EXHIBIT 10.7
OPERATING AGREEMENT
FOR
FEDERAL HOLDINGS L.L.C.
Dated: June 12,1995
INDEX
Page No.
Article 1 Definitions
Article 2 Formation
Article 3 Principal Office
Article 4 Term and Duration
Article 5 Purpose
Article 6 Capital Contributions by the Members
Article 7 Additional Capital Contributions
Article 8 Distributions of Net Proceeds
Article 9 Tax Allocations and Distributions
Article 10 Rights, Powers and Representations of the Investment
Manager and Administrative Manager; Management Fee
Article 11 Books, Records and Reports
Article 12 Indemnification
Article 13- Tax Matters
Article 14- Death, Dissolution or Bankruptcy of A Member
Article 15- Assignability, Transfer or Pledge of
Interests; Resignation of A Member
Article 16- Admission of Substituted Members;
Incapacity; Further Condition
Article 17 Liquidation
Article 18 Miscellaneous
Schedule A - Members' Percentage Interests and Capital
Contributions
OPERATING AGREEMENT
FOR
FEDERAL HOLDINGS L.L.C.
AGREEMENT made June 12,1995 by and among the members listed on Schedule A
annexed hereto (individually, a "Member" and collectively, the "Members").
W I T N E S S E T H:
WHEREAS, the Members desire to form a limited liability company pursuant to the
New York Limited Liability Company Law (the "Law") and adopt this Agreement in
connection therewith; and
WHEREAS, by executing this Agreement, each Member represents that it has
sufficient right and authority to execute this Agreement and is not acting on
behalf of any undisclosed or partially disclosed principal.
NOW, THEREFORE, in consideration of ten ($10) dollars and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows effective as of the date first
written above.
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, the following terms shall have the
definitions set forth below:
"Account": As defined in Section 10.4
"Additional Member": Means any person or entity other than the Members of
the Company as of the date hereof who acquires an interest in the Company.
"Administrative Manager': Xxxxx Xxxxx.
"Advance": As defined in Section 7.2.
"Agreement": This Operating Agreement as originally executed and as amended,
modified, supplemented or restated
from time to time.
"Articles of Organization": The Articles of Organization of the Company filed
with the Secretary of State of the State of New York, pursuant to the Law to
form the Company, as originally executed and as amended, modified, supplemented
or restated from time to time.
"Capital Account" or "Capital Accounts": As defined in Section 6.4.
"Capital Contributions": The respective capital contributions, including any
additional Capital Contribution,of each Member to the Company.
"Capital Transaction" or "Capital Transactions": Any transaction which, in
accordance with generally accepted accounting principles consistently applied,
is treated as a capital transaction including, without limitation, any sale of
all or substantially all of the assets of the Company.
"Closing Price": As defined in Section 16.4
"Code": The Internal Revenue Code of 1986, as amended, and any reference
to a particular section of the Code shall be deemed to include any successor
section to such section.
"Company": FEDERAL HOLDINGS L.L.C., a New York limited liability company.
"Contributing Member": A Member which has made its additional Capital
Contribution.
"Current Market Value": As defined in Section 16.4.
"Fair Market Value": As defined in Section 16.4.
"Gain from a Capital Transaction": The gain recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes.
"Interest": The respective percentage interest of each Member as set forth on
Schedule A.
"Investment Manager": Shall mean Xxxxxxxx Xxxxxxx, subject to the provisions
of Section 10.5.
"Loss from a Capital Transaction": The loss recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes.
"Management Fee": As defined in Section 10.2.
"Member": Means each of the parties who has executed this Agreement and any
party who may hereafter become an Additional Member or a Substitute Member
pursuant to this Agreement.
"Net Proceeds": As defined in Section 8.1.
"Net Profit" and "Net Loss": The net income (including income exempt from tax)
and net loss (including expenditures that can neither be capitalized nor
deducted), respectively, of the Company, determined in accordance with the
method of accounting used by the Company for federal income tax purposes, but
computed without regard for Gain from Capital Transactions, Loss from Capital
Transactions and items of income or loss, if any, that are specially allocated
to Members. In the event there is a revaluation of Company assets and the
Capital Accounts are adjusted pursuant to Section 704(b) of the Code and
applicable regulations promulgated thereunder, Net Profits and Net Losses shall
be computed by reference to the "book items" and not corresponding "tax items".
"Preferred Return": With respect to a Member, an amount equal to 7.5% per annum
simple interest (prorated for any partial year) on the amount of such Member's
Unrecovered Capital Contribution, from time to time, calculated from the date a
Capital Contribution is made.
"Substitute Member": Any transferee of a Member's Interests who is admitted
as a Member in the Company pursuant to Article 15 or 16.
"Trading Day": As defined in Section 16.4.
"Unrecovered Capital Contribution": For any Member, the aggregate amount of
capital contributed by such Member reduced by the aggregate amount of capital
theretofore distributed to such Member pursuant to Articles 16 and 17.
"Unrecovered Preferred Return": For any Member an amount equal to the
Preferred Return reduced by the aggregate amount of distributions theretofore
made to such Member pursuant to Section 8.1(b)(i).
"Unrecovered 20% IM Fee": An amount equal to 20% of the aggregate annual
Preferred Return for all Members divided by .8, reduced by the aggregate amount
of distributions of Net Proceeds theretofore made pursuant to Section 8.1(b)
(ii).
ARTICLE 2
FORMATION
2.1 The parties hereto do hereby form the Company under the name of FEDERAL
HOLDINGS L.L.C. pursuant to the Law.
In order to maintain the Company as a limited liability company under the laws
of the State of New York, the Company shall from time to time take appropriate
action, including the preparation and filing of such amendments to the Articles
of Organization and such other assumed name certificates, documents, instruments
and publications as may be required by law, including, without limitation,
action to reflect:
(i) a change in the Company name;
(ii) a correction of a defectively or erroneously executed Articles of
Organization;
(iii) a correction of false or erroneous statements in the Articles of
Organization or the desire of the Members to make a change in any statement
therein in order that it shall accurately represent the agreement among the
Members; or
(iv) a change in the time for dissolution of the Company as stated in
the Articles of Organization and in this Agreement.
2.2 Each Member hereby agrees to execute and deliver to the Company within five
(5) days after receipt of a written request therefor, such other and further
documents and instruments, statements of interest and holdings, designations,
powers of attorney and other instruments and to take such other action as the
Company deems necessary, useful or appropriate to comply with any laws, rules or
regulations as may be necessary to enable the Company to fulfill its
responsibilities under this Agreement, to preserve the Company as a limited
liability company under the Law and to enable the Company to be taxed as a
partnership for federal and state income tax purposes.
ARTICLE 3
PRINCIPAL OFFICE
3.1 The Company's registered office in New York shall be at 00 Xxxx
Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx. The Company's registered agent who is a resident of New York is
Xxxxxxxx X. Xxxxxxxxx, Esq. whose business address is Pryor, Cashman,
Xxxxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. At any time, the
Company may designate another registered agent and/or office.
3.2 The principal place of business of the Company shall be at 00 Xxxx Xxxxxx,
Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx. At any time, the Company may change the
location of its principal place of business and may establish additional
offices.
ARTICLE 4
TERM AND DURATION
4.1 The Company shall commence upon the filing of the Articles of Organization,
and shall continue in full force and effect until April 30, 2045; provided,
however, that the Company shall be dissolved prior to such date upon the
happening of any of the following events:
(a) The mutual written consent of all of the Members to dissolve the
Company;
(b) The divestiture or distribution of all or substantially
all of the assets of the Company, (other than a transfer to a nominee of the
Company for any Company purpose, which event shall not be construed as an event
of termination);
(c) The entry of a decree of judicial dissolution under Section 702 of the
Law; or
(d) The happening of any other prior event which pursuant to the terms and
provisions of this Agreement shall cause a dissolution or termination of the
Company.
4.2 Upon any dissolution of the Company, the liquidation of the Company's assets
and the winding up of its affairs shall be concluded in accordance with Article
17 of this Agreement.
ARTICLE 5
PURPOSE
5.1 The purpose of the Company is to legally or beneficially acquire, own, sell,
transfer, hold and vote shares of common stock, preferred stock, convertible or
exchangeable securities of any bank, bank holding company, savings and loan
association or trust company (hereinafter referred to as "Stock") and to enter
into any contracts or commitments, assume any obligation, execute any documents
and do any and all other acts and things, either directly or in conjunction with
others through corporations, joint ventures, partnerships, trusts, limited
liability companies or otherwise, which may be necessary, incidental or
convenient to carry on the business of the Company as contemplated by this
Agreement. The Company may also sell covered calls, repurchase such calls and
buy puts, but the Company shall not sell uncovered calls or puts.
5.2 The purpose of the Company shall also be for any other lawful purpose for
which the Members shall herewith agree in writing by amendment to this
Agreement.
ARTICLE 6
CAPITAL CONTRIBUTIONS BY THE MEMBERS
6.1 Each Member shall contribute to the capital of the Company the amounts
set forth on Schedule A.
6.2 No Member shall have the right to withdraw any part of his Capital
Contribution or receive any distribution, except in accordance with the
provisions of this Agreement. No interest shall be paid on any Capital
Contribution other than the Preferred Return.
6.3 No Member shall have any priority over any other Member with respect to the
return of Capital Contributions.
6.4 The Company shall maintain a capital account (a "Capital Account") for each
Member within the provisions of Treasury Regulation Section 1.704-1(b) (2) (iv)
as such regulation may be amended from time to time.
6.5 To the extent not inconsistent with the foregoing, the following shall
apply:
(a) The Capital Account of each Member shall be credited with (1) an amount
equal to such Member's cash contributions and the fair market value of property
contributed to the Company by such Member (net of liabilities securing such
contributed property that the Company is considered to assume or take subject to
under Section 752 of the Code) and (2) such Member's share of the Company's Net
Proceeds (or items thereof) and Gain from a Capital Transaction. The Capital
Account of each Member shall be debited by (1) the amount of cash distributions
to such Member and the fair market value of property distributed to such Member
(net of liabilities assumed by such Member and liabilities to which such
distributed property is subject) and (2) such Member's share of the Company's
Net Losses (or items thereof) and Loss from a Capital Transaction.
(b) Upon the transfer of an Interest in the Company after the date of this
Agreement, (x) if such transfer does not cause a termination of the Company
within the meaning of Section 708 (b) (1) (B) of the Code, the Capital Account
of the transferor Member that is attributable to the transferred Interest will
be carried over to the transferee Member but, if the Company has a Section 754
election in effect, the Capital Account will not be adjusted to reflect any
adjustment under Section 743 of the Code, or (y) if such transfer causes a
termination of the Company within the meaning of Section 708 (b) (1) (B) of the
Code, the income tax consequences of the deemed distribution of the property and
of the deemed immediate contribution of the property to a new Company (which for
all other purposes continues to be the Company) shall be governed by the
relevant provisions of Subchapter K of Chapter 1 of the Code and the regulations
promulgated thereunder, and the initial Capital Accounts of the Members in the
new Company shall be determined in accordance with Treasury Regulation Sections
1.704-1(b) (2) (iv) (d, (e), (f), (g), and (i) and thereafter in accordance with
Section 6.5 (a).
(c) Upon (i) the "liquidation of the Company" (as hereinafter defined), (ii) the
"liquidation of a Member's Interest in the Company" (as hereinafter defined),
(iii) the distribution of money or property to a Member as consideration for an
Interest in the Company , or (iv) the contribution of money or (if permitted
pursuant to (a) above) property to the Company by a new or existing Member as
consideration for an Interest in the Company, or upon any transfer causing a
termination of the Company for tax purposes within the meaning of Section 708
(b) (1) (B) of the Code, then adjustments shall be made to the Members' Capital
Accounts in the following manner: All property of the Company which is not sold
in connection with such event shall be valued at its then "agreed value". Such
"agreed value" shall be used to determine both the amount of gain or loss which
would have been recognized by the Company if the property had been sold for its
agreed value (subject to any debt secured by the property) at such time, and the
amount of Net Proceeds, as the case may be, which would have been distributable
by the Company pursuant to Section 9.2 if the property had been sold at such
time for said value, less the amount of any debt secured by the property. The
Capital Accounts of the Members shall be adjusted to reflect the deemed
allocation of such hypothetical gain or loss in accordance with Section 9.1. The
Capital Accounts of the Members (or of a transferee of a Member) shall
thereafter be adjusted to reflect "book items" and not tax items in accordance
with Treasury Regulation Section 1.704 1(b) (2) (iv) (g) and 1.704-1(b) (4) (i).
(d) For purposes of this Section 6.5, (i) the term "liquidation of the Company"
shall mean (A) a termination of the Company effected in accordance with this
Agreement, which shall be deemed to occur, for purposes of this Article 6, on
the date upon which the Company ceases to be a going concern and is continued in
existence solely to wind-up its affairs, or (B) a termination of the Company
pursuant to Section 708 (b) (1) of the Code; and (ii) the term "liquidation of a
Member's Interest in the Company" shall mean the termination of the Member's
entire Interest in the Company effected by a distribution, or a series of
distributions, by the Company to the Member.
ARTICLE 7
ADDITIONAL CAPITAL CONTRIBUTIONS
7.1 No Member shall be obligated to make additional Capital Contributions to the
Company. If the Administrative Manager determines that the Company shall need
additional funds for any Company purpose, including, without limitation, (a)
those purposes set forth in Article 5, or (b) cash in excess of Net Proceeds in
order to satisfy any obligations and liabilities of the Company, then within
fifteen (15) days of notice of such requirement, each Member may, but shall not
be obligated to, contribute to the Company his pro rata share.
If a Member elects to make an additional Capital Contribution and another Member
forgoes contributing additional capital, the Company shall, for purposes of
distributions and allocations, recompute each Member's percentage Interest in
the Company in proportion to the total capital contributed to the Company such
that thereafter each Member's Interest shall be equal to the percentage that
such Member's aggregate Capital Contribution theretofore made to the Company
bears to the total Capital Contributions theretofore made by all the Members.
7.2 A Member may from time to time, upon the consent of the Administrative
Manager but without the consent of a majority in interest of the Members,
advance additional monies (an "Advance") to or for the benefit of the Company,
and such advances shall not be treated as Capital Contributions but shall be
considered as loans to be repaid upon demand together with annual interest at a
rate not less than the lowest applicable federal rate of interest which allows
for the avoidance of imputed or unstated interest, for federal income tax
purposes. Such loans shall be evidenced by a promissory note executed and
delivered by the Company to the Member making such Advance.
ARTICLE 8
DISTRIBUTIONS OF NET PROCEEDS
8.1 (a) Net Proceeds shall be computed and distributed by the Company once, on
an aggregated basis of all stocks in which the Company has traded, at the
earlier of (i) a determination by the Investment Manager in his sole discretion,
(ii) the resignation or other termination of the Investment Manager, (iii) the
liquidation or winding up of the Company or (iv) the end of the Management Term.
"Net Proceeds" shall be defined as dividends received, interest income, all net
trading profits (i.e. proceeds from the sale of Stock less the Company's basis
in the Stock) less all expenses (including but not limited to brokerage
commissions, the Management Fee and other applicable accounting or professional
fees but not including the Unrecovered 20% IM Fee) all as computed in accordance
with generally accepted accounting principles.
(b) Net Proceeds shall be distributed as follows:
(i) first, to the Members, pro rata, an amount equal to each Member's cumulative
Unrecovered Preferred Return in proportion to their Unrecovered Preferred Return
until the Preferred Return shall be paid in full;
(ii) second, to the Investment Manager an amount equal to the Unrecovered
20% IM Fee; and
(iii) the balance, if any, shall be paid 80% to the Members in proportion
to their Interests and 20% to the Investment Manager.
(c) If Stock cannot be readily sold because of the lack of its liquidity in the
market or if the Administrative Manager elects not to sell the Stock at the time
of a distribution of Net Proceeds, the Company shall calculate the fair market
value of the Stock by averaging the closing sale prices (or if there is no sale
on a particular day, the average closing bid and ask prices) for the five
consecutive trading days preceding the date of computation. Thereafter, based
upon its valuation, the Company shall calculate the amount of Net Proceeds that
would be distributed if the Stock had actually been sold for its fair market
value (including all applicable commissions). The Company shall then distribute
the Stock in kind in accordance with Section 8.1(b) as if the Stock were Net
Proceeds.
(d) Notwithstanding Section 8.1(c), if the Investment Manager makes a
determination to distribute Net Proceeds in accordance with Section 8.1(a)(i)
and the Stock cannot be readily sold because of its lack of liquidity in the
market, the Investment Manager shall liquidate the Stock in an orderly fashion
over a six (6) month period. Thereafter, Net Proceeds shall be distributed in
accordance with Section 8.1(b).
8.2 Notwithstanding Section 8.1, Net Proceeds from a Capital Transaction which
constitutes a liquidation of the Company, together with other funds remaining to
be distributed, shall be distributed to the Members no later than the later of
(a) the end of the taxable year of the Company in which such liquidation occurs
or (b) within ninety (90) days after the date of such liquidation event, after
payment of all Company liabilities and expenses (or adequate provision therefor)
including the Management Fee, except that in no event shall (x) a distribution
be made to any Member if, after giving effect to such distribution, all
liabilities of the Company, other than liabilities to Members on account of
their Interests and liabilities for which the recourse of creditors of the
Company is limited to specified property of the Company, exceed the Fair Market
Value (as defined in Section 16.4(c)) of the assets of the Company, except that
the Fair Market Value of assets that is subject to a liability for which the
recourse of creditors is limited shall be included in the assets of the Company
only to the extent that the Fair Market Value of those assets exceeds that
liability and (y) the distribution to a Member exceed the positive balance in
such Member's Capital Account after giving effect to all allocations to such
Member under Article 9 50 that liquidation proceeds shall be distributed in
accordance with each Member's positive Capital Account balance (within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(~ as in effect on the
date hereof). If a Member shall receive a distribution that should not have been
made based upon the provisions of Section 8.2(x), the provisions of Section
508(b) of the Act shall apply. Section 508(c) of the Law shall apply to all
distributions made to the Members.
ARTICLE 9
TAX ALLOCATIONS AND DISTRIBUTIONS
9.1 The Net Profits of the Company for each fiscal year shall be allocated
among the Members as follows:
(a) First to the Members in an amount equal to, and in proportion to,
the aggregate amount of Net Losses
theretofore allocated to each Member; and
(b) Thereafter, in proportion to their respective Interests in the Company
Any credit available for income tax purposes shall be allocated among the
Members in proportion to their respective Interests in the Company.
9.2 Gain from a Capital Transaction shall be allocated in the following
order:
(a) There shall first be allocated to those Members, if any, who have deficit
balances in their Capital Accounts immediately prior to such transaction, an
amount of such gain equal to the aggregate amount of such deficit balances,
which amount shall be allocated in the same proportion as such deficit balances.
(b) There shall next be allocated to each of the Members, gain equal to the
amount by which (x) the aggregate Net Proceeds derived from such transaction
distributable to each Member in accordance with the provisions of Section 8.1(b)
(i) and (iii), assuming such amounts are distributable, exceeds (y) the positive
balance, if any, in such Member's Capital Account after such Member's Capital
Account has been adjusted to reflect the gain allocated to such Member pursuant
to paragraph (a) above; provided, however, that if there shall be an
insufficient amount of gain determined by this paragraph, then the gain shall be
allocated to the Members in proportion to the respective amounts determined
pursuant to this paragraph.
(c) Any remaining gain shall be allocated among the Members in
proportion to their respective Interests in the Company.
(d) If the Company shall realize, upon such transaction, gain which is treated
as ordinary income under Section 1245 or 1250 of the Code, such ordinary income
shall be allocated to the Members who receive the allocation of the depreciation
or cost recovery deduction that generated the ordinary income, which amount
shall be allocated in the same proportions as such deductions.
9.3 Net Losses of the Company shall be allocated among the Members as follows:
(a) First, to the Members in proportion to their respective positive
Capital Account balances until such balances are reduced to zero; and
(b) The balance shall be allocated to the Members in proportion to their
respective Interests in the Company.
9.4 Loss from a Capital Transaction from the sale or other disposition of all or
substantially all of the assets shall be allocated in the following order:
(a) First, to those Members, if any, who have positive balances in their Capital
Accounts, an amount of such loss equal to the aggregate amount of such positive
balances, which amount shall be allocated in the same proportion as such
positive balances; and
(b) The balance of such loss shall be allocated to the Members in
proportion to their respective Interests in the Company
9.5 Notwithstanding the foregoing provisions of Article 9:
(a) In accordance with Sections 704 (b) and (c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company (including all or part of any
deemed Capital Contribution under Section 708 of the Code) shall, solely for tax
purposes, be allocated among the Members so as to take into account any
variation between the adjusted basis of such property to the Company and its
agreed value. In the event that Capital Accounts are ever adjusted pursuant to
Treasury Regulation Section 1.704-1(b) (2) to reflect the fair market value of
any Company property, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset and its value as adjusted in the same manner as
required under Section 704 (c) of the Code and the Treasury Regulations
thereunder.
(b) At no time shall any allocation of losses be made to a Member if such
allocation would cause the deficit in the Member's adjusted Capital Account, if
any, to exceed his allocable share of "Company Minimum Gain" or "Minimum Gain
Attributable to Member Nonrecourse Debt" (as defined in Treasury Regulation
Sections 1.704-2 (g) (1) and (i) (5), respectively), and any losses not
allocated to a Member by reason of this clause (b) shall be allocated to each
Member whose deficit, if any, in the Member's adjusted Capital Account of such
Member shall not exceed his allocable share of such minimum gain by reason of
such allocation.
(c) If there is a net decrease in the Company's minimum gain (within the meaning
of Treasury Regulation Section 1.704-2 (g) (2)) for a Company taxable year and,
at the end of such taxable year, the deficit, if any, in a Member's Capital
Account exceeds his allocable share of such minimum gain, gross income of the
Company shall be allocated to such Member in an amount equal to such excess so
as to satisfy the requirements of Treasury Regulation Section 1.704-2 (f)
(minimum gain chargeback).
(d) If, during any taxable year, there is a net decrease in Company Minimum Gain
Attributable to Member Nonrecourse Debt, then, before any other allocations are
made for such year other than those pursuant to clause (b) above, each Member
with a share of the Company Minimum Gain Attributable to Member Nonrecourse Debt
at the beginning of the year shall be allocated items of Company income and gain
for such year (and, if necessary, for subsequent years) in an amount equal to
each Member's share of the net decrease in Minimum Gain Attributable to Member
Nonrecourse Debt as determined in accordance with Treasury Regulation Section
1.704-2 (i) (4) in a manner so as to satisfy the requirements of said Treasury
Regulation.
(e) If, during any taxable year, a Member unexpectedly receives an adjustment,
allocation or distribution described in paragraph (4), (5) or (6) of Treasury
Regulation Section 1.704-1(b) (2) (ii) (~, and if such adjustment, allocation or
distribution would cause at the end of the taxable year a deficit balance in
such Member's Capital Account in excess of his allocable share of minimum gain
as described above, then such Member shall be allocated items of income and gain
for such taxable year (and, if necessary, subsequent taxable years) in an amount
and in a manner sufficient to eliminate such excess balance as quickly as
possible before any other allocation is made for such year, other than pursuant
to Sections 9.5(b) and (c), so as to satisfy the requirements of Treasury
Regulation Section 1.704-1(b) (2) (ii) (~ (qualified income offset).
(f) In the event any Member has a deficit balance in his Capital Account at the
end of the fiscal year which is in excess of the sum of (i) the amount such
Member is obligated to restore pursuant to any provision of this Agreement, if
any, and (ii) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2
(g) (1) and 1.704-2 (i) (5), each Member shall be specially allocated items of
Company income and gain in the amount of such excess as quickly as possible.
ARTICLE 10
RIGHTS, POWERS AND REPRESENTATIONS
OF THE INVESTMENT MANAGER AND
ADMINISTRATIVE MANAGER: MANAGEMENT FEE
10.1 The Investment Manager shall have the full, exclusive and complete power
and authority to buy, sell and vote the Stock. The Investment Manager shall have
all necessary and appropriate powers to carry out the authority so granted, and
no other party, including any Member, shall have the right to take any action
with respect to the acquisition, sale or voting of the Stock. "Management Term"
shall mean a term of two (2) years commencing on the date hereof, unless sooner
terminated by the Administrative Manager for cause. The Administrative Manager
may terminate the Investment Manager for cause upon 30 days written notice to
the Investment Manager setting forth with specificity the grounds for
termination. For purposes of this Section, "cause" means any willful (i)
dissemination of genuine trade secrets or other confidences of the Company or
any of its affiliates by the Investment Manager; (ii) dishonesty of the
Investment Manager as punishable by criminal law or for which the Investment
Manager would be liable to the Company or its affiliates under civil law; (iii)
deliberate activity of the Investment Manager which is prejudicial to the
interests of the Company or its affiliates; and (iv) deliberate failure by the
Investment Manager to perform any of his material obligations hereunder which is
not cured by the Investment Manager within 30 days after ~ from the Company of
such failure. In the event of a termination of the Investment Manager under this
Section, or upon the death or adjudication of incompetency of the Investment
Manager, the Company shall, within 30 days, make a distribution of Net Proceeds
in accordance with Section 8.1 above.
10.2 The Company shall pay the Investment Manager a Management Fee. The
"Management Fee" shall be equal to .25% of the Fair Market Value (as defined
Section 16.4(c)) of the assets of the Company, payable quarterly, on the last
day of March, June, September and December of each calendar year of the
Management Term. The Management Fee shall be prorated as to the first such
quarter and upon the termination, resignation, death or adjudication of
incompetency of the Investment Manager
10.3 Except for the matters set forth in Section 10.1, all other decisions,
consents, authorizations and rights in connection with the management of the
Company shall be made, given or performed, as the case may be, by the
Administrative Manager. In furtherance of the foregoing, the Administrative
Manager may: i (a) negotiate, execute, deliver and perform on behalf of, and in
the name of, the Company any, wire transfer instructions, disbursement
authorizations, agreements, contracts, promissory notes and other evidences of
indebtedness, and any and all other instruments necessary or incidental to the
business of the Company and the financing thereof;
(b) to secure the payment thereof by all or any part of the assets then
owned or thereafter acquired by the
Company;
(c) effectuate the purpose of the Company as provided in Article 5 hereof;
(d) establish, maintain and draw upon any brokerage, money market,
demand deposit, checking and other accounts of the Company;
(e) execute any notifications, statements, reports, returns or other filings
that are necessary or desirable to be filed with any state or federal agency,
commission or authority;
(f) enter into contracts in connection with the business of the Company;
(g) retain professionals, accountants, lawyers, consultants as the
case may be to further the purpose and business of the Company;
(h) arrange for facsimile signatures for the Members in executing any and all
documents, papers, checks or other writings or legal instruments which may be
necessary or desirable in the Company's business;
(i) execute, acknowledge and deliver any and all contracts, documents and
instruments deemed appropriate to carry out any of the foregoing purposes and
intent of this Agreement;
(j) establish reserves for anticipated expenses, debts and obligations
incident to the operation of the Company's business; and
(k) perform all other duties and make all other decisions in furtherance of the
management and operation of the Company's business in accordance with the Law
except as otherwise set forth in this Agreement.
10.4 The Administrative Manager, on behalf of the Company, shall establish a
brokerage account (the "Account") at Spear, Leeds and Xxxxxxx or any other
brokerage company (the "Broker") approved by the Administrative Manager through
which the Investment Manager shall have the exclusive power and authority to
direct the Broker to disburse the funds necessary to acquire Stock and to sell
Stock. The Investment Manager shall have no power or authority to cause funds to
be disbursed from the Account other than for the purpose of acquiring Stock. Any
withdrawals of any kind from the Account shall be made by the Administrative
Manager.
10.5 Upon the expiration of the Management Term, the Administrative Manager
shall, upon the concurrence of the Investment Manager, have the right to extend
the Management Term or, in his sole discretion, select a successor Investment
Manager. The duties of a successor Investment Manager shall commence upon the
date so designated by the Administrative Manager, and from and after such date,
the prior existing Investment Manager shall be relieved of all duties and
obligations with respect to the Company, shall no longer hold himself or herself
out to any other person or entity as the Investment Manager of the Company,
shall turn over to the Administrative Manager any and all books and records of
the Company, and shall take such action as the Company shall request in order to
effectuate such discharge and termination. No such discharge shall affect any
obligations of the Company to the Investment Manager, including reimbursement
and indemnity obligations as set forth herein or in the Law.
10.6 The fact that the Members, the Investment Manager or the Administrative
Manager are directly or indirectly interested in or connected with any person,
firm or corporation employed by the Company to render or perform a service, or
from which or whom the Company may buy merchandise, material, services or other
property shall not prohibit the Company from employing such persons, firms or
corporations, or from otherwise dealing with such persons, firms or corporations
so long as such terms and conditions are equivalent to those available at the
Company and the transaction was on an arms-length basis.
ARTICLE 11
BOOKS, RECORDS AND REPORTS
11.1 At all times during the continuance of the Company, the Administrative
Manager shall keep or cause to be kept full and true books of account, in which
shall be entered fully and accurately each transaction of the Company. The books
of account, together with an executed copy of the Articles of Organization of
the Company and any amendments thereto, shall at all times be maintained at the
principal office of the Company and shall be open to inspection and examination
by the Members or their representatives at reasonable hours and upon reasonable
notice. For purposes hereof, the Company shall keep its books and records on the
same method of accounting employed for tax purposes.
11.2 The fiscal year of the Company shall be the calendar year. Within a
reasonable time after the end of each fiscal year and in any event on or before
thirty (30) days prior to the filing date for individual tax returns (including
extensions), the accountants for the Company shall deliver to each Member (a) an
annual statement of the Company's receipts and expenses for such year and the
Capital Account of such Member as of the end of each such year, prepared by the
Company's accountants, and (b) a report or a tax return setting forth such
Member's share of the Company's profit or loss for such year and such Member's
allocable share of all items of income, gain, loss, deduction and credit for
federal income tax purposes.
11.3 The Company shall also cause to be prepared and filed all federal, state
and local tax returns required of the Company. All books, records, balance
sheets, statements, reports and tax returns required pursuant to this Section 11
shall be prepared at the expense of the Company.
11.4 In accordance with Section 301(e) of the Law,. the Administrative Manager
shall cause to be prepared and filed biennially the requisite statements for
which service of process shall be accepted by the Secretary of State on behalf
of the Company.
ARTICLE 12
INDEMNIFICATION
12.1 Subject to the limitations and conditions provided in this Article 12 and
in the Law, each person ("Indemnified Person") who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative ("Proceeding"), or any appeal in such a Proceeding
or any action or investigation that could lead to such a Proceeding, by reason
of the fact that any manager or member was or is a Member, a Manager or an
officer of the Company or was or is the legal representative of or a manager,
director, officer, member, venturer, proprietor, trustee, employee, agent or
similar functionary of a Member, shall be indemnified by the Company against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable costs and expenses (including, without
limitation, attorneys' fees) actually incurred by such Indemnified Person in
connection with such Proceeding if such Indemnified Person acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any Proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal action or proceeding, that the Indemnified
Person had reasonable cause to believe that such conduct was unlawful.
12.2 Subject to the limitations and conditions provided in this Article 12 and
in the Law, the Company shall and does hereby indemnify any person who was or is
a party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that such person is or was a Member, a
Manager or an officer of the Company, the legal representative of a Member or
officer, or manager, director, officer, member, venturer, proprietor, trustee,
employee, agent or similar functionary of a Member against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, if such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company, provided that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Company unless, and only to the extent that, the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper.
12.3 To the extent that a person has been successful, on the merits or
otherwise, in the defense of any action, suit or proceeding referred to in
Sections 12.1 or 12.2, or in defense of any claim, issue or matter there;-' such
person shall be indemnified against expenses (including attorneys' fee3)
actually and reasonably incurred by such person in connection therewith.
12.4 Any indemnification under Sections 12.1 or 12.2 (unless ordered by a court)
shall be made by the Company except upon a reasonable determination that
indemnification is proper in the circumstances because such person has not met
the applicable standard of conduct set forth therein; and if such standard is
met indemnification shall be mandatory. Such determination shall be made (i) by
the holders of a majority of the Interests held by Members who were not parties
to such action, suit or proceedings, or (ii) if such a quorum is not obtainable,
or even if obtainable, if a quorum of disinterested Members so directs, by the
Company's independent legal counsel in a written opinion.
12.5 Indemnification under this Article 12 shall continue as to a person who has
ceased to serve in the capacity which initially entitled such person to
indemnity hereunder. The rights granted pursuant to this Article 12 shall be
deemed contract rights, and no amendment, modification or repeal of this Article
12 shall have the effect of limiting or denying any such rights with respect to
actions taken or Proceedings arising prior to any such amendment, modification
or repeal.
12.6 The right to indemnification conferred by this Article 12 shall include the
right to be paid or reimbursed by the Company for the reasonable expenses
incurred in advance of the final disposition of the Proceeding and without any
determination as to the person's ultimate entitlement to indemnification;
provided, however, that the payment of such expenses incurred in advance of the
final disposition of a Proceeding shall be made only upon delivery to the
Company of a written affirmation by such person of his good faith belief that he
has met the standard of conduct necessary for indemnification under this Article
12 and a written undertaking, by or on behalf of such person, to repay all
amounts so advanced if it shall ultimately be determined that such person is not
entitled to be indemnified under this Article 12 or otherwise.
12.7 The right to indemnification and the advancement and payment of expenses
conferred by this Article 12 shall not be exclusive of any other right which a
person may have or hereafter acquire under any law (common or statutory),
provision of the Articles of Organization or this Agreement, agreements, vote of
Members or otherwise.
12.8 Insurance. The Company may purchase and maintain insurance, at its expense,
to protect itself and any Indemnified Person against any expense, liability or
loss, whether or not the Company would have the power to indemnify such person
against such expense, liability or loss under this Article 12.
12.9 Savings Clause. If Sections 12.1,12.2 or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Indemnified Person
as to costs, charges and expenses (including attorneys' fees), judgments, fines
and accounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative to the full extent
permitted by any applicable portion of this Article 12 that shall not have been
invalidated and to the fullest extent permitted by applicable law.
ARTICLE 13
TAX MATTERS
13.1 (a) Notwithstanding any provisions hereof to the contrary, each of the
Members hereby recognizes that the Company will be a Company for United States
federal income tax purposes and that the Company will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, that the filing of United States Company Returns of Income shall not be
construed to extend the purposes of the Company or expand the obligations or
liabilities of the Members. At the request of any Member, the Company shall file
an election under Section 754 of the Code.
(b) The Company shall engage an accountant (the "Accountant") to prepare at the
expense of the Company all tax returns and statements, if any, which must be
filed on behalf of the Company regarding the operation, dissolution and
liquidation of the Company with any taxing authority.
(c) The Administrative Manager is designated the Tax Matters Member (herein
"TMM") for purposes of Chapter 63 of the Code and the Members will take such
actions as may be necessary, appropriate, or convenient to effect the
designation of the Administrative Manager as TMM. The TMM shall attempt to
comply with the responsibilities outlined in this Section 13.1 and in Sections
6222' through 6231 of the Code (including any Treasury Regulations promulgated
thereunder.
ARTICLE 14
DEATH, DISSOLUTION OR
BANKRUPTCY OF A MEMBER
14.1 Upon the death, dissolution, resignation, retirement, expulsion,
adjudication of bankruptcy or adjudication of incompetency of a Member, the
Company shall be dissolved and its affairs shall be wound up unless within 180
days after such event, the Company is continued by the vote of the majority in
Interest of the Members (which approval may be granted or withheld in such
Member's sole discretion). In the event the Company is continued, such Member
(a) making an assignment for the benefit of creditors; (b) filing a voluntary
petition in bankruptcy; (c) being adjudged bankrupt or insolvent, or having
entered against him an order for relief, in any bankruptcy or insolvency
proceeding; (d) filing a petition or answer seeking for himself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation; (e) filing an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against him in any proceeding of this nature; or (f) seeking,
consenting to or acquiescing in the appointment of a trustee, receiver or
liquidator of the Member or of all or any substantial part of its assets, shall
not be entitled to vote on any matters regarding the operation of the Company
except for matters described in Articles 14 and 15.
ARTICLE 15
ASSIGNABILITY, TRANSFER OR PLEDGE OF
INTERESTS RESIGNATION OF MEMBER
15.1 (a) No Member shall have the right to assign, convey, sell or otherwise
transfer or dispose of, or pledge, mortgage, hypothecate or otherwise encumber
his Interest, whether record or beneficial interest thereof, without the prior
written consent of the Administrative Manager and a majority in Interest of the
Members, which consent may be withheld or delayed in each Member's sole
discretion. Notwithstanding the preceding sentence, but subject to the
restrictions on transferability required by law, or set forth in any instrument
or agreement by which the Company may be bound, or which may be contained in
this Agreement, an individual Member may, with the consent of a majority in
interest of the other Members, assign, convey, sell or otherwise transfer or
dispose of all or any portion of his Interest in the Company to any one or more
of the members of his immediate family or families (defined for the purposes of
this Agreement as a mother, father, sister, brother, son, daughter, stepson,
stepdaughter or spouse (in each instance whether by marriage or otherwise))
and/or to a trust or other entity for the benefit thereof or themselves, by a
written instrument of assignment and assumption, provided that the instrument of
transfer provides for the assumption of the assignor's liabilities and
obligations hereunder and has been duly executed by the assignor of such
Interest and by the transferee. Upon consent of the Administrative Manager, such
assignee shall become a Member and shall thereafter have the rights, powers,
preferences and limitations and be subject to the restrictions and limitations
of a Member under this Agreement. The Member shall notify the Company of any
assignment, transfer or disposition of a beneficial interest in any Interest of
the Member which occurs without a transfer of record ownership, although such
notification, or the absence of a response thereto, shall not be deemed a
consent thereof.
(b) An assignee or transferee of any portion of the Interest of a Member shall
be entitled to receive allocations and distributions attributable to the
Interest acquired by reason of such assignment, from and after the effective
date of the assignment of such Interest to such assignee; however, anything
herein to the contrary notwithstanding, the Company shall be entitled to treat
the assignor of such Interest of the Member as the absolute owner thereof in all
respects, and shall incur no liability for allocations of net profits, net
losses, or gain or loss on sale of Company assets or property, or transmittal of
reports and notices required to be given to Members hereunder which are made in
good faith to such assignor until such time as the written assignment has been
received by the Company, approved and recorded on its books and the effective
date of the assignment has passed. Provided that the Company has actual notice
of any assignment of the Interest of the Member, the effective date of such
assignment on which the assignee shall be deemed an assignee of record shall be
the date set forth on the written instrument of assignment.
(c) Any assignment, sale, exchange, transfer or other disposition in
contravention of any of the provisions of this Article 15 and Article 16 hereof
shall be void and ineffective and shall not bind or be recognized by the
Company.
(d) In the event that there shall be more than one assignee, transferee,
representative or other successor-in-interest as permitted herein (collectively,
the "Transferees") and the Member as of the date of this Agreement shall remain
a Member, then the Member shall be authorized to act, and shall so act, on
behalf of the Member and all of the Transferees acting as such by, through or
under the Member. In the event that there shall be more than one Transferee, and
the Member as of the date of this Agreement shall no longer be a Member, then
the Company must be advised by the Member whose Interest is the subject of such
event or failing which by a two-thirds (2/3) majority in interest of those
holding any portion of the Interests of the Member, of one person to act on
behalf of all of the Transferees. The Member, if the first sentence of this
paragraph shall be applicable, or the person so noted to the Company, if the
second sentence of this paragraph shall be applicable, shall be authorized to
act, and shall so act, for all of the Transferees, all of whom shall be bound by
any decision or action taken by such person, and the Company and all of the
other Members shall be entitled to rely on the decisions or actions taken by
such person. Until the Company shall be advised as to the identity of such
person, (i) the Transferees shall be entitled only to distributions and tax
allocations as provided in Article 8 and 9 hereof, but shall have no right,
power or authority with respect to any decision making reserved herein to the
Members or any of them and (ii) wherever in this Agreement provision shall be
made for the Members to make decisions with respect to. Company matters, the
Interest of the Member, as transferred to the Transferees, shall not be included
in determining whether the requisite Interest of Members have consented to or
approved of such decision.
15.2 Without the prior written consent of all Members, a Member may not resign
from the Company prior to the dissolution and winding up of the Company.
ARTICLE 16
ADMISSION OF SUBSTITUTED MEMBERS;
INCAPACITY FURTHER CONDITIONS
16.1 No assignment or transfer of all or any part of the Interest of a Member
permitted to be made under this Agreement shall be binding upon the Company
unless and until a duplicate original of such assignment or instrument of
transfer, duly executed and acknowledged by the assignor and the transferee, has
been delivered to the Company.
16.2 As a condition to the admission of any Substituted Member, as provided in
Article 16 hereof, the person so to be admitted shall execute and acknowledge
such instruments, in form and substance as the Administrative Manager may deem
necessary or desirable to effectuate such admission and to confirm the agreement
of the person to be admitted as a Member to be bound by all of the covenants,
terms and conditions of this Agreement, as the same may have been amended.
16.3 Any person to be admitted as a Member pursuant to the provisions of this
Agreement shall, as a condition to such admission as a Member, pay all
reasonable expenses in connection with such admission as a Member, including,
but not limited to, the cost of the preparation, filing and publication of any
amendment to this Agreement and/or Articles of Organization.
16.4 (a) In the event of the death or adjudication of incompetency of a Member,
or upon the happening of any event described in Article 14, the executor,
administrator, committee or other legal representative of such Member, or the
successor-in-interest of such Member, shall succeed to the rights of such Member
to receive allocations and distributions hereunder, and at such party's election
may be admitted to the Company as a Member in the place and stead of the
deceased, incompetent, or bankrupt Member (as defined in Article 14), but shall
not be deemed to be a Substituted Member until admitted in accordance with the
procedures of this Article 16.
(b) Upon the death of a Member, the estate of a deceased Member or his heirs or
legatees thereunder, as the case may be, shall have the option to continue in
the Company, or, alternatively, may elect within ninety (90) days of the
deceased Member's death, to offer in writing, within nine (9) months of such
deceased Member's death, to sell the deceased Member's Interest to the Company
at a price equal to the then Fair Market Value thereof, and upon such additional
terms and conditions as may be agreed upon. If the Company does not elect to
purchase the deceased Member's Interest within thirty (30) days of said written
offer, then the remaining Member or Members, as the case may be, shall have the
option, for a period of thirty (30) days thereafter, to purchase the deceased
Member's entire Interest, either in proportion to their respective Interests in
the Company or in such other proportions as they may agree, at a price equal to
the Fair Market Value thereof and upon such additional terms and conditions as
may be agreed upon.
(c) For purposes of this Agreement, "Fair Market Value" shall be the then
aggregate value of the Company's assets including cash or cash equivalents and
Stock as determined by the Current Market Value, computed as of the Trading Day
immediately preceding the valuation date. "Current Market Value" on any date
shall mean the average of the Closing Price for a share of Stock for five (5)
consecutive Trading Days ending on such date. "Closing Price" shall mean, on any
date, with respect to a share of Stock, the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, for one share of Stock in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on its national securities exchange.
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Stock is listed or admitted to trading is open for the
transaction of business or, if the Stock is not listed or admitted to trading on
any national securities exchange, any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
16.5 Notwithstanding anything to the contrary contained in this Agreement, no
sale or exchange of an Interest in the Company may be made if the Interest
sought to be sold or exchanged, when added to the total of all other Interests
sold or exchanged within the period of twelve (12) consecutive months prior
thereto, results in the termination of the Company under Section 708 of the Code
without the prior written consent of a majority in Interest of the Members.
16.6 In the event of a permitted transfer of all or part of the Interest of a
Member, the Company shall, if requested, file an election in accordance with
Section 754 of the Code or a similar provision enacted in lieu thereof, to
adjust the basis of the assets of the Company. The Member requesting said
election shall pay all costs and expenses incurred by the Company in connection
therewith.
ARTICLE 17
LIQUIDATION
17.1 Upon the dissolution of the Company, the Company shall be liquidated and
its assets distributed as required by Article VII of the Law.
17.2 The assets of the Company shall be liquidated as promptly as possible, but
in an orderly and businesslike manner so as not to involve undue sacrifice.
17.3 In the event that any proceeds are to be distributed to the Members, same
shall be distributed, if practicable, no later than the later of (i) the end of
the taxable year of the Company in which such liquidation occurs; or (ii) within
ninety (90) days after the date of such liquidating event.
17.4 In any liquidation, the Company's assets shall be used first to pay the
costs and expenses of the dissolution and liquidation. In connection with any
liquidation, the Members may establish any reserves they deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Company or of the Members arising out of or in connection with the Company. Such
reserves shall be paid over by the Members to an attorney-at-law of the State of
New York as escrowee designated by the Members, to be held by him for the
purpose of disbursing such reserves in payment of any of the aforementioned
contingencies. At the expiration of such period as the Members shall deem
advisable, said escrowee shall distribute the balance remaining in the manner
hereinafter provided. No reserves shall be held for longer than two (2) years.
17.5 Any remaining proceeds shall be distributed as follows:
(a) first, to all Members in proportion to and to the extent of any remaining
positive balances in such Member's Capital Account after giving effect to all
allocations to such Member under Article 9 of this Agreement so that liquidation
proceeds shall be distributed in accordance with each Member's positive Capital
Account balance (within the meaning of Treasury Regulation Section 1.704-1(b)
(2) (ii) (~ as in effect on the date hereof); and
(b) second, in accordance with Section 8.1 hereof.
17.6 Each of the Members shall be furnished with a statement prepared by the
Company's then Accountants, which shall set forth the assets and liabilities of
the Company as at the date of completion of liquidation. Upon the Company's
compliance with the provisions of Section 17.4 (including payment over to the
Attorney-Escrowee if there are sufficient funds therefor), the Members shall
cease to be such under this Agreement, and shall execute, acknowledge and cause
to be filed the Articles of Dissolution of the Company.
ARTICLE 18
MISCELLANEOUS
18.1 All terms and words used in this Agreement, regardless of the sense or
gender in which they are used, shall be deemed to include each other sense and
gender unless the context requires otherwise.
18.2 The Members agree immediately and from time to time to execute,
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and to do all such other
acts and things as may be required by law, or as may, in the opinion of a
majority in Interest of the Members, be necessary or advisable to carry out the
intent and purposes of this Agreement.
18.3 The Members, on behalf of themselves, their legal representatives, heirs,
successors and assigns, hereby specifically renounce, waive and forfeit all
rights whether arising under contract, statute, or by operation of law, to seek,
bring, or maintain any action for partition in any court of law or equity
pertaining to any property which the Company may now or in the future own,
regardless of the manner in which title to any such real property may be held.
18.4 Unless otherwise specified in this Agreement, all notices, demands,
requests or other communications which any of the parties to this Agreement may
desire or be required to give hereunder (hereinafter referred to collectively as
"Notices") shall be in writing and shall be delivered by personal delivery
against receipt or by any nationally recognized overnight courier to the
appropriate Member at the address first set forth above, with a copy of any
Notice being sent simultaneously to Pryor, Cashman, Xxxxxxx & Xxxxx, Attention:
Xxxxxxxx X. Xxxxxxxxx, Esq., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Notice
may also be sent to such other addresses or substitute addresses of which a
Member advises the Company by notice given in the manner set forth herein.
Notices given in compliance with the provisions of this Article shall be deemed
given on the day received or attempted delivery.
18.5 The parties agree that the parties shall be governed by, and this Agreement
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed in such State and that all claims and suits
shall be heard in the courts located in the State of New York.
18.6 All section titles or captions contained in this Agreement are for
convenience only and shall not be deemed a part of this Agreement.
18.7 This Agreement may be executed in counterparts and each counterpart so
executed by each Member shall constitute an original, all of which when taken
together shall constitute one agreement, notwithstanding that all the parties
are not signatories to the same counterpart.
18.8 This Agreement may not be changed, modified, amended waived or discharged,
in whole or in part, unless in writing and signed by a majority in Interest of
the Members. This Agreement shall be binding upon the Members and their
respective executors, administrators, legal representatives, heirs, successors
and assigns. The singular of any defined term or term used herein shall be
deemed to include the plural.
18.9 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
18.10 This Agreement is the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements relative to such
subject matter.
18.11 It is expressly understood that the Investment Manager, the Administrative
Manager and each Member may engage in any other business or investment,
including the ownership of or investment in stocks, options, bonds, funds, and
other investment vehicles, whether or not in direct competition with the
business of the Company and neither the Company nor any other Member shall have
any rights in and to said businesses or investments, or the income or profits
derived therefrom.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
CHARISMA PARTNERS, L.P., a New York
limited Partnership
By: 0xx Xxxxx Realty Corp., its sole general
partner
By:
Name: /S/ Xxxxx X. Xxxxx
Title: Vice President
---------------------------
/S/Xxxx X. Xxxxxx
---------------------------
/S/Xxxxx X. Xxxxxx
---------------------------
/S/Xxxxxxx Xxxxxx
---------------------------
/S/Xxxxx X. Xxxxxxxxxx
---------------------------
/S/ Xxxx Xxxxxxxxxx
---------------------------
/S/ Xxxxxx X. Xxxxxxx III
---------------------------
/S/Xxxxxx Xxxxxxx
---------------------------
/S/ Xxxxxx X. Xxxxxxx XX
FIRST AMENDMENT TO
OPERATING AGREEMENT
This First Amendment to Operating Agreement -dated August 1, 1995 by
and among the parties who are Members in Federal Holdings L.L.C. prior to the
date hereof (the "Original Members*) and Xxxxxxxx X. Xxxxxxxxx ('JAB').
STATEMENT OF FACTS
By execution of that certain Operating Agreement (the
"Agreementm) for Federal Holdings L.L.C. (the OLLC") dated
June 12, 1995, the Original Members formed the LLC. The
Original Members have agreed to amend the Agreement to provide
for the inclusion of JAB as an Additional Member and to permit
the Administrative Manager (a) to admit such other persons as
he shall deem proper as Additional Members and (b) provide for
and accept Substitute Members as he shall deem proper, all in
his sole and exclusive discretion.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. All terms used in this First Amendment and not
defined hereinshall be as defined in the Agreement.
2. JAB is hereby admitted into the LLC as an
Additional Member as of the date hereof, with all of the rights and obligations
of a Member, and fromand after the date hereof, JAB shall be considered
a Member for all purposes under the Agreement, as the same may be modified or
amended from time to time.
3. On the date hereof, JAB is making an Initial Capital
Contribution to the LLC of $100,000. As a result of JAB becoming a Member and
making his Initial Capital Contribution, the Interests of each Member in the LLC
is as set forth on Schedule A annexed hereto and by this reference made a part
hereof.
4. The Administrative Manager shall have the sole and
exclusive right to admit Additional Members and provide for and accept
Substitute Members.
5. Except as modified by this First Amendment, the
Agreement remains unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the day and year first above written.
CHARISMA PARTNERS, L.P., a New York
limited Partnership
By: 0xx Xxxxx Realty Corp.,
its sole general partner By:
Name: /S/ Xxxxx X. Xxxxx
Title: Vice President
/s/ Attorney in fact
Xxxx X. Xxxxxx
/s/ Attorney in fact
Xxxxx X. Xxxxxx
/s/ Attorney in fact
Xxxxxxx Xxxxxx
/s/ Attorney in fact
Xxxx Xxxxxxxxxx
/s/ Attorney in fact
Xxxxxx X. Xxxxxxx III
/s/ Attorney in fact
Xxxxxx Xxxxxxx
/s/ Attorney in fact
Xxxxxx X. Xxxxxxx XX
/s/ Attorney in fact
Xxxxxxxx X. Xxxxxxxxx
SCHEDULE A
INITIAL CAPITAL
CONTRIBUTION
CHARISMA PARTNERS, LP $600,000.00
XXXX XXXXXX $100,000.00
XXXXX X. XXXXXX $50,000.00
XXXXXXX XXXXXX $50,000.00
XXXXX X. XXXXXXXXXX $50,000.00
XXXX XXXXXXXXXX $50,000.00
XXXXXX XXXXXXX III $50,000.00
XXXXXX XXXXXXX $25,000.00
XXXXXX X. XXXXXXX XX $25,000.00
XXXXXXXX X. XXXXXXXXX $100,000.00
SECOND AMENDMENT TO
OPERATING AGREEMENT
THIS Second Amendment to Operating Agreement dated as of July 1, 1998 by
and among the parties who are Members in Federal Holdings L.L.C.
STATEMENT OF FACTS
This Second Amendment to Operating Agreement dated as of July 1, 1998 by
and among the parties who are Members in Federal Holdings L.L.C.
By execution of that certain Operating Agreement (the "Original Agreement") for
Federal Holdings L.L.C. (the "LLC") dated June 12, 1995, the LLC was formed. The
Original Agreement was amended by a First Amendment to Operating Agreement dated
August 1, 1995 To admit an additional member. The original Agreement, As
modified by the First Amendment To Operating Agreement, is hereinafter referred
to as the "Agreement". The Members have agreed to amend the Agreement on the
Terms and conditions set forth below.
NOW, THEREFORE the parties hereto herby agree as follows:
1. All terms used in this Amendment and not defined herein shall be as
defined in the Agreement.
2. The definition of "Preferred Return" in Section 1.1 of the Original
Agreement is deleted in its entirety and the following is substituted
in its place and stead:
"Preferred Return": with respect to a Member, an amount equal to the Bank Index
Percentage on a per annum interest basis (prorated for any partial year) on the
amount of such Member's Unrecovered Capital Contribution, from time to time,
calculated from the date a Capital Contribution is made.
3. The following definitions are hereby inserted into section 1.1;
"Bank Index Percentage": A percentage determined by subtracting 2,123 from the
Current Index Value, and dividing the resulting number 2,123.
"Current Index Value": the value of the NASDAQ Bank Index as reported by NASDAQ
at the close of trading on any trading day, as provided in rule 2871(e) in the
NASDQ Manual and published in The Wall Street Journal under the NASDAQ Market
Indices. If The Wall Street Journal shall no longer publish such value, then the
Administrative Manger shall select another publication whether in print or
electronic form. As of the close of business on June 30, 1998, the Current Index
Value was 2,123.
"NASDAQ Bank Index": The index commonly known as the NASDAQ Bank Index as
reported by NASDAQ. In the event that the NASDAQ Bank Index is no longer
reported by NASDAQ, the administrative Manager shall select another index in
substitution thereof.
4. Modifying section 3.1 of the Original Agreement, the Company's
registered office in New York shall be at Xxx Xxxxxxxxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
5. The reference to "20%" in the defined term of "Unrecovered 20% IM Fee",
and in the definition thereof, shall be and hereby is changed to "25%."
6. Section 8.1 (b)(iv) is hereby deleted in its entirety and the following
is substituted in its place and stead: "the balance,if any, shall be
paid 75% of the Members in proportion to their Interest and 25% to
the Investment Manager."
7. The Management Term shall mean a term of (2) years commencing as of the
date hereof and continuing through and including June 30, 2000.
8. Modifying Sections 10.4, the "Account" is currently at Bear Xxxxxxx &
Co., Inc.
9. Except as modified by this Second Amendment, the Agreement remains
unmodified and in full force and effect.
IN WITHNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first above written.
CHARISMA PARTNERS, L.P., a New York
limited Partnership
By: 0xx Xxxxx Realty Corp.,
its sole general partner By:
Name: /S/ Xxxxx X. Xxxxx
Title: Vice President
/s/ Attorney in fact
Xxxx X. Xxxxxx
/s/ Attorney in fact
Xxxxx X. Xxxxxx
/s/ Attorney in fact
Xxxxxxx Xxxxxx
/s/ Attorney in fact
Xxxx Xxxxxxxxxx
/s/ Attorney in fact
Xxxxxx X. Xxxxxxx III
/s/ Attorney in fact
Xxxxxx Xxxxxxx
/s/ Attorney in fact
Xxxxxx X. Xxxxxxx XX
/s/ Attorney in fact
Xxxxxxxx X. Xxxxxxxxx
The undersigned, as Investment Manager, is executing this Second Amendment
to evidence its acknowledgment and agreement to the terms and conditions set
forth above.
Xxxxxxxx Xxxxxxx
