EXHIBIT 10-16(b)
OPERATING AGREEMENT
OF
HOME TEAM FINANCIAL, LLC
TABLE OF CONTENTS
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SECTION 1 - DEFINITIONS.....................................1
SECTION 2 - ORGANIZATION....................................4
SECTION 3 - PURPOSE.........................................4
SECTION 4 - TERM............................................4
SECTION 5 - PRINCIPAL OFFICE................................4
SECTION 6 - COMPANY CAPITAL AND PERCENTAGE INTERESTS........4
SECTION 7 - CAPITAL ACCOUNTS................................5
SECTION 8 - ALLOCATION OF PROFITS OR LOSSES.................6
SECTION 9 - DISTRIBUTIONS...................................6
SECTION 10 - TAX ELECTIONS..................................6
SECTION 11 - TAX MATTERS PARTNER............................7
SECTION 12 - CONFLICTS OF INTEREST..........................7
SECTION 13 -MANAGEMENT BY OPERATING COMMITTEE...............9
SECTION 14 - OFFICERS......................................11
SECTION 15 - RESPONSIBILITIES OF UNCB......................12
SECTION 16 - TRANSFER OF INTERESTS; ADMISSION OF ADDITIONAL
MEMBERS...................................................13
SECTION 17 - BUYOUT METHODOLOGY............................15
SECTION 18 - DISSOLUTION - BUYOUT BY INDIVIDUAL MEMBERS....15
SECTION 19 - BOOKS AND RECORDS.............................17
SECTION 20 - LIABILITY OF MEMBERS..........................17
SECTION 21 - INDEMNIFICATION...............................17
SECTION 22 - MISCELLANEOUS.................................19
ANNEX A - INITIAL CAPITAL CONTRIBUTIONS, OWNERSHIP SHARES AND
VOTING RIGHTS........................................... A-1
ANNEX B - LIST OF ASSETS PURCHASED BY THE COMPANY FROM HOME TEAM
MORTGAGE, INC............................................B-1
ANNEX C - NET PROFIT DISTRIBUTION SCHEDULE...............C-1
ANNEX D - BUYOUT PAYMENTS ON DEATH OR DISABILITY.........D-1
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OPERATING AGREEMENT
OF
HOME TEAM FINANCIAL, LLC
(A Pennsylvania Limited Liability Company)
This Operating Agreement of Home Team Financial, LLC (the
"Company"), dated as of July 15, 2005 has been adopted by and
among the Members of the Company.
RECITALS
WHEREAS, the Company has been organized as a Pennsylvania
limited liability company by the filing of a certificate of
organization with the Department of State of the Commonwealth of
Pennsylvania under and pursuant to the Act.
WHEREAS, the undersigned desire to set forth certain
operating standards and procedures to be applicable to the
Company and the Members with respect to the affairs of the
Company and the conduct of its business;
NOW, THEREFORE, the undersigned hereby state as follows:
1. Definitions. In addition to the terms defined in other
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provisions of this Agreement, including without limitation all
Annexes hereto, the following terms all have the meanings set
forth below unless the context requires otherwise:
"Act." The Pennsylvania Limited Liability Company Law of
1994, 15 Pa.C.S. Section 8901, et. seq., and any successor
statute, as amended from time to time.
"Affiliate." As to any Person, any other Person that
directly or indirectly, through one or more intermediaries
controls, is controlled by, or is under common control with such
Person or, if such Person is an individual, the Immediate Family
of such Person or trusts solely for the benefit of such Immediate
Family. As used in this definition, the term "control" means the
possession, directly or indirectly, or as trustee or executor, of
the power to direct or cause the direction of the management and
policies of a Person, either through ownership of voting
securities, as trustee or executor, by contract or credit
arrangement or otherwise.
"Agreement." This Operating Agreement, as amended,
modified, supplemented, or restated from time to time.
"Bank" or "UNCB." Union National Community Bank, located in
Mount Joy, PA.
"Buyout Payments" shall mean scheduled payments made by the
Bank, or to be made, in accordance with Section 17 hereof, to the
individual Members made in exchange for the scheduled step-down
of their ownership interests in the Company, as provided under
Section 2.5 of the Members Agreement.
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"Capital Account." The individual account maintained by the
Company with respect to each Member as provided in Annex A.
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"Capital Contribution." The aggregate amount of cash and the
agreed value of any property or services (as determined by the
Members and the Company) contributed by each Member to the
Company as provided in Section 6. In the case of a Member that
acquires a Membership Interest in the Company by an assignment or
transfer in accordance with the terms of this Agreement, "Capital
Contribution" means the Capital Contribution of that Member's
predecessor proportionate to the acquired Membership Interest.
"Certificate." The certificate of organization of the
Company and any and all amendments thereto and restatements
thereof filed on behalf of the Company with the Department of
State of the Commonwealth of Pennsylvania pursuant to the Act.
"Closing." The date of execution of this Operating
Agreement, the Members Agreement by and between the Members, the
Employment Agreements by and between the Bank and Xxxx Xxxxxxx
and the Bank and Xxxxx Xxxxxxx, respectively, and the Assignment
of Interest in TA of Lancaster, LLC.
"Code." The Internal Revenue Code of 1986, as amended.
"Company." See the preamble.
"Covered Person." A Member, any Affiliate of a Member, any
officer, director, shareholder, partner, employee,
representative, or agent of a Member, or their respective
Affiliates, or any officer, employee, or agent of the Company or
its Affiliates.
"Employment Agreements" means the employment agreements
entered into by and between Xxxx Xxxxxxx and the Bank and Xxxxx
Xxxxxxx and the Bank, entered into on even date herewith, and
effective as of the date this Agreement becomes effective.
"Immediate Family." With respect to any individual, such
individual's parents, spouse, issue, and adopted children, or any
of them.
"Laws." Any of the following:
(1) all constitutions, treaties, laws, statutes,
codes, ordinances, orders, decrees, rules, regulations, and
municipal bylaws, whether domestic, foreign, or
international;
(2) all judgments, orders, writs, injunctions,
decisions, rulings, decrees, and awards of any governmental
body;
(3) all policies, practices, and guidelines of any
governmental body; and
(4) any amendment, modification, re-enactment,
restatement, or extension of any of the foregoing, in each
case binding on or affecting the party or Person referred to
in the context in which such word is used.
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"Majority Vote." The written approval of, or the affirmative
vote by, Members holding a majority of the Voting Rights.
"Member." A Person who at the time is a member of the
Company. "Members" means two or more Persons when acting in their
capacities as members of the Company. For purposes of the
application of a provision of the Act to the Company, the Members
shall constitute one class or group of members. Annex A shall be
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amended from time to time to show the current Members.
"Membership Interest." The interest of a Member in the
Company, including, without limitation, interests in the profits
and losses, rights to distributions (liquidating or otherwise),
allocations and information, and rights to consent to or approve
actions by the Company, all in accordance with the provisions of
this Agreement, the Members Agreement, and the Act.
"Members Agreement." That certain Members Agreement executed
on even date with this Operating Agreement by and between the
Members of the Company.
"Net Profit." For purposes of this Operating Agreement, and
the Members Agreement, "Net Profit" means the gross revenue of
the Company, less expenses, determined under Generally Accepted
Accounting Principles, except that adjustments shall be made such
that "Net Profit" is not reduced by amortization of good-will, or
start-up costs that arise from the purchase transactions
contemplated in the Members Agreement.
"Percentage Interest." The proportionate Membership Interest
of a Member expressed as a percentage as shown on Annex A.
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"Person." A natural person, corporation, general or limited
partnership, limited liability company, joint venture, trust,
estate, association, or other legal entity or organization.
"Treasury Regulations" or "Treas. Regs." The income tax
regulations, including temporary regulations, promulgated under
the Code, as those regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"UNCB Incremental Income Tax Rate" UNCB's parent
corporation's consolidated marginal tax rate based on the United
States Internal Revenue Service published corporate income tax
rates (as of the date of Closing, Thirty-four percent (34%)).
"Voting Rights." Each Member shall have that number of
Voting Rights as set forth in "Annex C" hereto
"Startup Year." The period beginning on the date of Closing
and ending December 31, 2005.
"Year 1." The period beginning January 1, 2006 and ending
December 31, 2006.
"Year 2." The period beginning January 1, 2007 and ending
December 31, 2007.
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"Year 3." The period beginning January 1, 2008 and ending
December 31, 2008.
"Year 4." The period beginning January 1, 2009 and ending
December 31, 2009.
"Year 5." The period beginning January 1, 2010 and ending
December 31, 2010.
"Year 6." The period beginning January 1, 2011 and ending
December 31, 2011.
"Year 7." The period beginning January 1, 2012 and ending
December 31, 2012.
"Year 8." The period beginning January 1, 2013 and ending
December 31, 2013.
"Year 9." The period beginning January 1, 2014 and ending
December 31, 2014.
"Year 10." The period beginning January 1, 2015 and ending
December 31, 2015.
2. Organization. The Members have heretofore authorized
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the organization of the Company as a limited liability company
under and pursuant to the provisions of the Act and agree that
the rights, duties, and liabilities of the Members shall be as
provided in the Act, except as otherwise provided in this
Agreement.
3. Purpose. The Company is formed for the object and
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purpose and the nature of the business to be conducted and
promoted by the Company is, to do business as a mortgage
lender/correspondent engaging in any lawful act or activity for
which limited liability companies may be organized under the Act
and engaging in any and all activities necessary, convenient,
desirable, or incidental to the foregoing.
4. Term. The existence of the Company commenced on the
____
date the Certificate was filed in the office of the Department of
State of the Commonwealth of Pennsylvania and shall continue
until the Company is dissolved in accordance with the provisions
of this Agreement.
5. Principal Office. The principal office of the Company
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shall be located at 000 Xxxx Xxxx Xxxxxx, Xxxxx Xxx, XX, 00000 or
at such other location as may be determined, from time to time,
by the Members. The Company may also have such other offices at
such other locations as, from time to time, may be determined by
the Members.
6. Company Capital and Percentage Interests.
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(a) Initial Capital Contributions. The initial Capital
_____________________________
Contribution that each member has made or is deemed to have
made to the Company is set forth opposite the Member's name
in Annex A.
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(b) No Interest. Interest shall not be paid on or with
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respect to the Capital Contribution or Capital Account of
any Member.
(c) Return of Capital Contribution; Reimbursement of
________________________________________________
Start-up Expenditures.
_____________________
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(i) Although the Company may make distributions
to the Members from time to time as a return of their
Capital Contributions, a Member shall not have the
right to withdraw or demand a return of any of the
Member's Capital Contribution or Capital Account,
except upon dissolution or liquidation of the Company,
(ii) Notwithstanding the foregoing, all
capitalizable start-up expenditures incurred by UNCB
will be absorbed by the Company from the Capital
Contribution. UNCB, Neihart and Xxxxxxx may be
reimbursed by the Company to the extent of such amount
that each of their cash Capital Contributions is
expended in start-up costs.
(iii)Upon dissolution of the Company,
Neihart/Xxxxxxx shall have the right to distribution in
kind of the proprietary software developed by them for
use in their prior Mortgage Company, Home Team
Mortgage, Inc. which is being contributed as a part of
their capital contribution to the Company.
(d) Percentage Interests. The initial Percentage
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Interest of each Member shall be as set forth in Annex A.
Changes in the percentage ownerships of the Members shall be
governed by this Operating Agreement and the Step-down
Schedule of ownership set forth in Section 2.5 of the
Members Agreement.
7. Capital Accounts.
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(a) Tax Provisions. The allocation and capital account
______________
maintenance provisions of Treasury Regulations under section
704 of the Code are hereby incorporated by reference,
including a "qualified income offset" within the meaning of
Treas. Reg. 1.704-1(b)(2)(ii)(d), the rules regarding
allocation of "partner nonrecourse deductions" under Treas.
Reg. Section 1.704-2(i)(1), "minimum gain chargeback" under
Treas. Reg. Section 1.704-2(i) and "partner nonrecourse debt
minimum gain chargeback" under Treas. Reg. Section
1.704-2(i)(4), and the limitation on allocation of losses to
any Member that would cause a deficit capital account in
excess of such Member's capital contribution obligations and
share of minimum gain and partner nonrecourse debt minimum
gain under Treas. Reg. Section 1.704-1(b)(2)(ii)(d) as
modified by Treas. Reg. Section 1.704-2(g)(1) and
1.704-2(i)(5).
(b) Contributed Property. To the extent contributed
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property has a fair market value at the time of contribution
that differs from the contributing Member's basis in the
property, and to the extent the carrying value of property
of the Company for Capital Account purposes otherwise
differs from the Company's basis in such property,
depreciation, gain, and loss for capital account purposes
shall be computed by reference to such carrying value rather
than such tax basis. In accordance with section 704(c) of
the Code, income, gain, loss, and deduction with respect to
such property shall, solely for tax purposes, be shared
among the Members so as to take account of the variation
between the basis of the property to the Company and its
fair market value at the time of contribution, or at the
time that the carrying value of such property is adjusted
under Treas. Reg. Section 1.704-1(b)(2)(iv)(1), as the case
may be.
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(c) Purchased Property. Property to be purchased by
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the Company from Home Team Mortgage, Inc. is set forth in
Annex B.
8. Allocation of Profits or Losses. At all times while
_______________________________
there is more than one Member, Profits or Losses shall be
allocated to the Members as provided in Annex C .
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9. Distributions.
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The Net Profits of the Company shall be distributed to
the Members in the following manner:
(a) In the Startup Year and Years 1 through Year 5,
distributions of Net Profit shall be: 37.69% of Net Profits
of the Company shall be distributed to Neihart, and 32.31%
of Net Profits of the Company shall be distributed to
Xxxxxxx and 30% of the Net Profits shall be distributed to
UNCB.
(b) In Years 6 through Year 10, the Net Profit
distributions to Neihart and Xxxxxxx shall be reduced each
year by twenty percent (20%) of the original percentage,
(i.e., 20% of 37.69% and 32.31%. respectively, equaling a
7.538% reduction in Xxxxxxx'x percentage ownership for each
year and a 6.462% reduction in Xxxxxxx'x percentage
ownership) and the Net Profit distribution to UNCB shall be
increased by that amount equal to the sum of the reductions
to Neihart and Xxxxxxx.
Annex C sets forth the percentage of Net profits to be
distributed to each Member in the startup Year and Years 1
through 10.
10. Tax Elections.
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(a) Elections to be Made. To the extent permitted by
____________________
applicable tax law, the Company may make the following
elections on the appropriate tax returns:
(1) to adopt the calendar year as the Company's
taxable year;
(2) to adopt the cash method of accounting for
federal income tax purposes;
(3) if a transfer of a Membership Interest as
described in section 743 of the Code occurs, on written
request of the transferee, or if a distribution of
Company property is made on which gain described in
section 734(b)(1)(A) of the Code is recognized or there
is an excess of adjusted basis as described in section
734(b)(1)(B) of the Code, to elect, pursuant to section
754 of the Code, to adjust the basis of Company
properties;
(4) to elect to amortize the organizational
expenses of the Company and the start-up expenditures
of the Company ratably over a period of 60 months as
permitted by sections 195 and 709(b) of the Code; and
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(5) any other election the Members may deem
appropriate and in the best interests of the Members.
(b) No Election of Corporate Taxation. Neither the
_________________________________
Company nor any Member may make an election for the Company
to be taxable as a corporation for federal income tax
purposes or to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the
Code or any similar provisions of applicable state law, and
no provision of this Agreement shall be construed to
sanction or approve such an election.
00.Xxx Matters Partner. If the Company is subject to the
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consolidated audit procedures of sections 6221 to 6234 of the
Code, the "tax matters partner" of the Company pursuant to
section 623 1(a)(7) of the Code shall be UNCB. UNCB shall take
such action as may be necessary to cause each other Member to
become a "notice partner" within the meaning of section 6223 of
the Code. Any Member who is designated tax matters partner" shall
inform each other Member of all significant matters that may come
to its attention in its capacity as "tax matters partner" by
giving notice thereof on or before the fifth Business Day after
becoming aware thereof and, within that time, shall forward to
each other Member copies of all significant written
communications it may receive in that capacity. The Company shall
reimburse the tax matters partner for any costs incurred
representing the interests of the Members in respect of Company
tax matters.
12. Conflicts of Interest.
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(a) Other Business Interests. Except as set forth in
________________________
the Employment Agreements dated of even date herewith
between the Bank and Xxxx Xxxxxxx and Xxxxx Xxxxxxx, any
Member or Affiliate thereof may engage in or possess an
interest in other business ventures of any nature or
description, independently or with others, similar or
dissimilar to the business of the Company, and the Company
and the Members shall have no rights by virtue of this
Agreement in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the business of the
Company, shall not be deemed wrongful or improper. No
Member or Affiliate thereof shall be obligated to present
any particular investment opportunity to the Company even if
the opportunity is of character that, if presented to the
Company, could be taken by the Company, and any Member or
Affiliate thereof shall have the right to take for its own
account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment
opportunity. Notwithstanding the foregoing, in the absence
of breach of the Members Agreement, in the event that UNCB
proposes to acquire or charter an entity that engages in
the same mortgage business as the Company, Neihart/Xxxxxxx
shall be offered an opportunity for the proposed new entity
or acquiree to be merged into (or otherwise combined into)
the Company. The terms of the acquisition shall be subject
to determination and agreement by the parties. In the event
that Neihart/Xxxxxxx requests that the new entity, acquiree
be combined with the Company, and the Bank declines to so
combine the entities, then the restrictive clauses
prohibiting competition with the Company, as set forth in
paragraph 10 of their Employment Agreements shall become
null and void.
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(b) In the event that UNCB, or its holding Company, is
acquired by or merges with another financial institution or
bank holding company, and that entity determines that it
does not want to continue the business of the Company,
then: (i) the restrictive clauses prohibiting competition
with the Company, as set forth in paragraph 10 of their
Employment Agreements shall become null and void; and (ii)
Neihart and Xxxxxxx, or either of them, shall have the right
to purchase UNCB's Membership Interest in the Company at its
then fair market value, as determined by an independent
qualified business valuation consultant having experience
valuing mortgage origination businesses, agreed upon by the
parties, as provided in Section 8.1 of the Members
Agreement. For purposes of this subsection only, if Neihart
and/or Xxxxxxx purchases UNCB's Membership Interest under
this subsection then the Membership Interest of the Bank
shall be calculated for buyout purposes by first
establishing the fair market value as required above in this
subsection, and then:
(i) if the purchase of UNCB's Membership Interest
takes place on or before July 1, 2008, reducing
the fair market value of UNCB's Membership
Interest (including the capital position as set
forth in Annex A hereto) by twenty percent (20%);
or
(ii) if the purchase of UNCB's Membership Interest
takes place after July 1, 2008, but before
December 31, 2010, reducing the fair market value
of UNCB's Membership Interest (including the
capital position as set forth in Annex A hereto)
by twelve and one-half percent (12.5%).
(c) Interested Transactions. A contract or
_______________________
transaction between the Company and one or more of its
Members or between the Company and another domestic or
foreign association in which one or more of its Members have
a management role or a financial or other interest, shall
not be void or voidable solely for that reason, or solely
because the Member is present at or participates in the
meeting of the Members that authorizes the contract or
transaction, or solely because the vote of the Member is
counted for that purpose, if:
(1) the material facts as to the relationship or
interest and as to the transaction are disclosed or
known to the Operating Committee entitled to vote
thereon and the contract or transaction is specifically
approved in good faith by vote of those Members; and
(2) the contract or transaction is fair to the
Company as of the time it is authorized, approved, or
ratified by the Members.
An individual who personally has an interest in a
transaction shall recuse himself or herself from voting in
the Operating Committee on that transaction
(d) Voting Procedures. Members of the Operating
_________________
Committee may vote in person or by proxy at a meeting of
Members (which may be held by conference telephone), or by
consent in lieu of a Meeting. Proxies and consents shall be
in writing and may be communicated by electronic means.
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13. Management by Operating Committee.
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(a) The business and affairs of the Company shall be
managed under the direction of an Operating Committee.
(b) The Operating Committee shall be composed of
four (4) individuals, who need not be Members, provided,
however, that two (2) members of the Operating Committee
shall be appointed by UNCB and shall have the 51% voting
rights of UNCB, and two (2) members of the Operating
Committee shall be appointed by Neihart/Xxxxxxx and have the
49% voting rights of Neihart/Xxxxxxx. Meetings of the
Operating Committee shall be conducted by a chairman elected
to perform that function by the Operating Committee. The
initial members of the Operating Committee of the Company
and their Voting Rights shall be as set forth below:
Xxxx Xxxxxxx, President Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Executive Vice-President Xxxxxxx Xxxx
Assistant Secretary
Xxxxxxx Xxxxxx and Xxxxxxx Xxxx shall together or
individually exercise the 51% voting rights of UNCB.
Xxxx Xxxxxxx shall have the Voting Rights of Neihart.
Xxxxx Xxxxxxx shall have the Voting Rights of Xxxxxxx.
(c) Without any limitation thereon, the Operating
Committee shall have the power, on behalf and for the
purposes of the Company, to appoint, and remove with or
without cause, a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers of the
Company as the Operating Committee deem appropriate to carry
out, and execute the decisions and instructions of the
Operating Committee in the day-to-day operations of the
business of the Company, with such duties and powers as are
from time to time specified by the Operating Committee;
(d) An annual meeting of the Operating Committee shall
be held immediately after and at the same place as the
annual meeting of Members, with no notice other than this
Agreement being necessary. The Operating Committee may
establish by resolution, adopted by not less than 75% of the
outstanding Member votes the time and place, either in or
outside of the Commonwealth of Pennsylvania, for the holding
of regular meetings of the Operating Committee without
notice other than that resolution.
(e) Special meetings of the Operating Committee may be
called by or at the request of the chairman of the Operating
Committee or by a majority of the Operating Committee then
in office. The person or persons authorized to call special
meetings of the Operating Committee may fix any place in the
Commonwealth of Pennsylvania as the place for holding any
special meeting of the Operating Committee.
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(f) Notice of any special meeting of the Operating
Committee shall be given to each member of the Operating
Committee. Notice which is personally delivered or sent by
facsimile shall be given at least two days before the
meeting. Notice which is given by mail shall be given at
least five (5) days before the meeting. Notice given by mail
will be deemed to be received forty-eight (48) hours after
it is placed in the U.S. Mail, certified mail, return
receipt requested, postage fully prepaid thereon. Neither
the business to be transacted at, nor the purpose of, any
annual, regular or special meeting of the Operating
Committee need be stated in the notice.
(g) A majority of the entire Operating Committee shall
constitute a quorum for the transaction of business at any
meeting of the Operating Committee, provided, however, that,
if less than a majority of the Operating Committee members
are present at the meeting, a majority of the Operating
Committee members present may adjourn the meeting to a
future time, without further notice. The Operating Committee
members present at a meeting which has been duly called and
convened may continue to transact business until
adjournment, even though enough Operating Committee members
withdraw to leave less than a quorum.
(h) Except as otherwise provided herein, the
affirmative vote of a majority of the total outstanding
Member votes, at a meeting at which a quorum is present,
shall be required for the action of the Operating Committee.
(i) Members of the Operating Committee may participate
in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation
in a meeting by these means shall constitute presence in
person at the meeting.
(j) Any action required or permitted to be taken
at any meeting of the members of the Operating Committee may
be taken without a meeting if a consent in writing to the
action is signed by all of the members of the Operating
Committee required to take the action, and the written
consent is filed with the minutes of the Operating
Committee.
(k) Subject to the limitations set forth in
Paragraph 13(b) of this Operating Agreement, any vacancy on
the Operating Committee for any cause other than an increase
in the number of Operating Committee members may be filled
by:
(i) In the case of a vacancy among the members
entitled to exercise the Bank's votes, the Bank may,
in its sole discretion, designate the person to fill
the vacancy;
(ii) In the case of a vacancy among the person or
persons entitled to exercise Xxxx Xxxxxxx'x votes,
Xxxx Xxxxxxx may, in his sole discretion, designate
the person to fill the vacancy; and
(iii)In the case of a vacancy among the person or
persons entitled to exercise Xxxxx Xxxxxxx'x votes,
Xxxxx Xxxxxxx may, in his sole discretion,
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designate the person to fill the vacancy.
Any vacancy on the Operating Committee by reason of an
increase in the number of directors may be filled by a vote
of not less than 75% of the outstanding Member votes. A
member elected by the Operating Committee to fill a vacancy
shall serve until the next annual meeting of Members and
until his or her successor is elected and qualifies.
(l) The Members may, at any time, remove any Operating
Committee members, with or without cause, by the affirmative
vote of Seventy-five percent (75%) of all the votes
entitled to be cast on the matter and a successor may be
elected in the manner set forth in Subsection (k) of this
Section to fill any resulting vacancy for the balance of the
term of the removed Operating Committee members.
(m) The Company may not lease or purchase any real
property unless approved by 75% of the outstanding Member
votes in the Operating Committee.
14. Officers.
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(a) The Officers of the Company shall be as follows
with their respective titles set forth after their
names:
Xxxx Xxxxxxx President
Xxxxx Xxxxxxx Executive Vice President/Assistant Secretary
Xxxxxxx Xxxxxx Secretary/Treasurer
Xxxxxx Xxxxxxx Assistant Treasurer
(b) Except for the duties and responsibilities of UNCB
enumerated herein, and the other matters enumerated herein
requiring the consent of the Members, the Officers shall
serve the Operating Committee, it being expressly understood
that the Officers will have authority to manage the day to
day business of the Company (provided that the business is
operated in accordance with the guidelines, policies and
procedures established by UNCB and the Operating Committee)
other than the following matters, which the parties agree
will require the prior approval of the Operating Committee:
(i) Subject to the provisions of Subsection 15(e)
hereof, The hiring or firing of any employee receiving
salary or hourly wages over $55,000 (exclusive of
commissions and fringe benefits) on an annualized basis;
(ii) The entering into any Material contract or
purchase;
(iii)The origination of any loan outside of the
Company's internal lending guidelines or the expansion of
those internal lending guidelines;
(iv) The material deviation in any way from the
bank guidelines, policies and procedures relating to loan
application processing, origination and funding;
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(v) The establishment of any new lender
relationships other than those in effect commencing at the
Closing (i.e., Wilmington Finance, IndyMac, National City,
Countrywide, Long Beach, Washington Mutual, New Century,
Option One, Interfirst, and Nova Star).
(c) Without limiting their responsibilities, the
parties agree that the Officers shall have specific
responsibility for:
(i) marketing, loan origination, processing,
underwriting, closing and post-closing, shipping,
document follow-up and quality assurance;
(ii) secondary marketing-lender relationships,
pricing, hedging, obtaining all necessary lender
approvals to conduct correspondent and mortgage banking
activities;
(iii)origination, loan production, and closing
documentation technology; and
(iv) effecting the strategies, plans and business
model of the Company, as developed by the Operating
Committee.
15. Responsibilities of UNCB.
________________________
(a) Warehouse Line. UNCB will establish a revolving
warehouse line to provide loan funding service to the
Company. Interest will be at the Wall Street Journal prime
minus one-half percent (1/2 %). UNCB will provide line
availability to the Company on a daily basis. UNCB will
enter into a Warehouse Funding Services Agreement with the
Company.
(b) Ancillary Services. UNCB will enter into Services
Agreement(s) with the Company, with fees to be determined by
the Operating Committee, to provide some or all the
following services to the Company:
(i) Payroll administration and processing;
(ii) Human Resources services;
(iii) Employee health related insurance benefits
plans, life and disability insurance plans and
other employee benefits;
(iv) Audit and Compliance services;
(v) Accounting and Administrative services;
(vi) Credit administration services;
(vii) Marketing services;
(viii)Technology services; and
(ix) Business strategy and resource planning.
(x) Insurance Procurement Services (including
costs of insurance)
12
(xi) Management services provided by employees of
the Bank including, without limitation, UNCB
employees' service on the Operating Committee.
(c) Internal and external audit, compliance and
regulatory costs will be charged directly to the Company,
subject to review by the Operating Committee.
(d) All deposit accounts of the Company will be opened
with UNCB.
(e) Methodology and documentation of the Company's
hiring and firing of employees shall be approved by the
Human Resources Department of the Bank. Any disputes or
concerns arising from the hiring or termination of a Company
employee shall be brought before the Operating Committee.
(f) (1) Payments payable by the Company for services
and products listed in Subsection (b) of this section
which are obtained from external sources shall be based
upon external vendor invoices or invoice cost increases
attributable to goods or services provided to the
Company.
(2) Payments payable by the Company for services
listed in Subsection (c) of this Section shall be based
upon invoices for professional fees rendered by outside
professionals attributable to services performed for or
on behalf of the Company or performed for the Bank, but
which are incurred as the result of the Company.
(3) Fees payable by the Company to the Bank for
services listed in Subsection (b) of this Section that
are rendered by the Bank's employees will be based
upon a prorated allocation of the Bank employees' time
attributable to services to or performed for the
Company, which are expected to not exceed Four Thousand
Dollars ($4,000) per month for the first twelve (12)
months, and which may not, without approval by Seventy
five percent (75%) of the voting shares of the Members
(exercisable in the Operating Committee), exceed Six
Thousand Dollars ($6,000) for any one month for the
period commencing July 1, 2005 through December 31,
2010.
(g) UNCB will enter into a Management Services
Agreement with the Company separate from that described in
paragraph (b) of this section which will provide for monthly
payments to the Bank by the Company in an amount calculated
as the cost to the Bank of the Employment Agreements, in
exchange for the management services of Neihart and Xxxxxxx
which the Bank will provide to the Company.
16. Transfer of Interests; Admission of Additional
Members.
(a) Restrictions on Transfer. Membership Interests
________________________
constitute the personal estate of Members and may be
transferred or assigned only in accordance with the
terms of this Operating Agreement. If all of the other
Members of the Company other than the Member proposing
to dispose of his or her interest do not approve
13
of the proposed transfer or assignment by unanimous
written consent, the transferee of the interest of the
Member shall have no right to participate in the
management of the business and affairs of the Company
or to become a Member. Subject to the terms set forth
in this Section, the transferee shall only be entitled
to receive the distributions and the return of
contributions to which that Member would otherwise be
entitled. Notwithstanding the foregoing, the Bank shall
be permitted to assign or transfer its entire
membership interest, including its voting rights only
pursuant to a merger or acquisition transaction
undertaken with another depository financial
institution at either the bank or holding company
level.
(b) Transfers of Interests.
______________________
(i) In the event that a Member dies during the
term of the Membership Agreement, then the Company may
cease all distributions of Net Profit to that Member
commencing for the first full calendar year after which
the Member dies. If the Death occurs in any of years 5
(2010) through year 10 (2015), Buyout Payments to the
deceased member's estate or heirs will occur in
accordance with the schedule set forth in paragraph 17
hereof. However, if the death occurs in the Startup
year or year 1 (2006) through year 4 (2009) the buyout
schedule will be accelerated to commence for the first
full year after the death occurs, and the dollar figure
payable in each of the "payout" years shall be reduced
by six percent (6%) for each year the payout is
accelerated, in the manner as is more fully described
in "Annex D."
(ii) Company shall purchase disability insurance
insuring each individual Member against total
disability, and naming the Company as beneficiary. Any
payments of insurance proceeds from those policies
shall be 100% distributable to the Bank to fund the
buyout of the disabled Member. In the event that a
Member is determined to be disabled under the terms of
the policy applicable to the Member, then the Company
may cease all distributions of Net Profit to that
Member commencing for the first full calendar year
after which the disability occurs. If the disability
occurs in year 5 (2010) through year 10 (2015), Buyout
Payments to the disabled member will occur in
accordance with the schedule set forth in paragraph 17
hereof. However, if the disability occurs in the
Startup Year, or year 1 (2006) through year 4 (2009)
the buyout schedule will be accelerated to commence for
the first full year after the disability occurs, and
the dollar figure payable in each of the "payout" years
shall be reduced by six percent (6%) for each year the
payout is accelerated, in the manner as is more fully
described in" Annex D."
(iii)In exchange for the payments set forth in
this section and "Annex D", the deceased or disabled
member's Membership Interest in the Company (together
with the right to all Net Profit Distributions) shall
be automatically transferred to the Company as of
December 31 of the year the Member dies or becomes
disabled.
14
(c) Admission of Additional Members. Additional
_______________________________
Members shall only be admitted upon unanimous consent of all
existing members.
(d) The number resulting from the calculations
described in Subsection (b), hereof, shall be reduced by
UNCB's incremental income tax rate.
(e) In Year 6 (2011) through Year 10 (2015), the
Membership Interest in the Company of Neihart and Xxxxxxx
shall be reduced by twenty percent (20%) of each of their
respective original Membership Interests, and the
Membership Interest of UNCB shall increase proportionally,
with the result that in Year 10, Xxxxxxx'x and Xxxxxxx'x
Membership Interest shall be zero percent (0%) and UNCB's
Membership Interest shall be one hundred percent (100%) (as
provided in "Annex C" hereto). For purposes of this
subsection, "Membership Interest" shall not include voting
rights, which shall be adjusted over time in accordance with
Annex C hereto.
17. Buyout Methodology.
__________________
(a) Commencing with Calendar year 2011, Neihart and
Xxxxxxx shall be entitled to payments from the Bank in
consideration of the sale of their Membership Interests in
HTF LLC, as follows. Ninety (90) business days following
January 1 of 2011, UNCB shall prepare and provide to Xxxx
Xxxxxxx and Xxxxx Xxxxxxx an unaudited profit and loss
financial report of the Company (the "Net Profit Measurement
Report"). Subject to the review of Neihart and Xxxxxxx,
and the procedure as to any dispute thereof, as set forth in
this Operating Agreement, buyout payments to:
(1) Neihart payable in 2011 will be the sum of:
(a) 37.69% of the Net Profit distributable to the
Members for 2010 times three (x3); (b) 37.69% of the
Net Profit distributable to the Members for 2009 times
two (x2); and (c) 37.69% of the Net Profit
distributable to the Members for 2008, times one (x1);
the sum of which shall be divided by six (6);
(2) Xxxxxxx payable in 2011 will be the sum of:
(a) 32.31% of the Net Profit distributable to the
Members for 2010 times three (x3); (b) 32.31% of the
Net Profit distributable to the Members for 2009 times
two (x2); and (c) 32.31% of the Net Profit
distributable to the Members for 2008, times one (x1);
the sum of which shall be divided by six (6)
(b) For the years of 2012, 2013, 2014, and 2015
buyout payments shall be calculated on a "rolling" basis in
the same manner as set forth above, adjusting the dates to
reflect ongoing time. Buyout payments shall be payable by
April 30, of the year next succeeding the calendar year for
which the payment is calculated, unless a dispute between
the parties as to the amount delays a final calculation of
the amount owed.
(c) All payment calculations described in this Section
shall be reduced by a dollar figure calculated from UNCB's
incremental income tax rate for the latest completed taxable
year prior to the buyout payment.
15
18. Dissolution Buyout by Individual Members.
__________________________________________
(a) Events of Dissolution. The Company shall dissolve,
and its affairs shall be wound up, only upon the first to
occur of the following:
(1) the vote, consent, or agreement of members
holding at least 75.5% of the Voting Rights;
(2) the entry of an order of judicial dissolution
of the Company under Section 8972 of the Act.
(3) Upon UNCB's being placed in receivership or
conservatorship by its primary regulator, or the death,
retirement, insanity, resignation, expulsion, or
dissolution of a Member or the occurrence of any other
event that terminates the continued membership of a
Member in the Company unless the business of the
Company is continued by the vote or consent of the
remaining Members given within 180 days following such
event. In the event that UNCB is placed into
receivership or conservatorship, the remaining members
shall have an option to purchase UNCB's Membership
share in the Company at a price acceptable to the
conservator or receiver.
(b) Distributions upon Dissolution. In the event of
______________________________
the dissolution of the Company, the assets of the Company
shall be liquidated in such manner as the Members shall
determine and, after the obligations of the Company to third
parties have been discharged or provided for in accordance
with applicable law, the net proceeds of the liquidation
shall be distributed in accordance with the following
procedure:
(1) The net proceeds shall be distributed first,
among the Members, if any, who have made unrepaid loans
or advances to the Company, in an amount up to the
aggregate amount of such unrepaid loans and advances,
and in proportion to the amount of such loans and
advances and the unpaid interest thereon.
(2) The Company may sell any or all Company
property, including to Members, and any resulting gain
or loss from each sale shall be computed and allocated
to the Capital Accounts of the Members.
(3) With respect to all Company property that has
not been sold, the fair market value of that property
shall be determined and the Capital Accounts of the
Members shall be adjusted to reflect the manner in
which the unrealized income, gain, loss, and deduction
inherent in property that has not been reflected in the
Capital Accounts previously would be allocated among
the Members if there were a taxable disposition of that
property for the fair market value of that property on
the date of distribution.
(4) After completion of the steps in paragraphs
(1), (2) and (3), the remaining assets shall be
distributed to the Members in an amount equal to the
16
credit balance in each of their Capital Accounts, after
giving effect to all contributions, distributions, and
allocations for all periods.
(5) If there are additional amounts available
after satisfaction of all payments called for in
subparts (1) through (4) of this Subsection, those
monies shall be distributed to the Members in
proportion to their respective Percentage Interests.
(6) Upon dissolution, Neihart/Xxxxxxx shall have
the right to elect to receive distribution in kind of
the proprietary software developed heretofore by
Neihart/Xxxxxxx for use in Home Team Mortgage, Inc.,
which is being contributed as capital to the Company.
If that election is made, Neihart/Xxxxxxx'x
distributable capital account shall be reduced by the
fair market value of the software being distributed.
(c) Procedure. A reasonable time shall be allowed for
_________
the liquidation of the Company in order to minimize the
losses normally attendant upon liquidation.
(d) Certificate of Dissolution. On completion of the
__________________________
liquidation of Company assets as provided herein, the
Members (or such other person or persons as the Act may
require or permit) shall file a Certificate of Dissolution
with the Department of State of the Commonwealth of
Pennsylvania and take such other actions as may be necessary
to terminate the existence of the Company.
(e) Final Accounting. In connection with the
________________
Company's liquidation, the Company's accountants shall
compile and furnish to each Member a statement setting forth
the assets and liabilities of the Company as of the date of
complete liquidation.
19. Books and Records. The Operating Committee shall cause
_________________
to be kept full and accurate books and records of the Company.
All books and records of the Company shall be kept at the
Company's principal office and shall be available at such
location at reasonable times for inspection and copying by the
Members or their duly authorized representatives.
20. Liability of Members. The Members, as such, shall not
____________________
be liable for the debts, obligations, or liabilities of the
Company except to the extent required by the Act.
21. Indemnification.
_______________
(a) Subject to the terms and conditions of this
Agreement, Neihart and Xxxxxxx, jointly and severally, shall
indemnify and hold harmless UNCB from and against any and
all liabilities, losses, costs, damages, taxes, levies,
fees, penalties, fines, interest, obligations or expenses of
any kind whatsoever (including, without limitation,
reasonable attorneys' accountants', consultants' or experts'
fees and disbursements) which UNCB or any of its affiliates
actually suffers, incurs or sustains arising out of or
attributable to (whether or not arising out of third party
claims) any legal, administrative, arbitral, governmental
or other proceedings, actions or governmental investigations
of any nature in progress, open, pending or threatened on
the date of this Agreement and
17
any actions, suits, proceedings or causes of action, whether
civil, criminal, administrative or investigative (including
an action by or in the right of the Home Team Mortgage,
Inc.), commenced on the date of this Agreement or within
five (5) years following the date of this Agreement which
relate to actions on or prior to the date of this Agreement
against UNCB, brought by reason of acts or failure to act,
errors and omissions of the officers, directors, employees,
shareholders, or agents of Home Team Mortgage , Inc.,
arising from the activities and business of Home Team
Mortgage, Inc.
(b) The Operating Committee is required to authorize
that any Officer, Member, employee or duly authorized agent
of the Company shall be indemnified by the Company against
expenses actually and necessarily incurred in connection
with the defense of any action, suit or proceedings of any
nature whatsoever in which he or she is made a party by
reason of being or having been an officer, employee or
agent of the Company, to the fullest extent permitted under
Pennsylvania law. The indemnification shall include,
without limitation, any judgment, fine, penalty, settlement,
and reasonable expenses, unless and to the extent that the
party seeking indemnification has been adjudged liable to
the Company, or to the Bank pursuant to indemnification set
forth in Subsection (a) of this Section. The Operating
Committee may not authorize indemnification in relation to
matters as to which the person seeking indemnification has
been adjudged in such action, suit or proceeding to be
liable by reason of willful misconduct involving active and
deliberate dishonesty, bad faith in the performance of his
or her duties, or disloyalty to, or breach of any agreement
with the Company.
(c) The indemnified party shall promptly notify the
indemnifying party of the discovery by it of, or the
assertion against it of, any claim or potential liability
for which indemnification is provided herein or the
commencement of any action or proceeding in respect of which
indemnity may be sought hereunder; provided, however; that
the failure promptly to give such notice shall affect any
indemnified party's rights hereunder only to the extent that
such failure shall (i) actually materially and adversely
affect any indemnifying party or its rights hereunder or
(ii) result in the indemnified party failing to give notice
of a claim for indemnification prior to the expiration of
the survival period set forth in Section 21 hereof to which
the claim relates.
(d) The right of an indemnified party under this
Section 21 shall be subject to the following conditions and
limitations: (1) notice of any claim for indemnification
under Section 21 shall have been given within five (5) years
and fifteen (15) days following the date of this Agreement
and no party shall have the right to seek indemnification
hereunder unless the claim is so asserted during such
period; (2) notice of any claim for indemnification with
respect to Losses attributable thereto, shall have been
given prior to the expiration of the applicable statute of
limitations (giving effect to any extensions thereof) for
the assertion of claims by the relevant tax authority; and
(3) with respect to a claim for indemnification arising out
of or involving an assertion by a third party of liability
on the part of an indemnified party, the indemnified party
shall advise the indemnifying party of all facts relating to
such assertion within the knowledge of the indemnified
party, and shall afford the indemnifying party the
opportunity, at the indemnifying party's cost and expense,
to defend against such claims for liability; in any such
action or proceeding, the indemnified party shall have the
right to retain its own
18
counsel and to participate in the defense, but the fees and
expenses of such counsel shall be at the expense of the
indemnified party unless (1) the indemnifying party and
indemnified party mutually agree in writing to the retention
of such counsel or (2) in the reasonable judgment of
counsel for the indemnifying party, representation of the
indemnifying party and the indemnified party by the same
counsel would be inadvisable due to actual or potential
differing or conflicts of interest between them.
(e) Notwithstanding anything else to the contrary
contained herein and in addition to any of the other
conditions, limitations and exclusions set forth herein,
Neihart and Xxxxxxx shall not be required to indemnify UNCB,
and UNCB shall not seek indemnity from the Neihart and
Xxxxxxx for any of the following:
(1) Losses arising from the failure of UNCB in
any Material respect to comply with its obligations
under this Agreement or with respect to which Neihart
and Xxxxxxx followed the instructions of UNCB; and
(2) Losses for which UNCB is indemnified by any
Person, whether pursuant to an insurance policy,
guarantee or otherwise.
(f) The indemnifying party shall have the right to
settle or compromise any claim or liability subject to
indemnification under this Section 21 which is susceptible
to being settled or compromised, provided, however, that any
such settlement shall require the consent of the indemnified
party, which consent shall not be unreasonably withheld,
provided further however, that the consent of the
indemnified party shall not be required if (1) the terms of
the settlement require only the payment of damages and
payment of the full amount of the relevant indemnification
obligation to the indemnified party is assured and (2) the
indemnified party is not otherwise materially and adversely
affected by the terms of the settlement.
(g) For the limited purposes of determining Neihart
and Xxxxxxx'x indemnification obligations under this Section
21, a "material" loss shall mean a single loss or claim of
Ten Thousand Dollars ($10,000) or more, or aggregate losses
or claims arising from the same circumstances of Ten
Thousand Dollars ($10,000) or more.
(h) The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have with
respect to Losses actually suffered, incurred or sustained
due to the intentional or willful actions of a Party in
connection with this Agreement, the transactions
contemplated by this Agreement, or other agreements entered
into in connection with this Agreement. Each of Neihart and
Xxxxxxx hereby agrees that he or she will not make any claim
for indemnification against UNCB by reason of the fact that
he or she was a shareholder, director, officer, employee, or
agent of Home Team Mortgage, Inc., or was serving at the
request of such entity as a partner, trustee, shareholder,
director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such claim is pursuant to any
statute, charter, document, bylaw, agreement or otherwise).
19
22. Miscellaneous.
_____________
(a) Notices to Members. Any notice required to be
__________________
given to a Member under the provisions of this Agreement or
by the Act shall be given either personally or by sending a
copy thereof by first class or express mail, postage
prepaid, or courier service, charges prepaid, or hand
delivery, to the postal address of the Person appearing on
the books of the Company for the purposes of notice. Notice
pursuant to this paragraph shall be deemed to have been
given to the Person entitled thereto (1) if hand delivered
or sent by overnight delivery, on the next business day
following the date so delivered or sent; or (2) if sent by
first class or express mail, five business days following
the date sent.
(b) Effect of Waiver or Consent. A waiver or consent,
___________________________
express or implied, to or of any breach or default by any
Person in the performance by that Person of its obligations
with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that
Person of the same or any other obligations of that Person
with respect to the Company. Failure on the part of a Person
to complain of any act of any Person or to declare any
Person in default with respect to the Company, irrespective
of how long that failure continues, does not constitute a
waiver by that Person of its rights with respect to that
default until the period of the applicable statute of
limitations has run.
(c) Execution in Counterparts. This Agreement may be
_________________________
executed in any number of counterparts, each of which shall
be deemed to be an original as against any party whose
signature appears thereon, and all of which shall together
constitute one and the same instrument. If executed in
multiple counterparts, this Agreement shall become binding
when any counterpart or counterparts, individually or taken
together, bear the signatures of all of the parties.
(d) Amendments. The Certificate may be amended only
__________
if the amendment is approved by the vote, consent, or
agreement of Members holding at least 75% of the Voting
Rights, except that any provision of this Agreement
requiring a higher vote may only be amended or repealed by
at least that higher vote. An amendment to this Agreement
must be in writing and shall take effect as provided in the
document evidencing the amendment.
(e) Binding Effect and Rights of Third Parties. This
__________________________________________
Agreement has been adopted to govern the operation of the
Company, and shall be binding on and inure to the benefit of
the Members and their respective heirs, personal
representatives, successors, and assigns. This Agreement is
expressly not intended for the benefit of any creditor of
the Company or any other third party.
(f) Governing Law. This Agreement shall be governed
_____________
by and interpreted and enforced in accordance with the
substantive laws of the Commonwealth of Pennsylvania
(including, without limitation, provisions concerning
limitations of actions), without reference to the conflicts
of laws rules of that or any other jurisdiction, except that
federal law shall also apply to the extent relevant.
20
(g) Severability. If any provision of this Agreement
____________
or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder
of this Agreement and the application of that provision to
other Persons or circumstances shall not be affected thereby
and that provision shall be enforced to the greatest extent
permitted by law.
(h) Conflict Resolution. (1) Informal Procedures.
___________________ ___________________
Any and all disputes, controversies and disagreements
arising from or relating to this Agreement, initially shall
be referred to the Operating Committee for resolution, and
then if unresolved after thirty (30) days, shall be referred
to the Chief Executive Officer of UNCB and Xxxx Xxxxxxx who
shall evaluate the dispute and meet in good faith to resolve
the dispute. In the event a resolution is not reached
within 15 days, the parties agree that the dispute shall, at
the request of any party to the dispute be resolved by
binding arbitration and not by court action.
(2) Applicable Arbitration Law and Procedures. If
_________________________________________
arbitration is chosen, it will be conducted pursuant to the
then applicable rules of either the American Arbitration
Association ("AAA"), or that of JAMS, at the option of the
party requesting the arbitration. Copies of the AAA rules
and forms may be obtained at any American Arbitration
Association office, or through the internet at address
xxx.xxx.xxx . Copies of the JAMS rules may be obtained at
any JAMS office or through the internet at address
xxx.xxxxxxx.xxx. This arbitration provision is made
pursuant to a transaction involving interstate commerce and
shall be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1, et seq. (as amended from time to time), and the
substantive law of Pennsylvania,
(3) Conduct of Arbitration. Arbitration shall be
______________________
conducted in Lancaster County, Pennsylvania, unless the
parties agree to a different location. The arbitrator shall
be selected from a panel of 3 arbitrators submitted by the
parties to the arbitration, by the parties either mutually
agreeing on the arbitrator or striking persons from the
panel until one person is left, that person being the
arbitrator. The parties shall equally share the fees of the
arbitrator and other jointly incurred reasonable expenses.
The arbitrator shall have the power to authorize reasonable
discovery and to issue any necessary orders and subpoenas.
The parties agree that all discovery shall be limited and
expedited to the maximum extent practical, and the
arbitrator is specifically requested and encouraged to
minimize discovery and its cost to the maximum extent
practicable. The arbitrator shall have authority to award
damages and grant such other relief the arbitrator deems
appropriate, including reimbursement of a party's share of
the fees and expenses of the arbitration. The arbitrator
shall give effect to statutes of limitation in determining
any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator. The
arbitrator shall set forth in the award findings of fact and
conclusions of law supporting the arbitrator's decision,
which must be based upon applicable law and supported by
evidence meeting the judicial standards for the burden of
proof for like claims made in court, under the law of
Pennsylvania. Judgment upon the award may be entered by any
court of competent jurisdiction. Except as specifically set
forth herein, the arbitrator shall have the ability to grant
all equitable and legal remedies, declaratory and injunctive
relief, as may be available under applicable law.
21
BY AGREEING TO THIS ARBITRATION PROVISION, THE PARTIES ARE
AGREEING TO HAVE DISPUTES ARISING FROM THIS OPERATING
AGREEMENT, AS DESCRIBED ABOVE (OTHER THAN THOSE DISPUTES
RESOLVED INFORMALLY UNDER SUBSECTION (1) OF THIS SECTION),
RESOLVED EXCLUSIVELY BY ARBITRATION, AND ARE HEREBY
KNOWINGLY AND VOLUNTARILY WAIVING ANY RIGHT TO LITIGATE ANY
SUCH DISPUTES IN COURT, AND THE PARTIES ARE ALSO WAIVING ANY
RIGHT TO A TRIAL BY JURY.
(i) Construction. Whenever the context requires, the
____________
gender of any word used in this Agreement includes the
masculine, feminine, or neuter, and the number of any word
includes the singular or plural. All references to articles
and sections refer to articles and sections of this
Agreement, and all references to annexes are to annexes
attached hereto, each of which is made a part hereof for all
purposes. The headings in this Agreement are for convenience
only; they do not form a part of this Agreement and shall
not affect its interpretation.
(j) Sharing of Customer Information. It is intended
_______________________________
that, in operating the business formed under this Agreement,
the Bank and the Company will share customer information
with each other for cross-marketing purposes, to the extent
applicable law allows. To that end, the Company and the
Bank agree to modify their customer privacy policies and
disclosures to provide appropriate "opt out" options for
customers to decline to have their confidential financial
information shared with affiliates and shall take whatever
other steps are necessary to comply with applicable law
including, but not limited to Title V of the Gramm Xxxxx
Xxxxxx Act and any applicable state law.
22
IN WITNESS WHEREOF, the undersigned Members have executed
and delivered this Agreement as of the date first above written.
Attest: UNION NATIONAL COMMUNITY BANK
______________________________ By_____________________________
Witness:
______________________________ _______________________________
Xxxx Xxxxxxx
______________________________ _______________________________
Xxxxx Xxxxxxx
23
ANNEX A
Initial Capital Contributions, Ownership Shares and Initial
Voting Rights
July 1, 2005
Member Initial Capital Percentage
(Name and Address) Contribution Interest Voting Rights
_________________________ _______________ _________ _____________
Union National Community $294,000 Cash 98% 51%
Bank
X.X. Xxx 000
000 Xxxx Xxxx Xxxxxx
Xxxxx Xxx XX 00000
_________________________ _______________ _________ _____________
Xxxx Xxxxxxx $3,240 Cash 1.08% 24.5%
000 Xxxx Xxxxx Xxxxx $17,280 in kind
Xxxxxxxxx, XX 00000 $20,520 Total
_________________________ _______________ _________ _____________
Xxxxx Xxxxxxx $2,760 Cash .92%% 24.5%
000 Xxxxxx'x Xxxx Xxx $14,720 in kind
Xxxxxxx Xxxxxx, XX 00000 $17,480 Total
_________________________ _______________ _________ _____________
In addition to the cash capital contributions Neihart/Xxxxxxx
will contribute the following assets to the Company as a capital
contribution, which shall be valued in the aggregate at
Thirty-Two Thousand Dollars ($32,000), and allocated Seventeen
Thousand Two Hundred Eighty Dollars($17,280) to Neihart and
Fourteen Thousand Seven Hundred Twenty Dollars ($14,720) to
Xxxxxxx.
In Kind Contributed Assets:
1. Proprietary customized in-house software developed by
Neihart/Xxxxxxx specifically for the Mortgage business
2. The Business model and methodologies developed for Home
Team Mortgage, Inc., including the developed business
process, lead/customer development strategies, customer
follow-up methodologies, tracking systems for loans and
customers, developed relationships with wholesale
lenders and investors and vendors and the overall
strategic model for the mortgage business developed by
Neihart/Xxxxxxx for use by Home Team Mortgage, Inc.
A-1
ANNEX B
List of Assets Purchased by the Company from Home Team
Mortgage, Inc.
B-1
ANNEX C
Stepdown in Profit Distributions and Voting Rights
Net Profit Distribution %
_____________________________
Profit Distribution UNCB Neihart Xxxxxxx
___________________ _________ _________ _________
Startup Year 2005 30.0% 37.69% 32.31%
Year 1 2006 30.0% 37.69% 32.31%
Year 2 2007 30.0% 37.69% 32.31%
Year 3 2008 30.0% 37.69% 32.31%
Year 4 2009 30.0% 37.69% 32.31%
Year 5 2010 30.0% 37.69% 32.31%
Year 6 2011 44.0% 30.152% 25.848%
Year 7 2012 58.0% 22.614% 19.386%
Year 8 2013 72.0% 15.076% 12.924%
Year 9 2014 86.0% 7.538% 6.462%
Year 10 2015 100.0% 0% 0%
Startup Year Voting Rights
_____________ _____________________________
UNCB Neihart Xxxxxxx
_________ _________ _________
2005 51% 24.5% 24.5%
2006 51% 24.5% 24.5%
2007 51% 24.5% 24.5%
2008 51% 24.5% 24.5%
2009 51% 24.5% 24.5%
2010 51% 24.5% 24.5%
2011 70% 15% 15%
2012 70% 15% 15%
2013 70% 15% 15%
2014 70% 15% 15%
2015 100% 0% 0%
C-1
ANNEX D
The following sets forth the manner in which Buyout Payments
made to an individual member (or member's estate) are to be
calculated under the terms of Paragraph 16.
If an individual member dies or becomes disabled during calendar
year 2005 or 2006, Ninety (90) business days following January
1of 2007, UNCB shall prepare and provide to Xxxx Xxxxxxx and
Xxxxx Xxxxxxx (or their personal representative(s) or
guardian(s)) an unaudited profit and loss financial report of the
Company (the "Net Profit Measurement Report"). Buyout payments
to Neihart if he becomes disabled or Xxxxxxx'x estate if he dies,
payable in 2007, will be 37.69% of the Net Profit distributable
to the Members for 2006, reduced by 6% for each year of
acceleration (four years or 24%); the resulting sum shall be
payable annually, on or before April 30, for four (4) additional
years (2008 through 2011) but for each of five (5) years it
shall be reduced by a dollar figure calculated from UNCB's
incremental income tax rate for the latest completed taxable year
prior to the buyout payment; Buyout payments to Xxxxxxx if he
becomes disabled or Xxxxxxx'x estate if he dies, payable in
2007, will be 32.31% of the Net Profit distributable to the
Members for 2006, reduced by 6% for each year of acceleration
(four years or 24%); the resulting sum shall be payable annually,
on or before April 30, for four (4) additional years (2008
through 2011) but for each of five years it shall, in addition to
the foregoing reduction be further reduced by a dollar figure
calculated from UNCB's incremental income tax rate for the latest
completed taxable year prior to the buyout payment.
If the death or disability occurs in 2007, Buyout payments to
Neihart if he becomes disabled or Xxxxxxx'x estate if he dies
will be calculated as the sum of: (a) 37.69% of the Net Profit
distributable to the Members for 2007 times two (x2), and (b)
37.69% of the Net Profit distributable to the Members for 2006,
times one (x1), the sum of which is then divided by 3, and then
reduced by 6% for each year of acceleration (three years or 18%);
the resulting sum shall be payable annually, on or before April
30, for five (5) years (2008 through 2012) but for each of five
(5) years it shall be reduced by a dollar figure calculated from
UNCB's incremental income tax rate for the latest completed
taxable year prior to the buyout payment; Buyout payments to
Xxxxxxx if he becomes disabled or Xxxxxxx'x estate if he dies
will be calculated as the sum of: (a) 32.31% of the Net Profit
distributable to the Members for 2007 times two (x2), and (b)
32.31% of the Net Profit distributable to the Members for 2006,
times one (x1), the sum of which is then divided by 3, and then
reduced by 6% for each year of acceleration (three years or 18%);
the resulting sum shall be payable annually, on or before April
30, for five (5) years (2008 through 2012) but for each of five
years it shall, in addition to the foregoing reduction, be
further reduced by a dollar figure calculated from UNCB's
incremental income tax rate for the latest completed taxable year
prior to the buyout payment.
..
If the death or disability occurs in 2008, Buyout payments to
Neihart if he becomes disabled or Xxxxxxx'x estate if he dies
will be calculated as the sum of: (a) 37.69% of the Net Profit
distributable to the Members for 2008, times three (x3); (b)
37.69% of the Net Profit distributable to the Members for 2007,
times two (x2); and (c) 37.69% of the Net Profit distributable
to Members for 2006 times one (x1), the sum of which is then
divided by 6, and then reduced by 6% for each year of
acceleration (two years or 12%); the resulting sum shall be
payable annually, on or before April 30, for five (5) years (2009
through 2013) but for each of five (5) years it shall be reduced
by a dollar figure calculated from UNCB's incremental income
D-1
tax rate for the latest completed taxable year prior to the
buyout payment: Buyout payments to Xxxxxxx if he becomes
disabled or Xxxxxxx'x estate if he dies will be calculated as the
sum of: (a) 32.31% of the Net Profit distributable to the Members
for 2008, times three (x3); (b) 32.31% of the Net Profit
distributable to the Members for 2007, times two (x2); and (c)
32.31% of the Net Profit distributable to Members for 2006 times
one (x1), the sum of which is then divided by 6, and then reduced
by 6% for each year of acceleration (two years or 12%); the
resulting sum shall be payable annually, on or before April 30,
for five (5) years (2009 through 2013) but for each of five years
it shall, in addition to the foregoing reduction, be further
reduced by a dollar figure calculated from UNCB's incremental
income tax rate for the latest completed taxable year prior to
the buyout payment.
..
If the death or disability occurs in 2009, Buyout payments to
Neihart if he becomes disabled or Xxxxxxx'x estate if he dies
will be calculated as the sum of: (a) 37.69% of the Net Profit
distributable to the Members for 2009, times three (x3); (b)
37.69% of the Net Profit distributable to the Members for 2008,
times two (x2); and (c) 37.69% of the Net Profit distributable to
Members for 2007 times one (x1), the sum of which is then divided
by 6, and then reduced by 6% for each year of acceleration (one
year or 6%); the resulting sum shall be payable annually, on or
before April 30, for five (5) years (2010 through 2014) but for
each of five (5) years it shall be reduced by a dollar figure
calculated from UNCB's incremental income tax rate for the latest
completed taxable year prior to the buyout payment; Buyout
payments to Xxxxxxx if he becomes disabled or Xxxxxxx'x estate
if he dies will be calculated as the sum of: (a) 32.31% of the
Net Profit distributable to the Members for 2009, times three
(x3); (b) 32.31% of the Net Profit distributable to the Members
for 2008, times two (x2); and (c) 32.31% of the Net Profit
distributable to Members for 2007 times one (x1), the sum of
which is then divided by 6, and then reduced by 6% for each year
of acceleration (one year or 6%); the resulting sum shall be
payable annually, on or before April 30, for five (5) years (2010
through 2014) but for each of five years it shall, in addition to
the foregoing reduction, be further reduced by an amount
calculated from UNCB's incremental income tax rate for the latest
completed taxable year prior to the buyout payment.
D-2
