1
Exhibit 3.2
LIMITED LIABILITY COMPANY AGREEMENT
(ALSO REFERRED TO AS THE "OPERATING AGREEMENT")
OF
STUDENT LOAN FUNDING LLC,
A DELAWARE LIMITED LIABILITY COMPANY
EFFECTIVE AS OF MAY 28, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................................................1
ARTICLE II FORMATION OF COMPANY........................................................................5
2.01 Formation...................................................................................5
2.02 Name........................................................................................5
2.03 Principal Place of Business.................................................................5
2.04 Registered Office and Registered Agent......................................................5
2.05 Effective Date..............................................................................5
2.06 Term........................................................................................5
2.07 Foreign Qualification.......................................................................5
2.08 No State Law Partnership....................................................................5
ARTICLE III BUSINESS OF COMPANY.........................................................................6
3.01 Purpose of the Company......................................................................6
3.02 Change in Purpose of Company................................................................7
ARTICLE IV ACTIVITIES SEPARATE FROM
AFFILIATES AND MEMBERS......................................................................7
4.01 Affirmative Covenants.......................................................................7
4.02 Negative Covenants..........................................................................8
ARTICLE V MEMBERS.....................................................................................8
5.01 Members.....................................................................................8
5.02 Admission of Additional Members.............................................................8
ARTICLE VI CONTRIBUTIONS TO THE COMPANY AND
CAPITAL ACCOUNTS............................................................................9
6.01 Initial Capital Contributions; Interests....................................................9
6.02 Additional Contributions....................................................................9
6.03 Loans and Securities.......................................................................10
6.04 Withdrawal and Return of Contributions.....................................................10
6.05 Interest on Contributions..................................................................10
6.06 Capital Accounts...........................................................................10
6.07 Limitation on Member's Deficit Make-up.....................................................11
6.08 Member Liability...........................................................................11
(i)
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ARTICLE VII ALLOCATIONS AND DISTRIBUTIONS..............................................................11
7.01 Allocation of Net Profits and Net Losses from Operations...................................11
7.02 Distributions..............................................................................11
7.03 Limitation Upon Distributions..............................................................12
7.04 Tax Elections..............................................................................12
7.05 Tax Matters Partner........................................................................12
ARTICLE VIII RIGHTS, DUTIES, POWERS AND COMPENSATION
OF THE MANAGEMENT COMMITTEE................................................................12
8.01 Management of Business.....................................................................12
8.02 Management Committee.......................................................................12
8.03 Matters Reserved Exclusively to Management Committee.......................................13
8.04 Rights and Powers of Management Committee..................................................14
8.05 Initial Officers...........................................................................16
8.06 Reimbursement of Management Committee......................................................16
8.07 Consideration of the Company's Creditors by the
Management Committee.......................................................................16
ARTICLE IX MANAGER AND OFFICERS.......................................................................16
9.01 Designation................................................................................16
9.02 Duties.....................................................................................16
9.03 Matters Reserved Exclusively to Members....................................................16
9.04 Delegation of Authority; Officers..........................................................17
9.05 Standard of Conduct........................................................................17
9.06 Compensation...............................................................................17
9.07 Removal....................................................................................17
9.08 Resignation................................................................................18
9.09 Indemnification............................................................................18
9.10 Employees..................................................................................18
ARTICLE X RIGHTS AND OBLIGATIONS OF MEMBERS..........................................................18
10.01 Limitation of Liability....................................................................18
10.02 Company Debt Liability.....................................................................18
10.03 List of Members............................................................................18
10.04 Company Books..............................................................................18
10.05 Priority and Return of Capital.............................................................19
10.06 Binding Authority..........................................................................19
10.07 Consideration of the Company's Creditors by Members........................................19
(ii)
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ARTICLE XI MEETINGS OF MEMBERS........................................................................19
11.01 Meetings...................................................................................19
11.02 Place of Meetings..........................................................................19
11.03 Notice of Meetings.........................................................................19
11.04 Meeting of all Members.....................................................................19
11.05 Record Date................................................................................20
11.06 Quorum.....................................................................................20
11.07 Manner of Acting...........................................................................20
11.08 Proxies....................................................................................20
11.09 Action by Members Without a Meeting........................................................20
11.10 Waiver of Notice...........................................................................21
11.11 Participation by Electronic Communication..................................................21
11.12 Representations and Warranties.............................................................21
11.13 Conflicts of Interest......................................................................21
ARTICLE XII TRANSFERABILITY............................................................................22
12.01 Transfers..................................................................................22
12.02 Conditions to Transfers....................................................................22
12.03 Substitution of a Member...................................................................23
12.04 Pledge or Other Encumbrance................................................................23
ARTICLE XIII DISSOLUTION, TERMINATION AND
LIQUIDATION OF THE COMPANY.................................................................23
13.01 Dissolution................................................................................23
13.02 Winding Up, Liquidation and Distribution of Assets.........................................24
13.03 Certificate of Cancellation................................................................25
13.04 Return of Contribution Nonrecourse to Other Members........................................25
13.05 Final Accounting...........................................................................26
ARTICLE XIV MISCELLANEOUS PROVISIONS...................................................................26
14.01 Notices....................................................................................26
14.02 Fiscal Year................................................................................26
14.03 Application of Delaware Law................................................................26
14.04 Waiver of Action for Partition.............................................................26
14.05 Amendments to Organizational Documents.....................................................26
14.06 Construction...............................................................................26
14.07 Headings and Pronouns......................................................................27
14.08 Waivers....................................................................................27
14.09 Successors and Assigns.....................................................................27
(iii)
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14.10 Creditors..................................................................................27
14.11 Counterparts...............................................................................27
14.12 Enforcement of Independent Committee Members...............................................27
14.13 Indemnification of Members and Committee Members...........................................27
Exhibit 2.01 - Certificate of Formation
Exhibit 5.01 - Members
Exhibit 6.01 - Capital Contributions and Membership Interests
Exhibit 8.02 - Members of the Management Committee
Exhibit 8.05 - Initial Officers
(iv)
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LIMITED LIABILITY COMPANY AGREEMENT
OF
STUDENT LOAN FUNDING LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (also referred to as
the "Operating Agreement") is made and entered as of the 28th day of May, 1998,
between Student Loan Funding Resources, Inc., an Ohio corporation, and SLF
Enterprises, Inc., an Ohio corporation, as the initial members of the Company
(individually, a "Member" and collectively, "Members").
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the following
meanings:
1.01 "ACT" shall mean the Delaware Limited Liability Company Act
contained in Title 6, Chapter 18 of the Delaware Code Annotated, as amended from
time to time.
1.02 "ADDITIONAL CAPITAL CONTRIBUTION" shall have the meaning set forth
in Section 6.02(a) hereof.
1.03 "ADDITIONAL MEMBER" shall mean any Person admitted as an
additional member of the Company pursuant to Section 5.02 of this Agreement.
1.04 "AFFILIATE" shall mean with respect to any Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such Person. SLFC,
Inc., an Ohio nonprofit corporation, The Student Loan Funding Corporation, an
Ohio nonprofit corporation ("Student Loan Funding"), and the Members shall be
deemed Affiliates for the purposes of this Agreement.
1.05 "AGREEMENT" shall mean this Limited Liability Company Agreement
(also referred to as the "Operating Agreement") of the Company as originally
executed and as amended, restated or supplemented from time to time.
1.06 "APPROVAL OF THE MEMBERS" shall mean the approval of the Members
(i) holding a Majority Interest in accordance with Section 11.07 hereof or (ii)
by unanimous written consent as set forth in Section 11.09 hereof.
1.07 "CAPITAL ACCOUNT" as of any given date shall mean the Capital
Contribution to the Company by a Member as adjusted up to the date in question
pursuant to Article VI.
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1.08 "CAPITAL CONTRIBUTION" shall mean any contribution to the capital
of the Company in cash or property by a Member whenever made.
1.09 "CERTIFICATE OF FORMATION" shall mean the Certificate of Formation
of Student Loan Funding LLC, as filed with the Secretary of State of the State
of Delaware, as the same may be amended and/or restated from time to time.
1.10 "CODE" shall mean the Internal Revenue Code of 1986, as amended,
or corresponding provisions of subsequent superseding federal revenue laws, as
each of the foregoing may be amended from time to time.
1.11 "COMMITTEE MEMBER" shall mean a member of the Management Committee
of the Company designated in accordance with Section 8.02 hereof. A Committee
Member shall be deemed a manager of the Company within the meaning of Section
18-101(10) of the Act.
1.12 "COMPANY" shall refer to Student Loan Funding LLC.
1.13 "CONTRIBUTING MEMBER" shall have the meaning set forth in
Section 6.02(b) hereof.
1.14 "CONTRIBUTION DATE" shall have the meaning set forth in
Section 6.02(a) hereof.
1.15 "DISSOLUTION EVENT" shall have the meaning set forth in
Section 13.01(a) hereof.
1.16 "ENTITY" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association or any foreign trust or foreign business
organization.
1.17 "INDEMNITEE" shall have the meaning set forth in
Section 8.04(h).
1.18 "INDEPENDENT COMMITTEE MEMBER" shall mean a Person who is not, and
has not been for the preceding five (5) years, a direct, indirect or beneficial
shareholder, director (other than a member of the Management Committee of the
Company), officer, employee, Affiliate, customer, creditor or supplier of the
Members, any Affiliate (including, but not limited to, the Company) or any
Affiliate of any Member. In accordance with Section 8.02 of this Agreement, the
Independent Committee Members shall be designated on Exhibit 8.02. An
Independent Committee Member shall be deemed a manager of the Company within the
meaning of Section 18-101(10) of the Act.
1.19 "INITIAL CAPITAL CONTRIBUTION" shall have the meaning set forth in
Section 6.01.
1.20 "INITIAL MEMBERS" shall mean Student Loan Funding Resources, Inc.
and SLF Enterprises, Inc.
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1.21 "MAJORITY INTEREST" shall mean one or more of the Membership
Interests of the Members, which individually or taken together exceed 50% of the
aggregate of all Membership Interests.
1.22 "MANAGEMENT COMMITTEE" shall mean the committee described in
Section 8.02 hereof.
1.23 "MANAGER" shall mean the Person appointed as manager of the
Company pursuant to Section 9.01 hereof.
1.24 "MEMBERS" shall mean the Initial Members, Substitute Members and
Additional Members.
1.25 "MEMBERSHIP INTEREST" shall mean a Member's entire limited
liability company interest in the Company, including such Member's share of the
Net Profits and Net Losses of the Company and distributions of the Company's
assets pursuant to this Agreement and the Act, a Member's rights to participate
in the management or affairs of the Company, including rights to vote on,
consent to or otherwise participate in, any decision of the Members and such
other rights and privileges that the Member may enjoy by being a Member.
1.26 "NET PROFITS" and "NET LOSSES" shall mean for each taxable year of
the Company an amount equal to the Company's net taxable income or loss for such
year as determined for federal income tax purposes (including separately stated
items and the proceeds from the sale of all or any portion of the Company's
assets) in accordance with the accounting method and rules used by the Company
and in accordance with Section 703 of the Code.
1.27 "NON-CONTRIBUTING MEMBER" shall have the meaning set forth in
Section 6.02(a).
1.28 "OFFICERS" shall mean the Manager, provided the Manager is not an
Entity, and the Persons elected by the Management Committee to act as officers
of the Company.
1.29 "PARENT" shall have the meaning set forth in Section 3.01(a).
1.30 "PERSON" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns, of
such "Person" where the context so permits.
1.31 "QUALIFIED DEBT" shall have the meaning set forth in
Section 3.01(a).
1.32 "RATING AGENCIES" shall mean Fitch IBCA, Inc., ▇▇▇▇▇'▇ Investors
Service, Inc. and Standard & Poor's Rating Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and their respective successors.
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1.33 "RATING AGENCY CONDITION" shall mean, with respect to any action
referred to as such herein, that each Rating Agency shall have been given prior
written notice thereof and such Rating Agency shall have notified the Company in
writing that such action will not, in and of itself, result in a reduction or
withdrawal of the then current rating of the Qualified Debt and each additional
outstanding bond obligation, note obligation or other indebtedness of the
Company then outstanding and then rated by each Rating Agency, as applicable,
including, without limitation, any shadow rating.
1.34 "RESERVES" shall mean, with respect to any fiscal period, funds
set aside or amounts allocated during such period to reserves which shall be
maintained in amounts deemed sufficient by the Management Committee for working
capital and to pay taxes, insurance, debt service or other costs or expenses
incident to the ownership or operation of the Company's business.
1.35 "STUDENT LOANS" shall have the meaning set forth in
Section 3.01(a).
1.36 "SUBSTITUTE MEMBER" shall mean any transferee of a Membership
Interest permitted to become a member of the Company pursuant to Section 12.02
of this Agreement.
1.37 "TAX MATTERS PARTNER" shall have the meaning set forth in
Section 7.05.
1.38 "TRANSFER" means, with respect to a Membership Interest, to sell,
give, assign, bequeath, divest, dispose of, or transfer ownership or control of
all, any part of, or any interest in the Membership Interest, whether
voluntarily or by operation of law.
1.39 "TRANSFER AND SALE AGREEMENT" shall have the meaning set forth in
Section 3.01(a).
1.40 "TRANSFEROR" shall mean any Member that sells, assigns or
otherwise transfers in accordance with the terms of this Agreement either for or
without consideration all or any portion of its Membership Interest to any
Person permitted to be a member of a limited liability company under the Act.
1.41 "TREASURY REGULATIONS" shall include proposed, temporary and final
regulations promulgated under the Code in effect as of the date of filing the
Certificate of Formation and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
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ARTICLE II
FORMATION OF COMPANY
--------------------
2.01 FORMATION. The Members caused the Company to be formed as a
limited liability company effective May 20, 1998 by filing the executed
Certificate of Formation in the form of Exhibit 2.01 attached hereto, with the
Secretary of State of the State of Delaware in accordance with and pursuant to
the Act. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in her capacity as an authorized person of the
Company, was authorized to execute, deliver and file the Certificate of
Formation with the Secretary of State of the State of Delaware.
2.02 NAME. The name of the Company is Student Loan Funding LLC and all
business of the Company shall be conducted under that name.
2.03 PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Company is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. The
Company may establish additional offices or relocate its place of business as
the Members may from time to time deem advisable; provided, that the Company
shall not establish an office or locate its place of business at the address of
any Affiliate, Member or Affiliate of a Member.
2.04 REGISTERED OFFICE AND REGISTERED AGENT. The Company's initial
registered agent for the service of process shall be The Corporation Trust
Company and the registered office in the State of Delaware shall be Corporation
Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. The Manager may change
the registered office and registered agent from time to time by making an
appropriate filing with the Delaware Secretary of State pursuant to the Act.
2.05 EFFECTIVE DATE. Pursuant to Section 18-201(d) of the Act, this
Agreement shall be effective as of May 28, 1998.
2.06 TERM. The Company shall exist perpetually, unless earlier
dissolved and its affairs wound up in accordance with either the provisions of
this Agreement or the Act. The existence of the Company as a separate legal
entity shall continue until the cancellation of the Certificate of Formation as
provided in the Act.
2.07 FOREIGN QUALIFICATION. The Company will qualify to do business in
each jurisdiction where its business requires it to be so qualified. Each Member
shall execute, acknowledge, swear to and deliver all certificates and other
instruments conforming with this Agreement that are necessary or appropriate to
qualify, continue and terminate, as appropriate, the Company as a foreign
limited liability company in all such jurisdictions in which the Company may
conduct business.
2.08 NO STATE LAW PARTNERSHIP. The Members intend that the Company be
operated in a manner consistent with its treatment as a partnership for federal
and state income tax purposes, but not be operated or treated as a "partnership"
(including, without limitation,
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a limited partnership or joint venture), and that no Member be a partner or
joint venturer with any other Member, for any other purpose, including but not
limited to Section 303 of the Federal Bankruptcy Code, and this Agreement shall
not be construed to suggest otherwise. No Member shall take any action
inconsistent with the express intent of the Members hereto as set forth herein.
ARTICLE III
BUSINESS OF COMPANY
-------------------
3.01 PURPOSE OF THE COMPANY. The nature of the business or purposes of
the Company shall be to engage exclusively in the following business and
financial activities, in accordance with the provisions and restrictions of this
Agreement:
(a) to acquire from Student Loan Funding Resources, Inc., an
Ohio corporation (the "Parent") and other Persons, and to hold, sell, transfer
or pledge, or to hold, sell, transfer or pledge interests in, or interests in
pools of, any rights to payment arising from student loan notes and additional
contract and other related rights, whether constituting accounts, chattel paper,
instruments, general intangibles or otherwise, including the right to payment of
any interest or finance charges and other obligations with respect thereto (such
rights to payment, together with any collateral security for and guarantees
thereof, and together with associated rights, being herein collectively called
"Student Loans") and, without limiting the generality of the foregoing, to pay
and otherwise perform its obligations with respect to the Qualified Debt (as
defined in the Transfer and Sale Agreement dated May 29, 1998, among the
Company, the Parent and Student Loan Funding [the "Transfer and Sale
Agreement"]), and each additional outstanding bond obligation, note obligation
or other indebtedness issued by the Company from time to time, in accordance
with the terms and provisions thereof;
(b) to borrow money to facilitate any activity authorized
herein and to pledge or otherwise grant security interests in the Student Loans
to secure such borrowing;
(c) to enter into any agreement that provides for the
administration, servicing and collection of amounts due on any Student Loans;
(d) to lend or otherwise invest proceeds from Student Loans
and any other funds determined by the Management Committee in accordance with
the contractual agreements to which the Company is subject; and
(e) to engage in any lawful act or activity and to exercise
any powers permitted to limited liability companies organized under the Act,
provided that such act, activity or power is incidental to and necessary,
suitable or convenient for the accomplishment of the purposes specified in
subsections (a) through (d) above.
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3.02 CHANGE IN PURPOSE OF COMPANY. Notwithstanding any other provision
of this Agreement, the Company shall not, and none of the Members, the
Management Committee or the Manager shall cause the Company to, change the
purpose of the Company as set forth in this Article III, without the unanimous
consent of (a) the Members and (b) the Management Committee, including the
affirmative vote of the Independent Committee Members.
ARTICLE IV
ACTIVITIES SEPARATE FROM
------------------------
AFFILIATES AND MEMBERS
----------------------
4.01 AFFIRMATIVE COVENANTS. The Company will take, and the Members, the
Management Committee and Manager shall cause the Company to take, all of the
following actions:
(a) operate its business separate and apart from the
business of any other Entity, including, without
limitation, any of its Affiliates, Members and
Affiliates of its Members;
(b) hold itself out as an independent Entity which
conducts business separate and apart from all other
Entities and correct any misunderstanding regarding
its separate identity;
(c) prepare and maintain separate records and books of
accounts from those of any other Entity, including,
without limitation, any of its Affiliates, Members
and Affiliates of its Members;
(d) maintain bank accounts and other accounts separate
and apart from any other Entity;
(e) pay its own liabilities, indebtedness and obligations
from its own assets;
(f) prepare financial statements based only upon its
operations and business;
(g) maintain separate phone numbers, mailing addresses,
stationery and other business forms from those of any
other Entity;
(h) observe all formalities set forth in this Agreement
and any other organizational document;
(i) maintain an arms-length relationship with its
Affiliates, Members and Affiliates of its Members;
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(j) maintain a sufficient number of officers to conduct
its business and pay the salaries and wages of such
officers from its own assets or enter into arm-length
relationships with other parties for the conduct of
the business;
(k) maintain adequate working capital and Reserves to
conduct its business; and
(l) allocate fairly and reasonably any overhead expenses
for shared office space, if any.
4.02 NEGATIVE COVENANTS. Except as provided for herein, the Company
shall not take (or agree to take), and the Members or Manager shall cause the
Company not to take (or agree to take), any of the following actions:
(a) commingle its assets with the assets of any other
Entity;
(b) guarantee or become obligated for the debts of any
other Entity or hold out its credit as being
available to satisfy the debts or obligations of any
other Entity;
(c) acquire or assume the obligations of its Affiliates,
Members or Affiliates of a Member; or
(d) pledge any of its assets as collateral for the
benefit of any other Entity.
ARTICLE V
MEMBERS
-------
5.01 MEMBERS. The names and addresses of each of the Members are set
forth on Exhibit 5.01 attached hereto, as the same may be amended from time to
time.
5.02 ADMISSION OF ADDITIONAL MEMBERS. Additional Members may be
admitted to the Company only upon the Approval of the Members which approval
shall state the Capital Contribution of such Additional Member and prescribe
such other terms and conditions regarding such admission. Each Additional Member
approved for admission to the Company shall execute a copy of this Agreement.
Upon the admission of an Additional Member, this Agreement and the Exhibits
hereto shall be revised as appropriate to reflect such admission.
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ARTICLE VI
CONTRIBUTIONS TO THE COMPANY AND
--------------------------------
CAPITAL ACCOUNTS
----------------
6.01 INITIAL CAPITAL CONTRIBUTIONS; INTERESTS. On or before the Closing
Date as defined in the Transfer and Sale Agreement, each Member shall make
contributions in cash, property or other assets to the capital of the Company in
such amounts as set forth on Exhibit 6.01 attached hereto (the "Initial Capital
Contribution") in exchange for the Membership Interests set forth on Exhibit
6.01. Exhibit 6.01 shall be amended from time to time to reflect changes in
Members and Membership Interests.
6.02 ADDITIONAL CONTRIBUTIONS.
(a) In the event that the Management Committee determines
additional funds (over and above the Initial Capital Contributions of the
Members which are made pursuant to Section 6.01) are required or desired to
carry on the business and purposes of the Company, and to the extent the
Management Committee determines that the Company should not borrow such
additional funds pursuant to Section 6.03, the Management Committee may approve
and authorize a call for additional capital contributions from each of the
Members in proportion to their respective Membership Interests ("Additional
Capital Contributions"). At the direction of the Management Committee, the
Manager shall give each Member a written notice calling for an Additional
Capital Contribution and stating the amount of such Additional Capital
Contribution to be paid by such Member and the date by which such Additional
Capital Contribution must be received (the "Contribution Date"), such date being
at least fifteen (15) days after the date the request for Additional Capital
Contributions is made. Each Member shall either (i) contribute its Additional
Capital Contribution to the Company on the Contribution Date, or (ii) give
written notice to the Manager and each other Member at least ten (10) days prior
to the Contribution Date of such Member's election not to make all or any part
of such Member's Additional Capital Contribution. In the event a Member makes
the election described in subsection (a)(ii) of this Section 6.02 (a
"Non-Contributing Member"), the other Members may, but are not obligated to,
contribute to the Company all or any portion of the unpaid capital call.
(b) If more than one Member desires to contribute a portion of
an unpaid capital call requested of any Non-Contributing Member (each a
"Contributing Member") and unless such Contributing Members otherwise agree
between or among themselves, each such Contributing Member shall be entitled to
contribute that portion of the unpaid capital call which is equal to the
Contributing Member's then Membership Interest in the Company divided by the
then aggregate Membership Interest of all of the Contributing Members. Any such
contribution made by a Contributing Member shall be deemed an Additional Capital
Contribution to the Company.
(c) On the Contribution Date, the Membership Interest of each
Member making any Additional Capital Contribution to the Company shall be
adjusted and increased to
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reflect such Additional Capital Contribution, and the Membership Interests of
Members not making Additional Capital Contributions shall be adjusted and
decreased to reflect such Additional Capital Contributions.
(d) The Management Committee shall not be required to seek
additional funds for the Company by borrowing funds pursuant to Section 6.03
before authorizing a call for Additional Capital Contributions under this
Section 6.02.
6.03 LOANS AND SECURITIES. In the event that the Management Committee
determines additional funds (over and above the Capital Contributions of the
Members as of that date) are required or desired to carry on the business
purposes of the Company, the Management Committee may, in lieu of or in addition
to its rights under Section 6.02, approve and authorize the borrowing of funds
on behalf of the Company or the issuance of debt securities at commercially
available rates, and, if necessary, secured by mortgages, deeds of trust or
security interests in the property or assets of the Company or the issuance of
equity interests or securities, provided, that, in each case (other than with
respect to warehouse lines of credit in existence as of the effective date of
this Agreement) the Rating Agency Condition shall have been satisfied. The
determination of the amount of the funds required from time to time for the
conduct of the Company's business and the source of those funds (which may
include Members) shall be within the sole discretion of the Management
Committee, subject to the satisfaction of the Rating Agency Condition. The
Management Committee shall not be required to seek additional funds for the
Company by calling for Additional Capital Contributions pursuant to Section 6.02
before authorizing the borrowing of funds under this Section 6.03.
6.04 WITHDRAWAL AND RETURN OF CONTRIBUTIONS. No Member shall be
entitled to withdraw or to the return of its Capital Contributions, except as
provided in this Agreement. No Member shall have the right to demand and receive
property other than cash in return for its Capital Contributions except that,
upon dissolution, the Members shall be entitled to share in the distribution of
the remaining assets of the Company in accordance with Article XIII of this
Agreement.
6.05 INTEREST ON CONTRIBUTIONS. Capital Contributions to the Company
shall not earn interest, unless otherwise agreed by the Members.
6.06 CAPITAL ACCOUNTS.
(a) Maintenance of Capital Accounts. A separate Capital
Account shall be maintained and adjusted for each Member on the books and
records of the Company in strict accordance with the Code and the Treasury
Regulations. The initial Capital Accounts of the Members are set forth on
Exhibit 6.01. Such Capital Accounts shall be adjusted from time to time as set
forth below.
(1) Increase. To each Member's Capital Account there
shall be credited the amount of any cash and the fair market value of
any property contributed by
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such Member to the Company, such Member's distributive share of
profits, and any other items in the nature of income or gain that are
allocated pursuant to Article VII hereof.
(2) Decrease. To each Member's Capital Account there
shall be debited the amount of cash and the fair market value of any
Company property distributed to such Member pursuant to any provision
of this Agreement, such Member's distributive share of losses, and any
other items in the nature of expenses or losses that are specially
allocated pursuant to Article VII hereof.
(b) Transfers. In the event of a permitted sale, transfer or
other disposition of a Membership Interest, the Capital Account of the
Transferor shall become the Capital Account of the transferee of such Membership
Interest to the extent it relates to the transferred Membership Interest in
accordance with Section 1.704-l(b)(2)(iv) of the Treasury Regulations.
(c) Interpretation. The manner in which Capital Accounts are
to be maintained pursuant to this Section 6.06 is intended to and shall be
construed so as to comply with the requirements of Section 704(b) of the Code
and the Treasury Regulations promulgated thereunder.
6.07 LIMITATION ON MEMBER'S DEFICIT MAKE-UP. No Member shall have any
obligation to restore any deficit in its Capital Accounts.
6.08 MEMBER LIABILITY. Except as otherwise provided under the Act, no
Member, solely by reason of being a Member, shall be liable for the debts,
obligations or liabilities of the Company, whether arising in contract, tort or
otherwise, including under any judgment, decree or order of any court.
ARTICLE VII
ALLOCATIONS AND DISTRIBUTIONS
-----------------------------
7.01 ALLOCATION OF NET PROFITS AND NET LOSSES FROM OPERATIONS. Except
as otherwise provided in Article XIII hereof, the Net Profits or Net Losses of
the Company, and each item of income, gain, loss, deduction, or credit
attributable thereto, will be allocated among the Members in proportion to their
respective Membership Interests and in accordance with Section 704(b) and (c) of
the Code and the Treasury Regulations thereunder.
7.02 DISTRIBUTIONS. All distributions shall be made to Members pro rata
in proportion to their respective Membership Interests on the record date of
such distribution. Except as provided in Section 7.03, all distributions of cash
and property shall be made at such time as determined by the Management
Committee. All amounts withheld pursuant to the Code or any provisions of state
or local tax law with respect to any payment or distribution to the Members
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from the Company shall be treated as amounts distributed to the relevant Members
pursuant to this Section 7.02.
7.03 LIMITATION UPON DISTRIBUTIONS. No distribution shall be declared
and paid to a Member on account of its interest in the Company if such
distribution would violate Section 18-607 of the Act or other applicable law.
7.04 TAX ELECTIONS. The Management Committee may make any tax elections
for the Company allowed under the Code or the tax laws of any state or other
jurisdiction having taxing jurisdiction over the Company.
7.05 TAX MATTERS PARTNER. The Members shall designate a "tax matters
partner" of the Company (the "Tax Matters Partner"), as provided in the Treasury
Regulations pursuant to Code Section 6231(including Treasury Regulation
301.6231(a)(7)-2), to perform such duties as are required or appropriate
thereunder. The Tax Matters Partner shall not take any action contemplated by
Sections 6222 through 6232 of the Code without the Approval of the Members. The
Tax Matters Partner shall timely file and/or deliver to the appropriate taxing
authority and/or to each Member, as the case may be, all tax returns, reports
and documents required by local, state and federal law.
ARTICLE VIII
RIGHTS, DUTIES, POWERS AND COMPENSATION
---------------------------------------
OF THE MANAGEMENT COMMITTEE
---------------------------
8.01 MANAGEMENT OF BUSINESS. Except as otherwise provided or prohibited
herein, the Manager shall (i) be responsible for the day-to-day operation and
management of the business and affairs of the Company, (ii) shall make all
decisions, and take or cause to be taken all such actions, on behalf of the
Company or otherwise as are necessary in connection with the operation and
management of the Company in the ordinary course of business, and (iii) shall
have all the powers of a manager of a limited liability company permitted under
the Act. Notwithstanding the foregoing, in no event shall this Section 8.01
operate or be construed to allow the Manager to act in contravention of Sections
8.02, 8.03 or 9.03 of this Agreement.
8.02 MANAGEMENT COMMITTEE. A Management Committee shall be established
with the responsibility for (i) establishing policies and guidelines for the
conduct of the business and affairs of the Company, (ii) supervising and
directing the Manager, and (iii) making determinations with respect to certain
other significant and extraordinary matters (as more fully referenced in Section
8.03 below). The Management Committee shall consist of five (5) individuals
designated by the Members and listed on Exhibit 8.02 attached hereto. At any
given time, at least two (2) Committee Members must be, and must be designated
on Exhibit 8.02 as, Independent Committee Members. Independent Committee Members
may vote on any action taken by the Management Committee; provided that the
Independent Committee Members must
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vote upon the matters set forth in Sections 3.02, 8.03(c) through (f), and
14.05. In the event of the removal, death, complete disability, or resignation
of any Committee Member, the Management Committee shall have the right to
designate a substitute Committee Member, provided, that any vacancy created by
the removal, death, complete disability or resignation of an Independent
Committee Member shall be filled by the Members. Each individual designated by
the Members may be removed by the Members at any time for any reason, provided
that no Independent Committee Member may be removed unless his or her successor
has been duly appointed. An individual who serves on the Management Committee
may voluntarily resign at any time by delivering written notice to the Members.
8.03 MATTERS RESERVED EXCLUSIVELY TO MANAGEMENT COMMITTEE. The Company
shall not take (or agree to take), and none of the Members, the Manager or the
Management Committee shall cause the Company to take (or agree to take), any
action with respect to the following matters except upon the approval of all of
the Members and the Management Committee, including the affirmative vote of both
Independent Committee Members and all of the other Committee Members with
respect to Sections 8.03(c) through (f):
(a) call for Additional Capital Contributions;
(b) declare and pay distributions to Members;
(c) make an assignment for the benefit of creditors,
file, or consent to the filing of, a petition in
bankruptcy, petition or apply to any tribunal for the
appointment of a custodian, receiver, trustee or
other similar official for it or for a substantial
part of its assets, commence, to the fullest extent
permitted by law, any proceeding under any
bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution or liquidation law or statute or
similar law or statute of any jurisdiction, consent
or acquiesce in the filing of any such petition,
application, proceeding or appointment of or taking
possession by the custodian, receiver, liquidator or
trustee of the Company of substantially all or part
of its assets, or admit its inability to pay its debt
generally as they become due;
(d) cause or permit the Company to furnish any collateral
or issue a guarantee; provided, that, the Company
shall not be permitted to guarantee any indebtedness
of the Parent and the Rating Agency Condition shall
have been satisfied with respect to any such
transaction;
(e) sell, transfer, assign, convey or lease any
substantial part of the assets of the Company,
provided, that, the Rating Agency Condition shall
have been satisfied with respect to any such
transaction;
(f) merge, consolidate, liquidate or, subject to Article
XIII and to the fullest extent permitted by law,
dissolve the Company, provided, that, the Rating
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Agency Condition shall have been satisfied with
respect to any such transaction;
(g) directly or indirectly purchase or otherwise acquire
all or substantially all of the assets of another
Entity;
(h) approve the terms of any material settlement
involving the payment of consideration by the
Company;
(i) enter into transactions between the Company and
either a Member or an Affiliate of a Member;
(j) change any benefit plans or arrangements offered by
the Company to its employees;
(k) select and remove the auditors or legal counsel of
the Company;
(l) declare bonuses to Officers and employees of the
Company;
(m) enter into a collective bargaining agreement;
(n) elect and remove Officers; and
(o) purchase or otherwise acquire additional Student
Loans, except as permitted by the Student Loan
Acquisition Policy adopted by the Management
Committee from time to time.
8.04 RIGHTS AND POWERS OF MANAGEMENT COMMITTEE.
(a) Meetings. Meetings of the Management Committee may be
called at any time by any Member and shall be held at the Company's principal
office unless otherwise agreed upon by the Members; provided that, the
Management Committee shall meet at least four (4) times during each calendar
year. Written notice stating the date, time and place of the meeting shall be
given to each Member and each Committee Member not less than five (5) nor more
than thirty (30) days before the date of such meeting. Such notice shall specify
the purpose for which the meeting is called and any issues that are proposed to
be discussed or voted upon at such meeting.
(b) Waiver of Notice. Any Committee Member may waive notice of
any meeting before or after the meeting. The waiver must be in writing, signed
by the Committee Member entitled to the notice and delivered to the Manager for
inclusion in the minutes or filing with the Company's records. A Committee
Member's attendance at or participation in a meeting waives any objection to
lack of notice or defective notice of the meeting unless the Committee Member at
the beginning of the meeting, or promptly upon arrival, objects to holding the
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meeting or to transacting business at the meeting and does not thereafter vote
for or assent to action taken at the meeting.
(c) Quorum. Except as otherwise consented to in writing by
each Member, a quorum for the transaction of business at any meeting of the
Management Committee requires the presence at such meeting, in person or by
proxy, of at least two (2) Committee Members; provided that if the matter to be
voted upon requires the vote of the Independent Committee Members then a quorum
requires the presence at such meeting, in person or by proxy, of three (3)
Committee Members then in office.
(d) Proxy. Any Committee Member (other than an Independent
Committee Member with respect to matters specified in Sections 3.02, 8.03(c)
through (f), and 14.05 hereof) may grant any other Committee Member a proxy to
vote in his or her stead.
(e) Voting of Management Committee. Unless otherwise required
by the Act or this Agreement, all decisions of the Management Committee shall be
made by the vote of a majority of the Committee Members. Notwithstanding the
prior sentence, any decision requiring the approval of the Independent Committee
Members shall require the approval of all Committee Members. No issue shall be
voted on by the Management Committee unless notice of the issue is given or such
notice is waived by any Committee Member not receiving such notice as set forth
in Section 8.04(b) above.
(f) Action Without Meeting. Any action required or permitted
by this Agreement or by law to be taken at a meeting of the Management Committee
may be taken without a meeting if a written consent or consents, describing the
action so taken, is signed by all of the Committee Members entitled or required
to vote with respect to the subject matter thereof and delivered to the Company
for inclusion in the Company's records. Any such written consent may be signed
in two or more counterparts.
(g) Telephonic Meetings. Except as provided herein and
notwithstanding any place set forth in the notice of the meeting or this
Agreement, the Management Committee and any committees thereof may participate
in regular or special meetings by, or through the use of, any means of
communication by which all participants may simultaneously hear each other.
(h) Indemnification. The Company shall, to the maximum extent
provided by law, indemnify, defend and hold harmless each present or former
Committee Member ("Indemnitee"), to the extent of the Company's assets, from and
against any liability, damage, cost, expense, loss, claim, judgment or amounts
paid in settlement thereof (including reasonable attorneys' fees and costs in
settlement or defense thereof) incurred by reason of the fact that such
Indemnitee is or was a Committee Member. Notwithstanding the foregoing, no
Indemnitee shall be so indemnified, defended or held harmless for claims arising
out of a breach by the Indemnitee of this Agreement or any acts or omissions by
the Indemnitee that constitute fraud, willful misconduct or breach of fiduciary
duty to the Company or to the Members. The Company shall advance the expenses of
defense if the Indemnitee undertakes in writing to repay
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the advanced funds to the Company if the Indemnitee is finally determined by a
court of competent jurisdiction not to be entitled to indemnification pursuant
to this Section 8.04(h).
8.05 INITIAL OFFICERS. The Persons designated on Exhibit 8.05 shall be
the initial Officers of the Company and shall hold the position or positions set
forth opposite their nameson Exhibit 8.05. Each initial Officer shall serve at
the pleasure of the Management Committee until his or her successor is duly
elected, or until his or her earlier resignation or removal.
8.06 REIMBURSEMENT OF MANAGEMENT COMMITTEE. The Company shall reimburse
Committee Members for all reasonable out-of-pocket expenses (including, but not
limited to, legal fees) incurred in connection with the carrying out of the
duties set forth in this Agreement and the management of the Company.
8.07 CONSIDERATION OF THE COMPANY'S CREDITORS BY THE MANAGEMENT
COMMITTEE. When voting on actions, to the fullest extent permitted by law,
including Section 18-1101(C) of the Act, each Committee Member shall consider
the interests of the Company's creditors.
ARTICLE IX
MANAGER AND OFFICERS
--------------------
9.01 DESIGNATION. The Manager shall be such Person as the Management
Committee shall designate from time to time. The Manager may be removed and
replaced upon the affirmative vote of the majority of the Management Committee.
9.02 DUTIES. In addition to the duties set forth in Section 8.01, the
Manager shall be primarily responsible for the general management of the
business of the Company, shall make the ordinary and usual decisions concerning
the business affairs of the Company, shall have authority to make contracts on
behalf of the Company in the ordinary course of the Company's business, shall be
responsible to effect all properly approved orders and resolutions of the
Management Committee and Members, except as may be otherwise delegated by the
Management Committee or provided by law, shall preside at all meetings of the
Members, and shall perform such other duties as from time to time may be
assigned by the Management Committee. Without limiting the generality of the
foregoing, the Manager is authorized to sign contracts and obligations on behalf
of the Company, including, without limitation, purchase contracts, sales
contracts, leases, promissory notes, mortgages, deeds of trust; institute and
defend legal proceedings, lend money; invest and reinvest Company funds; appoint
employees and agents; and purchase insurance on the life of any Members or any
member of the Management Committee.
9.03 MATTERS RESERVED EXCLUSIVELY TO MEMBERS. Notwithstanding Sections
8.01 or 9.02 herein, the Company shall not take (or agree to take), and neither
the Management Committee nor the Manager shall cause the Company to take (or
agree to take), any action with
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respect to the following matters except upon Approval of the Members, and after
providing written notice of such action to the Rating Agencies:
(a) combine or reclassify the Membership Interests;
(b) admit Additional or Substitute Members; or
(c) any other acts on behalf of or with respect to the
Company which under Delaware law would require action
by the Members.
9.04 DELEGATION OF AUTHORITY; OFFICERS. The Management Committee shall
have the authority and power to appoint Officers and to delegate to one or more
of such Officers, the rights and powers to manage and control the business and
affairs of the Company; provided, that the Management Committee may not delegate
the right to vote that is reserved exclusively to the Management Committee in
Section 8.03 hereof. The Officers of the Company, if deemed necessary by the
Management Committee, may include a president, one or more vice presidents,
secretary, treasurer, assistant secretary and assistant treasurer. The Officers
shall serve at the pleasure of the Management Committee, subject to all rights,
if any, of an Officer under any contract of employment. Any individual may hold
any number of offices. The Officers shall exercise such powers and perform such
duties as shall be determined from time to time by the Management Committee.
9.05 STANDARD OF CONDUCT. Each of the Officers (including the Manager)
shall discharge the duties of an office in good faith, in a manner he or she
reasonably believes to be in the best interest of the Company and with the care
an ordinarily prudent person in a like position would exercise under similar
circumstances. In discharging his or her duties, the Officer is entitled to rely
in good faith on information, opinions, reports or statements, including
financial statements and other financial data, if prepared or presented by
employees of the Company whom the Officer reasonably believes to be reliable and
competent in the matters presented; or legal counsel, public accountants, or
other persons as to matters the Officer reasonably believes are within the
person's professional or expert competence. An Officer is not acting in good
faith who has knowledge concerning the matter in question that makes reliance
otherwise permitted by this provision unwarranted. An Officer shall not be
liable for any action taken as an officer, or any failure to take any action, if
the Officer has performed the duties of the office in compliance with this
provision.
9.06 COMPENSATION. The salaries and other compensation of the Officers
and employees of the Company shall be as determined by the Management Committee,
in its discretion, from time to time.
9.07 REMOVAL. The Management Committee may remove any of the Officers
at any time, for any reason, but no such removal shall affect the contractual
rights, if any, of the Officer so removed.
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9.08 RESIGNATION. The Manager or an Officer may resign at any time by
delivering written notice to the Management Committee. A resignation is
effective without acceptance when the notice is delivered to the Management
Committee, unless the notice specifies a later effective date. If a resignation
is made effective at a later date and the Management Committee accepts the
future effective date, the Management Committee may fill the pending vacancy
before the effective date if it provides that the successor does not take office
until the effective date. An Officer's resignation does not affect the Company's
contractual rights, if any, with the Officer.
9.09 INDEMNIFICATION. Subject to applicable law, the Company shall
indemnify and advance expenses to each present and future Manager of the Company
(and, in either case, his heirs, estate, executors or administrators) to the
full extent allowed by the laws of the State of Delaware, both as now in effect
and as hereafter adopted. The Company may indemnify and advance expenses to any
Officer or agent of the Company who is not the Manager (and his or her heirs,
estate, executors or administrators) to the same extent as the Manager, if the
Management Committee determines that it is in the best interests of the Company
to do so. The Company shall also have the power to contract with any Officer or
agent for whatever additional indemnification the Management Committee shall
deem appropriate.
9.10 EMPLOYEES. The Company shall not have any employees other than the
Officers permitted under this Agreement or required by applicable law.
ARTICLE X
RIGHTS AND OBLIGATIONS OF MEMBERS
---------------------------------
10.01 LIMITATION OF LIABILITY. Each Member's liability shall be limited
as set forth in this Agreement, the Act and other applicable law.
10.02 COMPANY DEBT LIABILITY. A Member will not be personally liable
for any debts or losses of the Company beyond its respective Capital
Contributions and any obligation of the Member under Section VI to make Capital
Contributions, except as otherwise required by law.
10.03 LIST OF MEMBERS. Upon written request of any Member, the Manager
shall provide a list showing the names, addresses and Membership Interests of
all Members.
10.04 COMPANY BOOKS. Full and complete books of account of the Company
(separate and apart from its Affiliates, Members and Affiliates of Members)
shall be kept in accordance with generally accepted accounting principles and
shall be maintained at all times at the Company's principal office or such other
place as the Manager shall determine, and shall be open to the reasonable
inspection and examination of the Members during reasonable business hours. The
Manager shall maintain and preserve, during the term of the Company, and for
five (5) years thereafter, all accounts, books, and other relevant Company
documents. Upon reasonable
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request, each Member shall have the right, during ordinary business hours, to
inspect and copy such Company documents at the requesting Member's expense. The
Manager and Committee Members shall not have the right to keep confidential from
the Members any information that the Manager or Committee Members might
otherwise be permitted to keep confidential from the Members pursuant to Section
18-305(c) of the Act.
10.05 PRIORITY AND RETURN OF CAPITAL. Except as may be expressly
provided in Article VII, no Member shall have priority over any other Member,
either as to the return of Capital Contributions or as to Net Profits, Net
Losses or distributions; provided that this Section 9.05 shall not apply to
loans (as distinguished from Capital Contributions) which a Member has made to
the Company.
10.06 BINDING AUTHORITY. No Member shall have authority to bind the
Company without the approval of the Management Committee in accordance with
Section 8.04(e) hereof.
10.07 CONSIDERATION OF THE COMPANY'S CREDITORS BY MEMBERS. When voting
on actions, each Member to the fullest extent permitted by law, including
Section 18-1101(c) of the Act, shall consider the interests of the Company's
creditors.
ARTICLE XI
MEETINGS OF MEMBERS
-------------------
11.01 MEETINGS. Meetings of the Members may be called for any purpose
or purposes and, unless otherwise prescribed by statute, may be called by any
Member.
11.02 PLACE OF MEETINGS. The Members may designate any place, either
within or outside the State of Delaware, as the place of meeting for any meeting
of the Members. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Company.
11.03 NOTICE OF MEETINGS. Except as provided in Section 11.04, written
notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than seven
(7) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the Manager or person calling
the meeting, to each Member entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered two (2) calendar days after being
deposited in the United States mail, addressed to the Member at its address as
it appears on the books of the Company, with postage thereon prepaid.
11.04 MEETING OF ALL MEMBERS. If all of the Members shall meet at any
time and place, either within or outside of the State of Delaware, and consent
to the holding of a meeting at such
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time and place, such meeting shall be valid without call or notice, and at such
meeting lawful action may be taken.
11.05 RECORD DATE. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment thereof, or
Members entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of Members. All Members who have not withdrawn from the Company
shall be entitled to vote on any matter submitted to a vote of the Members. When
a determination of Members entitled to vote at any meeting of Members has been
made as provided in this Section 10.05, such determination shall apply to any
adjournment thereof.
11.06 QUORUM. Members holding at least a Majority Interest, represented
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 Membership
Interests so represented may adjourn the meeting from time to time for a period
not to exceed sixty (60) days without further notice. However, if the
adjournment is for more than sixty (60) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Member of record entitled to vote at the meeting.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The Members present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during
such meeting of that number of Membership Interests whose absence would cause
less than a quorum.
11.07 MANNER OF ACTING. If a quorum is present, the affirmative vote of
Members holding a Majority Interest shall be the act of the Members, unless the
vote of a greater proportion or number is otherwise required by the Act. Such
action shall be evidenced by a written resolution for inclusion in the minutes
of the Company records.
11.08 PROXIES. At all meetings of Members, a Member that is entitled to
vote may vote in person or by proxy executed in writing by the Member or by a
duly authorized attorney-in-fact. Such proxy shall be filed with the Manager
before or at the time of the meeting. No proxy shall be valid after eleven (11)
months from the date of its execution, unless otherwise provided in the proxy.
11.09 ACTION BY MEMBERS WITHOUT A MEETING. Action required or permitted
to be taken at a meeting of Members may be taken without a meeting if the action
is evidenced by one or more written consents describing the action taken, signed
by each Member entitled to vote and delivered to the Manager for inclusion in
the minutes or for filing with the Company records. Action taken under this
Section 11.09 is effective when all Members entitled to vote have signed the
consent, unless the consent specifies a different effective date. The record
date for
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determining Members entitled to take action without a meeting shall be the date
the first Member signs a written consent.
11.10 WAIVER OF NOTICE. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the Member entitled to such
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
11.11 PARTICIPATION BY ELECTRONIC COMMUNICATION. A meeting among
Members may be held by any means of communication through which the participants
may simultaneously hear each other during the meeting, provided, that there is
at least one meeting each fiscal year at which all Members are present in
person. Subject to the preceding sentence, if all the other requirements for a
meeting are met, a Member participating in a meeting by electronic communication
shall be deemed to be present at the meeting in person or by proxy, as the case
may be, and the minutes may reflect such.
11.12 REPRESENTATIONS AND WARRANTIES. Each Member, and in the case of
an Entity, the Person(s) executing this Agreement on behalf of the Entity,
hereby represents and warrants to the Company and each other Member: (a) that
the Member is acquiring its interest in the Company for the Member's own account
as an investment and without an intent to distribute the interest and (b) that
the Member acknowledges that the interests have not been registered under the
Securities Act of 1933, as amended, or any state securities laws, and may not be
resold or transferred by the Member without appropriate registration or the
availability of an exemption from such requirements.
11.13 CONFLICTS OF INTEREST.
(a) A Member shall be entitled to enter into transactions that
may be considered to be competitive with, or a business opportunity that may be
beneficial to, the Company, it being expressly understood that one or more of
the Members may enter into transactions that are similar to the transactions
into which the Company may enter. Notwithstanding the foregoing, Members shall
account to the Company and hold as trustee for it any property, profit or
benefit derived by the Member, without the consent of the other Members, in the
conduct and winding up of the Company business or from a use or appropriation by
the Member of Company property, including, without limitation, information
developed exclusively for the Company and opportunities expressly offered to the
Company.
(b) No resolution adopted, or contract or transaction entered
into, by the Members of the Company (an "action"), shall be void or voidable
with respect to the Company for the reason that it is between or affects the
Company and one or more of its Members, or is between or affects the Company and
any other entity in which one or more of its Members is a member, manager,
director, trustee or officer, or has a financial or personal interest, or for
the reason that one or more interested Members participates in or votes at the
meeting that authorizes such contract, action or transaction, if in any case any
of the following apply:
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(i) The material facts as to his or their
relationship or interest and as to the contract, action or transaction
are disclosed or are known to the Manager and the Manager, in good
faith reasonably justified by such facts, authorize the contract,
action or transaction; or
(ii) The contract, action, or transaction is fair to
the Company as of the time it is authorized or approved by the Manager.
ARTICLE XII
TRANSFERABILITY
---------------
12.01 TRANSFERS. Subject to and in full compliance with the terms and
conditions of this Agreement, including, but not limited to, the conditions set
forth in Section 12.02, any Member may Transfer to any Person permitted to be a
member of a limited liability company under the Act, all or a fractional portion
of such Member's Membership Interest in the Company.
12.02 CONDITIONS TO TRANSFERS. No Member may make a Transfer of its
Membership Interest in the Company without the satisfaction of all of the
conditions set forth in this Section 12.02. The Company will register the
Membership Interest in the name of a transferee, and the transferee shall be
deemed to own such Membership Interest and shall become a Member, with the
rights and responsibilities of a Member, only if and when all of the following
conditions are satisfied:
(a) the Company has received a written instrument of
Transfer of such Membership Interest in a form
satisfactory to the Company, which instrument shall
be signed by the Transferor and the transferee and
shall contain the name and address of the transferee
and the transferee's express acceptance of and
agreement to be bound by all of the terms and
conditions of this Agreement;
(b) all requirements of applicable state and federal
securities laws have been met;
(c) such Transfer will not result in the Company being
classified as an "association" which is taxable as a
corporation for federal income tax purposes;
(d) the Company shall have been reimbursed by the
Transferor for all reasonable expenses incurred by
the Company in connection with such Transfer,
including but not limited to, reasonable attorneys'
fees and expenses relating to evaluation of the
proposed Transfer and the
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preparation, filing and/or publishing of any and all
documents necessary or appropriate to effectuate such
Transfer; and
(e) in the case of a Transfer which results from a pledge
or other similar encumbrance arising in connection
with the securing of a loan or other obligation of
the Transferor, all applicable conditions to the
transfer of ownership of the Membership Interest to
the pledgee or holder of the pledge or encumbrance
set forth in the agreement(s) relating thereto shall
have been satisfied.
12.03 SUBSTITUTION OF A MEMBER. A transferee of a Membership Interest
shall be admitted as a Substitute Member and admitted to all the rights of the
Transferor upon the satisfaction of the conditions set forth in Section 12.02.
If so admitted, the Substitute Member shall have all the rights and powers, and
be subject to all the restrictions on and liabilities of, the Transferor. In
addition, the Substitute Member is liable for the obligations of the Transferor
to make an Initial Capital Contribution or Additional Capital Contributions, if
any. The admission of a Substitute Member shall not release the Transferor from
any liability to the Company that may have existed prior to the Transfer of the
Membership Interest to the Substitute Member.
12.04 PLEDGE OR OTHER ENCUMBRANCE. A Membership Interest can be pledged
or otherwise encumbered, provided that no transfer of ownership of the
Membership Interest shall occur in connection with such pledge or other
encumbrance unless the conditions of Section 12.02(e) are satisfied.
ARTICLE XIII
DISSOLUTION, TERMINATION AND
----------------------------
LIQUIDATION OF THE COMPANY
--------------------------
13.01 DISSOLUTION.
(a) Subject to Sections 7.03 and 13.01(d), the Company shall
be dissolved and its affairs wound up upon the first to occur of any of the
following events (which, unless in the case of the events described in section
13.01(a)(ii) the Members agree to continue the business of the Company, shall
constitute "Dissolution Events"):
(i) at any time there are no members of the Company
unless the business of the Company is continued without
dissolution in a manner permitted by the Act;
(ii) the entry of a decree of judicial dissolution
under the Act; or
(iii)the sale of all or substantially all of the
assets of the Company.
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(b) The death, retirement, resignation, expulsion, bankruptcy
or dissolution of any Member of the Company or the occurrence of any other event
that terminates the continued membership of any Member of the Company shall not
cause the Company to be dissolved or its affairs to be wound up, and upon the
occurrence of any such event, the Company shall be continued without
dissolution. Notwithstanding any other provision in this Agreement, the
bankruptcy (as defined in Section 18-101(1) and 18-304 of the Act) of a Member
shall not cause the Member to cease to be a member of the Company, and upon the
occurrence of such an event, the business of the Company shall be continued
without dissolution. Notwithstanding any other provision of this Agreement, the
Members waive any right that they might have under Section 18-801(b) of the Act
to agree in writing to dissolve the Company upon the bankruptcy of a Member or
the occurrence of any other event that causes a Member to cease to be a member
of the Company.
(c) Upon the occurrence of a Dissolution Event, the Company
shall continue its existence until the winding up of the affairs is completed
and a certificate of cancellation of the Certificate of Formation has been filed
with the Secretary of State of the State of Delaware. A reasonable time shall be
allowed for the orderly liquidation of the assets of the Company and the
discharge of the Company's liabilities to creditors so as to minimize the normal
losses attendant to such liquidation.
(d) The Members shall not be permitted to dissolve the Company
by consent, unless the Management Committee, with the affirmative vote of both
Independent Committee Members, approves such dissolution and the Rating Agency
Condition shall have been satisfied.
13.02 WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS.
(a) Upon the occurrence of a Dissolution Event, an accounting
shall be made by the Company's independent accountants of the accounts of the
Company and of the Company's assets, liabilities and operations, from the date
of the last previous accounting until the date of dissolution. The Manager shall
immediately proceed to wind up the affairs of the Company.
(b) If the Company is dissolved and its affairs are to be
wound up, the Manager shall sell or otherwise liquidate all of the Company's
assets as promptly as practicable (except to the extent the Manager may
determine to distribute any assets to the Members in kind) and distribute the
proceeds of the liquidation of such assets and any other remaining, unliquidated
assets in the following order of priority:
(i) to creditors, excluding Members who are
creditors, to the extent permitted by law, in satisfaction of
the Company's liabilities (whether by payment or the making of
reasonable provision for payment thereof);
(ii) to Members who are creditors of the Company in
satisfaction of Company liabilities, including, without
limitation, the repayment of principal of
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and interest on loans made by Members to the Company (whether
by payment or the making of reasonable provision for payment
thereof); and
(iii) to Members in accordance with positive Capital
Account balances taking into account all Capital Account
adjustments for the Company's fiscal year in which the
liquidation occurs.
Liquidation proceeds shall be paid within sixty (60) days of the end of the
Company's fiscal year or, if later, within ninety (90) days after the date of
dissolution; provided, that, any distributions of the positive balances of
Members' Capital Accounts shall be made in accordance with the time requirements
set forth in Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations.
(c) If any assets of the Company are to be distributed in
kind, the net fair market value of such assets as of the date of dissolution
shall be determined by independent appraisal or by agreement of the Members.
Such assets shall be deemed to have been sold as of the date of dissolution for
their fair market value, and the Capital Accounts of the Members shall be
adjusted pursuant to the provisions of Article VI of this Agreement to reflect
such deemed sale.
(d) Notwithstanding anything to the contrary in this
Agreement, upon a liquidation within the meaning of Section 1.704-l(b)(2)(ii)(g)
of the Treasury Regulations, if any Member has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions, allocations
and other Capital Account adjustments for all taxable years, including the year
during which such liquidation occurs), such Member shall have no obligation to
make any Capital Contribution, and the negative balance of such Member's Capital
Account shall not be considered a debt owed by such Member to the Company or to
any other Person for any purpose whatsoever.
(e) The Manager shall comply with any applicable requirements
of applicable law pertaining to the winding up of the affairs of the Company and
the final distribution of its assets.
13.03 CERTIFICATE OF CANCELLATION. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Members, a certificate of cancellation shall be executed and filed in
accordance with the Act. Upon the filing with the Secretary of State of the
State of Delaware of a certificate of cancellation of the Certificate of
Formation, the existence of the Company shall cease.
13.04 RETURN OF CONTRIBUTION NONRECOURSE TO OTHER MEMBERS. Except as
provided by law or as expressly provided in this Agreement, upon dissolution,
each Member shall look solely to the assets of the Company for the return of its
Capital Contribution. If the Company property remaining after the payment or
discharge of the debts and liabilities of the Company is
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insufficient to return the cash contribution of one or more Members, such Member
or Members shall have no recourse against any other Member.
13.05 FINAL ACCOUNTING. Each of the Members shall be furnished a
statement reviewed by the Company's accountants, which shall set forth the
assets and liabilities of the Company as at the date of distribution and
liquidation of the Company.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
------------------------
14.01 NOTICES. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an executive officer of the party to whom the same is directed
or, if sent by registered or certified mail, postage and charges prepaid,
addressed to the Member's or Company's address, as appropriate, which is set
forth in this Agreement.
14.02 FISCAL YEAR. The Company's fiscal year for financial and income
tax purposes shall end on June 30 of each year.
14.03 APPLICATION OF DELAWARE LAW. This Agreement and the application
or interpretation hereof shall be governed exclusively by its terms and by the
laws of the State of Delaware, and specifically the Act, without regard to
principles of conflicts of laws.
14.04 WAIVER OF ACTION FOR PARTITION. Each Member irrevocably waives
during the term of the Company any right that it may have to maintain any action
for partition with respect to the property of the Company.
14.05 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. This Agreement and the
Certificate of Formation may not be amended, restated or otherwise modified in
any respect by the Members, Management Committee or Manager without the Approval
of the Members and the approval of the Management Committee, including the
affirmative vote of both Independent Committee Members nor may it be amended
without the consent of each Member adversely affected if such amendment would
(i) modify the limited liability of a Member or (ii) alter the interest of a
Member in Net Profits, Net Losses, other items, or any Company distributions.
Notwithstanding the foregoing, Sections 1.18, 1.33, 6.03, 8.02, 8.03, 8.04(d),
9.03, 9.10 and 13.01 of this Agreement shall not be amended, restated or
otherwise modified, unless the Rating Agency Condition shall have been
satisfied.
14.06 CONSTRUCTION. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa.
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14.07 HEADINGS AND PRONOUNS. The headings in this Agreement are
inserted for convenience only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof. All pronouns and any variations thereof shall be deemed to refer to
masculine, feminine or neuter, singular or plural as the identity of the Person
or Persons may require.
14.08 WAIVERS. The failure of any party to seek redress for violation
of or to insist upon the strict performance of any covenant or condition of this
Agreement shall not be deemed a waiver of such violation or failure to perform
or of any subsequent violation or failure to perform.
14.09 SUCCESSORS AND ASSIGNS. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective legal representatives, successors and assigns.
14.10 CREDITORS. Except as otherwise provided in this Agreement, none
of the provisions of this Agreement shall be for the benefit of or enforceable
by any creditors of the Company.
14.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
14.12 ENFORCEMENT OF INDEPENDENT COMMITTEE MEMBERS. Notwithstanding any
other provision of this Agreement, the Members agree that this Agreement,
including, without limitation, Article VIII, constitutes a legal, valid and
binding agreement of the Members, and is enforceable against the Members by the
Independent Committee Members, in accordance with its terms. In addition, the
Independent Committee Members shall be beneficiaries of this Agreement.
14.13 INDEMNIFICATION OF MEMBERS AND COMMITTEE MEMBERS. Subject to
applicable law, the Company shall indemnify and advance expenses to each present
and future Member and Committee Member of the Company (and, in either case, any
heirs, estate, executors or administrators of any of them) to the full extent
allowed by the laws of the State of Delaware, both as now in effect and as
hereafter adopted.
IN WITNESS WHEREOF, this Agreement has been executed by the Members as
evidenced by their signature on the attached signature page to be effective as
of the date first above written.
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MEMBER'S SIGNATURE PAGE
Each of the undersigned agrees to become a Member in Student Loan
Funding LLC, and each shall be bound by all the terms of the Agreement to which
this signature page is attached.
Student Loan Funding Resources, Inc.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------
Its: President & CEO
--------------------------------
SLF Enterprises, Inc.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------
Its: President
--------------------------------
34
EXHIBIT 2.01 - CERTIFICATE OF FORMATION
---------------------------------------
CERTIFICATE OF FORMATION
OF
STUDENT LOAN FUNDING LLC
This Certificate of Formation is being executed by the undersigned for
the purpose of forming a limited liability company pursuant to the Delaware
Limited Liability Act.
1. The name of the limited liability company is Student Loan
Funding LLC.
2. The address of the registered office and the registered agent
of the limited liability company in the State of Delaware is
Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle. The name of the registered
agent of the limited liability company is The Corporation
Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation on this 20th day of May, 1998.
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Authorized Person
35
EXHIBIT 5.01 - MEMBERS
----------------------
Name Address
---- -------
Student Loan Funding ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Resources, Inc., an ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
corporation
SLF Enterprises, Inc., an One West Fourth Street, Suite 220
Ohio corporation ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
36
EXHIBIT 6.01 - CAPITAL CONTRIBUTIONS AND MEMBERSHIP INTERESTS
-------------------------------------------------------------
Initial Capital Membership
Member Name Contribution Interest
----------- --------------- ----------
Student Loan Funding Resources, $990.00 99%
Inc.
SLF Enterprises, Inc. $ 10.00 1%
37
EXHIBIT 8.02 - MEMBERS OF THE MANAGEMENT COMMITTEE
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ - Independent Committee Member
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ - Independent Committee Member
38
EXHIBIT 8.05 - INITIAL OFFICERS
-------------------------------
Name Office
---- ------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. President
▇▇▇▇▇ ▇. ▇▇▇▇ Senior Vice President and Manager
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Secretary