EXHIBIT 3.2
OPERATING AGREEMENT
OF
CRESTAR SECURITIZATION, LLC
TABLE OF CONTENTS
SECTION I DEFINITIONS.......................................................................... 1
SECTION II NAME AND TERM........................................................................ 4
SECTION III BUSINESS OF COMPANY.................................................................. 6
SECTION IV RIGHTS AND OBLIGATIONS OF THE MANAGER AND THE
MEMBERS.............................................................................. 6
SECTION V CAPITAL CONTRIBUTIONS AND FINANCIAL OBLIGATIONS OF
MEMBERS.............................................................................. 10
SECTION VI ALLOCATIONS; DISTRIBUTIONS........................................................... 11
SECTION VII RESTRICTIONS ON TRANSFERS............................................................ 14
SECTION VIII INDEMNIFICATION...................................................................... 14
SECTION IX MEMBER REPRESENTATIONS, WARRANTIES AND
COVENANTS............................................................................ 16
SECTION X MISCELLANEOUS PROVISIONS............................................................. 18
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LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
CRESTAR SECURITIZATION, LLC
a Virginia limited liability company
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this
"Agreement"), dated as of the 30th day of April, 1998, between Crestar Bank, a
Virginia banking corporation (the "Bank"), and Crestar SP Corporation, a
Virginia corporation (the "Manager"), for the regulation of the affairs and the
conduct of the business of Crestar Securitization LLC, a Virginia limited
liability company (the "Company"), recites and provides as follows:
RECITALS:
1. The Company is being formed as a special purpose limited
liability company under the laws of the Commonwealth of Virginia pursuant to
articles of organization filed with the Virginia State Corporation Commission on
April 30th, 1998.
2. The Members desire to enter into this Agreement for the purpose
of setting forth the terms upon which the Company will be operated.
NOW, THEREFORE, in consideration of the mutual promises of the
parties hereto, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT:
SECTION I
DEFINITIONS
1.01 Act shall mean the Virginia Limited Liability Company Act,
Chapter 12 of Title 13.1 of the Code of Virginia, as amended from time to time.
1.02 Affiliate shall mean any Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person specified. The term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of at least 50% of the voting securities, by contract or otherwise.
1.03 Agreement shall mean this Operating Agreement of the
Company, as it may be amended from time to time.
1.04 Annual Tax Reports shall have the meaning set forth in
Section 10.03 hereof.
1.05 Bankruptcy Code shall mean the United States Bankruptcy
Code, 11 U.S.C. xx.xx. 101-1330, as amended from time to time.
1.06 Capital Account shall have the meaning set forth in Section
5.03 hereof.
1.07 Capital Contribution shall mean the amount of money or the
fair market value of other property contributed to the Company by each Member,
pursuant to the terms of this Agreement.
1.08 Capital Transaction shall mean the sale, exchange or other
disposition outside the ordinary course of business of all or any substantial
part of the assets of the Company, except for any Terminating Capital
Transaction.
1.09 Cash Available for Distribution shall mean, for any period,
the excess, if any, of (i) the cash receipts of the Company (other than from a
Capital Transaction or a Terminating Capital Transaction), over (ii)
disbursements of cash by the Company (other than distributions to Members, and
amounts paid with receipts from a Capital Transaction or a Terminating Capital
Transaction), including the payment of operating expenses, debt service on loans
from both Members and third parties, and capital expenditures, and amounts
deposited in reserves.
1.010 Code shall mean the Internal Revenue Code of 1986, as
amended, or any successor provision of law.
1.10 Collateral shall mean one or more financial assets,
including, without limitation, student loans, residential mortgage loans,
commercial mortgage loans, home equity loans, consumer finance loans,
manufactured housing installment sales contracts, credit card receivables,
automobile loans, notes, securities, leases, and pass-through certificates or
debt securities collateralized by any of the preceding.
1.11 Company shall mean Crestar Securitization, LLC, a Virginia
limited liability company.
1.12 Company Minimum Gain shall have the meaning set forth in
Treasury Regulations Section 1.704-2(d). In accordance with Treasury
Regulations Section 1.704-2(d), the amount of Company Minimum Gain is determined
by first computing, for each nonrecourse liability of the Company, any gain the
Company would realize if it disposed of the property subject to that liability
for no consideration other than full satisfaction of the liability, and then by
aggregating the separately computed gains. A Member's share of Company Minimum
Gain shall be determined in accordance with Treasury Regulations Section
1.704-2(g)(1).
1.13 Fiscal Year shall have the meaning provided in Section
10.01 hereof.
1.14 Fee shall have the meaning provided in Section 5.07 hereof.
1.15 Independent Director shall have the meaning provided in the
Manager's Articles of Incorporation.
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1.16 IRS shall mean the Internal Revenue Service.
1.17 Majority in Interest shall mean a majority of Membership
Interests in Company capital and profits as determined applying the principles
of Rev. Proc. 94-46, 1994-28 I.R.B. 129.
1.18 Manager shall mean Crestar SP Corporation, or any successor
thereto.
1.19 Member or Members shall mean any and all of those Persons
listed as Members in Exhibit A hereto or any Persons who replace them as
substitute Members as provided herein, in each such Person's capacity as a
Member of the Company.
1.20 Membership Interest shall mean a Member's ownership
interest in the Company, which includes (i) such Member's interest in the
income, gains, profits, deductions, losses, credits or distributions of the
Company, (ii) all benefits to which such Member may be entitled hereunder, and
(iii) all obligations of such Member to comply with the terms and provisions of
this Agreement. The Members' Membership Interests shall be as set forth in
Exhibit A.
1.21 Member Nonrecourse Debt Minimum Gain shall have the meaning
set forth in Treasury Regulations Section 1.704-2(i). A Member's share of Member
Nonrecourse Debt Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(i)(5).
1.22 Person shall mean and include an individual,
proprietorship, trust, estate, partnership, joint venture, association, company,
corporation, limited liability company or other entity.
1.23 Sale Proceeds shall mean the proceeds from a Capital
Transaction net of expenses related thereto after payment, or adequate provision
for, debts of the Company and any Company reserves; provided, however, that Sale
Proceeds shall not include proceeds from any Terminating Capital Transaction.
1.24 Securities shall mean either (i) bonds, notes, or other
debt instruments issued by the Company secured primarily by Collateral or (ii)
pass-through certificates evidencing ownership interests in one or more trusts
established by the Company, into which trusts the Company has deposited one or
more pools of Collateral.
1.25 State shall mean the Commonwealth of Virginia.
1.26 Taxable Year shall have the meaning set forth in Section
10.01 hereof.
1.27 Terminating Capital Transaction shall mean the sale,
exchange or other disposition of all or substantially all of the assets of the
Company, after which transaction the Company is dissolved and terminated.
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1.28 Treasury Regulations shall mean the Treasury regulations
issued under the Code, as amended and as hereafter amended from time to time.
Reference to any particular provision of the Treasury Regulations shall mean
that provision of the Treasury Regulations on the date hereof and any successor
provision of the Treasury Regulations.
SECTION II
NAME AND TERM
2.01 Name, Office and Registered Agent.
(a) The name of the Company shall be "Crestar Securitization,
LLC". The principal office and place of business of the Company shall be 000
Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000. The Manager may at any time change
the location of such office to another location, provided that the Manager gives
notice of any such change to the registered agent of the Company.
(b) The initial registered office of the Company for purposes
of the Act shall be 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000. The initial
registered agent of the Company for purposes of the Act shall be Xxxxx X.
Xxxxxx, Esq., whose business office is identical with the Company's registered
office. The registered office and registered agent may be changed by the Members
or the Manager at any time in accordance with the Act. The registered agent's
sole duty as such is to forward to the Company at its principal office and place
of business any notice that is served on him as registered agent.
2.02 Governing Law. This Agreement and all questions with
respect to the rights and obligations of the Members and the Manager, the
construction, enforcement and interpretation hereof, and the formation,
administration and termination of the Company shall be governed by the
provisions of the Act and other applicable laws of the State.
2.03 Term.
(a) The Company shall have perpetual existence, except that,
subject to the restrictions of Subsection 4.04, the Company shall be dissolved
and terminated upon the first to occur of any of the following events:
(i) The determination in writing of all of the
Members to dissolve and terminate the Company; or
(ii) The entry of a decree of judicial
dissolution under ss. 13.1-1047 of the Act or the automatic
cancellation of its certificate pursuant to ss. 13.1-1064 of the
Act.
(b) Upon the dissolution of the Company for any reason, the
Manager and Members shall proceed promptly to wind up the affairs of and
liquidate the Company; provided, however, that if any Securities are
outstanding, the Manager and Members shall not liquidate the assets of the
Company securing the Securities, except as permitted by the security agreement
pursuant to which such assets were pledged, without the consent of the secured
party under such agreement, which may continue to exercise all of its rights
under such security agreement and shall have complete and independent ability to
retain such assets until the Securities have been paid in full or otherwise
completely discharged. Subject to the foregoing, the Manager and Members shall
have reasonable discretion to determine the time, manner and terms of any sale
or sales of the Company's property pursuant to such liquidation.
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SECTION III
BUSINESS OF COMPANY
To issue securities secured primarily by Collateral and in
connection therewith to acquire, own, hold, sell, transfer, assign, pledge,
finance, refinance and otherwise deal with Collateral; to engage in the
establishment of one or more trusts to hold pools of Collateral deposited by the
Company in such trusts and in consideration of such deposits, to deliver to the
Company securities evidencing ownership interests in such pools of Collateral;
to acquire, own, hold, sell, transfer, assign, pledge, finance, refinance and
otherwise deal in or with the Securities; to acquire, own, hold, sell, transfer,
assign, pledge and otherwise deal in or with Collateral; and to acquire, own,
hold, sell, transfer, assign, pledge and otherwise deal in or with any or all of
the ownership interests in trusts established by other entities, institutions or
individuals. Subsequent to the issuance of any series of bonds, the Company may
sell the Collateral securing such bonds to a limited-purpose trust, partnership
or corporation, subject to the lien in favor of such bonds. Subject to the
limitations contained in the Company's Articles of Organization, as amended from
time to time, and this Section III, the Company may engage in any activity that
is incidental to or that renders convenient the accomplishment of any or all of
the foregoing and that is not prohibited by law or required to be set forth
specifically in this Agreement. The Company shall not engage in any other
business. In addition, the Company shall not incur any indebtedness other than
(a) indebtedness evidenced by Securities, (b) expenses incidental to the
issuance of Securities, and (c) indebtedness that (i) carries a rating equal to
or higher than the lowest rating assigned to any outstanding Securities by a
nationally recognized statistical credit rating agency, (ii) is fully
subordinate to any outstanding Securities and does not constitute a claim
against the Company for any purpose, including without limitation for purposes
of commencing an involuntary petition against the Company under any Chapter of
the Bankruptcy Code, for so long as the Securities are outstanding or (iii) is
nonrecourse, payable only from cash in excess of that required to make payments
on the Securities, and does not constitute a claim against the Company for any
purpose to the extent such excess cash flow is insufficient to pay the
additional debt.
SECTION IV
RIGHTS AND OBLIGATIONS OF THE MANAGER AND THE MEMBERS
4.01 Members. The Members of the Company are the Bank and the
Manager, and the business and notice address, telephone number and facsimile
number of each such Member are set forth opposite each Member's name on exhibit
A attached hereto.
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4.02 Management Rights.
(a) The management of the Company is vested in the Manager
exclusively, and the decisions of the Manager are controlling. Except as
otherwise provided herein, the Manager shall have no duty or obligation to
consult with or seek advice of the Members in connection with the conduct of the
business of the Company.
(b) The Manager may transact business for the Company, and
shall have the power to sign for and to bind the Company.
(c) No management rights are vested in any Member solely
because of such person's status as a Member.
4.03 Other Activities. Any Member or the Manager may engage in
or possess any interest in another business or venture of any nature and
description, independently or with others.
4.04 Major Decisions. For so long as any Securities are
outstanding, without the express prior written consent of 100% of the Members
and each Independent Director thereof, the Company shall not, and no Member
shall have any right, power or authority to cause the Company to, do any of the
following:
(a) commit any act in contravention of this Agreement;
(b) amend, modify or waive any of the terms or conditions of
this Agreement;
(c) admit any Person to the Company as a Member;
(d) authorize, issue, sell, redeem or otherwise purchase any
Membership Interests;
(e) declare or make a distribution other than as required or
specifically permitted in this Agreement;
(f) settle on behalf of the Company any suit, proceeding or
arbitration before any court or arbitrator or any governmental agency, authority
or official where the terms of such settlement could reasonably be expected to
affect materially and adversely the business, financial position, results of
operations, properties or prospects of the Company; or
(g) file or otherwise initiate on behalf of the Company (i) a
voluntary or involuntary petition for relief under any Chapter of the Bankruptcy
Code, (ii) a receivership, conservatorship or custodianship, (iii) an assignment
for the benefit of creditors or (iv) any other bankruptcy or insolvency related
proceeding;
(h) dissolve or liquidate, in whole or in part, consolidate or
merge with or into any other entity, or convey, sell or transfer all or
substantially all of the Company's assets; or
(i) consent to or acquiesce in (i) the filing or other
initiation of an involuntary petition for relief against the Company under any
Chapter of the Bankruptcy Code or (ii) the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, liquidator (or other similar
official) for the Company or all or substantially all of its assets.
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4.05 No Right to Withdraw. No Member shall have any right to
voluntarily resign or otherwise withdraw from the Company, or to receive any
distribution to which such Member is otherwise entitled to receive upon
withdrawal, without the written consent of all remaining Members of the Company.
4.06 Places of Meetings. All meetings of the Members shall be
held at such place within or without the State as from time to time may be fixed
by the Members. Meetings of the Members may be held telephonically or by video
conference provided that all of the Members participating in such meetings can
hear and, in the case of a video conference, see each other at the same time. In
addition, notwithstanding any provision hereof, the Members may act by unanimous
written consent in the absence of a meeting.
4.07 Annual Meetings. The annual meeting of the Members shall be
held on the first Monday in March of each year commencing in 1999 or on such
other date as may be selected by the Members.
4.08 Special Meetings. A special meeting of the Members for any
purpose or purposes may be called at any time by any Member. At a special
meeting no business shall be transacted and no action shall be taken other than
that stated in the notice of the meeting, except with the unanimous consent of
the Members present or represented by proxy.
4.09 Notice of Meetings. Notice of every meeting of the Members
shall be given by letter, telegraph, telephone or facsimile and shall be sent
not less than 48 hours nor more than 30 days before the date of such meeting to
each Member entitled to vote at such meeting at its address, telephone number or
facsimile number on Exhibit A hereto or such other address, telephone number or
facsimile number as a Member may have provided in writing to the other Members.
Notice of every meeting of the Members shall state the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the Members entitled to vote
at the meeting are present in person or by proxy or if notice is waived in
writing by those not present, either before or after the meeting.
4.10 Quorum. Any number of Members together holding at least a
majority of the Membership Interests entitled to vote with respect to the
business to be transacted, who shall be present in person or represented by
proxy at any meeting duly called, shall constitute a quorum for the transaction
of business. If less than a quorum shall be in attendance at the time for which
a meeting shall have been called, the meeting may be adjourned from time to time
by a majority of the Members present or represented by proxy without notice
other than by announcement at the meeting.
4.11 Voting. At any meeting of the Members, each Member entitled
to vote on any matter coming before the meeting shall, as to such matter, have a
vote, in person or by proxy, equal to its Membership Interest in its name on the
date, not more than 35 days prior to such meeting, fixed by the Members as the
record date for the purpose of determining Members entitled to vote. If the
Members do not fix a record date, the record date shall be deemed to be the date
that notice of the meeting is sent. Every proxy shall be in writing, dated and
signed by the Member entitled to vote or its duly authorized attorney-in-fact.
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4.12 Transactions with Members and Affiliates. Subject to
obtaining any consent expressly required hereunder, the Members may appoint,
employ, contract or otherwise deal with any Person, including Affiliates of a
Member, individuals with whom a Member is related, and with Persons that have a
financial interest in a Member or in which a Member has a financial interest,
for transacting the Company's business provided that (i) the terms of each such
agreement are no less favorable than the terms obtainable by the Company from a
comparable unaffiliated third party, and (ii) notice of each such agreement,
including the identity of such Person and the terms thereof, is given to the
other Members.
4.13 Personal Services. No Member shall be required to perform
services for the Company solely by virtue of being a Member. Unless approved by
the Members, no Member shall perform services for the Company or be entitled to
compensation for services performed for the Company.
When voting on the matters subject to a vote of the Members,
including without limitation the matters set forth in this Section IV, the
Members, and each Independent Director thereof, shall take into account the
interests of the holders of any outstanding Securities, regardless of whether
the Company is insolvent on either a balance sheet or equitable basis.
SECTION V
CAPITAL CONTRIBUTIONS AND
FINANCIAL OBLIGATIONS OF MEMBERS
5.01 Initial Capital Contributions. Each of the Bank and the
Manager shall contribute cash to the capital of the Company in the amount set
forth opposite its name on Exhibit A hereto.
5.02 Additional Capital Contributions. Except as otherwise
required herein, no additional Capital Contributions shall be required unless
all of the Members consent thereto in writing. The Membership Interest of each
Member shall be adjusted on Exhibit A hereto upon any additional Capital
Contribution made by a Member, with the written consent of all Members, to
reflect the aggregate amount of Capital Contributions made by each Member.
5.03 Capital Accounts. A separate capital account (each, a
"Capital Account") shall be established and maintained for each Member in
accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv) and 1.704-2.
5.04 No Interest on Contributions. No Member shall be entitled
to interest on its Capital Contribution.
5.05 Return of Capital Contributions. No Member shall be
entitled to withdraw any part of its Capital Contribution or its Capital Account
or to receive any distribution from the Company, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Member or withdrawn Member any part of such Member's
Capital Contribution to the Company for so long as the Company continues in
existence.
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SECTION VI
ALLOCATIONS; DISTRIBUTIONS
6.01 Allocations.
( )(a) Except as otherwise provided in this Section 6.01, profit
or loss of the Company that is not attributable to a Capital Transaction or a
Terminating Capital Transaction for each Fiscal Year shall be allocated to the
Members in accordance with their Membership Interests.
( )(b) Except as otherwise provided in this Section 6.01, profit
or loss of the Company that is attributable to a Capital Transaction or a
Terminating Capital Transaction for each Fiscal Year shall be allocated to the
Members in accordance with their Membership Interests.
(c) Except as otherwise provided in this Section 6.01,
depreciation and amortization deductions of the Company for each Fiscal Year
shall be allocated to the Members in accordance with their Membership Interests.
(d) Except as otherwise provided in this Section 6.01, credits
of the Company for each Fiscal Year shall be allocated to the Members in
accordance with their Membership Interests.
(e)( ) Notwithstanding any provision to the contrary, (i) any
expense of the Company that is a "nonrecourse deduction" within the meaning of
Treasury Regulations Section 1.704-2(b)(1) shall be allocated to the Members in
accordance with their Membership Interests, (ii) any expense of the Company that
is a "partner nonrecourse deduction" within the meaning of Treasury Regulations
Section 1.704-2(i)(2) shall be allocated in accordance with Treasury Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Company Minimum Gain
within the meaning of Treasury Regulations Section 1.704-2(f)(1) for any Taxable
Year, items of gain and income shall be allocated among the Members in
accordance with Treasury Regulations Section 1.704-2(f) and the ordering rules
contained in Treasury Regulations Section 1.704-2(j), and (iv) if there is a net
decrease in Member Nonrecourse Debt Minimum Gain within the meaning of Treasury
Regulations Section 1.704-2(i)(4) for any Taxable Year, items of gain and income
shall be allocated among the Members in accordance with Treasury Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Treasury Regulations
Section 1.704-2(j). A Member's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Company within the
meaning of Treasury Regulations Section 1.752-3(a)(3) shall be based on its
respective Membership Interest.
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(f) Notwithstanding any provision to the contrary, if a Member
receives in any Taxable Year an adjustment, allocation, or distribution
described in subparagraphs (4), (5), or (6) of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) that causes or increases a negative balance in such
Member's Capital Account that exceeds the sum of (i) such Member's shares of
Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, as determined in
accordance with Treasury Regulations Sections 1.704-2(g) and 1.704-2(i) and (ii)
any amounts that such Member is obligated to contribute to the Company pursuant
to Section 5.02 hereof, such Member shall be allocated specially for such
Taxable Year (and, if necessary, later Taxable Years) items of income and gain
in an amount and manner sufficient to eliminate such negative Capital Account
balance as quickly as possible as provided in Treasury Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Member in accordance with this Section 6.01(f), to the extent permitted by
Regulations Section 1.704-1(b), items of expense or loss shall be allocated to
such Member in an amount necessary to offset the income or gain previously
allocated to such Member under this Section 6.01(f).
(g) Loss, expense or deduction shall not be allocated to a
Member to the extent that such allocation would cause a deficit in such Member's
Capital Account (after reduction to reflect the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
(i) such Member's shares of Company Minimum Gain and Member Nonrecourse Debt
Minimum Gain and (ii) any amounts that such Member is obligated to contribute to
the Company pursuant to Section 5.02 hereof. Any loss, expense or deduction in
excess of that limitation shall be allocated to the other Member. After the
occurrence of an allocation of loss, expense or deduction to a Member in
accordance with this Section 6.01(g), to the extent permitted by Treasury
Regulations Section 1.704-1(b), profit or income shall be allocated to such
Member in an amount necessary to offset the loss, expense or deduction
previously allocated to such Member under this Section 6.01(g).
(h) If a Member transfers part or all of its Membership
Interest and the transferee is admitted as provided herein (a "Transferee
Member"), the distributive shares of the various items of profit and loss
allocable among the Members during such Fiscal Year shall be allocated between
the transferor and the Transferee Member (at the election of the Manager) either
(i) as if the Fiscal Year had ended on the date of the transfer or (ii) based on
the number of days of such Fiscal Year that each was a Member without regard to
the results of Company activities in the respective portions of such Fiscal Year
in which the transferor and Transferee Member were Members.
(i) The interest of each of the Bank and the Manager in each
material item of Partnership income, gain, loss, deduction, or credit shall be
equal to at least 1% of each such item at all times. The Bank and the Manager
shall each at all times maintain Capital Account balances at least equal in the
aggregate to 1% of the total positive Capital Account balances of the Members.
Whenever a capital contribution is made by Members to the Company, such
contribution shall be made by the Members that will result in the Bank and the
Manager each maintaining Capital Account balances at least equal in the
aggregate to 1% of the total positive Capital Account balances of the Members.
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(j) "Profit" and "loss" and any items of income, gain, expense
or loss referred to in this Section 6.01 shall be determined in accordance with
federal income tax accounting principles as modified by Treasury Regulations
Section 1.704-1(b)(2)(iv), except that profit and loss shall not include items
of income, gain, and expense that are specially allocated pursuant to Sections
6.01(e), 6.01(f) or 6.01(g) hereof. All allocations of income, profits, gains,
expenses, and losses (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 6.01, except as otherwise required by Section 704(c) of the Code and
Section 1.704-1(b)(4) of the Treasury Regulations.
6.02 Distribution of Cash Available for Distribution. Within 30
days after the end of each calendar quarter during a Fiscal Year, Cash Available
for Distribution shall be distributed to the Members in accordance with their
Membership Interests.
6.03 Distribution of Sale Proceeds. The Members may, within 90
days after a Capital Transaction, make a special distribution to the Members in
accordance with their Membership Interests in an aggregate amount not to exceed
the cash portion of the Sale Proceeds from such Capital Transaction.
6.04 Distribution of Proceeds from a Terminating Capital
Transaction. The net proceeds of a Terminating Capital Transaction shall be
distributed in the following order of priority:
(a) First, toward satisfaction of all outstanding debts and
other obligations of the Company other than those specified in Section 6.04(b)
hereof;
(b) Second, toward satisfaction of outstanding loans, if any,
made by Members to the Company; and
(c) Thereafter, the balance, if any, to the Members in
accordance with their respective positive Capital Account balances.
For purposes of Section 6.04(c), the Capital Account of each Member shall be
determined after all adjustments made in accordance with Sections 6.01, 6.02,
6.03, and 6.04 hereof resulting from the Company's operations and from all the
Company's operations and all sales and dispositions of all or any part of the
Company's assets. Any distributions pursuant to this Section 6.04 should be made
by the end of the Taxable Year in which the liquidation occurs (or, if later,
within 90 days after the date of the liquidation). To the extent deemed
advisable by the Members, appropriate arrangements (including the use of a
liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
6.05 Substantial Economic Effect. It is the intent of the
Members that the allocations of profit and loss under this Agreement have
substantial economic effect (or be consistent with the Members' interests in the
Company in the case of the allocation of losses attributable to nonrecourse
debt) within the meaning of Section 704(b) of the Code as interpreted by the
Treasury Regulations promulgated pursuant thereto. Article VI and other relevant
provisions of this Agreement shall be interpreted in a manner consistent with
such intent.
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6.06 Liability of Members. Notwithstanding any provision to the
contrary, the liability of each Member for Company losses shall in no event
exceed the aggregate amount of the Capital Contributions that such Member is
required hereunder to make to the Company, plus such Member's share of
undistributed Company profits, and in no event shall each Member be obligated
under any circumstances to make any additional Capital Contributions for the
purpose of restoring a negative balance in a Capital Account, or for any other
purpose whatsoever, except as expressly provided in Section 5.02.
SECTION VII
RESTRICTIONS ON TRANSFERS
7.01 Prohibition Against Transfer.
(a) No Member shall sell, assign, encumber,
transfer or otherwise dispose of all, or any part of, its Membership Interest
(or take or omit to take any action, filing, election or other action that could
result in a deemed sale, assignment, encumbrance, transfer or other disposition)
without the prior written consent of the other Member, which consent may be
withheld in its sole discretion. Any attempted transfer not in accordance with
this Agreement shall be void.
(b) Upon consent to a transfer and admission of an
additional Member, this Agreement shall be amended to reflect the admission of
the substitute Member, and the Members shall take any action required of record
to reflect such admission.
SECTION VIII
INDEMNIFICATION
8.01 Indemnification of Members and Manager. Unless otherwise
prohibited by law, the Company shall indemnify and hold harmless the Members and
the Manager, the respective officers, directors, and employees of the Members
and the Manager, and their respective successors (individually, an "Indemnitee")
from any claim, loss, expense, liability, action or damage resulting from any
act or omission performed by or on behalf of or omitted by the Indemnitee in its
capacity as Manager or a Member, including, without limitation, reasonable costs
and expenses of its attorneys engaged in defense of any such act or omission;
provided, however, that the Indemnitees shall not be indemnified or held
harmless for any act or omission that is in violation of any of the provisions
of this Agreement or that constitutes fraud, gross negligence, willful
misconduct, a knowing violation of the criminal law, or a knowing violation of
any federal or state securities law. Any indemnification pursuant to this
Section 8.01 shall be made only out of the assets of the Company.
Notwithstanding the foregoing or any other Section, subsection or provision
herein or in applicable law to the contrary, for so long as any Securities are
outstanding, any obligation of the Company to indemnify and/or hold harmless its
Members or Manager and/or their respective officers, directors and employees
shall be fully subordinate to all outstanding Securities and shall not
constitute a claim against the Company for any purpose, including without
limitation for purposes of commencing an involuntary petition against the
Company under any Chapter of the Bankruptcy Code.
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8.02 Expenses. To the fullest extent permitted by law, expenses
(including legal fees) incurred by an Indemnitee in defending any claim, demand,
action, suit or proceeding with respect to which such Indemnitee is entitled to
indemnification under Section 8.01 hereof shall, from time to time, be advanced
by the Company prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Company of an undertaking by or on behalf
of the Indemnitee, secured by adequate collateral, to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section VIII.
8.03 Insurance. The Company may purchase and maintain insurance
coverage to the extent and in such amounts as the Manager shall, in its sole
discretion, deem reasonable, on behalf of Indemnitees against any liability that
may be asserted against or expense that may be incurred by any Indemnitees in
connection with activities of the Company or such Indemnitees with respect to
which the Company would have the power to indemnity such Indemnitee against such
liability under the provisions of this Agreement.
8.04 Miscellaneous. In no event may an Indemnitee subject a
Member or Manager to personal liability by reason of these indemnification
provisions. An Indemnitee shall not be denied indemnification in whole or in
part under this Section VIII because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement. The provisions of this
Section VIII are for the benefit of the Indemnitees and their heirs, successors,
assigns, administrators and personal representatives and shall not be deemed to
create any rights for the benefit of any other Persons.
8.05 Notice of Claims. With respect to any claim made or
threatened against a Member, the Manager or any of their officers, directors or
employees, or their respective successors for which such Indemnitee is or may be
entitled to indemnification under this Section VIII, the Company shall, or shall
cause such Indemnitee to:
(a) give written notice to the other potential Indemnitees of
such claim promptly after such claim is made or threatened, which notice shall
specify in reasonable detail the nature of the claim and the amount (or an
estimate of the amount) of the claim;
(b) provide the other potential Indemnitees with such
information and cooperation with respect to such claim as the other potential
Indemnitees may require, including, without limitation, making appropriate
personnel available at such times as the other potential Indemnitees shall
request;
(c) cooperate and take all such steps as the other potential
Indemnitees may request to preserve and protect any defense to such claim;
(d) in the event suit is brought with respect to such claim,
upon prior notice, afford the other potential Indemnitees the right, which the
other potential Indemnitees may exercise in their sole discretion and at their
expense, to participate in the investigation, defense and settlement of such
claim; and
(e) neither incur any material expense to defend against nor
release or settle such claim or make any admission with respect thereto without
the prior written consent of the other potential Indemnitees.
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SECTION IX
MEMBER REPRESENTATIONS, WARRANTIES AND COVENANTS
9.01 Representations and Warranties. Each Member represents and
warrants to the Company and each other Member that, on the date of this
Agreement (or such later date as such Member shall become admitted as a Member
of the Company):
(a) Organization and Existence. Such Member is duly organized,
validly existing and in good standing under the laws of the state of its
organization.
(b) Power and Authority. Such Member has the full power and
authority to execute, to deliver and to perform this Agreement, and to own and
to lease its properties and to carry on its business as now conducted and to
carry out the transactions contemplated hereby.
(c) Authorization and Enforceability. The execution and
delivery of this Agreement by such Member and the carrying out by such Member of
the transactions contemplated hereby have been duly authorized by all requisite
action on the part of such Member, and this Agreement has been duly executed and
delivered by such Member and constitutes the legal, valid and binding obligation
of such Member, enforceable against it in accordance with the terms hereof,
subject, as to enforceability of remedies, to limitations imposed by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights generally and to general
principles of equity.
(d) No Consents. No authorization, consent, approval or order
of, notice to or registration, qualification, declaration or filing with, any
governmental authority or other third parties is required for the execution,
delivery and performance by such Member of this Agreement or the carrying out by
such Member of the transactions contemplated hereby, except those previously
obtained.
(e) No Conflict or Breach. None of the execution, delivery and
performance by such Member of this Agreement, the compliance with the terms and
provisions hereof and the carrying out of the transactions contemplated hereby,
conflicts or will conflict with or will result in a breach or violation of any
of the terms, conditions or provisions of any law, governmental rule or
regulation or the charter documents or bylaws of such Member or any applicable
order, writ, injunction, judgment or decree of any court or governmental
authority against such Member or by which it or any of its properties (other
than its Membership Interest in the Company), is bound, or any loan agreement,
indenture, mortgage, bond, note, resolution, contract or other agreement or
instrument to which such Member is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder or
will result in the imposition of any lien upon any of its properties.
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(f) No Proceedings. There is no suit, action, hearing, inquiry,
investigation or proceeding, at law or in equity, pending, or, to the knowledge
of such Member, threatened, before, by, or in any court or before any regulatory
commission, board or other governmental administrative agency against or
affecting such Member which could have a material adverse effect on the
business, affairs, financial position, results of operations, property or
assets, or condition, financial or otherwise, of such Member or on its ability
to fulfill its obligations hereunder.
(g) Investment Representation. Such Member has acquired its
Membership Interest in the Company for its own account, for investment, and not
with (i) a view to, or for sale in connection with, any distribution thereof or
(ii) any present intention of distributing or selling such interest.
9.02 Survival. All representations and warranties contained in
this Section IX shall survive the execution and delivery of this Agreement.
9.03 Separateness Covenants.
(a) Affirmative Covenants. For so long as any Securities are
outstanding, the Company shall, and the Manager shall cause the Company to, at
all times (i) observe all organizational, corporate and other applicable
formalities, (ii) maintain separate books, records and bank accounts, (iii)
maintain separate financial statements and cause its financial statements to be
prepared and maintained in accordance with generally accepted accounting
principles in a manner that indicates the separate existence of the Company and
its assets and liabilities, (iv) pay all of its liabilities out of its own funds
(including the salaries of its own employees) and allocate fairly and reasonably
pursuant to written agreement(s) any shared overhead expenses, such as office
space, (v) maintain and use its own separate stationary, invoices and checks,
(vi) in all dealings with the public identify itself and conduct its own
business under its own name as a separate and distinct legal entity, (vi) deal
with its affiliates only on arm's length bases and on commercially reasonable
terms, and (vii) independently make decisions with respect to its business and
daily operations.
(b) Negative Covenants. For so long as any Rated Securities are
outstanding, the Company shall not, and the Manager shall not cause the Company
to, at any time (i) pledge its assets for the benefit of any other person, (ii)
commingle its assets with those of any other person, (iii) assume or guarantee
the liabilities or obligations of any other person or otherwise hold out its
credit as being available or able to satisfy the liabilities or obligations of
any other person, (iv) acquire obligations or securities of, or make loans or
advances to, any affiliate, or (v) incur any indebtedness, liabilities or
obligations except as expressly permitted in Section III of this Agreement.
SECTION X
MISCELLANEOUS PROVISIONS
10.01 Fiscal and Taxable Year. The Fiscal Year and Taxable Year
of the Company shall be the calendar year or such other taxable year as may be
required by Section 706(b) of the Code.
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10.02 Accounting Method. For Company accounting purposes and for
federal income tax accounting purposes, the Company shall use the accrual method
of accounting.
10.03 Reports. At the Company's expense, the Manager shall
prepare or cause to be prepared, no later than 75 days after the close of each
Fiscal Year, a Schedule K-1, a copy of the Company's informational tax return
(IRS Form 1065), and such other reports (collectively, the "Annual Tax Reports")
setting forth in sufficient detail all such information and data with respect to
the transactions effected by or involving the Company during such Fiscal Year as
shall enable the Company and each Manager to prepare its federal, state, and
local income tax returns in accordance with the laws, rules, and regulations
then prevailing.
10.04 Bank Accounts; Checks, Notes and Drafts.
(a) Funds of the Company shall be deposited in an account or
accounts of a type, in form and name and in a bank(s) or other financial
institution(s) which are participants in federal insurance programs as selected
by the Manager. The Manager shall arrange for the appropriate conduct of such
accounts. Company funds shall be deposited and held in accounts which are
separate from all other accounts maintained by the Manager and the Members, and
the Company's funds shall not be commingled with any other funds of the Manager,
any Member or any Affiliate (other than the Company itself) of a Member. Funds
may be withdrawn from such accounts only for bona fide and legitimate Company
purposes.
(b) Company funds may be maintained in accounts, money market
funds, certificates of deposit, other liquid assets in excess of the insurance
provided by the Federal Deposit Insurance Corporation, or other depository
insurance institutions.
(c) Checks, notes, drafts and other orders for the payment of
money shall be signed by such persons as the Manager from time to time may
authorize. When the Manager so authorizes, the signature of any such person may
be a facsimile.
10.05 Books and Records.
(a) The Manager shall keep, or cause to be kept, full and
accurate books of account, financial records and supporting documents, which
shall reflect, completely, accurately and in reasonable detail, each transaction
of the Company, which books of account, financial records and supporting
documents shall be kept and maintained at the principal office of the Company.
The Manager shall keep, or cause to be kept, all other documents and writings of
the Company, which documents and writings shall be kept and maintained at the
principal office of the Company. The Manager or its designated representative
shall have access to such books, records and documents during reasonable
business hours and may inspect and make copies of any of them at its own
expense.
(b) The Manager shall also keep, or cause to be kept, at the
principal office of the Company the following:
(i) true and full information regarding the
status of the business and financial condition of the Company;
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(ii) promptly after becoming available, a copy
of the Company's federal, state, and local income tax returns for
each year;
(iii) a current list of the name and last known
business, residence or mailing address of each Member;
(iv) a copy of this Agreement and the Company's
certificate of formation, and all amendments thereto, together with
executed copies of any written powers of attorney pursuant to which
this Agreement and such certificate of formation and all amendments
thereto have been executed;
(v) true and full information regarding the
amount of cash and a description and statement of the agreed value
of any other property or services contributed by each Member and
which each Member has agreed to contribute in the future, and the
date on which each became a Member; and
(vi) other information regarding the affairs of
the Company as is just and reasonable.
10.06 Tax Matters Partner. The Bank shall be the Tax Matters
Partner for the Company within the meaning of Section 6231(a)(7) of the Code.
The Tax Matters Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters Partner.
In the event the Tax Matters Partner receives notice of a final partnership
adjustment under Section 6223(a)(2) of the Code, the Tax Matters Partner shall
either (i) file a court petition for judicial review of such final adjustment
within the period provided under Section 6226(a) of the Code, a copy of which
petition shall be mailed to all other Members on the date such petition is
filed, or (ii) mail a written notice to all other Members, which such period,
that describes the Tax Matters Partner's reasons for determining not to file
such a petition.
10.07 Tax Elections.
(a) The Tax Matters Partner shall make any available elections
under the Code or any applicable state or local tax law on behalf of the
Company.
(b) If requested by a Member, the Tax Matters Partner shall
cause the Company to make an election under Section 754 of the Code in
connection with any transfer by the Member of all or any part of its Membership
Interest.
(c) No election shall be made by the Company or any Member for
the Company to be excluded from the application of any of the provisions of
Subchapter K, Chapter 1 of Subtitle A of the Code or from any similar provisions
of any state or local tax laws.
(d) Each Member hereby grants the Tax Matters Partner an
irrevocable power of attorney to make any federal income tax election as may be
required or appropriate to cause the Company to be classified as a "partnership"
for federal income tax purposes, or to maintain such classification. If
requested by a Member, the Tax Matters Partner shall make any such election on
behalf of all the Members pursuant to the power of attorney, or shall cause the
Company to make any such election on its own behalf. The Tax Matters Partner
shall not make any affirmative election to have the Company treated as an
association taxable as a corporation for federal income tax purposes.
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10.08 Notices. Unless otherwise provided herein, any offer,
acceptance, election, approval, consent, certification, request, waiver, notice
or other communication required or permitted to be given hereunder (hereinafter
collectively referred to as a "Notice"), shall be given by delivering the same
by facsimile or reliable courier or by enclosing the same in an envelope
addressed to the Manager or the Member to whom the Notice is to be given at the
appropriate address set forth on Exhibit A hereto or at such other address as
any Member hereafter may designate to the others in accordance with the
provisions of this Section 10.08, and deposited in the U.S. Mail postage
prepaid. In addition, the other Members shall be sent a copy of all such
Notices, by registered or certified mail, return receipt requested. The date at
which notice shall be deemed received shall be the last date of the receipt of
the copy of such notice by the other Members.
10.09 Entire Agreement. This Agreement, including the Exhibits
attached hereto or incorporated herein by reference, constitutes the entire
agreement of the Members with respect to the matters covered herein. This
Agreement supersedes all prior and contemporaneous agreements and oral
understandings among the Members with respect to such matters. In the event
there is any litigation between the Members over the interpretation of any
provision of this Agreement, the prevailing Member in such litigation shall be
entitled to recover reasonable attorney's fees from the nonprevailing Member in
such litigation.
10.10 Amendment. Except as provided by law, in the Company's
certificate of formation or otherwise set forth herein, this Agreement may be
amended or altered only by the unanimous vote of the Members.
10.11 Interpretation. Wherever the context may require, any noun
or pronoun used herein shall include the corresponding masculine, feminine or
neuter forms. The singular form of nouns, pronouns and verbs shall include the
plural and vice versa.
10.12 Severability. Each provision of this Agreement shall be
considered severable and if for any reason any provision or provisions hereof
are determined to be invalid and contrary to existing or future law, such
invalidity shall not impair the operation or affect those portions of this
Agreement which are valid, and this Agreement shall remain in full force and
effect and shall be construed and enforced in all respects, and such invalid or
unenforceable provision or provisions shall be replaced with alternative valid
and enforceable provision or provisions which otherwise give effect to the
original intent of such invalid or unenforceable provision or provisions as
agreed upon by the Members pursuant to Section 10.10 hereof.
10.13 Successors. Except as expressly otherwise provided herein,
this Agreement is binding upon, and inures to the benefit of, the parties hereto
and their respective heirs, executors, administrators, personal and legal
representatives, successors and assigns.
10.14 Further Assurances. Each Member hereby agrees that it shall
hereafter execute and deliver such further instruments, provide all information
and take or forbear such further acts and things as may be reasonably required
or useful to carry out the intent and purpose of this Agreement and as are not
inconsistent with the terms hereof.
10.15 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
will constitute one instrument, binding upon all parties hereto, notwithstanding
that all of such parties may not have executed the same counterpart.
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[Signatures Appear on Next Page;
Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
MEMBERS:
CRESTAR BANK
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
CRESTAR SP CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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EXHIBIT A
MEMBERS, INTERESTS AND INITIAL CONTRIBUTIONS
Initial
Membership Capital
Members Interests Contributions
------- ---------- -------------
[S] [C]
CRESTAR BANK 99% $ 9,900
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone number: (000) 000-0000
Facsimile number: (000) 000-0000
CRESTAR SP CORPORATION 1% $ 100
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone number: (000) 000-0000
Facsimile number: (000) 000-0000
TOTALS 100% $ 10,000
==== ========
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