with respect to such Member's Priority Return that remains
unpaid (to the extent that such Profits have not been offset by Losses under
Section 6.2(b)(i)(C)).
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1.52. "Unpaid Priority Return" shall mean, with respect to a Member for a Fiscal
Year, the excess, if any, of (i) the sum of such Member's Priority Return for
the current Fiscal Year and all prior Fiscal Years; over (ii) the aggregate
amount distributed to such Member under Section 6.1(a)(iii) for the current
Fiscal Year and all prior Fiscal Years.
1.53. "Unpaid Special Distribution Amount" shall mean, with respect to the
Special Member for a Fiscal Year, the amount, if any, that the Special Member
would be entitled to receive under Section 6.1(a)(iv) that remains unpaid (after
taking into account all distributions to the Special Member under Section
6.1(a)(iv) for the current Fiscal Year and all prior Fiscal Years), reduced by
the amount of any Profits previously allocated under Section 6.2(a)(v) with
respect to such unpaid amounts (to the extent that such Profits have not been
offset by Losses under Section 6.2(b)(i)(B)).
1.54. "Withdrawal" shall mean the death (or dissolution, in the case of
corporate Members), adjudication of incompetence (which term shall include, but
not be limited to, insanity), Bankruptcy, retirement, resignation, or expulsion
of a Member.
SECTION 2
General Provisions
2.1. Formation of the Company. The Members have formed the Company for the
limited purposes set forth herein, and shall take all actions and appropriately
file all documents required by law to qualify the Company to conduct business as
provided herein in all appropriate jurisdictions. The rights and liabilities of
the parties hereto shall be as provided in the Act except as herein otherwise
expressly provided.
2.2. Purposes and Powers of the Company.
(a) The purposes for which the Company is formed are (i) to make, hold, and
dispose of Portfolio Investments in accordance with the Company's Investment
Policies as in effect from time to time; (ii) to make, hold and dispose of
Short-Term Investments in order to hold funds pending the investment or
reinvestment of Company funds in Portfolio Investments, to provide liquid
investments from which to meet expenses of the Company and contingencies, and to
hold funds pending distribution, in each case subject to the other provisions of
this Agreement; and (iii) to do any and all things necessary, convenient or
incidental to the achievement of the foregoing.
(b) The Company shall have the power to do any and all acts and things
necessary, appropriate, advisable or convenient for the furtherance and
accomplishment of the purposes of the Company including, without limitation, to
engage in any kind of activity and to enter into and perform obligations of any
kind necessary to or in connection with, or incidental to, the accomplishment of
the purposes of the Company, so long as said activities and obligations may
lawfully be engaged in or performed by a limited liability company under the
Act.
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2.3. Name of the Company. The name of the Company shall be Xxxxx Capital
Partners, LLC. The Company Business may be conducted under such other names as
the Managing Member may from time to time determine to be necessary or
advisable.
2.4. Place of Business of the Company. The principal place of business of the
Company shall be 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, or at such other
place as the Managing Member may from time to time determine. The Company may
have such additional offices as the Managing Member may from time to time deem
necessary or advisable.
2.5. Registered Office, Registered Agent. The name and business address of the
registered agent for service of process on the Company and its registered office
in the State of Delaware are The Corporation Trust Company at Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx of New Castle, Delaware, or such
other qualified Person as the Managing Member may designate from time to time.
The Managing Member may select any Person permitted by applicable law to act as
registered agent for the Company in each jurisdiction in which it is necessary.
2.6. No Liability to Third Parties. The debts, obligations and liabilities of
the Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Member shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member.
2.7. Intent. It is the intent of the Members that the Company be operated in a
manner consistent with its treatment as a partnership for federal and state
income tax purposes. The Company shall take all appropriate actions to ensure
that the Company will be treated as a partnership for federal and state income
tax purposes, including the making of available tax elections. No election may
be made to treat the Company as a corporation for federal or state income tax
purposes without the written consent of all Members. It is also the intent of
the Members that the Company not be operated or treated as a "partnership" for
purposes of Section 303 of the Federal Bankruptcy Code, or for any purposes
other than tax purposes. Neither the Company nor any Member shall take any
action inconsistent with the express intent of the parties hereto as set forth
in this Section 2.7.
2.8. Default Rules Under the Act. Regardless of whether this Agreement
specifically refers to a particular Default Rule:
(a) if any provision of this Agreement conflicts with a Default Rule, the
provision of this Agreement controls and such Default Rule is hereby modified or
negated accordingly, and
(b) if is necessary to construe a Default Rule as modified or negated in order
to effectuate any provision of this Agreement, such Default Rule is hereby
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modified or negated accordingly.
2.9. Title to Property. Except as otherwise provided in this Agreement, the
Company shall hold all of its real and personal property in the name of the
Company and not in the name of any Member.
2.10. Payments of Individual Obligations. The Company's credit and assets shall
be used solely for the benefit of the Company, and no asset of the Company shall
be transferred or encumbered for or in payment of any individual obligation of
any Member.
2.11. Independent Activities; Transactions with Affiliates. Insofar as permitted
by applicable law, the Members and the Managing Member (each acting on its own
behalf) and each of their Affiliates may, notwithstanding this Agreement, engage
in whatever activities they choose, whether the same are competitive with the
Company or otherwise, without having or incurring any obligation to offer any
interest in such activities to the Company or any other Member; and neither this
Agreement nor any activity undertaken pursuant hereto shall, except as expressly
provided in a written agreement signed by the parties to be bound thereby,
prevent the Managing Member or any Member or its Affiliates from engaging in
such activities, or require the Managing Member or any Member to permit the
Company or any Member or its Affiliates to participate in any such activities.
As a material part of the consideration for the execution of this Agreement by
each Member, each Member hereby waives, relinquishes, and renounces any such
right or claim of participation.
2.12. Term of the Company. The Company commenced its existence on the date upon
which its Certificate of Formation was duly filed with the Secretary of State of
the State of Delaware and shall continue until the 10th anniversary of the date
hereof, unless the Members by Supermajority Vote agree to extend its existence
or the Company is sooner dissolved pursuant to Section 8.1.
SECTION 3
Members and Profits Interests
3.1. Profits Interest. Each Member's Profits Interest shall be determined under
this Section 3.1.
(a) Each Member's initial Profits Interest is set forth in Schedule A attached
hereto.
(b) Each Member's Profits Interest shall be adjusted upon the occurrence of the
events specified in, and in the manner set forth in, Section 3.2 .
3.2. Additional Members and Interests. The Company shall not, except as provided
in Section 4.1(b)(iii), be expanded to include additional Members, or to provide
for the issuance of additional Company Interests, unless the existing Members by
Supermajority Vote consent to the same. In the event that the Members by
Supermajority Vote elect to take in new or additional Members or issue
additional Company Interests upon such terms and conditions as they may find
advisable, the Profits Interest of each new or additional Member shall be taken
from the existing Members on a pro rata basis unless otherwise agreed to by all
such Members, in such amount and in such fashion as may be agreed upon by the
parties.
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SECTION 4
Capital Contributions and Capital Accounts
4.1. Capital Contributions.
(a) In consideration of his or its Company Interest, each Member hereby
contributes to the Company the Initial Capital Contribution, in the form of cash
and investments currently held by the Members, as specified for such Member on
Schedule A.
(b) In further consideration of his or its Company Interest, each Contributing
Member hereby agrees to contribute to the Company, upon at least 10 business
days prior written notice by the Managing Member, at any one time or in
installments from time to time as specified by the Managing Member, additional
Capital Contributions in accordance with this Section 4.1(b), provided, however,
that, the aggregate amount of all such additional Capital Contributions by such
Member shall not exceed the maximum amount specified for such Member on Schedule
A, and the obligation of Xxxxx National Corporation to contribute shall be
subject to the following conditions:
(i) Such additional Capital Contributions shall be in compliance with
reasonable loss limits;
(ii) Such contributions shall be consistent with other capital priorities of
Xxxxx National Corporation;
(iii) Xxxxx National Corporation shall have the right to designate one or more
other persons who may contribute all or any portion of any capital contribution
otherwise due from Xxxxx National Corporation and become a Member in the LLC,
with the Profits Interest and Capital Interest of Xxxxx National Corporation
reduced proportionately; and
(iv) The performance of the Company's investments prior to the date of
contribution shall have been satisfactory to Xxxxx National Corporation in its
reasonable judgment.
Each such notice by the Managing Member shall call for contributions by each
Contributing Member on a pro rata basis, based upon their relative Capital
Interests.
(c) No Member shall be required to make Capital Contributions in addition to
those set forth in Section 4.1(a) and 4.1(b).
4.2. No Interest on or Right to Withdraw Capital Contributions. No interest
shall be paid on any contribution to the capital of the Company or on the
balance in any Capital Account and no Member shall have the right to withdraw
his Capital Contribution or to demand or receive a return of his Capital
Contribution.
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4.3. Maintenance of Capital Accounts.
(a) The Company shall maintain a separate Capital Account for each Member in
accordance with this Section 4.3.
(b) A Member's Capital Account shall be credited with (i) the amount of any cash
contributed to the Company by or on behalf of such Member, (ii) the fair market
value of any Property other than cash contributed to the Company by or on behalf
of such Member, (iii) allocations to such Member of Company Profits, income or
gain pursuant to Section 6.2, (iv) the amount of any Company liabilities assumed
by such Member or which are secured by any Property distributed to such Member,
and (v) any other item required to be credited for proper maintenance of capital
accounts by the Treasury regulations under Section 704(b) of the Code.
(c) A Member's Capital Account shall be debited with (i) the amount of any cash
and the fair market value of Property other than cash that is distributed to
such Member (other than guaranteed payments under Code Section 707(c)), all as
may be determined in accordance with this Agreement, (ii) allocations to such
Member of Company Losses, deductions, Company Nonrecourse Deductions, or Member
Nonrecourse Deductions pursuant to Section 6.2, (iii) the amount of any
liabilities of such Member assumed by the Company or which are secured by any
Property contributed by such Member to the Company, and (iv) any other item
required to be debited for proper maintenance of capital accounts by the
Treasury regulations under Section 704(b) of the Code.
(d) If any Property other than cash is distributed to a Member, the Capital
Accounts of the Members shall be adjusted to reflect the manner in which gain or
loss that has not previously been reflected in the Capital Accounts would be
allocated among the Members under Section 6.2 if the distributed Property had
been sold by the Company for a price equal to its fair market value on the date
of distribution. See Section 4.3(c)(i) for additional adjustments to be made to
the distributee Member's Capital Account.
(e) The Members may, upon the occurrence of one of the events described in
Section 4.3(e)(ii), increase or decrease the Capital Accounts of the Members in
accordance with Section 4.3(e)(i) to reflect a revaluation of Company Property.
(i) Any adjustments made under this Section 4.3(e) shall reflect the manner in
which the unrealized income, gain, loss, or deduction inherent in Company
Property (to the extent that it has not been reflected in the Capital Account
previously) would be allocated among the Members under Section 6.2 if the
Company had sold all of its Property for its fair market value on the date of
adjustment. The adjustments described in this Section 4.3(e)(i) shall be based
on the fair market value of Company Property on the date of adjustment.
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(ii) The Members may make the Capital Account adjustments described in this
Section 4.3(e) upon the occurrence of the following events: (a) a contribution
of money or other Property (other than a de minimis amount) to the Company by a
new or existing Member as consideration for an interest in the Company; (b) a
distribution of money or other Property (other than a de minimis amount) by the
Company to a retiring or continuing Member as consideration for an interest in
the Company; or (c) the liquidation of the Company.
(iii) The adjustments described in this Section 4.3(e) are intended to comply
with Treas. Reg. ss. 1.704-1(b)(2)(iv)(f) and shall be interpreted consistently
with such regulation to effectuate such intent. See the definition of "Profits
and Losses" for special rules for the computation of Profits and Losses in the
case of an adjustment under this Section 4.3(e).
(f) In the event any interest in the Company is transferred in accordance with
the terms of this Agreement, the transferee shall succeed to the Capital Account
of the transferor to the extent it relates to the transferred interest.
4.4 Maintenance of Investment Accounts.
(a) The Company shall maintain a separate Investment
Account for each Member in accordance with this Section 4.4.
(b) A Member's Investment Account shall be credited with (i)
the amount of any cash contributed to the Company by or on behalf of such
Member; (ii) the principal amount of any capital contribution made by a Member
to the Company in the form of a demand promissory note; and (iii) the fair
market value of any property other than cash contributed to the Company by or on
behalf of such Member (net of any liabilities assumed by the Company upon such
contribution and liabilities to the extent secured by such contributed
property).
(c) A Member's Investment Account shall be debited with the
amount of any distributions to such Member under Section 6.1(a)(ii).
(d) In the event any interest in the Company is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Investment Account of the transferor to the extent it relates to the transferred
interest.
SECTION 5
Management and Operation of Business
5.1. Managing Member. Xxxxx National Corporation shall be the "Managing Member"
of the Company and, in such capacity, responsible for the business and
operations of the Company. The Managing Member may be removed and replaced only
by Supermajority Vote.
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5.2. Management. The Managing Member shall be responsible for the overall
management and operation of the Company. No Member shall take any action in the
name of or on behalf of the Company except pursuant to authority granted by the
Managing Member. Each Member shall take such actions on behalf of the Company as
may be necessary or desirable in order to effectuate the decisions and
determinations of the Managing Member. The Managing Member shall adopt on behalf
of the Company, and may amend or modify from time to time, a compliance manual
for the Company (the "Compliance Manual") setting forth standards of conduct,
investment policies, and other policies relating to the operation of the
Company.
5.3. Investment Advisor. The Managing Member shall delegate to the Investment
Advisor the authority to conduct the day to day business of the Company and to
make investment decisions in accordance with the Compliance Manual as then in
effect. The Investment Advisor shall not be authorized to take any action that
the Managing Member is not authorized to take pursuant to Section 5.5 or Section
5.6. Except as otherwise specified or directed by the Managing Member or by the
Members by Supermajority Vote, the Investment Advisor shall have and may
exercise with respect to the Company all of the powers customarily exercised by
a president and chief executive officer of a Delaware corporation, subject to
the provisions of Sections 5.5 and 5.6 and the Compliance Manual as in effect
from time to time.
5.4. Meetings and Actions of the Members.
(a) A meeting of the Members may be called at such time and such place as the
Managing Member, the Investment Advisor, or Members holding Interests entitling
them to cast at least a Majority Vote, may specify by written notice to all
Members not less than 10 days prior to the date of such meeting.
(b) There shall be a quorum if Members holding in the aggregate more than a 50%
Profits Interest are present at a meeting. A Member shall be deemed present at
any meeting if he attends in person or by telephone conference call, or by proxy
granted to another Member and delivered to the Company. Unless otherwise
provided for in this Agreement, the Majority Vote of the Members shall
constitute an action of the Company. The Members, may also take action by
unanimous written consent. Copies of the records of the Company shall be
maintained at the principal offices of the Company.
5.5. Limitations of the Power of the Managing Member. The Managing Member and
the Investment Advisor shall not cause or permit the Company to take any of the
following actions without Supermajority Approval:
(a) admit any additional Member;
(b) carry on any business other than as provided in Section 2.2 hereof;
(c) guarantee or otherwise in any way become responsible (including as surety or
pursuant to a pledge or grant of security on any assets or rights of the
Company) for the obligations or indebtedness of any other Person, other than an
entity all of the equity interest of which is owned by the Company;
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(d) extend credit or make any loan to any Person, other than reasonable trade
credit offered in the ordinary course of the Company's business and reasonable
advances to officers and employees not exceeding $5,000 in the aggregate to any
one employee;
(e) enter into any transaction with any Member other than upon terms that, in
the reasonable judgement of the Managing Member, are not materially less
favorable to the Company than those that would be obtainable in an arm's length
transaction with an unrelated party; or
(f) sell or agree to sell, transfer, or dispose of all or substantially all of
the Company's assets, other than pursuant to a pledge or security interest
conferred in order to incur bona fide indebtedness for the Company.
5.6. Additional Restrictions. For so long as Xxxxx National Corporation is a
Member, the Company shall not, without the prior written consent of Xxxxx
National Corporation:
(a) acquire or hold any Portfolio Investment or Short-Term Investment that would
result in the Company holding an interest that has been determined by Xxxxx
National Corporation not to be permissible under the Bank Holding Company Act or
any rule or regulation thereunder; or
(b) engage in any other activity that Xxxxx National Corporation has determined
not to be permissible under the Bank Holding Company Act or any rule or
regulation thereunder.
5.7. Officers of the Company. The Investment Advisor may appoint from time to
time any one or more persons to serve as officers of the Company as the
Investment Advisor deems necessary for the proper conduct of the business of the
Company, in such capacities and with such delegated rights and powers as the
Investment Advisor may approve.
5.8. Cash Reserve. The Managing Member may decide to establish a Cash Reserve
for the Company. Such Cash Reserve may be replenished in accordance with the
limitations set forth in Section 1.10 hereof.
5.9. Compensation. The Managing Member shall not be entitled to any fee or other
compensation, other than reimbursement of expenses incurred by it on behalf of
or for the benefit of the Company, in consideration for its service as Managing
Member. The Company shall enter into a investment advisory agreement with the
Investment Advisor, which will entitle the Investment Advisor to receive an
annual management fee equal to (i) Two Percent (2%) of $100,000,000, or Two
Million Dollars ($2,000,000), minus (ii) all expenses of operating and managing
the Company, excluding origination expenses for raising funds from additional
Members, as determined in accordance with the Intercompany Operating and
Services Agreement dated as of July 15, 1998, between Xxxxx Bank N.A. and the
Company as the successor to Xxxxx Capital Partners, a division of Xxxxx National
Corporation.
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5.10. Exculpation and Indemnity. No Member, including without limitation the
Managing Member or the Investment Advisor, shall be liable or accountable in
damages or otherwise to the Company or the other Members for any act or omission
done or omitted by him in good faith, unless such act or omission constitutes
gross negligence, willful misconduct, or a willful breach of this Agreement or
the investment advisory agreement entered into pursuant to Section 5.9 on the
part of such person. The Company shall indemnify each Member, including the
Managing Member and the Investment Advisor, against any loss, damage, judgment
or claim incurred by or asserted against such person (including reasonable
attorney's fees and legal expenses), unless such act or omission constitutes
gross negligence, willful misconduct, or a willful breach of this Agreement or
the investment advisory agreement entered into pursuant to Section 5.9 on the
part of such person.
SECTION 6
Allocations and Distributions
6.1. Distributions.
(a) Net Cash Flow. The Company shall, except as otherwise provided in this
Section 6.1, distribute Net Cash Flow for a Fiscal Year when and as determined
by the Managing Member, in accordance with the following priorities:
(i) First, to the Members in proportion to, and to the extent of, each
Member's Tax Distribution Amount for such Fiscal Year;
(ii) Second, to the Members in proportion to, and to the extent of, the
outstanding balances in their respective Investment Accounts;
(iii) Third, to the Members entitled to a Priority Return, in proportion to, and
to the extent of, each such Member's Unpaid Priority Return for such Fiscal
Year;
(iv) Fourth, to the Special Member, up to the amount that, together with all
prior payments pursuant to this Section 6.1(a)(iv) equals 25% of the sum of all
distributions made pursuant to Section 6.1(a)(iii) (thereby equaling 20% of the
total distributions made pursuant to Sections 6.1(a)(iii) and 6.1(a)(iv));
(v) Fifth, to the extent that the remaining Net Cash Flow constitutes
Distributable Amounts, to the Members in proportion to their Profits Interests,
with appropriate adjustments made with respect to distributions for any period
during which the Profits Interests of the Members have changed; and
(vi) Sixth, to the extent that the remaining Net Cash Flow does not constitute
Distributable Amounts, to the Contributing Members in proportion to their
relative Profits Interests, with appropriate adjustments made with respect to
distributions for any period during which the Profits Interests of such Members
have changed.
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(vii) For purposes of making calculations pursuant to this Section 6.1(a), to
the extent that Net Cash Flow includes both amounts that are Distributable
Amounts and amounts that are not, Net Cash Flow payable pursuant to Sections
6.1(a)(i), 6.1(a)(ii), 6.1(a)(iii), and 6.1(a)(iv) shall be deemed to be
allocated between those two categories pro rata in accordance with their
relative proportions in Net Cash Flow at the time of distribution.
(b) Tax Distributions. The Company shall take reasonable efforts to make the
distributions under Section 6.1(a)(i) with respect to a Fiscal Year in a manner
that will allow the timely payment of the distributee Members' estimated taxes.
(c) Liquidation and Dissolution. Proceeds from the liquidation of the assets of
the Company upon dissolution shall be distributed to the Members in accordance
with Section 9.1. Proceeds from the sale (or other conversion into cash) of all
or substantially all of the Company Property shall be distributed to the Members
in accordance with Section 9.1 as if such proceeds arose from the liquidation of
the assets of the Company.
(d) Distributions in Kind. In the event that, prior to any sale by the Company
of any securities of a Portfolio Investment ("Sale Securities") the proceeds of
which the Company intends to distribute pursuant to Section 6.1 or Section 9.1,
the Company has received notice by any Member that such Member would, in lieu of
such distributed proceeds, prefer to receive such Member's portion of such
distribution in the form of Sale Securities with a value equal to the amount
otherwise to be distributed to such Member, then the Company may, if the
Managing Member determines that it may do so without impairing the value of the
remaining Sale Securities or violating any contractual or legal restriction upon
the transfer of such Sale Securities, pay such Member's distribution in the form
of Sale Securities, valued at their fair market value on the date of
distribution as determined by the Managing Member, and such value shall be
included in the amount of "Net Cash Flow" for purpose of Section 6.1(a).
6.2. Allocation of Profits and Losses.
(a) Allocation of Profits. After giving effect to the special allocations set
forth in Section 6.2(c), Profits of the Company for each Fiscal Year shall be
allocated to the Members as follows:
(i) First, Profits shall be allocated to the Members in proportion to, and to
the extent of, the amount equal to the remainder, if any, of (A) the cumulative
Losses allocated to each such Member pursuant to Section 6.2(b)(iii) for all
prior Fiscal Years, over (B) the cumulative Profits allocated to each such
Member pursuant to this Section 6.2(a)(i) for all prior Fiscal Years.
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(ii) Second, Profits less any amounts allocated under Section 6.2(a)(i), shall
be allocated to the Special Member in an amount not to exceed the excess, if
any, of (A) the aggregate amounts distributed to the Special Member under
Section 6.1(a)(iv) for the current and all prior Fiscal Years, over (B) the
aggregate amount of Profits allocated to the Special Member under Section
6.2(a)(v) or this Section 6.2(a)(ii) for all prior Fiscal Years (to the extent
that such Profits have not been offset by allocations of Losses under Sections
6.2(b)(i)(B) or 6.2(b)(i)(E), respectively).
(iii) Third, Profits less any amounts allocated under Sections 6.2(a)(i) and
6.2(a)(ii), shall be allocated in an aggregate amount not to exceed the
aggregate balances in all Members' Profit Shortfall Accounts for the current
Fiscal Year, among the Members in proportion to, and to the extent of, each
Member's Profit Shortfall Account.
(iv) Fourth, Profits less any amounts allocated under Sections 6.2(a)(i) through
6.2(a)(iii), shall be allocated to the Members in proportion to, and to the
extent of, each Member's Unpaid Priority Amount.
(v) Fifth, Profits less any amounts allocated under Sections 6.2(a)(i) through
6.2(a)(iv) shall be allocated to the Special Member to the extent of such
Member's Unpaid Special Distribution Amount.
(vi) Sixth, Profits less any amounts allocated under Sections 6.2(a)(i) through
6.2(a)(v) shall be allocated to the Members in proportion to their Profits
Interests; provided, however, that the Managing Member shall have the authority
to make appropriate adjustments to the allocation Profits under this Section
6.2(a)(vi) to reflect that such Profits, or a portion thereof, are more
appropriately allocated among the Contributing Members to reflect distributions
(or reasonably anticipated distributions) under Section 6.1(vi) (relating to Net
Cash Flow that does not constitute Distributable Amounts).
(b) Allocation of Losses. After giving effect to the special allocations set
forth in Section 6.2(c), Losses of the Company for each Fiscal Year shall be
allocated to the Members as follows:
(i) Except as provided in Section 6.2(b)(iii), Losses shall be allocated to the
Members to offset any Profits allocated under the following sections, in the
following order (in each case, pro rata in proportion to the share of Profits
being offset): (A) Section 6.2(a)(vi); (B) Section 6.2(a)(v); (C) Section
6.2(a)(iv); (D) Section 6.2(a)(iii); and (E) Section 6.2(a)(ii).
(ii) Except as provided in Section 6.2(b)(iii), Losses less any amounts
allocated under Section 6.2(b)(i), shall be allocated to the Members in
proportion to their Profits Interests.
(iii) The Losses allocated pursuant to Section 6.2(b)(i) and 6.2(b)(ii) shall
not exceed the maximum amount of Losses that can be so allocated without causing
any Member to have a deficit Adjusted Capital Account Balance at the end of any
Fiscal Year. In the event some but not all of the Members would have deficit
Adjusted Capital Account Balances as a consequence of an allocation of Losses
pursuant to Section 6.2(b)(i) or 6.2(b)(ii), the limitation set forth in this
Section 6.2(b)(iii) shall be applied on a Member by Member basis so as to
allocate the maximum permissible Losses to each Member under Treas. Reg. ss.
1.704-1(b)(2)(ii)(d). All Losses in excess of the limitations set forth in this
Section 6.2(b)(iii) shall be allocated to the Members in proportion to their
Profits Interests.
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(c) Regulatory Allocations. The following special allocations shall be made in
the following order:
(i) If there is a net decrease during a Company Fiscal Year in Company Minimum
Gain then, to the extent required by Treas. Reg. ss. 1.704-2(f), each Member
shall be allocated items of Company income and gain entering into the
computation of Profits and Losses for such Fiscal Year (and, as necessary, for
subsequent Fiscal Years) equal to that Member's share of the net decrease in the
Company Minimum Gain (within the meaning of Treas. Reg. ss. 1.704-2(g)(2)). It
is the intent of the Members that this Section 6.2(c)(i) constitute a Company
Minimum Gain chargeback provision under Treas. Reg. ss. 1.704-2(f) and be
interpreted consistently with such regulation to effectuate such intent.
(ii) If there is a net decrease during a Company Fiscal Year in Member
Nonrecourse Debt Minimum Gain then, to the extent required by Treas. Reg. ss.
1.704-2(i)(4), any Member with a share of Member Nonrecourse Debt Minimum Gain
at the beginning of such Fiscal Year shall be allocated items of Company income
and gain entering into the computation of Profits and Losses for such Fiscal
Year (and, if necessary, for subsequent Fiscal Years) equal to that Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain (within the
meaning of Treas. Reg. ss. 1.704-2(i)(4)). It is the intent of the Members that
this Section 6.2(c)(ii) constitute a Member Nonrecourse Debt Minimum Gain
chargeback provision under Treas. Reg. ss. 1.704-2(i)(4) and be interpreted
consistently with such regulation to effectuate such intent.
(iii) If any Member unexpectedly receives an adjustment, allocation, or
distribution of the type contemplated by Treas. Reg. ss.
1.704-1(b)(2)(ii)(d)(4), (5), or (6) that causes or increases a deficit in such
Member's Adjusted Capital Account Balance items of Company income and gain
entering into the computation of Profits and Losses shall be allocated to all
such Members in an amount and manner sufficient to eliminate, to the extent
required by Treas. Reg. ss. 1.704-1(b), the deficit Adjusted Capital Account
Balance of such Member as quickly as possible, provided that an allocation
pursuant to this Section 6.2(c)(iii) shall be made only if and to the extent
that such Member would have a deficit Adjusted Capital Account Balance after all
other allocations provided for in this Section 6.2 have been tentatively made as
if this Section 6.2(c)(iii) were not in the Agreement. It is the intent of the
Members that this Section 6.2(c)(iii) constitute a qualified income offset
provision under Treas. Reg. ss. 1.704-1(b)(2)(ii)(d) and be interpreted
consistently with such regulation to effectuate such intent.
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(iv) In the event that any Member has a deficit Capital Account balance at the
end of any Fiscal Year which is in excess of the amount such Member is deemed to
be obligated to restore pursuant to the next to last sentences of Treas. Reg.
xx.xx. 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 Section
6.2(c)(iv) shall be made only if and to the extent that such Member would have a
deficit Capital Account balance in excess of such sum after all other
allocations provided for in this Section 6.2 have been made as if Section
6.2(c)(iii) and this 6.2(c)(iv) were not in the Agreement. It is the intent of
the Members that this Section 6.2(c)(iv) constitute a gross income allocation
and be interpreted to effectuate such intent.
(v) Company Nonrecourse Deductions shall be allocated to the Members in
proportion to their Profits Interests.
(vi) Member Nonrecourse Deductions attributable to a Member Nonrecourse Debt
shall be allocated to the Member (or Members) that bear the economic risk of
loss for such Member Nonrecourse Debt in accordance with Treas. Reg. ss.
1.704-2(i)(1).
(d) Curative Allocations. The Regulatory Allocations are intended to comply with
certain requirements of the Treasury Regulations under Code Section 704(b). It
is the intent of the Members that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss or deduction
pursuant to this Section 6.2(d). Therefore, notwithstanding any other provision
of this Section 6.2 (other than the Regulatory Allocations), the Managing Member
shall make such offsetting special allocations of Company income, gain, loss or
deduction in whatever reasonable manner it determines appropriate so that, after
such offsetting allocations are made, each Member's Capital Account balance is,
to the extent possible, equal to the Capital Account balance such Member would
have had if the Regulatory Allocations were not part of the Agreement and all
items of Company items of income, gain, loss or deduction were allocated
pursuant to Sections 6.2(a) and 6.2(b). In exercising its discretion under this
Section 6.2(d), the Managing Member shall take into account future Regulatory
Allocations under Sections 6.2(c)(i) and 6.2(c)(ii) that, although not yet made,
are likely to offset other Regulatory Allocations previously made under Sections
6.2(c)(v) and 6.2(c)(vi). This Section 6.2(d) is intended to minimize to the
extent possible and to the extent necessary any economic distortions which may
result from application of the Regulatory Allocations and shall be interpreted
in a manner consistent therewith.
(e) Special Allocations In Connection With Liquidation. In the case of the
Fiscal Year in which the Company is liquidated (and, to the extent necessary,
for prior Fiscal Years) the Profits and Losses (or, to the extent necessary,
items thereof) shall be allocated in such a manner, as determined by the
Managing Member, as is necessary to provide a Capital Account balance for each
Member equal to the amount that such Member would receive if all of the proceeds
of liquidation of the Company were distributed among the Members in accordance
with Section 6.1(a) (determined as if (i) the Company were not liquidating and
that such distributable amounts were Net Cash Flow, and, (ii) only distributions
actually made under Section 6.1(a) prior to liquidation shall be taken into
account and no additional amounts will be deemed to be distributed with respect
to Tax Distribution Amounts).
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6.3. Tax Allocations. All items of income, gain, loss, and deduction, and all
tax preferences, depreciation, accelerated cost recovery system deductions and
investment interest and other tax items of the Company for each Fiscal Year
(collectively referred to as "Company Tax Items") shall be allocated for tax
purposes to the Members in accordance with this Section 6.3.
(a) Except as provided in Sections 6.3(b) and 6.3(c), Company Tax Items shall be
allocated for tax purposes in accordance with the allocations of items of
income, gain, loss, deduction, Company Nonrecourse Deductions, Member
Nonrecourse Deductions, Profits, and Losses under Section 6.2. For purposes of
the preceding sentence, an allocation to a Member of a share of Profits or
Losses shall be treated as an allocation to such Member of the same share of
each Company Tax Item that is taken into account in computing such Profits or
Losses.
(b) Gain or loss upon sale or other disposition of any Property contributed to
the Company or any depreciation, amortization, or other cost recovery deduction
allowable with respect to the basis of Property contributed to the Company shall
be allocated for tax purposes among the contributing and non-contributing
Members so as to take into account the difference between the adjusted tax basis
and the Agreed Value of the Property on the date of its contribution to the
extent permitted by Treas. Reg. ss. 1.704-3 or such superseding regulations as
may be promulgated in accordance with Section 704(c) of the Code. In making
allocations pursuant to the preceding sentence, the Managing Member may apply
any method or convention required or permitted by Section 704(c) of the Code.
(c) Except as provided in Section 6.3(b), if there has been an adjustment to the
Members' Capital Accounts pursuant to Section 4.3(e) to reflect the unrealized
income, gain, loss, or deduction inherent in Company Property, Company Tax Items
with respect to such Property shall be allocated to the Members for tax purposes
so as to take into account the difference between the adjusted tax basis of such
Property and the value at which it is reflected in the Members' Capital Accounts
in the same manner as variations between the adjusted tax basis and fair market
value of Property contributed to the Company are taken into account in
determining the Members' allocations of Company Tax Items under Section 6.3(b).
The allocations under this Section 6.3(c) are intended to comply with paragraphs
(b)(2)(iv)(f)(4) and (b)(4)(i) of Treas. Reg. ss. 1.704-1 and shall be
interpreted consistently with such regulation to effectuate such intent.
(d) To the extent consistent with the intent of the parties to this Agreement,
accounting matters relating to allocations of Profits and Losses, Capital
Accounts, and allocations of items of federal income tax significance shall be
handled in such a way that the allocations of items of federal income tax
significance will have substantial economic effect or will otherwise be
respected for federal income tax purposes.
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6.4. Other Allocation Rules.
(a) All other items that must be allocated to the Members shall be allocated to
the Members in accordance with the allocation of Profits and Losses as provided
in Section 6.2 of this Agreement.
(b) The Members are aware of the income tax consequences of the allocations made
by this Section 6 and hereby agree to be bound by the provisions of this Section
6 in reporting their shares of Company income and loss for income tax purposes.
(c) Solely for purposes of determining a Member's proportionate share of the
"excess nonrecourse liabilities" of the Company, within the meaning of Treas.
Reg. ss. 1.752-3(a)(3), the Members' interests in Company profits are in
proportion to their Profits Interests.
(d) To the extent permitted by Treas. Reg. ss. 1.704-2(h)(3), the Managing
Member shall endeavor not to treat distributions of Net Cash Flow as having been
made from the proceeds of a Company nonrecourse liability or a Company
nonrecourse debt.
6.5. Allocation Savings Provision. The allocation method set forth in this
Section 6 is intended to allocate Profits and Losses to the Members for federal
income tax purposes in accordance with their economic interests in the Company
while complying with the requirements of Code Section 704(b) and the Treasury
Regulations promulgated thereunder. If in the reasonable opinion of the Managing
Member, the allocation of Profits or Losses pursuant to the provisions of this
Section 6 shall not (i) satisfy the requirements of Code Section 704(b) or the
Treasury Regulations thereunder, (ii) comply with any other provisions of the
Code or Treasury Regulations or (iii) properly take into account any expenditure
made by the Company or transfer of a Company Interest, then notwithstanding
anything to the contrary contained in the preceding provisions of this Section
6, Profits and Losses shall be allocated in such reasonable manner as the
Managing Member determines to be required so as to reflect properly (i), (ii) or
(iii), as the case may be; provided, however, that any change in the method of
allocating Profits or Losses shall not materially alter the economic agreement
between the Members.
6.6. Members' Varying Interests. In the event of any changes in any Member's
Company Interest during the Fiscal Year, then for purposes of this Section 6,
the Managing Member shall take into account the requirements of Code Section
706(d) and shall have the right to select any reasonable method of determining
the varying interests of the Members during the Fiscal Year which satisfies Code
Section 706(d). See Section 7.9 for additional rules relating to distributions
and allocations in respect to Transferred Company Interests.
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SECTION 7
Transfer Provisions
7.1. Restriction on Transfers. Except as otherwise permitted by this Agreement,
no Member shall Transfer all or any portion of his Company Interest. In the
event that any Member pledges or otherwise encumbers any of its Company Interest
as security for the payment of an obligation, any such pledge or hypothecation
shall be made pursuant to a pledge or hypothecation agreement that requires the
pledgee or secured party to be bound by all of the terms and conditions of this
Section 7. For purposes of this Section 7, any Transfer of a partnership
interest in RCP Investments, L.P., shall be deemed to be a Transfer of a Company
Interest, and RCP Investments, L.P., shall not permit it to be effected unless
it is done in compliance with the provisions of this Section 7 applicable to
Transfers of Company Interests as if the holder thereof were a Member.
7.2. Permitted Transfers. Subject to the conditions and restrictions set forth
in Section 7.3 hereof, a Member may at any time Transfer all or any portion of
his or its Company Interest to (a) any other Member, (b) any member of the
transferor's Family, (c) any Affiliate of the transferor, (d) the transferor's
executor, administrator, trustee, or personal representative to whom such
Company Interest are transferred at death or involuntarily by operation of law,
or (e) any Purchaser in accordance with Section 7.4 hereof (any such Transfer
being referred to in this Agreement as a "Permitted Transfer"). For purposes
hereof, a Member's "Family" shall include only (i) such Member's spouse, natural
or adoptive lineal ancestors or descendants, sisters, brothers, (ii) trusts for
the exclusive benefit of one or more of the Member and such other persons, and
(iii) corporations, partnerships or limited liability companies substantially
all of the securities of which are held by one or more of the Member and such
other persons.
7.3. Conditions to Permitted Transfers. A Transfer shall not be treated as a
Permitted Transfer under Section 7.2 hereof unless and until the following
conditions are satisfied or waived by the Managing Member:
(a) Except in the case of a Transfer of a Company Interest at death or
involuntarily by operation of law, the transferor and transferee shall execute
and deliver to the Company such documents and instruments of conveyance as may
be necessary or appropriate in the opinion of counsel to the Company to effect
such Transfer and to confirm the agreement of the transferee to be bound by the
provisions of this Section 7. In the case of a Transfer of a Company Interest at
death or involuntarily by operation of law, the Transfer shall be confirmed by
presentation to the Company of legal evidence of such Transfer, in form and
substance satisfactory to counsel to the Company. In all cases, the Company
shall be reimbursed by the transferor and/or transferee for all costs and
expenses that it reasonably incurs in connection with such Transfer.
(b) The transferor and transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the Company Interest transferred, and any
other information reasonably necessary to permit the Company to file all
required federal and state tax returns and other legally required information
statements or returns. Without limiting the generality of the foregoing, the
Company shall not be required to make any distribution otherwise provided for in
this Agreement with respect to any transferred Company Interest until it has
received such information.
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(c) Except in the case of a Transfer of a Company Interest at death or
involuntarily by operation of law, the transferor shall provide an opinion of
counsel, which opinion and counsel shall be satisfactory to the Company, to the
effect that (i) such Transfer is exempt from all applicable registration
requirements, including the Securities Act of 1933, as amended, and any
applicable state securities laws, (ii) such Transfer will not result in the
Company being deemed an investment company within the meaning of the Investment
Company Act of 1940, (iii) such Transfer will not result in the Company or any
person providing services to the Company becoming subject to the provisions of
the Investment Adviser's Act of 1940, and (iv) such Transfer will not violate
any applicable laws regulating the Transfer of securities.
(d) The transferor shall comply with the provisions of Section 7.8 and 7.11
hereof.
7.4. Right of First Refusal. In addition to the other limitations and
restrictions set forth in this Section 7, except as permitted by Section 7.2
hereof, no Member other than Xxxxx National Corporation or an Affiliate thereof
shall Transfer all or any portion of his Company Interest (the "Offered
Interests") unless such Member (the "Seller") complies with the terms of this
Section 7.4.
(a) Limitation on Transfers. No Transfer may be made under this Section 7.4
unless the Seller has received a bona fide written offer (the "Purchase Offer")
from a Person (the "Purchaser") to purchase the Offered Interest for a purchase
price (the "Offer Price") denominated and payable in United States dollars at
closing or according to specified terms, with or without interest, which offer
shall be in writing signed by the Purchaser and shall be irrevocable for a
period ending no sooner than the day following the end of the Offer Period, as
hereinafter defined.
(b) Offer Notice. Prior to making any Transfer that is subject to the terms of
this Section 7.4, the Seller shall give to the Company and Xxxxx National
Corporation written notice (the "Offer Notice") which shall include a copy of
the Purchase Offer and an offer (the "Firm Offer") to sell the Offered Interests
to the Company or Xxxxx National Corporation (the "Offerees") for the Offer
Price, payable according to the same terms as (or more favorable terms than)
those contained in the Purchase Offer, provided that the Firm Offer shall be
made without regard to the requirement of any xxxxxxx money or similar deposit
required of the Purchaser prior to closing, and without regard to any security
(other than the Offered Interest) to be provided by the Purchaser for any
deferred portion of the Offer Price.
(c) Offer Period. The Firm Offer shall be irrevocable for a period (the "Offer
Period") ending at 11:59 P.M., local time at the Company's principal place of
business, on the ninetieth day following the day of the Offer Notice.
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(i) Acceptance of Firm Offer. At any time during the first sixty (60) days of
the Offer Period, any Offeree who is a Member may, by giving written notice of
acceptance to the Seller, accept the Firm Offer as to the Offered Interest. In
the event that within sixty (60) days of the Offer Period, the Company or, if
the Company does not do so, Xxxxx National Corporation (the "Accepting Offeree")
accepts the Firm Offer with respect to all of the Offered Interests, the Firm
Offer shall be deemed to be accepted, and the Offered Interest shall be
purchased by the Accepting Offeree.
(d) Closing of Purchase Pursuant to Firm Offer. In the event that the Firm Offer
is accepted, the closing of the sale of the Offered Interest shall take place
within thirty (30) days after the Firm Offer is accepted or, if later, the date
of closing set forth in the Purchase Offer. The Seller and the Accepting Offeree
shall execute such documents and instruments as may be necessary or appropriate
to effect the sale of the Offered Interest pursuant to the terms of the Firm
Offer and this Section 7.
(e) Sale Pursuant to Purchase Offer If Firm Offer Rejected. If the Firm Offer is
not accepted in the manner hereinabove provided, the Seller may sell the Offered
Interest to the Purchaser at any time within sixty (60) days after the last day
of the Offer Period, provided that such sale shall be made on terms no more
favorable to the Purchaser than the terms contained in the Purchase Offer and
provided further that such sale complies with other terms, conditions, and
restrictions of this Agreement that are applicable to sales of Company Interests
and are not expressly made inapplicable to sales occurring under this Section
7.4.
7.5. Prohibited Transfers. Any purported Transfer of a Company Interest that is
not a Permitted Transfer shall be null and void and of no force or effect
whatever; provided that, if the Company is required to recognize a Transfer that
is not a Permitted Transfer (or if the Managing Member, in its sole discretion,
elects to recognize a Transfer that is not a Permitted Transfer), the interest
Transferred shall be strictly limited to the transferor's rights to allocations
and distributions as provided by this Agreement with respect to the transferred
Company Interest, which allocations and distributions may be applied (without
limiting any other legal or equitable rights of the Company) to satisfy any
debts, obligations, or liabilities for damages that the transferor or transferee
of such Company Interest may have to the Company. In the case of a Transfer or
attempted Transfer of a Company Interest that is not a Permitted Transfer, the
parties engaging or attempting to engage in such Transfer shall be liable to
indemnify and hold harmless the Company and the other Members from all cost,
liability, and damage that any of such indemnified Persons may incur (including,
without limitation, incremental tax liability and lawyers' fees and expenses) as
a result of such Transfer or attempted Transfer and efforts to enforce the
indemnity granted hereby.
7.6. Rights of Unadmitted Assignees. A Person who acquires one or more Company
Interests but who is not admitted as a Substitute Member pursuant to Section 7.7
hereof shall be entitled only to allocations and distributions with respect to
such Company Interest in accordance with this Agreement, and shall have no right
to any information or accounting of the affairs of the Company, shall not be
entitled to inspect the books or records of the Company, and shall not have any
of the rights of a Member under the Act or this Agreement.
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7.7. Admission as Substitute Members. A transferee of Company Interest may be
admitted to the Company as a Substitute Member only upon satisfaction of the
conditions set forth below in this Section 7.7, unless waived by the Managing
Member:
(a) The Company Interest with respect to which the transferee is being admitted
was acquired by means of a Permitted Transfer;
(b) The transferee becomes a party to this Agreement as a Member and executes
such documents and instruments as the Members may reasonably request as may be
necessary or appropriate to confirm such transferee as a Member in the Company
and such transferee's agreement to be bound by the terms and conditions hereof;
(c) The transferee pays or reimburses the Company for all reasonable legal,
filing, and publication costs that the Company incurs in connection with the
admission of the transferee as a Member with respect to the Transferred Company
Interest;
(d) The transferee provides the Company with evidence satisfactory to counsel
for the Company that such transferee has made each of the representations and
undertaken each of the warranties applicable to it described in Section 11
hereof; and
(e) If the transferee is not an individual of legal majority, the transferee
provides the Company with evidence satisfactory to counsel for the Company of
the authority of the transferee to become a Member and to be bound by the terms
and conditions of this Agreement.
7.8. Covenants. Each Member hereby represents, covenants and agrees with the
Company for the benefit of the Company and all Members, that (i) he is not
currently making a market in Company Interests and will not in the future make a
market in Company Interests, (ii) he will not Transfer his Company Interest on
an established securities market, a secondary market (or the substantial
equivalent thereof) within the meaning of Code Section 7704(b) (and any
regulations, proposed regulations, revenue rulings, or other official
pronouncements of the Internal Revenue Service or Treasury Department that may
be promulgated or published thereunder), and (iii) in the event such
Regulations, revenue rulings, or other pronouncements treat any or all
arrangements which facilitate the selling of partnership interests and which are
commonly referred to as "matching services" as being a secondary market or
substantial equivalent thereof, he will not Transfer any Interest through a
matching service that is not approved in advance by the Company. Each Member
further agrees that he will not Transfer any Interest to any Person unless such
Person agrees to be bound by this Section 7.8 and to Transfer such Company
Interest only to Persons who agree to be similarly bound. The Managing Member
may, from time to time and at the request of an Member, consider whether to
approve a matching service and shall notify all Members of any matching service
that is so approved.
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7.9. Distributions and Allocations in Respect to Transferred Company Interest.
If any Company Interest is sold, assigned, or Transferred during any Fiscal Year
in compliance with the provisions of this Section 7, Profits, Losses, each item
thereof, and all other items attributable to the Transferred Interest for such
Fiscal Year shall be divided and allocated between the transferor and the
transferee by taking into account their varying Company Interests during such
Fiscal Year in accordance with Code Section 706(d), using any conventions
permitted by law and selected by the Members. All distributions on or before the
date of such Transfer shall be made to the transferor, and all distributions
thereafter shall be made to the transferee. Solely for purposes of making such
allocations and distributions, the Company shall recognize such Transfer not
later than the end of the calendar month during which it is given notice of such
Transfer, provided that, if the Company is given notice of a Transfer at least
ten (10) Business Days prior to the Transfer the Company shall recognize such
Transfer as the date of such Transfer, and provided further that, if the Company
does not receive a notice stating the date such Interest was Transferred and
such other information as the Members may reasonably require within thirty (30)
days after the end of the Fiscal Year during which the transfer occurs, then all
such items shall be allocated, and all distributions shall be made, to the
Person who, according to the books and records of the Company, was the owner of
the Interest on the last day of the Fiscal Year during which the Transfer
occurs. Neither the Company nor any Member shall incur any liability for making
allocations and distributions in accordance with the provisions of this Section
7.9, whether or not any Member or the Company has knowledge of any Transfer of
ownership of any Interest.
7.10. Tax Elections.
(a) In the event of a Transfer of all or part of a Company Interest by sale or
exchange or on death of a Member, upon request of the transferee Member, the
Company shall elect, pursuant to Section 754 of the Code, to adjust the basis of
the Company's Property with respect to such Member; provided, however, that the
transferee Member shall bear all costs incurred by the Company as a result of
the election. Any tax items or aspects attributable to the aforesaid adjustments
to basis (whether consisting of additional depreciation deductions or a
reduction of gain on sale or otherwise) shall be allocated solely to the
transferee Member. Each Member shall, at its own expense, within thirty (30)
days of request from the Company, furnish to the Company such information as is
reasonably necessary to accomplish the adjustments in basis provided for under
the Section 754 election.
(b) The Managing Member shall cause the Company to make or revoke all other tax
elections provided for under the Code. Each Member who transfers all or any
portion of its Company Interest shall furnish the Company with all information
required to enable the Company to fulfill any federal income tax reporting
requirements imposed with respect to such transfer.
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SECTION 8
Sale of Assets and Dissolution of Company
8.1. Dissolution of the Company. The Company shall be dissolved on the
occurrence of any of the following events:
(a) the sale of all or substantially all of the assets of the Company;
(b) the expiration of the term of the Company in accordance with Section
2.12;
(c) the determination of the Managing Member to dissolve the Company; or
(d) otherwise by operation of law.
8.2. Heirs and Executors. The Members agree that this Operating Agreement,
including, without limitation, the terms and conditions of this Section 8, shall
be binding upon any of their heirs, executors, administrators, successors, and,
subject to Section 7 hereof, assigns.
SECTION 9
Distribution Upon Dissolution
9.1. Distributions Upon Dissolution.
(a) Upon the dissolution of the Company, the Members or the Persons required by
law to wind up the Company's affairs shall liquidate the assets of the Company
and apply and distribute the proceeds of such liquidation as follows, unless
required otherwise by law:
(i) first, to the payment of debts and liabilities of the Company, exclusive of
those debts and liabilities set forth in clauses (ii) and (iii) hereof, and to
the payment of the expenses of winding up;
(ii) second, to the payment of any accrued any unpaid fees due under the
investment advisory agreement with the Investment Advisor and any other amounts
payable to any Member (other than amounts payable to a Member solely in such
Member's capacity as a Member of the Company);
(iii) third, to the setting up of reasonable reserves for any contingent
liabilities and obligations of the Company, provided that any such reserves
shall be held for such period as the Members or other Persons so distributing
shall deem advisable for the purpose of disbursing such reserves in payment of
such liabilities or obligations and, at the expiration of such period, the
balance of such reserves, if any, shall be distributed as hereinafter provided;
(iv) fourth, to the Members to the extent of, and in proportion to, their
positive Capital Account balances as adjusted to reflect Company operations up
to and including the liquidation.
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(b) If the Members or the Persons required by law to wind up the Company's
affairs, in their sole discretion (and whether or not in accordance with Section
6.1(d)), shall determine that a portion of the Property should be distributed in
kind to the Members, the Members or such Persons, as the case may be, shall
obtain an appraisal as of a date reasonably close to the date of liquidation.
The Capital Accounts shall be adjusted as provided in Section 4.3 to reflect
each Member's share of the unrealized appreciation (or loss) with respect to
such distributed Property. The distribution of any such Property (or portions
thereof as tenants in common) in kind to a Member shall be considered a
distribution of an amount equal to the Property's appraised fair market value
(or portion thereof) for purposes of this Section 9.1.
9.2. Time for Liquidation. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the discharge of liabilities.
9.3. Statements Upon Dissolution. By no later than one hundred twenty (120) days
after the dissolution and termination of the Company, each of the Members shall
be furnished with statements similar, so far as may be practicable, to those set
forth in Section 10.2 hereof prepared by the certified public accountant for the
Company as of and for the period ending with the date of complete liquidation.
SECTION 10
Books of Account, Records and Reports
10.1. Books and Records of the Company. Proper and complete records and books of
account of the Company shall be kept or caused to be kept by an accountant
approved by the Managing Member, in which shall be entered fully and accurately
all transactions and such other matters relating to the Company Business as are
usually entered into records and books of account maintained by Persons engaged
in businesses of a like character. The Company's annual financial statements
shall be prepared on an accrual basis in accordance with generally accepted
accounting principles. The books and records shall at all times be maintained at
the principal offices of the Company, and shall be open to the reasonable
inspection and examination of any Member or such Member's duly authorized
representatives during reasonable business hours.
10.2. Tax Information to Members. Within ninety (90) days after the end of each
Fiscal Year of the Company, the Company shall send to each Person who was a
Member at any time during such Fiscal Year such tax information, including,
without limitation, Federal Tax Schedule K-1, as shall be reasonably necessary
for the preparation of such Member's federal income tax return. This period
shall be automatically extended by the period of any delay beyond the control of
the Members, such as a delay resulting from the failure of a third party to
provide required tax information to the Company in a timely manner.
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10.3. Tax Matters Member. Xxxxx National Corporation shall be the Tax Matters
Member and shall be designated as such on all relevant forms or in any other
manner as designated by applicable law or regulation; provided, however, that if
at any time Xxxxx National Corporation ceases to be the Managing Member, then
the Members by Majority vote may select another Member to serve as the Tax
Matters Member. The Tax Matters Member shall have all powers needed to perform
its duties, including, without limitation, the power to retain all attorneys and
accountants of its choice. The Tax Matters Member shall be entitled to
reimbursement from the Company for all necessary and reasonable out-of-pocket
expenses incurred in performing his duties as Tax Matters Member.
10.4. Tax Returns. The Managing Member shall cause income and other required
federal, state and local tax returns for the Company to be prepared and to be
timely filed with the appropriate authorities making such elections as the
Managing Member shall reasonably deem to be in the best interest of the Company
and the Members.
SECTION 11
Representations and Warranties
Each of the Members hereby represents and warrants to each of
the remaining Members as follows:
11.1. Such Member has power to execute, deliver and perform his obligations
under this Agreement. This Agreement constitutes the valid and binding
obligation of such Member, enforceable against him in accordance with its terms
except as enforcement may be limited by laws governing bankruptcy, insolvency
and similar matters and by general principles of equity.
11.2. The execution, delivery and performance of his obligations hereunder by
such Member do not conflict with, violate, or constitute a breach or default
under any law, regulation, judicial or administrative order, contract, indenture
or other agreement to which such Member is a party or subject or by which he may
be bound.
11.3. There is not pending or, to the best knowledge of such Member, threatened
or pending against such Member any claim, suit, action or governmental
proceeding, that would, if adversely determined, materially impair the ability
of such Member to perform his obligations hereunder.
SECTION 12
Miscellaneous
12.1. Notices. All notices under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally, or, if sent by an overnight
delivery service maintaining records of receipt, on the first business day of
actual receipt. Notices shall be addressed to the Members at the addresses set
forth on Schedule A or to such other address as the Members shall specify by
written notice to the Company and the other Members. Notices shall be addressed
to the Company at: 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, or to such
other address as the Company may specify by written notice to the Members.
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12.2. Amendments. This Agreement constitutes the full and complete agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements, understandings, letters of intent, term sheets,
and similar evidences of prior intent. This Agreement may be amended only with
the written consent of the Members by Supermajority Vote; provided, however,
that no amendment may materially and adversely affect the rights of any Member
relative to the other Members without the consent of the adversely affected
Member.
12.3. Additional Documents. Each Member agrees to execute and acknowledge all
documents and writings reasonably necessary to the creation of this Company and
the achievement of its purposes, specifically including, without limitation, a
certificate of formation and all amendments thereto, as well as any cancellation
thereof.
12.4. Successors and Assigns. Except as herein otherwise provided to the
contrary, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors and assigns.
12.5. Interpretation and Governing Law. When the context in which words are used
in this Agreement indicates that such is the intent, words in the singular
number shall include the plural, and vice versa, the masculine gender shall
include the neuter or female gender, and "or" is used in the inclusive sense.
Headings or titles contained herein are inserted only as a matter of convenience
and in no way define, limit, extend or interpret the scope of this Agreement or
any particular Section hereof. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving regard to the
conflict of laws provisions thereof.
12.6. Severability. If any provision, sentence, phrase or word of this Agreement
or the application thereof to any Person or circumstance shall be held invalid,
the remainder of this Agreement, or the application of such provision, sentence,
phrase or word to Persons or circumstance, other than those as to which it is
held invalid, shall not be affected thereby.
12.7. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
12.8. Third Parties. The agreements, covenants and representations contained
herein are for the benefit of the Members hereto and are not for the benefit of
any third parties including, without limitation, any creditors of the Company.
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IN WITNESS WHEREOF, the parties have executed this Operating
Agreement as of the day and year first above written.
XXXXX NATIONAL CORPORATION
By/s/XXXXXXX X. XXXXXXXX /s/J. XXXXXX XXXXX, XX.
------------------- --------------------
President J. Xxxxxx Xxxxx, Xx.
RCP Investments, L.P.
By /s/ J. XXXXXX XXXXX, XX.
--------------------
J. Xxxxxx Xxxxx, Xx., General Partner
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SCHEDULE A
MEMBERS OF XXXXX CAPITAL PARTNERS, LLC
Members
Members' Names Initial Capital Maximum Annual Capital Interest Profits
And Addresses Contribution Capital Contribution Interest
Xxxxx National Corporation Equity Interests $58,616,171.17 99% 79.2%
000 00xx Xxxxxx, X.X. listed below
Xxxxxxxxxx, X.X. 00000
RCP Investments L.P. $500 None 0% 20.0%
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: J. Xxxxxx Xxxxx, Xx.
J. Xxxxxx Xxxxx, Xx. Equity interests $592,082.54 1% 0.8%
000 00xx Xxxxxx, X.X. listed below
Xxxxxxxxxx, X.X. 00000
Contributed Equity Interests:
NOTE: Equity interests are being contributed by Xxxxx National Corporation,
which has held such interests 99% for the benefit of itself and 1% for the
benefit of J. Xxxxxx Xxxxx, Xx., in the manner previously agreed to by them.
Stock Interests
---------------
Company Number of Shares and Class
------- --------------------------
omitted-proprietary and confidential
Partnership Interests
---------------------
Partnership Percentage Interest
----------- -------------------
omitted-proprietary and confidential
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