EXHIBIT 10.1
EBANK MORTGAGE, LLC,
A GEORGIA LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
APRIL 19, 2006
EBANK MORTGAGE, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
APRIL 19, 2006
ACQUIRORS OF MEMBERSHIP INTERESTS ("MEMBERSHIP INTERESTS") IN EBANK MORTGAGE,
LLC ("COMPANY") WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED (I)
UNDER ANY STATE SECURITIES LAW (THE "STATE ACTS"), OR (II) UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND NEITHER
THE MEMBERSHIP INTERESTS NOR ANY INTEREST THEREIN MAY BE SOLD, EXCHANGED OR
OTHERWISE TRANSFERRED, EXCEPT (I) IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF
ARTICLE 5 OF THIS AGREEMENT, WHICH RESTRICT THE TRANSFER OF MEMBERSHIP
INTERESTS, AND (II) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE ACTS OR IN A TRANSACTION WHICH IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE ACTS OR FOR
WHICH SUCH REGISTRATION OTHERWISE IS NOT REQUIRED.
TABLE OF CONTENTS
ARTICLE PAGE
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1. THE COMPANY........................................................... 1
1.1 FORMATION......................................................... 1
1.2 NAME; PLACE OF BUSINESS; REGISTERED OFFICE AND AGENT.............. 2
1.3 PURPOSE; LIMITATIONS.............................................. 2
1.4 DISSOLUTION....................................................... 3
1.5 BOOKS, RECORDS AND TAX AND ACCOUNTING MATTERS..................... 4
1.6 OTHER AGREEMENTS.................................................. 5
2. MEMBERS............................................................... 6
2.1 RIGHTS AND OBLIGATIONS OF MEMBERS................................. 6
2.2 MEETINGS.......................................................... 6
2.3 CAPITAL CONTRIBUTIONS............................................. 8
2.4 LOANS............................................................. 8
3. MANAGEMENT............................................................ 9
3.1 THE MEMBERS....................................................... 9
3.2 OFFICERS; BANK APPROVALS.......................................... 12
4. ALLOCATIONS AND DISTRIBUTIONS......................................... 17
4.1 ALLOCATIONS OF PROFIT AND LOSS.................................... 17
4.2 DISTRIBUTIONS..................................................... 20
5. ENTRANCE AND EXIT..................................................... 21
5.1 TRANSFER OF INTERESTS............................................. 21
5.2 ADDITIONAL MEMBERS................................................ 23
5.3 XXXXXXX PUTS, BANK CALLS AND WITHDRAWAL UPON TERMINATION OF
EMPLOYMENT..................................................... 23
6. DEFINITIONS AND MISCELLANEOUS......................................... 25
6.1 DEFINITIONS....................................................... 25
6.2 MISCELLANEOUS..................................................... 31
EBANK MORTGAGE, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the "Agreement") of
EBANK MORTGAGE, LLC, a Georgia limited liability company (the "Company"),
effective this 19th day of April, 2006, is made and entered into by the Company,
ebank (the "Bank") and Madison Mortgage Corporation ("Madison Mortgage"). (the
Bank, together with Madison Mortgage, the "Members").
WHEREAS, the Members and the Company desire to enter into this Agreement to
govern the operations of the Company from and after the date hereof.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the Members, intending to be legally bound, agree on behalf of themselves and
their respective successors and assigns as follows:
1. THE COMPANY
1.1 FORMATION.
1.1.1. Formation; Statutory Compliance. The Company constitutes a
limited liability company formed pursuant to, and governed by, the terms of this
Agreement and the Georgia Limited Liability Company Act (the "Georgia Act") and
other applicable laws of the State of Georgia. The Members shall, when required
and as permitted hereunder, file such amendments to or restatements of the
Articles, and such other documents and instruments, in such public offices in
the State of Georgia or elsewhere as the Members deem advisable to give effect
to the provisions of this Agreement and the Articles, to respect the formation
of and the conduct of business by, the Company, and to preserve the character of
the Company as a limited liability company.
1.1.2. Investment Representations. Each Member represents and warrants
as to the following:
(a) The Member acknowledges that the Company will not register
the issuance of the Units under the federal Securities Act of 1933, as amended
(the "Securities Act"), or any applicable state securities laws (the "State
Acts") in reliance upon exemptions from registration contained in the Securities
Act and applicable State Acts, and that the Company relies upon these
exemptions, in part, because of each Member's representations, warranties, and
agreements contained in this Agreement.
(b) The Member is acquiring the Units for such Member's own
account, with the intention of holding the Units for investment and with no
present
intention of participating, directly or indirectly, in a distribution of the
Units; and the Member will not make any sale, transfer, or other disposition of
the Units, (i) without registration under the Securities Act and applicable
State Acts, unless an exemption from registration is available under the
Securities Act and applicable State Acts and (ii) except in accordance with the
provisions of this Agreement.
(c) The Member is familiar with the business in which the Company
is or will be engaged, and based upon such Member's knowledge and experience in
financial and business matters, the Member is familiar with investments of the
type that such Member is undertaking to purchase; the Member is fully aware of
the risks involved in making an investment of this type; and such Member is
capable of (i) evaluating the merits and risks of this investment and (ii)
holding the Units indefinitely. The Member acknowledges that, prior to executing
this Agreement, the Member has had the opportunity to ask questions of and
receive answers or obtain additional information from a representative of the
Company concerning the financial and other affairs of the Company. Each Member
understands there is no market for the Units and none is expected to develop.
1.2 NAME; PLACE OF BUSINESS; REGISTERED OFFICE AND AGENT.
The business of the Company is conducted under the name of "ebank Mortgage,
LLC". If permitted by applicable law, the Company may operate under such other
names as shall be determined by the Managers. The Company's office, required to
be maintained by Section 00-00-000 of the Georgia Act, shall be located at 0000
Xxxx Xxxx Xx. Xxxxx 000, Xxxxxx, Xxxxxxx 00000. The agent for service of process
on the Company shall be CT Corp, located at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, XX 00000. The office of the Company shall be established at its
principal facility after commencement of operations. All records required to be
kept by Section 00-00-000 of the Georgia Act shall be available at such
principal facility. The business of the Company may be conducted at such other
locations in Georgia and elsewhere as the Managers may from time to time
determine.
The Managers have caused the Articles of Organization to be filed with the
Secretary of State of the State of Georgia. The Managers will register the
Company as a foreign limited liability company in all appropriate states by
taking such steps as are required under the applicable laws of such states. The
Members will amend such certificates and registration documents from time to
time, as may be required by law. All Additional Members waive the right to
receive a copy of such certificates and registration documents or any amendments
thereto either before or after they are filed.
1.3 PURPOSE; LIMITATIONS.
(a) The objects, purposes and powers of the Company are to:
(i) engage in the business of originating residential mortgages
through the Internet, as well as any other lawful business, purpose or activity
incidental thereto and in furtherance thereof; and
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(ii) possess and exercise all powers and privileges granted by
the Georgia Act or any other law or this Agreement, together with any powers or
privileges incidental thereto, including all powers and privileges that are
necessary, convenient, or incident to the conduct, promotion or attainment of
the business purposes or activities of the Company.
(b) The Members and the Company acknowledge and agree that the Company
shall not own stock, debt instruments or other securities, other than
obligations of the United States government ancillary to prudent cash
management. In addition, the Members and the Company acknowledge and agree that
the Bank may prevent the Company from engaging in activities that do not meet
the criteria in (a)(i) above or if the Company engages in activities that do not
meet such criteria, the Bank will have the right to withdraw as a Member of the
Company.
1.4 DISSOLUTION.
1.4.1 Events Causing Dissolution. The Company will be dissolved and
its affairs wound up upon the occurrence of any of the following:
(a) The agreement of Members owning a majority of the Units;
(b) An order of a court of competent jurisdiction ordering the
dissolution of the Company; or
(c) The sale, abandonment or other disposition by the Company of
all or substantially all of its assets and the collection of all the proceeds
therefrom.
1.4.2 Liquidation of Property and Application of Proceeds.
Upon the dissolution of the Company, the Managers will wind up
the Company's affairs in accordance with the Georgia Act, and will be authorized
to take any and all actions contemplated by the Georgia Act as permissible,
including, without limitation:
(a) prosecuting and defending suits, actions, investigations and
proceedings, whether civil, criminal, or administrative;
(b) settling and closing the Company's business, causing the
Accountants to prepare a final financial statement in accordance with Section
1.5.3, and making adjustments among Members with respect to distributions under
Article 4 based upon such financial statement;
(c) liquidating and reducing to cash the Property as promptly as
is consistent with obtaining its fair value;
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(d) discharging or making reasonable provision for the Company's
liabilities; and
(e) distributing the proceeds of liquidation and any undisposed
Property to the Members in accordance with their Capital Account balances and to
the extent there are proceeds in excess of such balances, then in proportion to
their Percentage Interests.
None of the foregoing actions in this Section 1.4.2 will affect the liabilities
of any Member or Manager, and shall not impose any liability upon a liquidating
trustee, if any, for the Company.
1.5 BOOKS, RECORDS AND TAX AND ACCOUNTING MATTERS.
1.5.1 Availability. At all times during the existence of the Company,
the Managers must keep or cause to be kept complete and accurate books and
records appropriate and adequate for the Company's business. Such books and
records, whether financial, tax, operational or otherwise, will include a copy
of the Company's Articles, this Agreement, and any amendments thereto, and a
current list of the Members and last known addresses of each Manager and Member,
and must at all times be maintained at the principal place of business of the
Company. Each Member and their respective Member's Representative has the right
to inspect the books and records of the Company as provided in the Georgia Act.
Until otherwise changed by a vote or action of a Majority in Interest, Madison
Mortgage shall be responsible for, and shall perform all activities specified in
the first two sentences of this Section 1.5.1
1.5.2 Tax and Accounting Decisions. The Company shall be taxed as a
partnership for federal and state income tax purposes, and has or will promptly
file any elections required for such purpose. All decisions as to tax and
accounting matters, including but not limited to the making of any tax
elections, shall, except to the extent that Section 2.2.9 or any other
applicable provision of this Agreement specifically provides otherwise, be made
by the Managers. The Managers shall select Accountants to prepare the Company's
tax returns and, at the discretion of the Managers, to review, audit or assist
in the preparation of the Company Financial Statements. All such accounting
decisions hereunder shall be in accordance with GAAP. The Managers may rely upon
the advice of the Accountants as to whether such decisions are in accordance
with GAAP.
1.5.3 Reports. The Managers shall deliver to the Members the Company
Financial Statements on a monthly, quarterly and annual basis as promptly as is
practicable after end of the respective period to which such Company Financial
Statements apply. In any event, the annual Company Financial Statements shall be
delivered to the Members within 90 days of the end of each fiscal and calendar
year respectively. The Company Financial Statements shall be prepared in
accordance with GAAP.
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1.5.4 Tax Returns. The Managers shall cause the Accountants to prepare
all federal, state, municipal and other tax filings, returns and reports that
the Company is required to file, subject to requests for extensions, and file
with the appropriate taxing authorities all filings, returns and reports
required to be filed by the Company in a manner required for the Company to be
in compliance with any law governing the timely filing of such returns.
1.5.5 Taxable and Fiscal Years. The Company's taxable year shall be
the same as its Fiscal Year.
1.5.6 Depositories. The Managers or their designees shall maintain or
cause to be maintained one or more accounts for the Company in such depositories
as the Managers or such designees shall select. All receipts of the Company from
whatever source received shall be deposited to such accounts, all expenses of
the Company shall be paid from such accounts, and no funds not belonging to the
Company shall be deposited to such accounts. All amounts so deposited shall be
received, held and disbursed by Persons designated by the Managers only for and
on behalf of the Company.
1.6 OTHER AGREEMENTS.
1.6.1 Madison Mortgage Indemnity. Madison Mortgage will indemnify,
defend and hold harmless the Company, the Bank, and their respective
shareholders, affiliates, officers, directors, employees, agents and
representatives, from and against any loss or liability arising from, directly
or indirectly, (i) the management and conduct of Madison Mortgage or its
affiliates, (ii) any conflicts of interest arising from Madison Mortgage's
operations or the operations of any affiliates of Madison Mortgage, (iii)
Madison Mortgage's activities as Manager, and (iv) the acts, or failure to act,
by Madison Mortgage and/or its affiliates in complying with all loan closing
instructions and activities. The Members further agree and acknowledge that the
Bank and its respective shareholders, affiliates, officers, directors,
employees, agents and representatives, shall not be subject to any loss or
liability arising from or relating to any claims made in connection with title
insurance policies, closing, warehousing, servicing, or selling of residential
loans and that Madison Mortgage will indemnify such parties against any such
asserted claims, losses or liabilities, except to the extent that said liability
arises from the intentional misconduct of the party seeking indemnity.
1.6.2 Indemnity. the Bank will indemnify, defend and hold harmless the
Company, Madison Mortgage, and their respective shareholders, affiliates,
officers, directors, employees, agents and representatives, from and against any
loss or liability arising from, directly or indirectly, (i) the management and
conduct of the Bank or its affiliates, (ii) any conflicts of interest arising
from the Bank's operations or the operations of any affiliates of the Bank and
(iii) the Bank's activities as Managers.
1.6.3 Survival of Indemnities. The parties agree that the obligations
contained in this Section 1.6 shall survive any transfer of Units or withdrawal
of the Bank or Madison Mortgage as Members as well as any dissolution pursuant
to Section 1.4 or other termination of this Agreement.
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2. MEMBERS
2.1 RIGHTS AND OBLIGATIONS OF MEMBERS.
2.1.1 Units. A Member's interest in the Company shall be represented
by Units having such rights, duties and privileges as are set forth herein. As
used in this Agreement, a Member's "Percentage Interest" means the result,
expressed as a percentage, obtained by dividing (a) the number of Units held of
record by such Member, as set forth on Exhibit A hereto, by (b) the aggregate
number of Units held by all Members, as set forth on Exhibit A hereto. Each
Member agrees to use good faith efforts to promote the business of the Company.
2.1.2 Priority and Return of Capital. Except as otherwise specifically
set forth in this Agreement, no Member shall have the right to demand or receive
Property other than cash in return for a Capital Contribution or as a
distribution pursuant to Article 4; nor shall such Member have priority over any
other Member, either as to the return of Capital Contributions or as to any
distributions pursuant to Article 4, except as otherwise specifically set forth
in Section 4.1.4 hereof.
2.2 MEETINGS.
2.2.1 Meetings. Meetings of Members will be called by the Managers
whenever the Managers deem necessary or when requested in writing to do so by a
Member or Members owning Units representing an aggregate Percentage Interest of
20% or greater. Any such meetings shall be held at the principal place of
business of the Bank, or at such other location as determined by the Managers,
or may be held by means of a conference call or similar communications by means
of which all Persons participating in the meeting can hear each other and be
heard.
2.2.2 Quorum. In the event that the Bank and Madison Mortgage are the
only Members of the Company, the representation of Members owning Units
representing an aggregate Percentage Interest of 100% in person or by proxy
shall constitute a quorum at any meeting of Members, otherwise, the
representation of Members owning Units representing a Majority Interest or
greater in person or by proxy shall constitute a quorum at any meeting of
Members. In the absence of a quorum at any such meeting, a majority of the Units
so represented may adjourn the meeting from time to time for a period not to
exceed sixty (60) days without further notice. However, if at the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting must be given to each Member of record entitled to vote at the meeting.
At such adjourned meeting at which a quorum is present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed.
2.2.3 Manner of Acting. If a quorum is present, the affirmative vote
of Members holding a Majority in Interest is the act of the Members, except as
expressly provided otherwise by this Agreement or the Georgia Act. No Member
shall be
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prohibited from voting on a matter solely because the matter relates to such
Member or an affiliate of such Member.
2.2.4 Proxies. At all meetings of Members, a Member may vote in person
or by proxy. A Member may appoint a proxy by executing a writing that authorizes
another Person or Persons to vote or otherwise act on the Member's behalf. Such
writing must be filed with the Members before or at the time of the meeting. No
appointment of proxy is valid after 11 months from the date of its execution,
unless otherwise provided in such writing.
2.2.5 Action by Members Without a Meeting. Any action required or
permitted to be taken at a meeting of Members may be taken without a meeting,
upon the same notice as would be required for a meeting, and without a vote, if
a consent or consents in writing are signed by not less than the minimum number
of votes that would be necessary to authorize or take the action at a meeting at
which all Members entitled to vote thereon were present. The action must be
evidenced by one or more written consents describing the action taken, signed by
all the Members entitled to take such action and delivered to the Company for
inclusion in its records, and a copy of such written consents shall be delivered
to each Member. Action taken under this Section 2.2.5 is effective when the
Members required to approve such action have signed the consent, unless the
consent specifies a different effective date. The record date for determining
Members entitled to take action without a meeting is the date the first Member
signs a written consent.
2.2.6 Notice. The Managers must provide each Member with at least five
(5) days' prior notice of a meeting of the Members in accordance with Section
6.2.2. The notice must contain the date, time and place of such meeting. The
notice shall state the purpose or purposes of the meeting with reasonable
particularity and shall contain a description of the items to be acted upon,
including, if applicable, copies of any amendments proposed to be made to the
Articles or this Agreement and of all agreements then available in respect of a
transaction for which Member approval is being sought pursuant to Section 2.2.9.
2.2.7 Waiver of Notice. A Member may waive any notice required by the
Georgia Act, the Articles or this Agreement before or after the date and time of
the meeting or event for which notice is required or before or after the date
and time stated in the notice. The waiver must be in writing, signed by the
Member entitled to the notice and be delivered to the Company for inclusion in
its records. A Member's attendance at a meeting, whether in person or by
telephone conference call or similar communication methods, waives objection to
lack of notice or defective notice of the meeting, unless the Member at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting.
2.2.8 Member Representative. Each of Madison Mortgage and the Bank may
duly authorize one or more of their respective officers or agents to be such
Member's representative and agent with full authority to cast all votes and
grant all approvals and consents to be given by such Member ("Member's
Representative").
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Madison Mortgage hereby appoints Xxxx X. Xxxxxxxxxx as its initial Member's
Representative. The Bank hereby appoints Xxxxx Box as its initial Member's
Representative. If any Member appoints more than one Member Representative, and
in the event of any conflict among the instructions or directions given by the
Members' Representatives of a Member, neither the Company nor any other Member
shall have any obligation to act (or, as the case may be, refrain from action)
until the Members' Representatives of such Member shall have jointly given
instructions or directions resolving such conflict. Any Member may change its
Member Representative by providing written notice to the other Members
specifying a new Member Representative.
2.3 CAPITAL CONTRIBUTIONS.
2.3.1 Member's Capital Contribution. Each Member's Capital Account at
the effective time of this Agreement is set forth on Exhibit A, and reflects
each Member's initial capital contribution.
2.3.2 Additional Contributions. No Member is required to make any
additional capital contributions without such Member's consent. In the event the
Members unanimously agree to make additional capital contributions, then each
Member shall have the right to make capital contributions pro rata to such
Member's Percentage Interest.
2.3.3 Other Matters.
(a) Except as otherwise provided in this Agreement, no Member may
demand or receive a return of Capital Contributions. No Member is entitled to
interest on any Capital Contribution.
(b) The Members have no personal liability for the repayment of
any Capital Contribution of any Member.
2.3.4 Negative Capital Accounts. No Member is obligated to restore a
negative balance in such Member's Capital Account.
2.4 LOANS.
2.4.1 Loans to the Company. The Members may lend money to the Company
as approved by the Members. If a Member makes a loan to the Company pursuant to
this Section 2.4.1, the amount of any such loan is not an increase in the
Member's Capital Contribution or Units, nor does such loan entitle the Member to
any increase in the share of distributions of the Company in respect of Units,
nor subject the Member to any greater proportion of the Losses that the Company
may sustain. The amount of any such loan shall be a debt due from the Company to
the Member, on such terms as determined reasonably by the Managers, but in no
event shall any interest on such loan be less than the Applicable Federal Rate.
2.4.2 Other Loans. If the Managers determine that funds are reasonably
necessary for conducting the business of the Company, the Members are authorized
(but
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not obligated) to enter into any loan or credit agreements, and to borrow the
needed funds on the Company's behalf on terms such Managers believe are
commercially reasonable, and with the consent of the majority of all outstanding
Units, all or any portion of the Company's assets may be pledged or conveyed as
security for indebtedness of the Company.
3. MANAGEMENT
3.1 THE MANAGERS.
3.1.1 Management and Authority.
(a) Except for situations in which the approval of the Members is
otherwise required by this Agreement or by applicable law, (i) the powers of the
Company shall be exercised by or under the authority of, and the business and
affairs of the Company shall be managed under the direction of, the Managers;
and (ii) the Managers may make all decisions and take all actions for the
Company not otherwise provided in this Agreement, including, without limitation,
setting the general policies of the Company. Subject to the foregoing and to the
provisions of this Agreement, including Section 3.2, the President of the
Company shall have the full power and authority to manage and control, in good
faith, the day-to-day business, operations and affairs of the Company, to make
all decisions regarding such matters and to perform any and all other acts or
activities customary or incident to the management of the Company's day to day
business operations, subject to the supervision of the Bank. The initial
President shall be Xxxxxx X. Xxxxxxxx.
(b) The Bank Managers (as defined in Section 3.1.2) shall jointly
exercise a number of votes equal to 100 times the Percentage Interest of the
Bank, and the Madison Mortgage Managers (as defined below) shall jointly
exercise a number of votes equal to 100 times the Percentage Interest of Madison
Mortgage. In the event of disagreement among the Managers within any class of
Managers, all votes entitled to be cast by such class shall be cast as
determined by the majority of the Managers of that class. Except as otherwise
expressly provided in this Agreement, all actions required or permitted to be
taken by the Managers must be approved by the affirmative vote of a majority of
all votes entitled to be cast.
3.1.2 Classes, Number, Tenure and Qualifications. The Company shall
have two classes of Managers. One class of Managers (the "Bank Managers") shall
be appointed by the Bank for so long as it holds any Percentage Interest. The
other class of Managers (the "Madison Mortgage Managers") shall be appointed by
Madison Mortgage for so long as it holds any Percentage Interest. Madison
Mortgage shall, for so long as it possesses a right of appointment pursuant to
the preceding sentence, appoint at least one but no more than two Persons to be
Madison Mortgage Managers, and the Bank shall appoint at least three but no more
than four Persons to be the Bank Managers. The initial Managers of the Company
under this Agreement shall be as set forth on Exhibit B hereto. Each Manager
shall hold office at the pleasure of the Member appointing such Manager, which
appointing Member may at any time, and from time to time, remove any or all of
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the Managers appointed by such Member then in office with or without cause, and
appoint substitute Managers to serve in their stead, which shall be effective at
such time as determined by such appointing Member and which may be effective
immediately; provided, that at and after such time as the Bank or Madison
Mortgage ceases to hold any Percentage Interest, the remaining Member, whether
Madison Mortgage or the Bank, shall be deemed the Member appointing the
departing Member's Manager designee then in office. If, at any time, none of the
Company, the Bank, Madison Mortgage nor any of their respective affiliates
continues to employ any Manager, then such Manager shall automatically and
without any action of the appointing Member, be removed from office, unless a
Majority in Interest of the Managers determines otherwise.
3.1.3 Quorum and Voting of Members.
(a) Meetings of the Managers will be held from time to time at
such times and at such places as the Managers determine, but not less frequently
than quarterly. Meetings may be held by means of a telephone conference call or
other communications by means of which all persons participating in the meeting
can hear each other.
(b) Written notice of the time and place of the meeting must be
given in accordance with Section 6.2.2 at least five days prior to the meeting.
(c) The presence or participation of at least one Bank Manager
and at least one Madison Mortgage Manager will constitute a quorum for the
transaction of business of the Managers.
(d) Except as otherwise expressly provided in this Agreement, all
actions required or permitted to be taken by the Managers must be approved by
the affirmative vote of a majority of all votes entitled to be cast by the
Managers.
3.1.4 Waiver of Notice. A Manager may waive any notice required by the
Georgia Act, the Articles or this Agreement before or at the date and time of
the meeting or event for which notice is required or before or at the date and
time stated in the notice. The waiver must be in writing, be signed by the
Managers entitled to the notice and be delivered to the Company for inclusion in
its records. A Manager's attendance at a meeting, whether in person or by
telephone conference call or similar communication methods, waives objection to
lack of notice or defective notice of the meeting, unless the Manager, at the
beginning of the meeting, objects to holding the meeting or transacting business
at the meeting.
3.1.5 Action by Managers Without a Meeting. Any action required or
permitted to be taken at a meeting of Managers may be taken without a meeting,
upon the same notice as would be required for a meeting, and without a vote, if
such action is approved by the written consent of such number and class of
Managers (which may be executed in counterparts) as would have been required to
approve such action at a meeting duly called of all the Managers. Such written
consents shall be delivered to the Company for inclusion in its records. Action
taken under this Section 3.1.5 is effective
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when the Managers required to approve such action have signed the consent,
unless the consent specifies a different effective date. The record date for
determining Managers entitled to take action without a meeting is the date the
first Manager signs a written consent.
3.1.6 Duties and Obligations of Managers and Tax Matters Person.
(a) The Managers shall take all actions necessary or appropriate
(i) for the continuation of the Company's valid existence as a limited liability
company under the Georgia Act and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Managers or to
enable the Company to conduct the business in which it is engaged and (ii) for
the accomplishment of the Company's objects, purposes and powers.
(b) Each Manager must devote to the Company such time as may be
necessary for the proper performance of its duties under this Agreement, and, to
the extent applicable, under their respective employment agreements.
(c) The Tax Matters Person may, upon authorization by the
Managers, enter into and execute on behalf of all Managers an agreement with the
Internal Revenue Service extending the statute of limitations for making an
assessment of federal income taxes or the time periods relating to submitting
administrative adjustment requests for the Company. The Tax Matters Person may
not enter into any agreement with the Internal Revenue Service which affects the
amount, deductibility or credit of any Company item without prior consultation
with, and opportunity for comment by, the Bank Managers. In the event of an
audit of the Company's federal income tax return, the Tax Matters Person will
provide all Managers with the information required by law relating to the
administrative or judicial proceedings for the adjustment of Company items. The
Tax Matters Person is entitled to reimbursement by the Company for all expenses
reasonably incurred by him in representing the Company in any administrative or
judicial proceeding relating to the tax treatment of Company items.
3.1.7 Liability of Members and Members. Except as otherwise expressly
provided in this Agreement, a Member or Manager of the Company is not liable to
the Company or to any Member or Manager for any action taken, or any failure to
take any action, as a Member or Manager, except for liability with respect to
(a) intentional misconduct or a knowing violation of law, or (b) any transaction
for which such Member or Manager received a personal benefit in violation or
breach of any provision of this Agreement. If the Georgia Act is hereafter
amended to authorize the further elimination or limitation of the liability of
Members or Managers, then the liability of a Member or Manager of the Company,
in addition to the limitation on liability provided herein, shall be limited to
the fullest extent permitted by the amended Georgia Act. In the event that any
of the provisions of this Section 3.1.7 (including any provision within a single
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
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3.1.8 Compensation. The Managers will not receive any compensation for
their service as Managers of the Company, except as provided in such Manager's
employment agreement with the Company or its affiliates, as applicable.
3.1.9 Resignation. A Manager may resign at any time by giving written
notice to the Members. The resignation of a Manager takes effect upon receipt of
such notice or at such later time as is specified in such notice, and, unless
otherwise specified in such notice, the acceptance of such resignation is not
necessary to make it effective. The resignation of a Manager does not affect the
Manager's rights as a Member and does not constitute a withdrawal of a Member.
3.1.10 Vacancies. Any vacancy of a Manager occurring for any reason
will be filled by the Member that appointed the Manager that vacated such
position. The Manager elected to fill a vacancy shall hold office until such
Manager's death, resignation or removal pursuant to Section 3.1.2, or until such
Manager has become disabled.
3.2 OFFICERS; BANK MANAGERS APPROVALS.
3.2.1 General. Subject to Section 3.2.2, the Managers shall have the
authority to appoint, and to delegate authority to, such officers, employees,
agents and representatives of the Company, or committees thereof, as they may
from time to time deem to be appropriate; provided, that any delegation of
authority to take any action must have been approved in the same manner as would
be required for the Managers to approve such action directly; and provided
further, that the Company shall at all times have a president, treasurer and a
secretary. Any member of the Manager or other officer may act as an assistant
treasurer or assistant secretary. Annual or other periodic election of officers
shall not be required. Each officer or assistant officer shall serve, subject to
Section 3.2.5(a)(iv), at the pleasure of the Managers. Any officer may be
removed by the President, subject to Section 3.2.5(a)(iv), for any reason
whatsoever or for no reason. Any officer may resign at any time. The
compensation of all officers and assistant officers shall be fixed by, or
pursuant to authority delegated by, the Managers from time to time. Any two or
more offices, except President and Secretary, may be held by the same person.
3.2.2. President. The President of the Company shall have the power
and authority to manage and control the day-to-day business, operations and
affairs of the Company as set forth in Section 3.1.1, subject to the rights and
powers of the Managers and Members. The initial President shall be Xxxxxx X.
Xxxxxxxx. The President shall be elected by the Members and shall serve in such
position at will, subject to the terms of such Person's employment agreement, if
any. Each year, the President shall be responsible for the preparation of a
proposed annual operating budget and capital budget of the Company for
presentation to the Managers for their approval, which proposed budgets shall
include proposed intercompany charges, if any, from the Bank or Madison Mortgage
or their respective affiliates. The President shall be responsible for operating
the Company in accordance with the annual operating and capital budgets approved
by the Managers. The President each year shall also prepare and submit to the
Managers for
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their approval an annual business plan. The President shall have such further
powers which are ordinarily inherent in the office of the president of a limited
liability company or as shall be prescribed from time to time by the Managers,
subject to the supervision of the Bank.
3.2.3 Secretary. The Secretary shall keep a permanent record of the
minutes of the proceedings of meetings of the Managers and Members, and shall
give notice of all such meetings as required by the Act. The Secretary shall
have custody of the seal of the Company and of all books, records, and papers of
the Company, except such as shall be in the charge of the Treasurer or of some
other Person authorized to have custody and possession thereof by resolution of
the Managers. The Secretary shall also have such other powers and perform such
other duties as are incident to the office of the secretary of a limited
liability company or as shall be prescribed from time to time by, or pursuant to
authority delegated by, the Managers or the President.
3.2.4 Treasurer. The Treasurer shall be the chief financial officer of
the Company, shall keep full and accurate accounts of the receipts and
disbursements of the Company in books belonging to the Company, shall deposit
all moneys and other valuable effects of the Company in the name and to the
credit of the Company in such depositories as may be appointed by the President,
and shall also have such other powers and perform such other duties as are
incident to the office of the treasurer of a limited liability company or as
shall be prescribed from time to time by, or pursuant to authority delegated by,
the Members or the President.
3.2.5 Matters Requiring the Bank Manager Approval.
(a) General. Notwithstanding the powers and authority given to
the President under Sections 3.1.1 and 3.2.2, the approval of the Bank Managers
shall be required for each of the following actions:
(i) Adoption of and changes to an annual operating and capital
budget for the Company;
(ii) Entry into and amendment of employment agreements and
arrangements;
(iii) The determination of, and changes in, annual compensation
and bonuses for any employee whose aggregate annual compensation and bonus is or
is likely to be in excess of $100,000, subject to any applicable terms of such
employee's employment agreement with the Company;
(iv) The hiring, dismissal and reassignment of any officer or
employee whose aggregate annual compensation and bonus is or is likely to be in
excess of $100,000;
(v) The adoption of any employee incentive, benefit or retirement
plan and the grant of awards thereunder;
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(vi) Investments by the Company outside the ordinary course of
business;
(vii) Borrowings;
(viii) Appointment of outside counsel and of the Company's
independent auditors, if any;
(ix) Changes in operational policies and procedures;
(x) Changes in accounting policies;
(ixi) Establishment and changes in accounting reserves;
(xi) Selling assets other than in the ordinary course of
business;
(xii) Entering into or exiting different types of business than
presently conducted;
(xiv) Initiating and/or settling any material litigation
involving the Company;
(xv) Changes in, or deviations from, the annual operating and
capital budgets approved by the Members or the annual business plan approved by
the Members which, individually or in the aggregate, exceed $100,000; and
(xvi) Other actions outside the ordinary course of the Company's
business.
(b) Notice. The Bank Manager shall not cause any of the actions
specified in Section 3.2.5(a) to be taken by the Company other than in
compliance with the applicable notice requirements set forth in Sections 2.2.5,
2.2.6, 3.1.3 and 3.1.5 of this Agreement.
3.2.6 Transactions with Affiliates; Certain Reimbursement. The Members
acknowledge that, from time to time, the President or the Members may cause the
Company to enter into certain agreements, management contracts, and lease
agreements with Persons that may be affiliates of Madison Mortgage or the Bank.
The Members further acknowledge and agree that such relationships and agreements
are permissible provided that:
(a) such transactions or business relationships with such
related or affiliated parties shall be commercially fair and
reasonable, on terms and under circumstances that are
substantially the same, or at least as favorable to the
Company, as those prevailing at the time for comparable
transactions with or involving other nonaffiliated
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companies;
(b) the fees relating thereto must be the lower of the retail
fees regularly charged by the affiliated entity or such fees
as may be comparable to and competitive with the fees
charged by independent companies in the same geographic
location that provide comparable services which could
reasonably be made available to the Company;
(c) in no event shall any Member acquire assets from the Company
except with the consent of a Majority in Interest, including
both the Bank and Madison Mortgage;
(d) in no event shall any Member lease assets from the Company
except with the consent of a Majority in Interest, including
both the Bank and Madison Mortgage;
(e) in no event shall any Member receive any loans from the
Company except with the consent of a Majority in Interest,
including both the Bank and Madison Mortgage;
(f) in no event shall the Company lease or acquire assets in
which any Member has an interest, except with the consent of
a Majority in Interest, including both the Bank and Madison
Mortgage; and
(g) in no event shall any Member directly or indirectly receive
any rebates or give-ups or participate in any reciprocal
business arrangements which would circumvent any of the
restrictions contained in this Agreement.
3.3 INDEMNIFICATION OF MEMBERS, MANAGERS, OFFICERS AND EMPLOYEES. The
Company shall indemnify its Members, Managers, officers and employees in
accordance with the requirements of federal regulations governing
indemnification provided by federal savings institutions as set forth in 12
C.F.R. Section 545.121, which provides as follows:
3.3.1 Definitions and rules of construction.
(a) Definitions for purposes of this section.
(i) Action. Ther term "action" means any judicial or
administrative proceeding, or threatened proceeding, whether civil, criminal, or
otherwise, including any appeal or other proceeding for review.
(ii) Court. The term "court" includes, without limitation, any
court to which or in which any appeal or any proceeding for review is brought.
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(iii) Final judgment. The term "final judgment" means a judgment,
decree, or order which is not appealable or as to which the period for appeal
has expired with no appeal taken.
(iv) Settlement. The term "settlement" includes entry of a
judgment by consent or confession or a plea of guilty or nolo contendere.
(b) References in this section to any individual or other person,
including any association, shall include legal representatives, successors, and
assigns thereof.
3.3.2 General. Subject to sections 3.3.3 and 3.3.7 of this section,
the Company shall indemnify any person against whom an action is brought or
threatened because that person is or was a Member, Manager, officer, or employee
of the Company, for:
(a) Any amount for which that person becomes liable under a
judgment if such action; and
(b) Reasonable costs and expenses, including reasonable
attorney's fees, actually paid or incurred by that person in defending or
settling such action, or in enforcing his or her rights under this section if he
or she attains a favorable judgment in such enforcement action.
3.3.3 Requirements. Indemnification shall be made to such period under
paragraph (b) of this section only if:
(a) Final judgment on the merits is in his or her favor; or
(b) In case of:
(i) Settlement,
(ii) Final judgment against him or her, or
(iii) Final judgment in his or her favor, other than on the
merits, if the Bank Managers determine that he or she was acting in good faith
within the scope of his or her employment or authority as he or she could
reasonably have perceived it under the circumstances and for a purpose he or she
could reasonably have believed under the circumstances was in the best interests
of the Company or its Members.
However, no indemnification shall be made unless the Company gives the OTS
at least 60 days' notice of its intention to make such indemnification. Such
notice shall state the facts on which the action arose, the terms of any
settlement, and any disposition of the action by a court. Such notice, a copy
thereof, and a certified copy of the resolution containing the required
determination by the board of directors shall be sent to the Regional Director,
who shall promptly acknowledge receipt thereof. The notice period shall run from
the date of such receipt. No such
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indemnification shall be made if the OTS advises the Company in writing, within
such notice period, of his or her objection thereto.
3.3.4 Insurance. The Company may obtain insurance to protect it and
its members,managers, officers, and employees from potential losses arising from
claims against any of them for alleged wrongful acts, or wrongful acts,
committed in their capacity as members, managers, officers, or employees.
However, the Company may not obtain insurance which provides for payment of
losses of any person incurred as a consequence of his or her willful or criminal
misconduct.
3.3.5 Payment of expenses. If a majority of the managers of the
Company concludes that, in connection with an action, any person ultimately may
become entitled to indemnification under this section, the managers may
authorize payment of reasonable costs and expenses, including reasonable
attorneys' fees, arising from the defense or settlement of such action. Nothing
in this section 3.3.5 shall prevent the managers of the Company from imposing
such conditions on a payment of expenses as they deem warranted and in the
interests of the Company. Before making advance payment of expenses under this
paragraph (e), the Company shall obtain an agreement that the Company will be
repaid if the person on whose behalf payment is made is later determined not to
be entitled to such indemnification.
3.3.6 Exclusiveness of provisions. The Company shall not indemnify any
person referred to in section 3.3.2 or obtain insurance referred to in section
3.3.4 other than in accordance with this section.
3.3.7 The indemnification provided for in section 3.3.2 is subject to
and qualified by 12 U.S.C. 1821(k).
4. ALLOCATIONS AND DISTRIBUTIONS
4.1 ALLOCATIONS OF PROFIT AND LOSS.
4.1.1 Profits and Losses. Profits and Losses shall be allocated to the
Members as follows:
4.1.1.1 Profits shall be allocated to the Members in proportion
to their respective Percentage Interests.
4.1.1.2 Losses shall be allocated to the Members (i) first, in
proportion to their respective Percentage Interests until the Capital Account of
any Member has been reduced to zero, (ii) then to the remaining Members in
proportion to their respective Percentage Interests until any Member's Capital
Account has been reduced to zero, and (iii) thereafter according to the same
process repeatedly until all
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Capital Accounts have been reduced to zero. Thereafter, all Losses shall be
allocated in proportion to Percentage Interests.
4.1.2 Special Allocation Rules.
(a) Allocable Cash Basis Items. Any "allocable cash basis item"
of the Company (as defined in Section 706(d) of the Code) for any fiscal year
that is required to be allocated to the Members in the manner provided in
Section 706(d) of the Code must be allocated to the Members in the manner so
required.
(b) Limitation on Loss Allocation. Notwithstanding the provisions
of Section 4.1 hereof, if the amount of Loss that would otherwise be allocated
to a Member in any fiscal year under Section 4.1.2 hereof would cause or
increase a Member's Adjusted Capital Account Deficit as of the last day of such
fiscal year, then a proportionate part of such Loss equal to such excess shall
be allocated to the other Members to the extent such allocation can be made
without violating the provisions of this Section 4.1.2(b) with respect to such
other Members.
(c) Qualified Income Offset. Notwithstanding any provision hereof
to the contrary, if a Member unexpectedly receives in any fiscal year any
adjustment, allocation or distribution described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5), or (6), and if a Member has an Adjusted Capital
Account Deficit as of the last day of such fiscal year, then all items of income
and gain of the Company (consisting of a pro rata portion of each item of
Company income and gain) for such fiscal year (and, if necessary, for subsequent
fiscal years) shall be allocated to the Member in the amount and in the manner
necessary to eliminate such Adjusted Capital Account Deficit as quickly as
possible.
(d) Gross Income Allocation. Notwithstanding any provision hereof
to the contrary, if a Member has an Adjusted Capital Account Deficit as of the
last day of any fiscal year, then all items of income and gain of the Company
(consisting of a pro rata portion of each item of Company income and gain,
including gross income) for such fiscal year shall be allocated to such Member
in the amount and in the manner necessary to eliminate such Adjusted Capital
Account Deficit as quickly as possible.
(e) Minimum Gain Chargeback. Notwithstanding any provision hereof
to the contrary, any item of Company income or gain for any fiscal year (or any
portion of any such item) that is required to be allocated to the Members under
Regulations Sections 1.704-2(f) or 1.704-2(i)(4) shall be allocated to the
Members for such fiscal year in the manner so required by such Regulations,
including Regulations Section 1.704-2(j)(2).
(f) Member Nonrecourse Deductions. Notwithstanding any provision
hereof to the contrary, any item of Company loss, deduction or expenditure
described in Section 705(a)(2)(B) of the Code for any fiscal year (or any
portion of any such item) that is required to be allocated to the Members under
Regulations Section
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1.704-2(i)(l) shall be allocated to the Members for such fiscal year in the
manner so required by such Regulation.
(g) Curative Allocations. The allocations set forth in
subsections (c) through (f) of this Section 4.1.2 (the "Regulatory Allocations")
are intended to comply with certain requirements of Sections 1.704-1(b) and
1.704-2 of the Regulations. Notwithstanding any other provision of this Article
4 other than the Regulatory Allocations, the Regulatory Allocations shall be
taken into account in allocating Profits, Losses and items of Company income,
gain, loss and deduction to the Members so that, to the extent possible, the net
amount of such allocations of Profits, Losses and other items and the Regulatory
Allocations to each Member shall be equal to the net amount that would have been
allocated to each such Member if the Regulatory Allocations had not occurred.
(h) Transfer of Units. If one or more Unit(s) are transferred
during any fiscal year of the Company, the Company income or loss attributable
to such Unit(s) for such fiscal year shall be allocated between the transferor
and the transferee in any manner permitted by law as they shall agree; provided,
however, that if the Company does not receive on or before November 30 of the
year following the year in which the transfer occurs, written notice stating the
manner in which such parties have agreed to allocate such Company income or
loss, then all such Company income or loss shall be allocated between the
parties based on the percentage of the year each party was, according to the
books and records of the Company, the owner of record of the Company interest(s)
transferred during that year.
4.1.3 General Rules.
(a) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction for federal and state income tax purposes,
and any other allocations not otherwise provided for shall be divided among the
Members in the same proportions as they share Profits or Losses, as the case may
be, for the year.
(b) For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a monthly basis, as determined by the Members using any
permissible method under Code Section 706 and the Regulations thereunder.
4.1.4 Power of Members to Vary Allocations of Profits and Losses. It
is the intent of the Members that each Member's allocable share of Profits and
Losses shall be determined and allocated in accordance with the provisions of
this Section 4.1 to the fullest extent permitted by Section 704(b) of the Code,
or its statutory successor. However, if the Company is advised that the
allocations provided in this Section 4.1 will not be respected for Federal
income tax purposes, the allocation provisions of this Agreement shall be
amended, on advice of accountants or legal counsel, in the manner and to the
extent in the best interest of and consistent with, the economic sharing of all
of the Members, but in no event shall such reallocation be greater than the
minimum
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reallocation necessary so that the allocation in this Section 4.1 will be
respected for Federal income tax purposes.
4.1.5 Section 704(c) Allocation. In accordance with Code Section
704(c) and the Regulations thereunder and with Section 1.704-1(b)(2)(iv)(f)(4)
and 1.704-1(b)(4)(i) of the Regulations, income, gain, loss and deduction with
respect to any Property contributed to the capital of the Company or Property
revalued on the Company's books and in the Capital Accounts shall, solely for
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 for federal
income tax purposes and its initial Gross Asset Value. Absent another agreement
of the Members, which must be consented to by all affected Members, the Company
shall use the "Traditional Method" of allocation as defined in Treas. Reg.
Section 1.704-3(b)(1).
4.2 DISTRIBUTIONS.
4.2.1 Quarterly Tax Distribution. Except as provided in Section 1.4 or
as determined in their reasonable discretion by a Majority in Interest, the
Company must distribute to the Members the Estimated Tax Amount for the
respective calendar year to date to the extent of available Cash Flow (unless
otherwise restricted by the Act) in proportion to their Percentage Interests.
Each such Estimated Tax Amount, if to be made, (i) shall, except as otherwise
determined by a Majority in Interest, be paid not later than the first business
day of the month in which the Members' quarterly payments of federal tax are
due, and (ii) must be determined on a cumulative basis and considering all
previous distributions made pursuant to this Section 4.2.1 and Section 4.2.2
during such calendar year.
4.2.2 Other Mandatory Distributions. Except as provided in Section
1.4.2 relating to the liquidation of the Company or otherwise agreed to by a
Majority in Interest, the Company must, not later than thirty (30) days
following the last day of any fiscal quarter, distribute the excess of the
Company's available Cash Flows for such fiscal quarter over the sum of (a)
$100,000, (b) all distributions of the Estimated Tax Amount made during such
fiscal quarter, and (c) all distributions, if any, made during such fiscal
quarter pursuant to Section 4.2.3 below. Distributions pursuant to this Section
4.2.2 (taking into account distributions made pursuant to Section 4.2.1) shall
be made to the Members in proportion to their Percentage Interests, unless
otherwise agreed to by all affected Members.
4.2.3 Discretionary Distributions. Except as otherwise provided in
Sections 4.2.1 and 4.2.2 above, in Section 1.4.2 relating to the liquidation of
the Company, or as restricted by the Georgia Act, the Members may, by action of
a Majority in Interest, distribute to the Members available Cash Flow of the
Company, if any, or a portion thereof, and any other cash or other assets
generated from the Company's activities, at any time and from time to time, as
determined by the Members. Distributions pursuant to this Section 4.2.3 shall be
made to the Members in proportion to their Percentage Interests, unless
otherwise agreed to by all affected Members.
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4.2.4 Distribution Among Members. If any Units are sold, assigned or
transferred during any accounting period, all distributable earnings accrued on
or before the date of such Transfer will be made to the transferor of record,
and all distributable earnings after such date will be made to the transferee of
record after such transfer date.
4.2.5 Amounts Withheld. All amounts withheld pursuant to the Code or
any provision of any state or local tax law with respect to any payment or
distribution to a Member will be treated as amounts distributed to the
respective Member pursuant to this Section 4.2 for all purposes of this
Agreement.
4.2.6 Proceeds Available Upon Dissolution. Upon the dissolution and
winding up of the Company, subject to (a) the requirements of Section 1.4.2, (b)
the payment of all liabilities of the Company, including any debts owed to a
Member, and (c) the establishment of such Reserves as the Members reasonably
deem necessary for any contingent or unforeseen liabilities or obligations, the
proceeds from such liquidation first will be distributed, as expeditiously as
possible, to Members in proportion to the positive balances in their Capital
Accounts until no Member has a positive balance in his Capital Account, and then
in proportion to their Percentage Interests.
4.2.7 In Kind Distributions. If any assets of the Company are
distributed in kind, such assets will be distributed to Members entitled to such
distribution as tenants-in-common in the same proportions as such Members would
have been entitled to cash distributions, unless otherwise agreed to by the
Members.
4.2.8 Limitation Upon Distributions. No distribution shall be made to
Members if prohibited by the Georgia Act.
5. ENTRANCE AND EXIT
5.1 TRANSFER OF INTERESTS.
5.1.1 Restriction on Transfers. Except as expressly permitted by this
Agreement, no Member may Transfer all or any portion of such Member's Units.
5.1.2 Permitted Transfers.
(a) A Member may Transfer all or a portion of its Units in
accordance with Section 5.3.
(b) the Bank or Madison Mortgage may transfer its Units to its
parent or to any direct or indirect wholly-owned subsidiary of its parent with
the prior written consent of the other Members, which consent shall not be
unreasonably withheld.
5.1.3 Prohibited Transfers.
(a) Any purported Transfer of Units that is not a Permitted
Transfer shall be null and void and of no effect whatsoever; provided, however,
if the Company is required by law to recognize a Transfer that is not a
Permitted Transfer, the
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interest transferred is strictly limited to the transferor's economic rights
with respect to the transferred Units, and any allocations and distributions of
such Person may be applied (without limiting any other legal or equitable rights
of the Company) to satisfy any debts, obligations, or liabilities for damages
that the transferor or transferee of such interest may have to the Company.
(b) In the case of a Transfer or attempted Transfer of Units that
is not a Permitted Transfer, the parties engaging or attempting to engage in
such Transfer shall indemnify and hold harmless the Company, the Managers and
the other Members from all claims, actions, proceedings, costs, liabilities, and
damages that any of such indemnified Persons may incur (including, without
limitation, incremental tax liability and reasonable attorneys' fees and
charges) as a result of such Transfer or attempted Transfer and efforts to
enforce this Agreement, including without limitation this Section 5.1.3.
5.1.4 Rights of Unadmitted Assignees. A Person who acquires one or
more Units, but who is not admitted as a substituted Member pursuant to Section
5.1.5 is entitled only to become an owner of economic rights, such Units shall
not be deemed outstanding for purposes of calculating any necessary vote or
action by Members or Managers. Such Units shall entitle the holder only to the
right to allocations and distributions with respect to such interests in
accordance with this Agreement, but such a person has no right to any
information or accounting of the affairs of the Company, is not entitled to
inspect the books or records of the Company, and does not have any of the voting
rights, rights to participate in the management of the Company or other rights
of a Member under the Georgia Act or this Agreement, and any distributions with
respect to these purported Transferred Units may be applied (without limiting
any other legal or equitable rights of the Company) to satisfy any debts,
obligations or liabilities for damages that the Transferor or transferee of such
Units may have to the Company.
5.1.5 Admission of Interest Holders as Members. Subject to the other
provisions of this Section 5.1, a transferee of Units may be admitted to the
Company as a substituted Member only upon satisfaction of the following
conditions:
(a) The Units with respect to which the transferee is being
admitted were acquired by means of a Permitted Transfer;
(b) The transferee becomes a party to this Agreement as a Member
and executes such documents and instruments as the Members deem necessary or
appropriate to confirm such transferee as a Member and such transferee's
agreement to be bound by the terms and conditions of this Agreement;
(c) The transferee pays or reimburses the Company for all
reasonable legal, filing, and publication costs that the Company incurs in
connection with the admission of the transferee as a Member with respect to the
transferred Units; and
(d) If the transferee is not a human being, the transferee
provides the Company with evidence satisfactory to counsel for the Company of
the
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authority of the transferee to become a Member and to be bound by the terms and
conditions of this Agreement.
5.2 ADDITIONAL MEMBERS.
After the date of this Agreement any Person may become a Member only as a
Permitted Transferee of Units, or any portion thereof, subject to the terms and
conditions of this Agreement, or by admission with the consent of Members owning
Units representing a Majority Interest. No new Member shall be entitled to any
retroactive allocation of losses, income or expense deductions incurred by the
Company. The Members may, at their option, at the time a Member is admitted,
close the Company books (as though the Company's tax year had ended) or make pro
rata allocations of loss, income and expense deductions to a new Member for that
portion of the Company's tax year in which a Member was admitted in accordance
with the provisions of Code Section 706(d).
5.3 VOLUNTARY WITHDRAWAL.
5.3.1 The Bank Put Rights.
(a) In the event the Office of Thrift Supervision or the Banks'
other regulators require it to dispose of some or all of its interest in the
Company, Madison Mortgage hereby grants the Bank the option (the "Bank Put") to
require Madison Mortgage to purchase from the Bank some or all of its Units on
the terms and conditions set forth in this Section 5.3.1.
(b) So long as the Bank owns any Units, the Bank may exercise the
Bank Put with respect to some or all of its Units in respect of which the Bank
Put is then exercisable by delivery of a put exercise notice, stating the number
of Units with respect to which the Bank Put is being exercised (a "Put Exercise
Notice"), to the Company and Madison Mortgage.
(c) The price to be paid by Madison Mortgage for each Unit sold
pursuant to the Bank Put (or pursuant to any other provision of this Agreement
that provides for the price of Units to be in accordance with Section 5.3.1(c))
shall be equal to the value of the related interest in the Company, as mutually
agreed to by Madison Mortgage and the Bank. If a value cannot be established,
the value shall be determined in accordance with Section 5.3.4.
5.3.2 The Bank Call Rights.
(a) In the event the Office of Thrift Supervision or the Banks'
other regulators requires it to own 100% of the Company, then Madison Mortgage
hereby grants the Bank the option (the "Bank Call") to require Madison Mortgage
to sell to the Bank some or all of its Units on the terms and conditions set
forth in this Section 5.3.
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(b) So long as the Bank owns any Units, the Bank may exercise the
Bank Call with respect to some or all of Madison Mortgage's Units in respect of
which the Bank Call is then exercisable by delivery of a call exercise notice,
stating the number of Units with respect to which the Bank Call is being
exercised (a "Call Exercise Notice"), to the Company and Madison Mortgage.
(c) The price to be paid by Madison Mortgage for each Unit sold
pursuant to the Bank Call (or pursuant to any other provision of this Agreement
that provides for the price of Units to be in accordance with Section 5.3.2(c))
shall be equal to the value of the related interest in the Company, as mutually
agreed to by Madison Mortgage and the Bank. If a value cannot be established,
the value shall be determined in accordance with Section 5.3.4.
5.3.3 Closing. Closing of the purchase and sale of Units pursuant to
the exercise of a Bank Put or a Bank Call shall be at a time and place specified
by the parties involved in such transaction, but not less than five (5) nor more
than thirty (30) days after the delivery of the applicable Exercise Notice,
unless otherwise agreed by the parties thereto in writing or unless (i) the
performance of the parties' obligations is then prohibited by applicable Law, in
which event closing shall take place as soon as is reasonably practicable after
such prohibition is removed or no longer applicable, or (ii) a dispute as to the
respective Company Financial Statement is ongoing among the Members, in which
event closing shall take place as soon as is practicable after the final
resolution of such dispute by the parties or by the independent accountants
pursuant to Section 5.3.4 below.
5.3.4 Valuation Determination. If a value for the Units in connection
with the put and call rights cannot be agreed to by Madison Mortgage and the
Bank under Section 5.3.1(c) or 5.3.2(c), as applicable, then the fair market
value shall be determined by an independent appraiser experienced in the
valuation of businesses similar to that of the Company and mutually acceptable
to the Bank and Madison Mortgage, and the fees of such appraiser shall be
divided equally between the Bank and Madison Mortgage. If the Bank and other
Members of the Company cannot agree on an appraiser, each of the parties will
retain an independent investment adviser and such advisers will jointly appoint
an appraiser. The independent appraiser shall consider controlling interests,
but shall not consider any illiquidity, minority discount or other discounts
when determining fair market value.
5.3.5 Permitted Transferees. The covenants of the Members set forth in
this Section 5.3 shall be binding upon any permitted transferee of Units under
the terms of this Agreement.
5.4 NOTICE TO THE OFFICE OF THRIFT SUPERVISION.
5.4.1 In the event of any transfer of ownership, the Company will
immediately provide notice of such transfer to the OTS as an amendment to the
Company's operating subsidiary application.
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5.4.2 Any transfer that is subsequently disapproved by the OTS will be
null and void.
6. DEFINITIONS AND MISCELLANEOUS
6.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"ACCOUNTANTS" means any firm of independent certified public
accountants registered with the PCAOB engaged to prepare the Company's tax
returns, review, audit or assist in the preparation of the Company Financial
Statements as independent certified public accountants or otherwise assist in
the maintenance of the Company's books and records, which shall be the same
independent certified public accountants engaged to audit the books of ebank
Financial Services, Inc. and its subsidiaries.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:
(a) Such Capital Account shall be increased to reflect the amounts, if
any, which such Member is obligated to restore to the Company or is treated or
deemed to be obligated to restore pursuant to Regulations Sections
1.704-1(b)(2)(ii)(c), 1.704-2(g)(1)(ii) and 1.704-2(i)(5);
(b) Such Capital Account shall be reduced to reflect any items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6);
(c) If such Adjusted Capital Account Deficit is being determined as of
the last day of a fiscal year for purposes of Section 4.1.2(c) hereof, then such
Capital Account shall be adjusted to reflect the allocation to such Member of
all amounts required to be allocated to such Member for such fiscal year under
Article 4 hereof (other than Section 4.1.1);
(d) If such Adjusted Capital Account Deficit is being determined as of
the last day of a fiscal year for purposes of Section 4.1.2(e) hereof, then such
Capital Account shall be adjusted to reflect the tentative allocation to such
Member of all amounts that would be required to be allocated to such Member for
such fiscal Year if neither Section 4.1.2(e) nor Section 4.1.2(d) were a part of
this Agreement; and
(e) If such Adjusted Capital Account Deficit is being determined as of
the last day of a fiscal year for purposes of Section 4.1.2(d) hereof, then such
Capital Account shall be adjusted to reflect the tentative allocation to such
Member of all amounts that would be required to be allocated to such Member for
such fiscal year if Section 4.1.2(d) were not a part of this Agreement.
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"AGREEMENT" means this Limited Liability Company Operating Agreement,
as it may be amended in accordance with the provisions hereof and of the Georgia
Act.
"APPLICABLE FEDERAL RATE" means, depending upon the initial payment
period as described in the applicable section, the annual federal short term
rate of interest or the annual federal mid term rate of interest, as
appropriate, described in Section 1274(d) of the Code.
"ARTICLES" means the Articles of Organization of the Company, duly
filed with the Department of State of the State of Georgia, as amended.
"BANK" means ebank, a federal savings bank.
"BANK PUT" has the meaning provided in Section 5.3.1(a) hereof.
"CAPITAL ACCOUNT" means with respect to any Member, the Capital
Account maintained for such Member in accordance with the following provisions:
(a) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Members' distributive share of Profits and
any items in the nature of income or gain which are specially allocated pursuant
to Section 4.1.2 hereof, and the amount of any Company liabilities assumed by
such Member or which are secured by any Property distributed to such Member;
(b) To each Member's Capital Account there shall be debited the amount
of cash and the Gross Asset Value of any Property distributed to such Member
pursuant to any provision of this Agreement, such Member's distributive share of
Losses and any items in the nature of expenses or losses which are specially
allocated pursuant to Section 4.1.2 hereof, and the amount of any liabilities of
such Member assumed by the Company or which are secured by any property
contributed by such Member to the Company;
(c) Subject to the provisions of this Agreement, in the event any
interest in the Company is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred interest; and
(d) In determining the amount of any liability for purposes of clauses
(a) and (b) of this definition, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such
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Regulations. The Members are authorized, with the consent of a majority of the
Manger votes, to make modifications to the manner in which Capital Accounts are
computed, if it is determined that such adjustments are necessary in order to
comply with such Regulations, provided that such adjustments are not likely to
have a material effect on the amounts distributable to a Member hereunder upon
the dissolution of the Company in accordance with Article 1.4.
"CAPITAL CONTRIBUTIONS" means with respect to any Member, the amount
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Company with respect to the Units held by such Member.
"CASH FLOW" means , for any period, the amount by which (a) the sum of
(i) the Profits or Losses, as the case may be, of the Company for such period;
(ii) all non-cash charges deducted in determining Profits or Losses for such
period; (iii) the amount of any reduction in reserves of the Company made for
such period in accordance with the terms hereof; plus (iv) all other cash
received by the Company for such period (from any source whatsoever) that was
not included in determining Profits or Losses for such period; exceeds (b) the
sum of (i) any capital expenditures made by the Company during such period; (ii)
any investments made by the Company in another entity during such period (to the
extent not described in the immediately preceding clause); (iii) any other
expenditures or payments not deducted in determining Profits or Losses for such
period to the extent actually paid by the Company during such period; (iv) any
amount included in determining Profits or Losses for such period to the extent
not actually received by the Company during such period; plus (v) the amount of
any increases in reserves established by the Members during such period.
"CODE" means the United States Internal Revenue Code of 1986, as
amended, or any successor provisions thereto.
"COMPANY" means ebank Mortgage, LLC, a limited liability company
organized and existing under the Georgia Act.
"COMPANY FINANCIAL STATEMENTS" means (i) in respect of any month,
calendar quarter or calendar year, the balance sheet (including related notes
and schedules, if any) of the Company as of the end of such period, and the
related statements of income, changes in capital accounts, and cash flows
(including related notes and schedules, if any) for such period, prepared in
accordance with GAAP, and (ii) in respect of any Fiscal Year, the balance sheet
(including related notes and schedules, if any) of the Company as of the end of
any Fiscal Year, and the related statements of income, changes in capital
accounts, and cash flows (including related notes and schedules, if any) for
such Fiscal Year, prepared in accordance with GAAP.
"DEPRECIATION" shall mean, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to
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such beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis, provided, however, if the federal
income tax depreciation, amortization or other cost recovery deduction for such
year is zero, Depreciation shall be determined with reference to such beginning
Gross Asset Value using any reasonable method selected by the Manager.
"ESTIMATED TAX AMOUNT" means an amount of cash which, in good faith
judgment of the Members, equals the highest amount of taxable income of the
Company allocated to any Member for any quarter of the Fiscal Year multiplied by
the highest combined marginal tax rate for an individual living in New York, New
York under applicable federal, state and local income tax laws and after taking
into account the deductibility of state income taxes for federal income tax
purposes.
"FISCAL YEAR" shall mean the year ending on December 31 of each
calendar year.
"GEORGIA ACT" means Section 00-00-000 et seq. of the Georgia Business
Corporation Code, as amended.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the fair market value of such asset, as determined by
the contributing Member and the Company;
(b) The Gross Asset Values of each item of Property shall be adjusted
to equal its gross fair market value, as determined by the Members, as of the
following times: (i) the acquisition of an additional interest in the Company by
any new or existing Member either in exchange for more than a de minimis Capital
Contribution or through the exercise of an option to acquire such interest; (ii)
the distribution by the Company to a Member of more than a de minimis amount of
Property; and (iii) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, if Gross Asset
Values are adjusted as provided herein, the Member's Capital Accounts shall be
restated in accordance with Regulations Section 1.704-1(b)(2)(iv)(f) and that
adjustments pursuant to clauses (i) and (ii) above shall be made only if the
Members reasonably determine that such adjustments are necessary or appropriate
to reflect the relative economic interests of the Members in the Company;
(c) The Gross Asset Value of any Property distributed to any Member
shall be its fair market value on the date of distribution; and
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(d) The Gross Asset Values of Property shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such Property
pursuant to Code Section 734(b) or Code Section 743(b) but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, Gross
Asset Values shall not be adjusted pursuant to this clause (d) to the extent the
Manager determines that an adjustment pursuant to clause (b) of this definition
is necessary or appropriate and such adjustment is made in connection with a
transaction that would otherwise result in an adjustment pursuant to clause (d)
of this definition.
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to clauses (a), (b) or (d) of this definition, such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses.
"MAJORITY IN INTEREST" means Members owning more than fifty percent
(50.0%) of the outstanding Units.
"MEMBERS" means the Persons described in Section 3.1.2 of this
Agreement.
"MEMBERS" means collectively, each of the parties who signs a
counterpart of this Agreement as a Member, and each of the parties who may
hereafter become Members. "Member" means any of the Members.
"PERCENTAGE INTEREST" has the meaning set forth in Section 2.1.1 of
this Agreement.
"PERMITTED TRANSFER" means a Transfer of Units as described in Section
5.1.2 hereof.
"PERSON" means any individual, partnership, corporation, trust,
unincorporated association, joint venture, limited liability company or other
entity or any government, a governmental agency or authority.
"PERSONAL REPRESENTATIVE" means the Person acting in a representative
capacity as the executor or administrator of a Member's estate or the duly
appointed guardian of the property of a Member.
"PROFITS" AND "LOSSES" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses pursuant to
this definition shall be added to such taxable income or loss;
-29-
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition, shall be subtracted
from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to clauses (b) or (c) of the definition of Gross Asset Value,
the amount of such adjustment shall be taken into account as gain or loss from
the disposition of such asset for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such fiscal year or other period,
computed in accordance with the definition of Depreciation herein; and
(f) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Section 4.1.2 hereof shall not be
taken into account in computing Profits or Losses.
"PROPERTY" means all assets owned by the Company and forming a part of
or in any way related to or used in connection with the ownership, operation and
management of the business of the Company, including, without limitation, all
real property and personal property.
"PUT EXERCISE NOTICE" has the meaning provided in Section 5.3.1(b)
hereof.
"REGULATIONS" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such Regulations may be amended
(including corresponding provisions of succeeding regulations).
"REGULATORY ALLOCATION" has the meaning provided in Section 4.1.2(g)
hereof.
"RESERVES" means, with respect to any period, the amount of funds as
reasonably determined by the Members set aside, or amounts allocated during such
period, for (a) funding reserves for contingent liabilities, working capital,
repairs, replacements, renewals, (b) paying taxes, insurance, debt service, or
other costs or expenses incident to the ownership or operation of the Company,
and (c) any other purposes deemed by the Members necessary or appropriate to
meet the current or anticipated future needs of the Company.
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"SECURITIES ACT" has the meaning set forth in Section 1.1.2 hereof.
"MADISON MORTGAGE" means Madison Mortgage Corporation, a Georgia
corporation.
"MADISON MORTGAGE MEMBERS" means the Manager(s) designated by Madison
Mortgage.
"STATE ACTS" has the meaning set forth in Section 1.1.2 hereof.
"TAX MATTERS PERSON" means Madison Mortgage, who is the Person
designated to act on behalf of the Company as the "tax matters partner" within
the meaning of that term in Code Section 6231(a)(7) in administrative and
judicial proceedings relating to the determination of Company items of income,
deduction, and credit for federal income tax purposes.
"TRANSFER" means, as a noun, any voluntary or involuntary transfer,
sale, pledge, hypothecation, or other disposition and, as a verb, voluntarily or
involuntarily to transfer, sell, pledge, hypothecate, or otherwise dispose of,
whether for consideration or gratuitously.
"UNIT" means each unit of economic interest of the Members in the
Company.
The foregoing definitions shall include the singular as well as the plural
forms, and each gender of such term as applicable. When used herein, the words
"include" or "including" shall mean include without limitation, without regard
to any enumeration of items that may follow such terms.
6.2 MISCELLANEOUS.
6.2.1 Limitation on Liability. Except as otherwise expressly provided
by the Georgia Act or expressly provided in a written agreement to which the
affected Member or Manager is a party, all debts, obligations and liabilities of
the Company, whether arising in contract, tort or otherwise ("Debts"), shall be
solely the debts, obligations and liabilities of the Company, and no Member or
Manager shall be obligated personally for any Debts solely by reason of being a
Manager or a Member.
6.2.2 Notices. All notices, demands, requests, consents or other
communications required or permitted to be given or made under this Agreement
must be in writing and signed by the party giving the same and shall be deemed
given when personally delivered, the day on which a facsimile is sent and
receipt is confirmed, the next day after being sent by an overnight delivery
service, or three days after being mailed by registered or certified mail
(return receipt requested), in each case to the intended recipient as indicated
below or to any other address of which prior written notice has been given:
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The Bank:
eBank
0000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx Box
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice):
Xxxxxx & Bird LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. XxxXxxxxx III
Facsimile No.: 000-000-0000
Madison Mortgage:
Madison Mortgage
0000 Xxxx Xxxx Xxxxx #000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
6.2.3 Severability. In the event any provision of this Agreement is
determined to be invalid, the remainder of this Agreement will continue in full
force and effect as if such offending provision were never a part of this
Agreement.
6.2.4 Captions. Headings, section references and captions contained in
this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or prescribe the scope of this Agreement or
the intent of any provision.
6.2.5 Successors and Assigns. The restrictions and covenants set forth
in Section 5 of this Agreement and each of the other terms and provisions of
this Agreement are binding upon, and inure to the benefit of, the successors,
assigns, personal representatives, estates, heirs and legatees of Members.
6.2.6 Applicable Law. Notwithstanding the place where this Agreement
may be executed by any of the parties, the parties expressly agree that all the
terms and provisions of this Agreement are construed under and governed by the
laws of the State of Georgia.
6.2.7 Entire Agreement. This Agreement, together with its Exhibits and
Schedules, constitutes the entire agreement of the parties with respect to
matters set forth in this Agreement and supersedes any prior understanding or
agreement, oral or written, with respect to such matters.
-32-
6.2.8 Agreement in Counterparts. This Agreement may be executed in two
or more identical counterparts, and when executed by all parties thereto, such
counterparts shall constitute one and the same Agreement, binding on all the
parties, notwithstanding that all the parties are not signatories to the
original or the same counterpart.
6.2.9 Amendment. Any amendment, modification or waiver of this
Agreement must be approved in accordance with Section 2.2.9; provided, that the
Managers shall be authorized to amend Exhibit A from time to time without Member
approval insofar as is necessary to reflect any Permitted Transfers or duly
approved issuances of additional Units or other equity interests in the Company.
6.2.10 Further Assurances. Each Member agrees to execute and deliver
all such further instruments and do all such further acts as the Managers deem
necessary or advisable to effectuate this Agreement.
6.2.11 Certain Understandings.
(a) Restrictive Covenants.
Each of the Members, Managers and employees of the Company hereby covenant
and agree that, so long as such Person is a Member, Manager or employee of the
Company in any capacity, or directly or indirectly owns any Units, and for
twenty-four (24) months thereafter, such Person will not alone or in conjunction
with any Person, firm, corporation or other entity, unless on behalf of the
Company, (i) directly or indirectly solicit any employee of the Company or any
Member to leave such employee's employment, (ii) directly or indirectly
transmit, disclose, use or provide to others any Trade Secret or Confidential
Information to any Person, concern or entity, and shall not make use of or
permit others to use any such Trade Secret or Confidential Information, directly
or indirectly, for himself or for others, without the prior written consent of
the Person that originally developed such Trade Secret or Confidential
Information (either the Bank or Madison Mortgage, as appropriate). Without
limiting the generality of (ii), Madison Mortgage and its affiliates, officers,
employees and representatives agree, so long as Madison Mortgage owns any Units
and for twenty-four (24) months thereafter, not to use, directly or indirectly,
or provide to any third party, customer information learned or developed in
connection with the Company's business, to originate, to close or make mortgage
loans or refinance mortgage loans. The parties acknowledge and agree that the
Bank may use such customer information for purposes of marketing and providing
other banking services, but not for purposes of making or refinancing mortgage
loans. Each of the parties agrees to use good faith efforts to promote the
business of the Company.
"Trade Secrets" shall mean all secret, proprietary or confidential
information, in addition to any information covered by any definition of "trade
secrets" or any equivalent term under state, local or federal law, regarding the
Company's or any Member's activities, including any and all information not
generally known to, or ascertainable by, Persons not employed by the Company or
such Member, the disclosure or knowledge of
-33-
which would permit those Persons to derive actual or potential economic value
therefrom or to cause economic or financial harm to the Company or any Member,
including but not limited to technical or non-technical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a drawing, a
process, financial data, financial plans, product plans, or a list of actual or
potential customers or suppliers, technical information regarding Company or
Member products and product development, product formulas, current and future
development and expansion or contraction plans of the Company or a Member,
information concerning the legal affairs of Company or a Member and information
concerning the financial affairs of the Company or a Member. "Trade Secrets"
shall not include information that has become generally available to the public
by the act of one who has the right to disclose such information without
violating any right or privilege of the Company or any Member.
"Confidential Information" shall mean, in addition to information covered
by any definition of "trade secrets" or any equivalent term under state, local
or federal law, all information regarding the Company or a Member, or the
Company's or such Member's activities, business or clients that is not generally
known to Persons not employed by the Company or such Member, and that is not
generally disclosed by the Company or such Member's practice or authority to
Persons not employed by the Company or such Member, but that does not rise to
the level of a Trade Secret. "Confidential Information" shall include, but is
not limited to, sales and marketing techniques and plans, distribution
techniques, purchase and supply information, pricing information, customer
billing information, financial plans and data concerning the Company or a
Member, management planning and financial information, client and customer
lists, know-how, information about client requirements, terms of license
agreements, and terms of contracts with clients and customers. "Confidential
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right or privilege of the Company or any Member.
The covenants contained in this Section 6.2.11(a) are considered by the
parties hereto to be fair, reasonable and necessary for the protection of
Company and the Members and the conduct of their respective businesses. The
Members have been represented by their own counsel throughout the negotiation of
this Agreement and have had the opportunity to consult with counsel about every
provision of this Agreement.
(b) Withdrawal and Dissolution - Limitation on Further Obligations. In
the event that: (i) Madison Mortgage or the Bank shall cease to own any Units,
or (ii) the Company shall dissolve or wind up its operations pursuant to Section
1.4, then the Members acknowledge and agree that, in the case of (i), the
withdrawing Member, and in the case of (ii), all of the Members, shall cease to
have any obligations to the Company or any of its Members, except for such
obligations as shall survive such withdrawal or dissolution within the express
terms of this Agreement.
[Signatures Follow On Next Page]
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IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first above written.
THE COMPANY:
EBANK MORTGAGE, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
MEMBERS:
EBANK
By: /s/ Xxxxx X. Box
------------------------------------
Name: Xxxxx X. Box
Title: President and CEO
MADISON MORTGAGE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
EXHIBIT A
EBANK MORTGAGE, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
VALUE OF CAPITAL NUMBER OF
MEMBERS' NAMES AND ADDRESSES CONTRIBUTION UNITS HELD PERCENTAGE INTEREST
---------------------------- ---------------- ---------- -------------------
ebank
0000 Xxxxx Xxxxx Xxxx $612,000.00 51 51%
Xxxxx 000
Xxxxxxx, XX 00000
Madison Mortgage Corporation
0000 Xxxx Xxxx Xxxxx #000 $588,000.00 49 49%
Xxxxxx, XX 00000
EXHIBIT B
EBANK MORTGAGE, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
INITIAL MEMBERS OF THE COMPANY
ebank Managers:
Xxxxx Box
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
Xxx Xxxxx
Madison Mortgage Managers:
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxxxxxx
