Exhibit 10.1
COMPANY AGREEMENT
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OF
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Bluestone Capital, L.L.C.
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A TEXAS LIMITED LIABILITY COMPANY
EFFECTIVE AS OF AUGUST 25, 2006
THE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. SUCH INTERESTS ARE
BEING ACQUIRED FOR INVESTMENT ONLY, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
DONATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED WITH RESPECT TO THE PROPOSED DISPOSITION THEREOF
AND THAT SUCH DISPOSITION WILL NOT CAUSE THE LOSS OF THE EXEMPTION UPON WHICH
THE ISSUER RELIED IN SELLING THESE MEMBERSHIP INTERESTS TO THE ORIGINAL
PURCHASER THEREOF.
THE MEMBERSHIP INTERESTS AND THE TRANSFER THEREOF ARE SUBJECT TO QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS SET FORTH IN THIS COMPANY AGREEMENT, AND THE
MEMBERSHIP INTERESTS SHALL NOT BE TRANSFERRED UPON THE BOOKS OF THE COMPANY
UNTIL THE TERMS AND CONDITIONS OF THIS AGREEMENT HAVE BEEN FULLY COMPLIED WITH.
TABLE OF CONTENTS
ARTICLE I. FORMATION..........................................................1
1.1. FORMATION...........................................................1
1.2. PRINCIPAL PLACE OF BUSINESS.........................................1
1.3. REGISTERED AGENT OFFICE.............................................1
1.4. TERM................................................................1
1.5. PURPOSE.............................................................1
ARTICLE II. RIGHTS AND DUTIES OF MANAGERS.....................................2
2.1. MANAGEMENT OF COMPANY VESTED IN THE MANAGERS........................2
2.2. CERTAIN POWERS OF MANAGERS..........................................2
2.3. LIABILITY FOR CERTAIN ACTS..........................................2
2.4. MEMBERS AND MANAGERS HAVE NO EXCLUSIVE DUTY TO COMPANY..............3
2.5. AUTHORITY OF MANAGERS TO DEAL WITH AFFILIATES.......................3
2.6. RESIGNATION AND REMOVAL OF MANAGERS.................................3
2.7. COMPENSATION AND FEES...............................................3
ARTICLE III. RIGHTS AND OBLIGATIONS OF MEMBERS................................3
3.1. LIMITATION OF MEMBERS' LIABILITIES..................................3
3.2. NO CONTROL OF BUSINESS OR RIGHT TO ACT FOR COMPANY..................4
3.3. PRIORITY AND RETURN OF CAPITAL......................................4
3.4. MEETINGS OF THE COMPANY; VOTING RIGHTS..............................4
3.5. POWERS RESERVED TO THE MEMBERS......................................5
ARTICLE IV. COMPANY BOOKS AND RECORDS; AMENDMENT OF AGREEMENT;
POWER OF ATTORNEY..............................................................6
4.1. AMENDMENT OF AGREEMENT..............................................6
4.2. BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS...............6
ARTICLE V. CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS;
SECURITIES MATTERS.............................................................7
5.1. INITIAL CAPITAL CONTRIBUTIONS.......................................7
5.2. ADDITIONAL CONTRIBUTIONS; ADDITIONAL UNITS; PREEMPTIVE RIGHTS.......7
5.3. FAILURE TO CONTRIBUTE ADDITIONAL CONTRIBUTIONS......................8
5.4. CAPITAL ACCOUNTS....................................................8
5.5. SECURITIES MATTERS..................................................8
ARTICLE VI. ALLOCATIONS, DISTRIBUTIONS........................................8
6.1. ALLOCATIONS OF PROFITS AND LOSSES...................................8
6.2. SPECIAL ALLOCATIONS.................................................9
6.3. DISTRIBUTIONS......................................................11
ARTICLE VII. TRANSFERABILITY.................................................11
7.1. GENERAL............................................................11
7.2. TRANSFERS NOT REQUIRING PRIOR CONSENT..............................11
7.3. VOLUNTARY TRANSFER PROCEDURE.......................................12
7.4. PURCHASE PRICE.....................................................13
7.5. REMEDIES...........................................................13
7.6. EFFECT OF TRANSFER OF INTEREST.....................................13
ARTICLE VIII. ADMISSION AND WITHDRAWAL OF MEMBERS............................14
8.1. ADMISSION OF MEMBERS...............................................14
8.2. WITHDRAWAL OF MEMBERS..............................................14
ARTICLE IX. WINDING UP AND TERMINATION.......................................14
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9.1. EVENTS REQUIRING WINDING UP........................................14
9.2. WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS.................15
9.3 RETURN OF CONTRIBUTION NONRECOURSE TO MEMBERS......................15
ARTICLE X. MISCELLANEOUS.....................................................16
10.1. NOTICE.............................................................16
10.2. WAIVER OF NOTICE...................................................16
10.3. AUTHORITY TO BIND THE COMPANY......................................16
10.4. WAIVER OF ACTION FOR PARTITION.....................................16
10.5. INDEMNIFICATION BY COMPANY.........................................16
10.6. CONSTRUCTION.......................................................16
10.7. ARTICLES AND OTHER HEADINGS........................................16
10.8. SEVERABILITY.......................................................17
10.9. APPLICATION OF TEXAS LAW...........................................17
10.10. DISREGARDED ENTITY TAX TREATMENT INTENDED IF ONE MEMBER............17
10.11. PARTNERSHIP TAX TREATMENT INTENDED IF MORE THAN ONE MEMBER;
TAX ADMINISTRATIVE MATTERS.........................................17
10.12. NO PARTNERSHIP INTENDED FOR NON-TAX PURPOSES.......................17
CERTIFICATION.................................................................18
EXHIBIT A MEMBER CAPITAL CONTRIBUTIONS.....................................19
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EXHIBIT B SERVICING AGREEMENT..............................................20
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This Company Agreement of BLUESTONE CAPITAL, LLC is adopted by the Managers
and the undersigned Members, for the purpose of forming and operating BLUESTONE
CAPITAL, LLC as a Texas limited liability company, and the undersigned Managers
and Members do each mutually acknowledge and agree as follows:
DEFINITIONS
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The following terms used in this Company Agreement shall have the following
meanings unless otherwise expressly provided herein:
(i) "Agreement" shall mean this Company Agreement, as originally executed,
and as amended from time to time in writing, including all exhibits and
schedules hereto, which concerns the conduct of the business of the Company.
(ii) "Capital Account" shall mean the Capital Account maintained for each
Member in accordance with Section 5.4.
(iii) "Capital Contribution" shall mean any contribution to the capital of
the Company in cash or property by a Member whenever made.
(iv) "Certificate of Formation" shall mean the Certificate of Formation
filed with the Texas Secretary of State for the purpose of organizing the
Company, as the same may be amended or restated from time to time.
(v) "Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.
(vi) "Company" shall mean Bluestone Capital, LLC, the Company organized
pursuant to the Certificate of Formation and this Agreement.
(vii) "Deficit Capital Account" shall mean with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
taxable year, after giving effect to the following adjustments:
(a) credit to such Capital Account any amount which such Member is
obligated to restore under Section 1.704-1(b)(2)(ii)(c) of the Treasury
Regulations, as well as any addition thereto pursuant to the next to last
sentence of Sections 1.704-2(g)(1) and (i)(5) of the Treasury Regulations,
after taking into account thereunder any changes during such year in
company minimum gain (as determined in accordance with Section 1.704-2(d)
of the Treasury Regulations) and in the minimum gain attributable to any
member nonrecourse debt (as determined under Section 1.704-2(i)(3) of the
Treasury Regulations); and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
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This definition of Deficit Capital Account is intended to comply with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and 1.704-2, and
will be interpreted consistently with those provisions.
(viii) "Distributable Cash" shall mean all cash, revenues and funds
received by the Company from Company operations, including from the sale of any
asset to the extent not reinvested in replacement assets, less the sum of the
following to the extent paid or set aside by the Company: (a) all principal and
interest payments on indebtedness of the Company and all other sums paid to
lenders; (b) all cash expenditures incurred incident to the purchase or sale of
any asset and the normal operation of the Company's business; (c) reimbursement
of expenses and payment of compensation to any Manager; and (d) such Reserves as
the Managers deem reasonably necessary to the proper operation of the Company's
business.
(ix) "Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association.
(x) "Fair Market Value" shall mean, on the date such Fair Market Value is
to be determined, the excess of the value of all of the Company's assets minus
all of the Company's liabilities. For purposes of determining Fair Market Value,
(a) no value shall be placed on the goodwill or name of the Company or the
office records, files, statistical data or any similar intangible assets of the
Company not normally reflected in the Company's accounting records, (b) there
shall be taken into consideration any related items of income earned but not
received, expenses incurred but not yet paid, liabilities fixed or contingent,
prepaid expenses to the extent not otherwise reflected in the books of account,
and the value of options or commitments to purchase securities pursuant to
agreements entered into on or prior to the valuation date, (c) determination of
value of any publicly-traded security or bond, shall be the most recent closing
sale price quoted for such security on the exchange on which it is traded, (d)
determination of the value of other securities shall be based on all relevant
factors, including without limitation, type of security, marketability,
restrictions on disposition, and current financial position and operating
results, (e) the value of real estate shall be deemed to be the most recent fair
market value of such real estate as determined by a real estate appraiser
selected by the Managers; and (f) as to the liabilities and any other assets of
the Company, the book value carried on the books of the Company in accordance
with Generally Accepted Accounting Principles, consistent with the Company's
past practice.
(xi) "Fiscal Year" shall mean the Company's fiscal year, which shall end on
December 31, of each year.
(xii) "Initial Capital Contribution" shall mean the initial contribution to
the capital of the Company pursuant to this Agreement.
(xiii) "Manager" and "Managers" As used in this Agreement the term
"Manager" shall mean each individual Manager of the Company from time to time.
The term "Managers" shall refer (i) to the Manager of the Company at any time
when the Company has one (1) Manager and (ii) collectively, to all of the
Managers of the Company at any time when the Company has multiple Managers.
Initially, the Company shall have one Manager, which shall be Mortgage
Assistance Corp., a Texas corporation.
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(xiv) "Member" shall mean any person that signs in person or by an
attorney-in-fact, or otherwise is a party to the Agreement at the time that the
Company is formed and is identified as a Member in the Agreement and any Person
who is subsequently admitted as a Member in the Company in accordance with the
Texas Act and the Agreement, until such time as such Person withdraws, is
removed, or is otherwise no longer a Member of the Company.
(xv) "Membership Interest" shall mean a Member's entire interest in the
Company, including such Member's right to participate in the decisions of the
Members, as reflected by the ratio of such Member's Units to the aggregate of
the Units of all Members.
(xvi) "Net Profits" and "Net Losses" shall mean the income, gain, loss,
deductions and credits of the Company in the aggregate or separately stated, as
appropriate, determined under the Company's adopted method of accounting at the
close of each Fiscal Year.
(xvii) "Offer" shall have the meaning ascribed to such term in Section 7.3
hereof.
(xviii) "Offered Interest" shall have the meaning ascribed to such term in
Section 7.3 hereof.
(xix) "Percentage of Interest" means, for a Member, the percentage
equivalent of a fraction, the numerator of which is the number of Units owned by
such Member and the denominator of which is the total number of Units owned by
all Members.
(xx) "Persons" shall mean any individuals, partnerships, limited liability
companies, corporations, trusts, business trusts, real estate investment trusts,
estates and other associations or business entities.
(xxi) "Reserves" shall mean, with respect to any fiscal period, funds set
aside or amounts allocated during such period to reserves which shall be
maintained in amounts deemed sufficient by the Managers for working capital and
to pay taxes, insurance, debt service or other costs or expenses incident to the
ownership or operation of the Company's business.
(xxii) "Securities Acts" shall mean the Securities Act of 1933 or any other
applicable state securities laws.
(xxiii) "Selling Member" shall mean any Member who sells, assigns, or
otherwise transfers for consideration, all or any portion of a Membership
Interest.
(xiv) "Texas Act" shall mean the Texas Limited Liability Company Law, part
of the Texas Business Organizations Code, as amended.
(xxv) A "Transfer" of all or any part of a Membership Interest means any
type of disposition of any right, title or interest whatsoever in such
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Membership Interest, voluntarily or involuntarily, directly or indirectly,
including without limitation any sale, exchange, assignment, encumbrance, grant
of security interest, pledge, hypothecation, gift, transfer by trust, transfer
by will or intestate succession, or other disposition whatsoever.
(xxvi) "Transferring Person" shall have the meaning ascribed to such term
in Section 7.3.
(xxvii) "Treasury Regulations" shall mean the proposed, temporary and final
regulations promulgated under the Code in effect as of the date of filing the
Certificate of Formation and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
(xxviii) "Units" shall mean equity ownership in the Company represented by
membership units ("Units"). The Company may issue such total number of Units as
the Managers shall determine, and may issue partial Units.
ARTICLE I. FORMATION
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1.1. Formation. On August 25, 2006, the Company was organized as a
Texas limited liability company by execution and delivery of Certificate of
Formation to the Texas Secretary of State in accordance with the Texas Act.
1.2. Principal Place Of Business. The principal place of business of
the Company shall be located 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000. The Company
at any time may change the location of such principal office and may have such
other offices, either within or without the State of Texas, as the Members may
designate or as the business of the Company may require.
1.3. Registered Agent Office. The initial registered agent is Mortgage
Assistance Corporation and the address of the initial registered agent office of
the Company is 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000. The registered agent
office and the registered agent may be changed from time to time by the
Managers, with the consent of the Members, filing the prescribed form with the
Texas Secretary of State.
1.4. Term. The existence of the Company shall be perpetual, unless
terminated or dissolved as set forth herein.
1.5. Purpose. The Company may conduct or promote any lawful businesses
or purposes for which limited liability companies may be organized under the
Texas Act. The Company shall possess and may exercise all the powers and
privileges necessary or convenient to the conduct, promotion, or attainment of
the businesses or purposes of the Company.
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ARTICLE II. RIGHTS AND DUTIES OF MANAGERS
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2.1. Management of Company Vested in the Managers. The business and
affairs of the Company shall be managed by the Managers. The consent of a
majority in number of the Managers then-serving shall be the act of the
Managers. The Managers shall direct, manage and control the business of the
Company to the best of their ability. Except for situations in which the
approval of the Members is expressly required herein and as specifically
provided in Section 3.5, the Managers shall have full and complete authority,
power and discretion to: (i) manage and control the business, affairs and
property of the Company; (ii) make all decisions regarding the business, affairs
and property of the Company; and (iii) perform any and all other acts incident
to the management of the Company's business subject to the provisions of this
Agreement. Subject to the limitations in the preceding sentence, the right,
power, and authority of the Managers pursuant to this Agreement shall be
liberally construed to encompass all acts and activities in which a Company may
engage under the Texas Act.
2.2. Certain Powers of Managers. Without limiting the generality of the
provisions set forth in Section 2.1 above, the Managers shall have the power to
act on behalf of the Company:
(a) To enter into and execute, on behalf of the Company, all
agreements, contracts, instruments and related documents in connection with the
Company's business, on such terms as the Managers, in their reasonable
discretion, deem to be in the best interests of the Company.
(b) To carry out the business of the Company.
(c) To acquire and enter into, on behalf of the Company, any
contract of insurance, which the Managers reasonably deem necessary and proper
for the protection of the Company, for the conservation of its property, or for
any purpose beneficial to the Company.
(d) To employ persons (including affiliates of any Manager,
subject to the restrictions on compensation to such affiliates set forth in this
Agreement) in the operation of the Company, on such terms and for such
compensation as the Managers shall reasonably determine.
(e) To employ attorneys, accountants, consultants, brokers,
and other outside entities or individuals (including affiliates of any Manager,
subject to the restrictions on compensation to such affiliates set forth in this
Agreement) on behalf of the Company.
(f) To pay, collect, compromise, arbitrate, resort to legal
action for or otherwise adjust claims or demands of or against the Company.
(g) To sell assets to another investor as well as maintain
servicing and/or obtain other incentives as deemed in the best interest of the
company.
2.3. Liability for Certain Acts. Each Manager shall perform its duties
as a Manager in good faith, in a manner reasonably believed to be in the best
interest of the Company, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances. If any Manager so performs
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the duties as a Manager, it shall not have any liability by reason of being or
having been a Manager. No Manager shall be liable to the Company or to any
Member for any loss or damage sustained by the Company or any Member, unless the
loss or damage shall have been the result of fraud, deceit, gross negligence,
willful misconduct or a wrongful taking by such Manager.
2.4. Members and Managers Have No Exclusive Duty to Company. The
Managers, and affiliates of the Managers, shall not be required to manage the
Company as their sole and exclusive function and each Member and Manager and
their affiliates may have other business interests and may engage in other
activities in addition to those relating to the Company, including business
interests or other activities that directly compete with the business of the
Company.
2.5. Authority of Managers to Deal with Affiliates. Any Manager may, on
behalf of the Company, contract with any person, firm or corporation, including,
without limitation, any of the Members, any entity in which any of the Members
or any Manager has a direct or indirect interest and any affiliated or related
corporation or other entity, for the performance of any and all services which
may at any time be necessary, proper, convenient or advisable to carry on the
business of the Company; provided that any such transaction shall be effected
only on terms competitive with those that may be obtained from unaffiliated
persons. Any goods or services provided by affiliates to the Company shall be
pursuant to a written contract which sets forth the goods and services to be
provided and the compensation to be paid.
2.6. Resignation and Removal of Managers. Any Manager may resign by
giving thirty (30) days prior written notice to the Members. Any Manager may be
removed by the unanimous vote of all of the Members. The Members shall by the
unanimous vote of all Members then elect a successor Manager to begin serving
simultaneously with the resignation or removal of any Manager. The Members may
increase or decrease (but not below one (1)) the number of Managers constituting
all of the Managers of the Company.
2.7. Compensation and Fees. Each Manager shall be reimbursed by the
Company for all out of pocket expenses incurred by such Manager in furtherance
of performing its obligations to the Company as Manager. Except as specifically
provided in the Servicing Agreement (as described in Section 3.5(c) herein),
Manager shall receive no compensation other than reimbursement of out-of-pocket
expenses incurred by Manager in furtherance of the business of the Company. No
Manager shall receive any additional compensation except as the Members shall
decide.
ARTICLE III. RIGHTS AND OBLIGATIONS OF MEMBERS
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3.1. Limitation of Members' Liabilities. Based on the Texas Act, a
Member shall not be bound by, or be personally liable for, the expenses,
liabilities or obligations of the Company or the Manager, and such Member's
liability shall be limited solely to the amount of its Capital Contributions,
whether or not returned to such Member, together with the undistributed share of
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the profits of the Company from time to time credited to such Member's Capital
Account and any money or other property wrongfully paid or conveyed to such
Member on account of its Capital Contribution, including but not limited to
money or property to which creditors were legally entitled, paid or conveyed to
a Member, and, under certain circumstances, interest on returned capital.
3.2. No Control of Business or Right to Act for Company. No Member
shall have any right or authority to act for or bind the Company or to vote on
matters other than the matters set forth in this Agreement, except as
specifically required by applicable law.
3.3. Priority and Return of Capital. Except as provided herein, no
Member shall have priority over any other Member, as to the return of Capital
Contributions, Net Profits, Net Losses or distributions.
3.4. Meetings of the Company; Voting Rights.
(a) Meetings of the Company may be called by the Managers and
shall be called by it upon the written request of Members with the authority to
vote an aggregate of not less than 49% Percentage of Interest. Upon receipt of
such a written request, stating the purpose of the proposed meeting, the
Managers shall provide each Member, within ten (10) days of such request, with
written notification of a meeting and the purpose of such meeting. Such meetings
shall be held not less than fifteen (15) days or more than sixty (60) days after
the receipt of such request and shall be held at the principal place of business
or principal executive office of the Company or such other place as the Members
shall unanimously decide.
(b) At all meetings of the Company, any decision,
determination, consent, approval or action by or of the Members shall be
affected by the favorable vote of all of the Members of the Company, unless the
vote of a greater or lesser number is otherwise required by the Act, the
Certificate of Formation or this Agreement.
(c) At all meetings of the Company, a Member may vote by proxy
executed in writing by the Member or by a duly authorized attorney-in-fact. Such
proxy shall be filed with the Company at least one (1) day before the meeting.
Unless otherwise provided in the proxy, no proxy shall be effective after eleven
(11) months after the date of its execution.
(d) Action required or permitted to be taken at a meeting of
Members may be taken without a meeting if the action is evidenced by one or more
written consents describing the action taken, signed by each Member entitled to
vote, and delivered to a Manager for inclusion in the minutes or for filing with
the Company records. Action taken under this section is effective when all
Members entitled to vote have signed a consent, unless the consent specifies a
different effective date.
(e) When any notice is required to be given to any Member, a
waiver of the notice in writing signed by the person entitled to the notice,
whether before, at, or after the time stated therein, shall be equivalent to the
giving of the notice.
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3.5. Powers Reserved to the Members. Each of the following actions on
behalf of the Company shall require the unanimous approval of the Members:
(a) the acquisition of any real property in excess of $100,000 per
parcel of real estate;
(b) the acquisition of any loan or portfolio of loans in excess of
$100,000 per loan;
(c) the execution, on behalf of the Company, of a servicing
agreement in the form of Exhibit B, attached hereto and
incorporated herein by this reference, or any amendment
thereto, to service the Initial Loan Portfolio (as defined in
Section 5.6 herein) and an additional portfolio of loans owned
by the Company (hereinafter referred to as a "Servicing
Agreement").
(d) the sale, exchange or other disposition of substantially all
of the assets of the Company;
(e) the filing by the Company of any voluntary petition in
bakruptcy or delivery of any assignment for the benefit of
creditors;
(f) the lending of Company funds to any person (except as
otherwise set forth herein), or obligating the Company as
surety, guarantor or accommodation party, except that the
Company shall be able to guarantee credit accounts with
suppliers in the ordinary course of business;
(g) the incurrence of any debt on behalf of the Company, other
than trade debt incurred in the ordinary course of the
Company's business;
(h) the investment or participation by the Company in any other
entity;
(i) the merger or consolidation of the Company;
(j) the admission of new Members of the Company, except as
specifically provided in Section 8.1; or
(k) the establishment of reserves to help meet anticipated Company
expenses and the investment of such reserves pending
utilization.
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ARTICLE IV. COMPANY BOOKS AND RECORDS; AMENDMENT OF
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AGREEMENT; POWER OF ATTORNEY
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4.1. Amendment of Agreement.
(a) Amendment. Any amendment to this Agreement must be
approved in writing by all of the Members and by the Managers.
(b) Recording of Amendment. In making any amendments, there
shall be prepared and filed for recordation by the Managers such documents and
certificates, if any, as shall be required to be prepared and filed under the
Texas Act and under the laws of the other jurisdictions in which the Company is
then formed or qualified.
4.2. Books and Records, Accounting, Reports, Tax Elections.
(a) Availability. At all times during the existence of the
Company, the Managers shall keep or cause to be kept full and true books and
records of account. Such books and records of account shall be maintained at the
principal place of business of the Company or such other place or places as may
be determined by the Managers from time to time. In addition, the Company shall
maintain at its principal office (i) a current list of the full name and last
known business address of each Member set forth in alphabetical order, (ii) a
copy of this Agreement and all amendments thereto, together with executed copies
of any powers of attorney pursuant to which this Agreement or any amendment has
been executed, (iii) copies of the Company's federal, state and local tax
returns and reports, if any, for the three (3) most recent years, and (iv)
accounting records of the Company. Any Member or his, her or its duly authorized
representative shall have the right to inspect and copy the books and records of
the Company upon reasonable notice during business hours.
(b) Financial Reports. The Managers shall cause to be prepared
and delivered to each Member, at the expense of the Company, such financial
reports as shall be decided by the Members.
(c) Income Tax Information. The Managers shall cause income
tax returns for the Company to be prepared by the Company's accountant and filed
with the appropriate authorities and shall furnish to each Member within ninety
(90) days after the close of the taxable year of the Company, all tax
information with respect to the Company as may be required by the Member for the
preparation of his, her or its individual federal and state tax returns, at the
expense of the Company.
(d) Accounting Principles. The Company's books shall be
maintained in accordance with generally accepted accounting principles
determined by the Company's accountants, which accounting principles shall be
consistently applied.
(e) Bank Accounts. The Managers are authorized to open a bank
or investment account for the Company and withdraw funds or sign checks
withdrawing funds from such bank or investment account for the sole purpose of
paying all ordinary and necessary charges and expenses incident to or arising
out of the operations of the Company in the ordinary course of business
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(including expenses arising out of a Servicing Agreement provided said Servicing
Agreement has been approved by the Members as required herein), and that such
banks and investment companies be, and hereby are, authorized and directed to
honor, pay and charge to the account of this Company all checks and orders for
the payment of money so drawn when so signed. The Managers are authorized to
certify to any bank or other investment company a copy of this Section 4.2(e)
and the names and signatures of the Company's Managers authorized to sign checks
as provided in this Section 4.2(e), and such bank or other investment company is
hereby authorized to rely upon such certificate until formally advised of any
changes therein.
ARTICLE V. CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS;
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SECURITIES MATTERS
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5.1. Initial Capital Contributions. Each Member shall contribute the
amount set forth for such Member in Exhibit A, attached hereto and incorporated
herein, as his, her or its Initial Capital Contribution. Exhibit A shall be
revised from time to time as necessary to record all Capital Contributions and
all changes in the Company and ownership of the Company effected in accordance
with this Agreement, and Exhibit A as so revised shall be furnished to each
Member.
5.2. Additional Contributions; Additional Units; Preemptive Rights.
(a) Unless approved by all of the Members, no additional
Capital Contributions shall be required from any Members. Upon such approval,
the Managers shall give written notice to each Member of the amount of any
required additional Capital Contributions, and each Member shall deliver to the
Company his, her or its pro rata share thereof based upon such Member's
Percentage of Interest no later than thirty (30) days following the date such
notice is given.
(b) Unless approved by the Members, the Company shall not
offer additional Units or any other interest in the Company for sale to third
parties. If authorized by the Members, the purchase price for which additional
Units shall be offered shall be determined by the Members. Purchasers of
additional Units pursuant to this paragraph who are not already Members shall be
admitted to the Company as Members in accordance with Section 8.1 hereof. The
Managers are authorized to adjust the Percentages of Interest of the Members as
appropriate to reflect the issuance of additional Units. Exhibit A shall be
revised from time to time as necessary to record all changes in the ownership of
the Company affected in accordance with this section, and Exhibit A as so
revised shall be furnished to each Member.
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5.3. Failure to Contribute Additional Contributions. In the event that
a Member does not contribute his, her or its portion of the additional Capital
Contribution provided for in Section 5.2(a) when due, then such Member's
Membership Interest shall be reduced pro-rata by the proportion of the unpaid
additional Capital Contribution of such Member to the aggregate of all Capital
Contributions actually made by such Member pursuant to Section 5.1 and 5.2.
5.4. Capital Accounts.
(a) A Capital Account will be maintained for each Member in
accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations. Each
Member's Capital Account will be increased by: (i) the amount of money or the
fair market value of property contributed by such Member to the Company; (ii)
allocations to each Member of Net Profits; and (iii) allocations to each Member
of income described in Code Section 705(a)(1)(B). Each Member's Capital Account
will be decreased by: (a) the amount of money distributed to each Member by the
Company; (b) the Fair Market Value of property distributed to each Member by the
Company, net of liabilities secured by such distributed property that such
Member is considered to assume or take subject to, pursuant to Code Section 752;
(c) allocations to the Member for expenditures described in Code Section
705(a)(2)(B); (d) allocations to each Member of Net Losses; and (e) allocations
to the account of such Member of other Company losses and deductions as set
forth in the Treasury Regulations.
(b) In the event of a permitted sale or exchange of a
Membership Interest in the Company, the Capital Account of the transferor shall
become the Capital Account of the transferee to the extent it relates to the
transferred Membership Interest in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv).
(c) A Member shall not receive out of the Company's property
any part of its Capital Contribution until all liabilities of the Company,
except liabilities to Members on account of their Capital Contributions, have
been paid or there remains property of the Company sufficient to pay them.
5.5. Securities Matters. The undersigned Members understand: (i) that
the Membership Interests evidenced by this Agreement have not been, and will not
be, registered under the Securities Acts because the Company is issuing these
Membership Interests in reliance upon the exemptions from the registration
requirements of the Securities Acts; (ii) that the Company has relied upon the
fact that the Membership Interests are to be held by each Member for investment;
and (iii) that exemption from registrations under the Securities Acts would not
be available if the Membership Interests were acquired by a Member with a view
to distribution.
ARTICLE VI. ALLOCATIONS, DISTRIBUTIONS
--------------------------------------
6.1. Allocations of Profits and Losses.
(a) Except as provided in Section 6.2, Net Profits of the
Company for each Fiscal Year shall be allocated to each Member in proportion to
their Percentage of Interests.
8
(b) Except as provided in Section 6.2, Net Losses of the
Company for each Fiscal Year shall be allocated to the Members in proportion to
their Percentage of Interests.
6.2. Special Allocations.
Notwithstanding any other provisions of this Agreement to the contrary:
(a) No allocation of loss, deduction, and/or expenditures
described in Code Section 705(a)(2)(B) shall be charged to the Capital Account
of any Member if such allocation would cause such Member to have a Deficit
Capital Account. The amount of the loss, deduction and/or expenditure which
would have caused a Member to have a Deficit Capital Account shall instead be
charged to the Capital Account of each Member who would not have a Deficit
Capital Account as a result of the allocation, in proportion to their respective
Capital Contributions.
(b) In the event any Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4),(5), or (6), which create or increase a Deficit
Capital Account of such Member, then items of Company income and gain
(consisting of a pro rata portion of each item of Company income, including
gross income, and gain for such year and, if necessary, for subsequent years)
shall be specially credited to the Capital Account of such Member in an amount
and manner sufficient to eliminate, to the extent required by the Treasury
Regulations, the Deficit Capital Account so created as quickly as possible. This
provision is intended to constitute a "qualified income offset" within the
meaning of Treasury Regulation Section l.704-1(b)(2)(ii)(d)(3) and shall be
applied and interpreted consistent therewith.
(c) In the event any Member would have a Deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of any
amount that such Member is obligated to restore to the Company under Treasury
Regulations Section 1.704-l(b)(2)(ii)(c) and such Member's share of minimum gain
as defined in Treasury Regulation Section 1.704-2(g)(1), the Capital Account of
such Member shall be specially credited with items of Company income (including
gross income) and gain in the amount of such excess as quickly as possible.
(d) Notwithstanding any other provision of this section 6.2,
if there is a net decrease in the Company's minimum gain as defined in Treasury
Regulation Section 1.704-2(d) during a taxable year of the Company, then each
Member shall be allocated items of income (including gross income) and gain for
such year (and if necessary for subsequent years) equal to that Member's share
of the net decrease in Company minimum gain. This section 6.2(d) is intended to
comply with the minimum gain chargeback requirement of Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith. If in any
taxable year that the Company has a net decrease in the Company's minimum gain,
the minimum gain chargeback requirement would cause a distortion in the economic
arrangement among the Members and it is not expected that the Company will have
sufficient other income to correct that distortion, the Managers may in their
discretion (and shall, if requested to do so by a Member) seek to have the
Internal Revenue Service waive the minimum gain chargeback requirements in
accordance with Treasury Regulation Section 1.704-2(f)(4).
9
(e) Items of Company loss, deduction and expenditures
described in Code Section 705(a)(2)(B) which are attributable to any nonrecourse
debt of the Company and are characterized as member nonrecourse deductions under
Treasury Regulation Section 1.704-2(i) shall be allocated to the Members'
Capital Accounts in accordance with Treasury Regulation Section 1.704-2(i).
(f) Beginning in the first taxable year in which there are
allocations of "nonrecourse deductions," as described in Treasury Regulation
Section 1.704-2(b), such deductions shall be allocated to the Members in
accordance with, and as a part of, the allocations of Company Net Profit or Net
Loss for such period.
(g) In connection with a Capital Contribution by a new or
existing Member as consideration for one or more Units, or in connection with
the liquidation of the Company or a distribution of money or other property
(other than a de minimis amount) by the Company to a retiring Member as
consideration for one or more Units, the Capital Accounts of the Members shall
be adjusted to reflect a revaluation of Company property including intangible
assets in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f). If
under Treasury Regulation Section 1.704-1(b)(2)(iv)(f) Company property that has
been revalued is properly reflected in the Capital Accounts and on the books of
the Company at a book value that differs from the adjusted tax basis of such
property, then depreciation, depletion, amortization and gain or loss with
respect to such property shall be shared among the Members in a manner that
takes account of the variation between the adjusted tax basis of such property
and its book value, in the same manner as variations between the adjusted tax
basis and Fair Market Value of property contributed to the Company are taken
into account in determining the Members' shares of tax items under Code Section
704(c).
(h) All recapture of income tax deductions resulting from sale
or disposition of Company property shall be allocated to the Members to whom the
deduction that gave rise to such recapture was allocated hereunder to the extent
that such Member is allocated any gain from the sale or other disposition of
such Company property.
(i) Any credit or charge to the Capital Accounts of the
Members under this section 6.2 shall be taken into account in computing
subsequent allocations of profits and losses, so that the net amount of any
items charged or credited to Capital Accounts shall be equal to the net amount
that would have been allocated to the Capital Account of each Member pursuant to
the provisions of this Article if the special allocations required by this
Section 6.2 had not occurred.
(j) In accordance with Code Section 704(c)(1)(A) and Treasury
Regulation Section 1.704-3, if a Member contributes property with a fair market
value that differs from its adjusted basis at the time of contribution, income,
gain, loss and deductions with respect to the property shall, solely for federal
income tax purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the Company and its
fair market value at the time of contribution.
10
6.3. Distributions.
(a) Notwithstanding anything herein to the contrary, the
Managers may distribute available funds on an asset by asset basis or quarterly
basis. If the managing member elects to distribute when an asset is sold, then a
distribution will be made the following month. The priority for "distribution of
proceeds" is as follows:
1) Costs to third parties or Managers expenses and servicing
fees (for all assets)
2) Return of capital contribution in proportion to members'
contribution for the sold assets.
3) Excess proceeds (or profit) in proportion to the Members'
Percentage of Interest.
(b) The Company shall make a distribution to any Member from
Distributable Cash to the extent that such Member is allocated income pursuant
to Section 6.1 or Section 6.2 in excess of distributions received pursuant to
Section 6.3(a), in an amount sufficient to defray federal, state and local tax
liabilities of such Member with respect to such excess for the Fiscal Year,
based upon the then-current highest marginal federal tax rate plus the
then-current highest marginal state tax rate for the State of Texas.
ARTICLE VII. TRANSFERABILITY
----------------------------
7.1. General. Except as provided herein or as otherwise consented to in
writing by the Members, a Member shall not Transfer all or any part of a
Membership Interest. Any purported or attempted Transfer of all or any part of a
Membership Interest in violation of this Article 7 shall be null and void and
the purported transferee of such invalid Transfer shall not be entitled to have
any interest in the Company transferred to such purported transferee on the
books of the Company.
7.2. Transfers Not Requiring Prior Consent.
(a) A Member may, without first obtaining the written consents
required in Section 7.1 above, Transfer by sale or gift all or any undivided
share of its Membership Interest to any one or more of the following: (i) a
partnership, limited liability company or corporation in which fifty percent
(50%) or more of the capital and profit interests (in the case of a partnership
or a limited liability company) or in which fifty percent (50%) or more of the
capital stock (in the case of a corporation) is owned by or for the benefit of
the Member; (ii) the Member's partners (if the Member is a partnership), the
Member's members (if the Member is a limited liability company) or the Member's
shareholders (if the Member is a corporation); (iii) the Company; and (iv) a
Member or Members; provided any such transferee shall agree in writing to be
bound by the terms and conditions of this Agreement as they applied to the
transferring Member on the date of execution of this Agreement in the same
manner as if the transferring Member had retained ownership of its Membership
Interest (upon meeting the foregoing requirements, such transferee shall be
referred to as a "Permitted Transferee").
11
(b) The Managing Member may, without first obtaining the
written consents required in Section 7.1, transfer by sale or gift all or any
undivided share over and above its fifty percent Membership Interest to a third
party.
7.3. Voluntary Transfer Procedure.
(a) A Member who desires to Transfer all or any portion of a
Membership Interest (the "Transferring Person") to a third party, except as
permitted under Section 7.2, shall obtain from such third party a bona fide
written offer to purchase such Membership Interest (the "Offered Interest"),
stating the terms and conditions upon which the purchase is to be made and the
consideration offered therefore (the "Offer"). The Transferring Person shall
give written notification to the Managers and each of the Members, by certified
mail or personal delivery, of his, her or its intention to Transfer the Offered
Interest, furnishing to the Managers and each Member a copy of the Offer.
(b) Upon receipt of the written notice required under
paragraph (a) above, the Company and the Members shall comply with the following
procedure:
(i) The Company shall have thirty (30) days from the
date of delivery of the notice required by paragraph (a) above to notify the
Transferring Person in writing of the Company's election to redeem all or a part
of the Offered Interest at the purchase price set forth in Section 7.4 of this
Agreement, which decision of the Company shall be made by an affirmative vote of
all of the Members.
(ii) If the Company does not elect to redeem all of
the Offered Interest, the other Members shall have the right, within thirty (30)
days of the date of the notice of nonelection by the Company or election as to
less than all of the Offered Interest, to elect to purchase the remaining
Offered Interest, and the Transferring Person shall sell such interest to the
other Members at the purchase price set forth in Section 7.4 of this Agreement.
Any Member desiring to acquire any or all of the Offered Interest shall deliver
to the Managers and each of the Members a written election to purchase the
Offered Interest.
(iii) If two or more Members of the Company elect to
exercise the option to purchase the Offered Interest then, in the absence of an
agreement between them, each Member shall have priority to purchase such
proportion of the available interest that such Member's Percentage of Interest
bears to the total Percentage of Interests held by all other Members electing to
purchase. The portion of the Offered Interest not purchased on such a priority
basis shall be allocated in one or more successive allocations to those Members
electing to purchase more than the proportion of the Percentage of Interest to
which they have a priority right, up to the proportion of the Offered Interest
specified in their respective notices, in the proportion that the Percentage of
Interests held by each of them bears to the total Percentage of Interest held by
all of them.
(iv) If the Company and the Members do not exercise
their rights to redeem or purchase, as the case may be, all of the Offered
Interest pursuant to the terms set forth in Section 7.3(b)(i) and Section
12
7.3(b)(ii) above, then the Transferring Person shall be free to Transfer the
remaining part of the Offered Interest to the bona fide purchaser set forth in
the Offer under the terms of the Offer, subject to the restrictions on such
Transfer imposed by this Agreement or any other agreement or by law.
(v) If the Company exercises its right to redeem all
or a part of the Offered Interest in accordance with Section 7.3(b)(i) above,
the Transferring Person shall be obligated to sell such Offered Interest to the
Company. If any or all of the Members exercise their rights to purchase all or a
part of the Offered Interest in accordance with Section 7.3(b)(ii) above, the
Transferring Person shall be obligated to sell such Offered Interest to such
exercising Members. The closing of the Transfer of the Offered Interest from the
Transferring Person to the Company or any Members pursuant to this Section shall
be held at the principal offices of the Company not later than ninety (90) days
after receipt of notice required by paragraph (a) above.
(c) In the event of the Transfer of all or any part of any
Offered Interest by a Transferring Person to any third party, and as a condition
to recognizing the effectiveness and binding nature of any such Transfer, the
Company may require the Transferring Person or Transferring Person and the third
party, as the case may be, to execute, acknowledge and deliver to the Members or
Managers such instruments of transfer, assignment and assumption and such other
certificates, representations and documents, and to perform all such other acts
which the Managers deem necessary or desirable.
7.4. Purchase Price. The purchase price to be paid to a Transferring
Person for all or any part of such Transferring Person's Membership Interest
redeemed by the Company or purchased by a Member under Section 7.3(b) shall be
the lower of (i) the purchase price set forth in the Offer for such Membership
Interest, or (ii) the product of (A) the Percentage of Interest represented by
the Offered Interest multiplied by (B) the Fair Market Value of the Company as
of the date of such redemption or purchase.
7.5. Remedies. The Members agree that a violation by any of them of
this Article 7 will cause such damage to the Company and to the other Members as
will be irreparable and the exact amount of which will be impossible to
ascertain. For this reason, the Members agree that the Company shall be entitled
as a matter of right to a decree of specific performance of the terms of this
Article 7 or for temporary or permanent injunctive relief from any court of
competent jurisdiction restraining any attempted or purported Transfer of
interest in the Company in violation of this Article 7. In addition, any Member
attempting or purporting to Transfer an interest in the Company in violation of
this Article 7 and the purported transferee participating in the attempted or
purported Transfer, shall be jointly and severally liable to reimburse and pay
the Company for any and all costs, fees and expenses including without
limitation any attorneys', accountants', and other professional fees and
expenses actually expended or incurred by the Company in connection with any
such violation, whether or not litigation ensues. The remedies set forth in this
Section 7.6 shall be cumulative and in addition to whatever other rights and
remedies the Company and the Members may have to protect their respective rights
in the event of a violation of the provisions of this Article 7, including
without limitation the right to recover damages including actual, compensatory,
consequential, incidental and punitive damages.
13
7.6. Effect of Transfer of Interest. Upon the Transfer of any interest
in the Company in accordance with the provisions of this Article 7, the
transferee of such interest shall own and hold such interest in the Company as a
transferee, subject to all the terms, conditions, and limitations of this
Agreement, including without limitation restriction on any further Transfer of
such interest as provided in this Article 7. Consent to such Transfer shall not
constitute consent to the admission of the transferee as a Member of the
Company. A transferee may become a Member only in accordance with the provisions
of Section 8.1. Unless a transferee is admitted to the Company as a Member in
accordance with the provisions of Section 8.1, such transferee shall not be
entitled to any of the rights or benefits of a Member hereunder except the right
to the share of profits and losses and distributions of assets based on the
transferee's Percentage of Interest. Without limiting the generality of the
preceding sentence, such transferee shall have no right (i) to vote upon,
approve, or consent to, any matter requiring the vote, approval or consent of
the Members, or (ii) to receive any information from the Company of the kind to
which Members are entitled, or any other information.
ARTICLE VIII. ADMISSION AND WITHDRAWAL OF MEMBERS
-------------------------------------------------
8.1. Admission of Members. No additional Member may be admitted to the
Company, except upon the prior written consent of and upon such additional
Member signing, in person or by attorney-in-fact, or otherwise becoming a party
to this Agreement; provided, however, each Permitted Assignee (as defined in
Section 7.1) shall automatically be deemed to be a Member of the Company
regardless of whether or not the Members consented to said transfer. No Member
shall have the power to grant a transferee, and no transferee shall have, the
right to become a Member of the Company except as specifically provided in the
preceding sentence. If a Member who is an individual dies or a court of
competent jurisdiction adjudges him or her to be incompetent to manage person or
property, the Member's executor, administrator, guardian, conservator, or other
legal representative may exercise all of the Member's rights for the purpose of
settling his estate or administering his property and shall have any power the
Member had to give his or her assignee a Percentage of Interest in Net Profits
and Net Losses. Said assignee may not be admitted as a Member of the Company
except upon the prior written consent of the Members.
8.2. Withdrawal of Members. No Member shall have any right to withdraw
or resign as a Member of the Company prior to the dissolution and winding up of
the Company, except upon a Transfer of all of his, her or its interest in the
Company in accordance with the terms and conditions of Article 7. A Member who
resigns or whose Membership Interest is otherwise terminated for any reason,
shall not be entitled to receive any distributions to which such Member would
have been entitled had such Member remained a Member. Damages for breach of this
section 8.2 shall be monetary damages only and not specific performance, and
such damages may be offset against distributions by the Company to which such
Member would otherwise be entitled.
14
ARTICLE IX. WINDING UP AND TERMINATION
--------------------------------------
9.1. Events Requiring Winding Up. The Company shall be wound up upon
the occurrence of any of the following events:
(a) Unanimous written consent of the Members; or
(b) The consent of a majority in number of the remaining
Members to wind up the Company within ninety (90) days after the Company is
wound up in accordance with the Texas Act.
9.2. Winding Up, Liquidation and Distribution of Assets. If an event
requiring the winding up of the Company occurs, the Managers shall wind up the
business of the Company and shall apply or distribute the assets of the Company,
or shall sell the assets of the Company and apply or distribute proceeds
thereof, as promptly as practicable and in the following order of priority:
(a) First, if there are sufficient assets therefore, to
creditors of the Company, including Members who are creditors, to the extent
permitted by law, in satisfaction of liabilities of the Company (whether by
payment or the making of reasonable provision for payment thereof) other than
liabilities for distributions to Members; and if there are insufficient assets,
such claims and obligations shall be paid or provided for according to their
priority and, among claims and obligations of equal priority, ratably to the
extent of assets available therefore; and if there is any contingent,
conditional, or unmatured debt, claim, obligation, or liability known to the
Company, a reserve shall be established for it in accordance with law, in an
amount determined by the Managers to be appropriate for such purpose;
(b) Second, to Members in satisfaction of liabilities for
distributions; and
(c) Third, any remaining assets, to the Members in proportion
to the positive balances in their respective Capital Accounts, and after all
Capital Accounts have been reduced to zero, in accordance with their respective
Percentages of Interest. The Company may offset damages for breach of this
Agreement by a Member against the amount otherwise distributable to such Member
hereunder.
(d) At the time final distributions, exclusive of any reserves
for contingent, conditional or unmatured items, are made in accordance with
clause (c) above, the Company shall terminate, but, if at any time thereafter,
any reserve is released because the Managers determine the need for such reserve
is ended, then such reserve shall be distributed in accordance with clause (c)
above.
9.3. Return of Contribution Nonrecourse to Members. Except as provided
by law or as expressly provided in this Agreement, upon winding up, each Member
shall look solely to the assets of the Company for the return of his, her or its
15
Capital Contribution. If the Company property remaining after the payment or
discharge of the debts and liabilities of the Company is insufficient to return
the Capital Contribution of one or more Members, such Member or Members shall
have no recourse against any other Member or the Manager.
ARTICLE X. MISCELLANEOUS
------------------------
10.1. Notice. Any notice required or permitted to be given pursuant to
the provisions of the Texas Act or this Agreement shall be effective as of the
date personally delivered, delivered via facsimile with electronic confirmation,
or delivered via overnight express mail, or if sent by certified mail, return
receipt requested, three (3) days after being deposited with the United States
Postal Service, prepaid and addressed to the intended recipient at the last
known address as shown in the Company's records.
10.2. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the Texas Act or this Agreement, a waiver thereof, in
writing, signed by the person entitled to such notice shall be deemed equivalent
to the giving of such notice.
10.3. Authority to Bind the Company. Unless authorized to do so by this
Agreement or by the Managers, no attorney-in-fact, employee or other agent of
the Company shall have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable pecuniary for any purpose. No Member
shall have any power or authority to bind the Company unless the Member has been
authorized by the Managers to act as an agent of the Company.
10.4. Waiver of Action For Partition. Each Member irrevocably waives
any right to maintain an action for partition with respect to the property of
the Company during the term of the Company.
10.5. Indemnification By Company. The Company may indemnify any person
who was or is a party defendant or is threatened to be made a party defendant to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a Manager, Member,
employee or agent of the Company, or is or was serving at the request of the
Company, against expenses, including attorney's fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the Managers determine that he, she or it
acted in good faith and in a manner reasonably believed to be in the best
interest of the Company, and with respect to any criminal action or proceeding,
had no reasonable cause to believe the conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not in itself create a
presumption that the Person did or did not act in good faith and in a manner
which was reasonably believed to be in the best interest of the Company, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe the conduct was unlawful.
10.6. Construction. Whenever the context requires, as used in this
Agreement, the singular shall include the plural and the masculine gender shall
include the feminine and neuter genders, and vice versa.
16
10.7. Articles and Other Headings. The Articles and headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation thereof.
10.8. Severability. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the remainder of this Agreement shall not be
affected.
10.9. Application of Texas Law. This Agreement will be governed by the
laws of the State of Texas, without giving effect to its conflicts of laws
provisions.
10.10. Disregarded Entity Tax Treatment Intended If One Member. At any
time when the Company has only one (1) Member, the parties intend that the
provisions of this Agreement will qualify the Company to be taxed as a
disregarded entity under the Code and not as a corporation, and the Managers and
each Member shall take such action from time to time as may be necessary or
desirable to carry out such intention. The Managers may make any tax elections
for the Company allowed under the Code or the tax laws of any state or other
jurisdiction having taxing jurisdiction over the Company.
10.11. Partnership Tax Treatment Intended If More Than One Member; Tax
Administrative Matters. At any time when there is more than one Member of the
Company, the parties intend that the provisions of this Agreement will qualify
the Company to be taxed as a partnership under the Code and not as a
corporation, and the Managers and Members shall take such action from time to
time as may be necessary or desirable to carry out such intention. The Managers
may make any tax elections for the Company allowed under the Code or the tax
laws of any state or other jurisdiction having taxing jurisdiction over the
Company. The Members hereby designate Mortgage Assistance Corp. as the tax
matters partner of the Company pursuant to Section 6231(a)(7) of the Code. The
person designated tax matters partner shall not take any action contemplated by
Section 6222 through 6232 of the Code without the approval of the Members.
10.12. No Partnership Intended For Non-Tax Purposes. The undersigned
Members have formed the Company under the Texas Act, and as long as there is
more than one Member of the Company such parties expressly do not intend hereby
to form a partnership under either the Revised Uniform Partnership Act of the
State of Texas nor the Revised Uniform Limited Partnership Act of the State of
Texas. The Members do not intend to be partners one to another, or partners as
to any third party. To the extent any Member, by word or action, represents to
another person that any other Member is a partner or that the Company is a
partnership, the Member making such wrongful representation shall be liable to
any other Member who incurs personal liability by reason of such wrongful
representation.
[The remainder of this page is intentionally left blank.]
17
CERTIFICATION
THE UNDERSIGNED hereby evidence their adoption and ratification of the
foregoing Company Agreement of Bluestone Capital, LLC as of the date indicated
below.
Mortgage Assistance Corp., as Member and
Manager
Date:______________ By:________________________________
Its:_______________________________
Name:______________________________
18
EXHIBIT A
---------
MEMBER CAPITAL CONTRIBUTIONS
----------------------------
AS OF AUGUST 25, 2006
============================ ======================== ========= ================
MEMBER CAPITAL CONTRIBUTION UNITS PERCENTAGE OF
INTEREST
---------------------------- ------------------------ --------- ----------------
Mortgage Assistance
Corp., a Texas Corporation None 50 50%
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
---------------------------- ------------------------ --------- ----------------
Fiserviss Trustee $ 45,000.00 7.41 7.41%
FBO Xxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
Fiserviss Tax I.D. #20-
2054042
---------------------------- ------------------------ --------- ----------------
One Source Mortgage
Investments $258,610.00 42.59 42.59%
00000 X. Xxxxxxxxxx Xx.
Xxxxx 000
Xxxxxxxxxx, XX 00000
---------------------------- ------------------------ --------- ----------------
Total $303,610.00 100 100%
============================ ======================== ========== ===============
19
EXHIBIT B
---------
SERVICING AGREEMENT
-------------------
