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EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
GREATAMERICA LEASING RECEIVABLES 2000-1, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is made
and entered into effective as of April 12, 2000, by and among the Persons whose
signatures appear on the signature page hereon.
ARTICLE 1
DEFINITIONS
The following terms used in this Agreement shall have the following
meanings (unless otherwise expressly provided herein):
"Act" means the Delaware Limited Liability Company Act, as
amended.
"Affiliate" means, with respect to any Person, (i) any other
Person directly or indirectly controlling, controlled by, or under
common control with such Person, (ii) any Person owning or controlling
fifty-one percent (51%) or more of the outstanding voting interests of
such Person, (iii) any officer, director, or general partner of such
Person, or (iv) any Person who is an officer, director, general
partner, trustee, or holder of fifty-one percent (51%) or more of the
voting interests of any Person described in clauses (i) through (iii).
For purposes of this definition, the term "controls," "is controlled
by," or "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
"Capital Account" means the capital account determined and
maintained for each Member pursuant to Section 8.3.
"Capital Contribution" means any contribution to the capital
of the Company in cash or property by a Member whenever made.
"Certificate of Formation" means the certificate of formation
pursuant to which the Company was formed, as originally filed with the
office of the Secretary of State of the State of Delaware on March 22,
2000, and as amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue
laws.
"Company" means GreatAmerica Leasing Receivables 2000-1,
L.L.C.
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"Company Minimum Gain" has the same meaning as the term
"partnership minimum gain" in Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
"Deficit Capital Account" means with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the
end of the taxable year, after giving effect to the following
adjustments:
(i) credit to such Capital Account any amount that
such Member is obligated to restore to the Company under
Regulation Section 1.704-1(b)(2)(ii)(c), as well as any
addition thereto pursuant to the next to last sentences of
Regulation Section 1.704-2(g)(1) and (i)(5); and
(ii) debit to such Capital Account the items
described in Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6).
This definition of is intended to comply with the provisions of
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be
interpreted consistently with those provisions.
"Distributable Cash" means all cash received by the Company,
less the sum of the following to the extent paid or set aside by the
Company: (i) all principal and interest payments on indebtedness of the
Company and other sums paid or payable to lenders; (ii) all cash
expenditures incurred incident to the normal operation of the Company's
business; and (iii) Reserves.
"Economic Interest" means a Member's share of Net Profits, Net
Losses, and other tax items of the Company and distributions of the
Company's assets pursuant to this Agreement and the Act, but shall not
include any right to participate in the management or affairs of the
Company, including, the right to vote on, consent to or otherwise
participate in any decision of the Members.
"Entity" means any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, cooperative or association or any other organization that is not
a natural person.
"Independent Director" means a director of a corporation who
shall at no time be employed by, or hold any beneficial interest in any
Affiliate of the Company, and who shall at no time hold any beneficial
interest in the Company.
"Independent Member" means a special-purpose corporation
serving as a Member of the Company which has at least one Independent
Director.
"Majority Interest" means, at any time, more than fifty
percent (50%) of the then outstanding Units held by Members.
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"Member" means each Person who executes a counterpart of this
Agreement as a Member and each Person who may hereafter become a
Member.
"Membership Interest" means all of a Member's share in the Net
Profits, Net Losses, and other tax items of the Company and
distributions of the Company's assets pursuant to this Agreement and
the Act and all of a Member's rights to participate in the management
or affairs of the Company, including the right to vote on, consent to
or otherwise participate in any decision of the Members.
"Member Minimum Gain" has the same meaning as the term
"partner nonrecourse debt minimum gain" in Regulation Section
1.704-2(i).
"Member Nonrecourse Deductions" has the same meaning as the
term "partner nonrecourse deductions" in Regulation Sections
1.704-2(i)(1) and (2). The amount of Member Nonrecourse Deductions for
a Company fiscal year shall be determined in accordance with Regulation
Section 1.704-2(i)(2).
"Net Profits" and "Net Losses" shall have the meaning ascribed
to those terms in Section 9.5.
"Nonrecourse Deductions" has the meaning set forth in
Regulation Section 1.704-2(b)(1). The amount of Nonrecourse Deductions
for a Company fiscal year shall be determined pursuant to Regulation
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulation Section 1.704-2(b)(3).
"Percentage Interest" means with respect to any Member the
percentage determined based upon the ratio that the number of Units
held by such Member bears to the total number of outstanding Units.
"Person" means any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors, and
assigns of such "Person" where the context so permits.
"Regulations" includes any proposed, temporary and final
Treasury regulations promulgated under the Code and the corresponding
sections of any regulations subsequently issued that amend or supersede
such regulations.
"Reserves" means, 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 Company for working
capital and to pay taxes, insurance, debt service or other costs or
expenses incident to the ownership of operation of the Company's
business.
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"Units" means the Units issued to any Member under this
Agreement as reflected in attached Schedule I, as amended from time to
time.
ARTICLE 2
FORMATION OF COMPANY
Section 2.1. Formation. The Company was formed on March 22, 2000, when
the Certificate of Formation was executed and filed with the office of the
Secretary of State of Delaware in accordance with and pursuant to the Act. An
Amendment to the Certificate of Formation was executed and filed on April 12,
2000 with the office of the Secretary of State of Delaware in accordance with
and pursuant to the Act.
Section 2.2. Name. The name of the Company is GreatAmerica Leasing
Receivables 2000-1, L.L.C.
Section 2.3. Principal Place of Business. The principal place of
business of the Company shall be Cedar Rapids, Iowa. The Company may locate its
place of business at any other place or places as the Company may from time to
time deem advisable.
Section 2.4. Registered Office and Registered Agent. The address of the
registered office of the Company in the State of Delaware is ▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County of Kent. The name of the Company's
registered agent at such address in the State of Delaware is Lexis Document
Services Inc. The registered office and registered agent may be changed by the
Company from time to time by filing an amendment to the Certificate of
Formation.
Section 2.5. Term. The term of the Company shall be fifteen (15) years,
unless the Company is earlier dissolved in accordance with Article 13.
ARTICLE 3
BUSINESS OF COMPANY
The business of the Company shall be:
(a) to acquire equipment leases and lease receivables
(including equipment), loan agreements and other financing agreements
(the "Assets") and to enter into any agreements necessary for the
securitization of such Assets.
(b) to issue notes secured by such Assets (the "Notes"); and
(c) to exercise all other powers necessary to or reasonably
connected with the Company's business as set forth in (a) and (b) above
which may be legally exercised by limited liability companies under the
Act.
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ARTICLE 4
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the Members are set forth in attached
Schedule 1, as amended or restated from time to time.
At all times, at least one Member of the limited liability company
shall be a special-purpose corporation which has an Independent Director.
ARTICLE 5
MANAGEMENT VESTED IN MEMBERS
Section 5.1. Management. The management of the business and affairs of
the Company shall be vested in the Members in proportion to their Percentage
Interests.
Section 5.2. Members. Notwithstanding the provisions of Section 5.1
above, management of the business and property of the Company may be vested in
the Members other than in proportion to their Capital Contributions to the
extent provided in this Section 5.2.
(a) Major Decisions. No act shall be taken, sum expended,
decision made or obligation incurred by the Company except by the prior
unanimous consent of all Members and the consent of the Independent
Director of the Independent Member with respect to a matter within the
scope of any of the major decisions enumerated below (the "Major
Decisions"). The Major Decisions shall include (i) the sale of all or
substantially all assets of the Company, (ii) a mortgage or encumbrance
upon all or substantially all assets of the Company, (iii) any matter
which could result in a change in the amount or character of the
Company's contributions to capital, (iv) a change in the character of
the business of the Company, (v) disposal of the goodwill of the
Company, (vi) submission of claim of the Company to arbitration, (vii)
confession of a judgment, (viii) commission of any act which would make
it impossible for the Company to carry on its ordinary business, (ix)
contravention of this Agreement, (x) the amendment, modification, or
other alteration of this Agreement, or (xi) the election to dissolve
the Company. Without the prior written consent of the Independent
Director of the Independent Member and unanimous consent of all
Members, neither the Independent Member nor the Company shall institute
proceedings to be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file
a petition or consent to a petition seeking reorganization or relief
under any applicable federal and state law relating to bankruptcy or
insolvency, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Independent Member, or a substantial part of its property, or make any
assignment for the benefit of creditors, or, except as required by law,
admit in writing its inability to pay its debts generally as they
become due, or take any action in furtherance of any such action.
(b) Responsibilities. The Company shall (i) except with
respect to indebtedness under the Notes, not incur, assume or guaranty
any indebtedness; (ii) not commingle its assets with those of any
entity; (iii) maintain complete and accurate
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records and books of account separate from any other entity; (iv)
maintain an office through which its business will be conducted
separate and apart from any affiliate; (v) conduct its business solely
in its own name so as not to mislead others as to the identity of the
entity or assets with which they are concerned; (vi) provide for its
operating expenses and liabilities from its own funds; (vii) at all
times ensure that its capitalization is adequate in light of its
business and purpose; (viii) maintain meetings as required to conduct
business and as required by law and maintain minutes of all meetings
and other proceedings of its members and directors; (ix) when
appropriate, obtain proper authorization from its directors or members
for its actions; and (x) maintain an arm's-length relationship with its
members and affiliates.
(c) Member Compensation. Members providing management
services may receive such compensation as shall be determined by all
Members. In all events the Members shall be reimbursed for all prior
approved expenses advanced by such Members on behalf of the Company.
All such amounts shall be subordinate to payments on the Notes .
Section 5.3. Appointment of Officers. The Members may elect or appoint
officers of the Company who shall serve at the pleasure of the Members. The
officers of the Company, if deemed necessary by the Members, shall be a
president and one or more vice-presidents, and may include a secretary and a
treasurer. Any individual may hold any number of offices. No officer need be a
resident of the State of Delaware, but all officers shall be either employees,
officers, directors, shareholders or members of a Member, or an Entity that has
a controlling ownership interest in a Member.
Section 5.4. Authority of the Officers and Members. No Officer or
Member shall have the authority to act for or on behalf of the Company unless
such Officer or Member is authorized to do so under Section 5.1 or, with respect
to any Major Decision, Section 5.2(a) hereof. Notwithstanding the foregoing, the
Officers are authorized to execute any registration statement or filing required
to be made in connection with the issuance and sale of the Notes.
ARTICLE 6
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 6.1. Limitation of Liability. Each Member's liability shall be
limited as set forth in this Agreement and the Act.
Section 6.2. Liability for Company Obligations. Members shall not be
personally liable for any debts, obligations or liability of the Company beyond
their respective Capital Contributions and any obligation of the Members under
Section 8.1 or 8.2 to make Capital Contributions, except as otherwise provided
by law.
Section 6.3. Inspection of Records. Upon reasonable request, each
Member shall have the right to inspect and copy at such Member's expense, during
ordinary business hours the records required to be maintained by the Company
pursuant to Section 11.5.
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Section 6.4. No Priority and Return of Capital. Except as expressly
provided in Article 9 or 10, 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 6.4 shall not apply to
loans made by a Member to the Company.
Section 6.5. Withdrawal of Member. The Independent Member shall not
withdraw from the Company. Except as expressly permitted in this Agreement, no
Member shall voluntarily resign or otherwise withdraw as a Member. Unless
otherwise approved by all Members, a Member who resigns or withdraws shall be
entitled to receive only those distributions to which such Person would have
been entitled had such Person remained a Member (and only at such times as such
distribution would have been made had such Person remained a Member). Except as
otherwise expressly provided herein, a resigning or withdrawing Member shall
continue to own its Economic Interest. The remedy for breach of this Section 6.5
shall be monetary damages (and not specific performance), which may be offset
against distributions by the Company to which such Person would otherwise be
entitled.
ARTICLE 7
MEETINGS OF MEMBERS
Section 7.1. Annual Meeting. The annual meeting of the Members shall be
held at such time as shall be determined by the Members, for the purpose of the
transaction of such business as may come before the meeting.
Section 7.2. Special Meetings. Special meetings of the Members, for any
purpose or purposes, may be called by the Company or by Members holding at least
ten percent (10%) of the Units held by Members.
Section 7.3. Place of Meetings. The Company or 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 is called, the place of meeting shall be the principal
office of the Company specified in Section 2.3.
Section 7.4. Notice of Meetings. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the Company or the Members
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered two calendar days after being
deposited in the United States Mail, addressed to the Member as specified in
Schedule 1, with postage thereon prepaid.
Section 7.5. 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, 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. When a determination of Members entitled
to
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vote at any meeting of Members has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
Section 7.6. Quorum. 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 Units held by Members 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 Units whose absence would cause less than a quorum.
Section 7.7. Manner of Acting. Except with respect to Major Decisions
which shall be governed by Section 5.2, if a quorum is present, the affirmative
vote of a Majority Interest shall be the act of the Members, unless the vote of
a greater or lesser percentage is required by this Agreement or the Act.
Section 7.8. Proxies. At all meetings of Members a Member may vote in
person or by proxy executed in writing by the Member. Such proxy shall be filed
with the Company 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.
Section 7.9. 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, executed by Members entitled to vote thereon and delivered to the Company
for inclusion in the Company's minutes. Action taken under this Section 7.9 is
effective when all Members entitled to vote thereon have signed such consents,
unless such consents specify a different effective date. The record date for
determining Members entitled to take action without a meeting shall be the date
the first Member signs a consent.
Section 7.10. Waiver of Notice. When any notice is required to be given
to a 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.
ARTICLE 8
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
Section 8.1. Members' Capital Contributions. Each Member shall
contribute such amount as is set forth on attached Schedule 1 as such Member's
share of the Members' Initial Capital Contribution. Such amount may be
contributed in the form of property.
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Section 8.2. Capital Accounts.
8.2.1. Establishment and Maintenance. A separate Capital Account
will be maintained for each Member throughout the term of the Company in
accordance with the rules set forth herein. Each Member's Capital Account will
be increased by (1) the amount of money contributed by such Member to the
Company; (2) the fair market value of property contributed by such Member to the
Company (net of liabilities secured by such contributed property that the
Company is considered to assume or take the property subject to under Code
Section 752); (3) allocations to such Member of Net Profits; (4) any items in
the nature of income and gain that are specially allocated to the Member
pursuant to Sections 9.2 and 9.3; and (5) allocations to such Member of income
and gain exempt from federal income tax. Each Member's Capital Account will be
decreased by (1) the amount of money distributed to such Member by the Company;
(2) the fair market value of property distributed to such Member by the Company
(net of liabilities secured by such distributed property that such Member is
considered to assume or take the property subject to Code Section 752); (3)
allocations to such Member of expenditures described in Code Section
705(a)(2)(B); (4) any items in the nature of deduction and loss that are
specially allocated to the Member pursuant to Sections 9.2 and 9.3; and (5)
allocations to such Member of Net Losses. In the event of a permitted sale or
exchange of a Membership Interest, the Capital Account of the transferor shall
become the Capital Account of the transferee to the extent it relates to the
transferred Membership Interest.
8.2.2. Compliance with Regulations. The manner in which Capital
Accounts are to be maintained pursuant to this Section 8.2 is intended to comply
with the requirements of Code Section 704(b) and the Regulations promulgated
thereunder. If in the opinion of the Company's legal counsel or accountants the
manner in which Capital Accounts are to be maintained pursuant to the preceding
provisions of this Section 8.2 should be modified in order to comply with Code
Section 704(b) and the Regulations thereunder, then notwithstanding anything to
the contrary contained in the preceding provisions of this Section 8.2, the
method in which Capital Accounts are maintained shall be so modified; provided,
however, that any change in the manner of maintaining Capital Accounts shall not
materially alter the economic agreement between or among the Members.
Section 8.3. Withdrawal or Reduction of Members' Contributions to
Capital. A Member shall not receive out of the Company's property any part of
its Capital Contribution until all liabilities of the Company, except
liabilities to Members on account of their Capital Contributions, have been paid
or there remains property of the Company sufficient to pay them. A Member,
irrespective of the nature of its Capital Contributions, has only the right to
demand and receive cash in return for its Capital Contributions.
ARTICLE 9
ALLOCATIONS OF NET PROFITS AND LOSSES
Section 9.1. Allocations of Net Profit and Net Loss. Net Profit or Net
Loss for any fiscal year of the Company shall be allocated among the Members as
follows:
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(a) Net Profits shall be allocated to the Members in
proportion to their Percentage Interests.
(b) Net Losses shall be allocated to the Members in proportion
to their Percentage Interests; provided, however, that the Net Loss
allocated to each Member for any Company fiscal year pursuant hereof
shall not exceed the maximum amount of Net Loss that may be so
allocated without causing such Member to have a Deficit Capital Account
at the end of the fiscal year. All Net Losses in excess of the
limitation set forth in this Section 9.1(b) shall be allocated to the
other Members who do not have Deficit Capital Accounts in proportion to
their respective Percentage Interests.
Section 9.2. Special Allocations. The following special allocations
shall be made for any fiscal year of the Company in the following order:
9.2.1. Minimum Gain Chargeback. If there is a net decrease in
Company Minimum Gain during any Company fiscal year, each Member shall be
specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member's share of the
net decrease in Company Minimum Gain, determined in accordance with Regulation
Sections 1.704-2(f) and 1.704-2(g)(2). The items to be so allocated, and the
manner in which those items are to be allocated among the Members, shall be
determined in accordance with Regulation Sections 1.704-2(f) and 1.704-2(j)(2).
This Section 9.2.1 is intended to satisfy the minimum gain chargeback
requirement in Regulation Section 1.704-2(f) and shall be interpreted and
applied accordingly.
9.2.2. Member Minimum Gain Chargeback. If there is a net decrease
in Member Minimum Gain during any Company fiscal year, each Member who has a
share of that Member Minimum Gain, determined in accordance with Regulation
Section 1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Member Minimum Gain, determined in
accordance with Regulation Sections 1.704-2(i)(4) and 1.704-2(i)(5). The items
to be so allocated, and the manner in which those items are to be allocated
among the Members, shall be determined in accordance with Regulation Sections
1.704-2(h)(4) and 1.704-2(j)(2). This Section 9.2.2 is intended to satisfy the
minimum gain chargeback requirement in Regulation Section 1.704-2(i)(4) and
shall be interpreted and applied accordingly.
9.2.3. Qualified Income Offset. In the event that any Member
unexpectedly receives any adjustments, allocations, or distributions described
in Regulation Sections 1.704-1(b)(2)(ii)(d)(4)(5) or (6), items of Company
income and gain shall be specially allocated to such Member in an amount and in
a manner sufficient to eliminate as quickly as possible, to the extent required
by Regulation Section 1.704-(1)(b)(2)(ii)(d), the Deficit Capital Account of the
Member (which Deficit Capital Account shall be determined as if all other
allocations provided for in this Article 9 have been tentatively made as if this
Section 9.2.3 were not in this Agreement).
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9.2.4. Nonrecourse Deductions. Nonrecourse Deductions shall be
allocated among the Members in accordance with their respective Percentage
Interests.
9.2.5. Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions shall be specially allocated among the Members in accordance with
Regulation Section 1.704-2(i).
Section 9.3. Corrective Allocations.
9.3.1 Allocations to Achieve Economic Agreement. The allocations
set forth in the last sentence of Section 9.1.2 and in Section 9.2 are intended
to comply with certain regulatory requirements under Code Section 704(b). The
Members intend that, to the extent possible, all allocations made pursuant to
such Sections will, over the term of the Company, be offset either with other
allocations pursuant to Section 9.2 or with special allocations of other items
of Company income, gain, loss, or deduction pursuant to this Section 9.3.1.
Accordingly, the Company is hereby authorized and directed to make offsetting
allocations of Company income, gain, loss or deduction under this Section 9.3.1
in whatever manner the it determines is appropriate so that, after such
offsetting special allocations are made, the Capital Accounts of the Members
are, to the extent possible, equal to the Capital Accounts each would have if
the last sentence of Section 9.1(b) and the provisions of Section 9.2 were not
contained in this Agreement and all income, gain, loss and deduction of the
Company were instead allocated pursuant to the remaining provisions of Section
9.1.
9.3.2. Waiver of Application of Minimum Gain Chargeback. The Tax
Matters Member, with the prior consent of a Majority Interest, shall request
from the Commissioner of the Internal Revenue Service a waiver, pursuant to
Regulation Section 1.704-2(f)(4), of the minimum gain chargeback requirements of
Regulation Section 1.704-2(f) if the application of such minimum gain chargeback
requirement would cause a permanent distortion of the economic arrangement of
the Partners, as reflected in Section 9.1.
Section 9.4. Other Allocation Rules.
9.4.1. Reserved.
9.4.2. Allocation of Recapture Items. In making any allocation
among the Members of income or gain from the sale or other disposition of a
Company asset, the ordinary income portion, if any, of such income and gain
resulting from the recapture of cost recovery or other deductions shall be
allocated among those Members were previously allocated (or whose
predecessors-in-interest were previously allocated) the cost recovery deductions
or other deductions resulting in the recapture items, in proportion to the
amount of such cost recovery deductions or other deductions previously allocated
to them.
9.4.3. Allocation of Excess Nonrecourse Liabilities. Solely for
purposes of determining a Member's proportionate share of the "excess
nonrecourse liabilities" of the Company within the meaning of Regulation Section
1.752-3(a)(3), the Members' interests in the Company's profits shall be as set
forth in Section 9.1.
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9.4.4. Allocations in Connection with Varying Interests. If,
during a Company fiscal year, there is (i) a permitted transfer of a Membership
Interest under this Agreement or (ii) the admission of a Member or additional
Members, Net Profit, Net Loss, each item thereof, and all other items of the
Company for such period shall be divided and allocated among the Members by
taking into account their varying interests during such fiscal year in
accordance with Code Section 706(d) and using any conventions permitted by law
and selected by the Company.
Section 9.5. Determination of Net Profit or Loss.
9.5.1. Computation of Net Profits or Loss. The Net Profit or Net
Loss of the Company, for each fiscal year or other period, shall be an amount
equal to the Company's taxable income or loss for such period, determined in
accordance with Code Section 703(a) (and, for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss) and shall be
adjusted to reflect income and gains exempt from federal income tax and losses
and deductions that are not deductible for federal tax purposes and not
chargeable to a partnership asset account.
9.5.2. Adjustments to Net Profit or Loss. For purposes of
computing taxable income or loss on the disposition of an item of Company
property or for purposes of determining the cost recovery, depreciation, or
amortization deduction with respect to any property, the Company shall use such
property's book value determined in accordance with Regulation Section
1.704-1(b). Consequently, each property's book value shall be equal to its
adjusted basis for federal income tax purposes, except as follows:
(a) The initial book value of any property, contributed by a
Member to the Company shall be the gross fair market value of such
property at the time of contribution;
(b) In the discretion of the Members holding not less than
fifty-one percent (51%) of the Units held by Members, the book value of
all Company properties may be adjusted to equal their respective gross
fair market values, as determined by the Members as of the following
times: (1) in connection with the acquisition of an interest in the
Company by a new or existing Member for more than a de minimis capital
contribution, (2) in connection with the liquidation of the Company as
defined in Regulation Section 1.704-(1)(b)(2)(ii)(g), or (3) in
connection with a more than de minimis distribution to a retiring or a
continuing Member as consideration for all or a portion of his or its
interest in the Company. In the event of a revaluation of any Company
assets hereunder, the Capital Accounts of the Members shall be
adjusted, including, continuing adjustments for depreciation, to the
extent provided in Regulation Section 1.704-(1)(b)(2)(iv)(f);
(c) If the book value of an item of Company property has been
determined pursuant to this Section 9.5.2, such book value shall
thereafter be used, and shall thereafter be adjusted by depreciation or
amortization, if any, taken into account with respect to such property,
for purposes of computing taxable income or loss.
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9.5.3. Items Specially Allocated. Notwithstanding any other
provision of this Section 9.5, any items that are specially allocated pursuant
to Sections 9.2 or 9.3 shall not be taken into account in computing Net Profit
or Net Loss.
Section 9.6. Tax Allocations.
9.6.1. General Allocations. Generally, allocations of taxable
income, gains, losses, deductions and credits shall be made in a manner that is
as consistent as possible with the manner in which Net Profit and Net Loss are
allocated to the Members pursuant to Sections 9.1 through 9.5 hereof.
9.6.2. Mandatory Tax Allocations Under Code Section 704(c). In
accordance with Code Section 704(c) and Regulation Section 1.704-3, income,
gain, loss and deduction with respect to any property contributed to the capital
of the Company shall, solely for tax purposes, be allocated among the Members so
as to take account of any variation between the adjusted basis of such property
to the Company for federal income tax purposes and its initial book value. Prior
to the contribution of any property to the Company that has a fair market value
that differs from its adjusted tax basis in the hands of the contributing Member
on the date of contribution, the contributing Member and a Majority Interest of
the noncontributing Members shall agree upon the allocation method to be applied
with respect to that property under Regulation Section 1.704-3, which allocation
method shall be set forth on attached Schedule 2, as amended from time to time.
If the book value of any Company property is adjusted pursuant to
Paragraph (b) of Section 9.5.2, subsequent allocations of income, gain, loss and
deduction with respect to such property shall take account of any variation
between the adjusted basis of such property for federal income tax purposes and
its book value in the same manner as under Code Section 704(c). The choice of
allocation methods under Regulation Section 1.704-3 with respect to such
revalued property shall be made by the Members and set forth on attached
Schedule 2, as amended from time to time.
Allocations pursuant to this Section 9.6 are solely for purposes of
federal, state, and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Net Profit,
Net Loss, or other items as computed for book purposes, or distributions
pursuant to any provision of this Agreement.
Section 9.7. Characterization of Company as a Partnership. Neither the
Company, any party to this Agreement nor any Person with an interest of any kind
in the Company shall elect to treat the Company as an association for federal
income tax purposes.
Section 9.8. Transfer Restrictions. Notwithstanding anything in this
Agreement to the contrary, no Unit shall be issued, sold, transferred, listed or
otherwise exchanged at any time on an established securities market, including
(i) a national securities exchange registered under the Exchange Act of 1934
(the "1934 Act") or exempted from registration because of the limited volume of
transactions; (ii) a foreign securities exchange that, under the law of the
jurisdiction where it is organized, satisfies regulatory requirements that are
analogous to the regulatory
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requirements under the 1934 Act applicable to exchanges described in clause (i);
(iii) a regional or local exchange; or (iv) an over-the-counter market, as all
such terms are defined for purposes of Section 7704 of the Code.
Notwithstanding anything in this Agreement to the contrary, no transfer
or issuance of any Unit or any direct or indirect interest therein shall be made
(i) that would result in there being more than one hundred (100) owners of the
Units and any Notes issued by the Company which are not rated or have a rating
equivalent to "BBB" or less (the "Restricted Notes") or (ii) to any beneficial
owner of an interest in a partnership, grantor trust or S corporation (herein
referred to as a "Flow-through entity") which Flow-through entity owns, directly
or indirectly through other Flow-through entities, any Units or the Restricted
Notes if fifteen percent (15%) or more of such beneficial owner's interest in
the Flow-through entity is attributable to the Flow-through entity's interest
(direct or indirect) in the Units or the Restricted Notes.
Section 9.9. Certain Prohibitions. The Company shall not participate in
the (i) creation of an interdealer quotation system or a secondary market or the
substantial equivalent thereof (a "Market") for the Units or the Restricted
Notes, or (ii) inclusion of Units or the Restricted Notes on a Market. If a
Market develops without the participation by the Company, the Company will not
recognize any transfers made on the Market by (i) redeeming the transferor
Member or owner of a Restricted Note (in the case of a redemption or repurchase
by the Company) or (ii) admitting the transferee as a partner or otherwise
recognizing any rights of the transferee, such as a right of the transferee to
receive distributions (directly or indirectly) or to acquire an interest in the
capital or profits of the Company (except as otherwise expressly provided in the
Restricted Notes).
ARTICLE 10
DISTRIBUTIONS
Section 10.1. Nonliquidating Distributions. Distributions of
Distributable Cash, other than distributions in liquidation pursuant to Section
13.3(c) hereof, shall be made to the Members monthly in proportion to their
Capital Account balances.
Section 10.2. Distributions in Kind. Non-cash assets, if any, shall be
distributed in a manner that reflects how cash proceeds from the sale of such
assets for fair market value would have been distributed (after any unrealized
gain or loss attributable to such non-cash assets has been allocated among the
Members in accordance with Article 9).
Section 10.3. Withholding; Amounts Withheld Treated as Distributions.
The Company is authorized to withhold from distributions, or with respect to
allocations or payments, to Members and to pay over to the appropriate federal,
state or local governmental authority any amounts required to be withheld
pursuant to the Code or provisions of applicable state or local law. All amounts
withheld pursuant to the preceding sentence in connection with any payment,
distribution or allocation to any Member shall be treated as amounts distributed
to such Member pursuant to this Article 10 for all purposes of this Agreement.
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Section 10.4. Limitations Upon Distributions. No distribution shall be
paid unless, after the distribution is made, the assets of the Company are in
excess of all liabilities of the Company, except liabilities to Members on
account of their contributions.
ARTICLE 11
ACCOUNTING, BOOKS, AND RECORDS
Section 11.1. Accounting Principles. The Company's books and records
shall be kept, and its income tax returns prepared, under such permissible
method of accounting, consistently applied, as the Members determine is in the
best interest of the Company and its Members.
Section 11.2. Interest on and Return of Capital Contributions. No
Member shall be entitled to interest on its Capital Contribution or to return of
its Capital Contribution, except as otherwise specifically provided for herein.
Section 11.3. Loans to Company. No Member shall make any secured or
unsecured loans to the Company and the Company shall make no secured or
unsecured loans to any Member.
Section 11.4. Accounting Period. The Company's accounting period shall
be the calendar year.
Section 11.5. Records, Audits and Reports. The Company shall maintain
records and accounts of all operations and expenditures of the Company. At a
minimum the Company shall keep at its principal place of business the following
records:
(a) A current list and past list, setting forth the full name
and last known mailing address of each Member;
(b) A copy of the Certificate of Formation and all amendments
thereto;
(c) Copies of this Agreement and all amendments hereto;
(d) Copies of the Company's federal, state, and local tax
returns and reports, if any, for the three most recent years;
(e) Minutes of every meeting of the Members and any written
consents obtained from Members for actions taken by Members without a
meeting; and
(f) Copies of the Company's financial statements for the three
most recent years.
Section 11.6. Tax Matters Member.
11.6.1. Designation. The Independent Member, or if the Independent
Member is ineligible to serve, then the Member with the largest interest in
Company profits, shall be the
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"tax matters member" of the Company for purposes of Code Section 6221 et seq.
and corresponding provisions of any state or local tax law.
11.6.2. Expenses of Tax Matters Members; Indemnification. The
Company shall indemnify and reimburse the tax matters member for all reasonable
expenses, including legal and accounting fees, claims, liabilities, losses and
damages incurred in connection with any administrative or judicial proceeding
with respect to the tax liability of the Members attributable to the Company.
The payment of all such expenses shall be made before any distributions are made
to Members (and such expenses shall be taken into consideration for purposes of
determining Distributable Cash) or any discretionary Reserves are set aside by
the Company. Neither the tax matters member nor any Member shall have any
obligation to provide funds for such purpose. The provision for exculpation and
indemnification of the Members set forth in Section 6.2 of this Agreement shall
be fully applicable to the Member acting as tax matters person for the Company.
Any right to indemnification or reimbursement hereunder shall be subordinate to
amounts due on the Notes.
Section 11.7. Returns and Other Elections. The Members shall cause the
preparation and timely filing of all tax and information returns required to be
filed by the Company pursuant to the Code and all other tax and information
returns deemed necessary and required in each jurisdiction in which the Company
does business. Copies of such returns, or pertinent information therefrom, shall
be furnished to the Members within a reasonable time after the end of the
Company's fiscal year.
Except as otherwise expressly provided to the contrary in this
Agreement, all tax and other elections permitted to be made by the Company under
federal or state laws shall be made by the Independent Member in its sole
discretion.
ARTICLE 12
TRANSFERABILITY
Section 12.1. General. Except as otherwise expressly provided in this
Agreement, a Member shall not have the right to:
(a) Sell, assign, transfer, exchange or otherwise transfer for
consideration (collectively, "sell" or "sale"),
(b) gift, bequeath or otherwise transfer for no consideration
whether or not by operation of law, except in the case of bankruptcy
(collectively "gift"),
all or any part of its Membership Interest or Economic Interest. Each Member
hereby acknowledges the reasonableness of the restrictions on sale and gift of
Membership Interests and Economic Interests imposed by this Agreement in view of
the Company's purposes and the relationship of the Members. Accordingly, the
restrictions on sale and gift contained herein shall be specifically
enforceable. A Member may not pledge or otherwise encumber any of its Membership
Interest or Economic Interest.
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Section 12.2. First Refusal Rights. (a) A Member desiring to sell all
or any portion of its Membership Interest to a third party purchaser shall
obtain from such third party purchaser a bona fide written offer to purchase
such Interest, stating the terms and conditions upon which the purpose is to be
made and the consideration offered therefor. Such Member shall give written
notice to the other Members of its intention to so transfer such Interest. Such
notice shall set forth the complete terms of the written offer to purchase and
the name and address of the proposed third party purchaser.
(b) The other Members, shall, on a basis pro rata to their Units or on
a basis pro rata to the Units of those remaining Members exercising their first
refusal rights, have the first right to purchase all (but not less than all) of
the selling Member's Interests on the same terms and conditions stated in the
notice given pursuant to Section 12.2(a) by giving written notice to the other
Members within ten (10) days after such notice from the selling Member. The
failure of a Member to so notify the other Members of its desire to exercise its
first refusal rights within said ten (10) day period as required by this Section
12.2(b) shall result in the termination of such Member's first refusal rights.
Within ten (10) days after the expiration of the ten (10) day period
specified in the preceding paragraph, the other Members shall notify those
Members electing to exercise their first refusal rights of any Units that the
other Members did not elect to purchase. Those Members exercising first refusal
rights in accordance with the preceding paragraph shall then notify the other
Members and the other purchasing Members whether they elect to purchase such
remaining Units, which shall be pro rata or allocated in such other manner as
the purchasing Members shall agree. If no such notification is received by the
other Members from any such Members in accordance with this paragraph, no Member
shall have any further first refusal rights with respect to such Units.
If Members have elected to purchase all of the Units offered by the
selling Member, the selling Member shall sell such Units upon the same terms and
conditions specified in the notice required by Section 12.2(a), and the
purchasing Members shall have the right to close the purchase within thirty (30)
days after the receipt of notification from the other Members that such Members
have elected to purchase the selling Member's Units.
If Members do not elect to purchase all of the Units offered by the
selling Member in accordance with this Section 12.2, then the selling Member
shall be entitled to sell such Units to the third party purchaser in accordance
with the terms and conditions upon which the purchase is to be made as specified
in the notice under Section 12.2(a). However, if such sale is not completed
within thirty (30) days following expiration of the other Members' first refusal
rights under this Section 12.2, then the selling Member shall not be entitled to
complete the sale to such third party purchaser and the selling Member's Units
shall continue to be subject to the rights of first refusal set forth in this
Section 12.2 with respect to any proposed subsequent transfer.
(c) Upon the purchase or the gift of a Membership Interest, and as a
condition to recognizing the effectiveness and binding nature of any sale or
gift and (subject to Section 12.3, below) substitution of a Person as a new
Member, the Member may require the transferring Member and the proposed
purchaser, donee or successor-in-interest, as the case may be, to
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execute, acknowledge and deliver to the other Members such instruments of
transfer, assignment and assumption and such other agreements and to perform all
such other acts that the other Member may deem necessary or desirable to:
(i) constitute such Person as a Member;
(ii) confirm that the Person desiring to become a Member, has
accepted, assumed and agreed to be subject and found by all of the
terms, obligations and conditions of this Agreement (whether such
Person is to be admitted as a new Member);
(iii) maintain the status of the Company as a partnership for
federal tax purposes; and
(iv) assure compliance with any applicable state and federal
laws, including securities laws and regulations.
(d) Any sale or gift of a Membership Interest or admission of a Member
in compliance with this Article 12 shall be deemed effective as of the last day
of the calendar month in which the remaining Members' consent thereto was given,
or, if no such consent was required pursuant to Section 12.3, then on such date
that the transferor and the transferee both comply with Section 12.2(c). The
transferring Member hereby indemnifies the Company and the other Members against
any and all loss, damage, or expense (including, without limitation, tax
liabilities or loss of tax benefits) arising directly or indirectly as a result
of any transfer or purported transfer in violation of this Article 12.
Section 12.3. Transferee Not Member in Absence of Consent. (a)
Notwithstanding anything to the contrary in this Article 12, if the sale or gift
of a Member's Membership Interest to a transferee or donee which is not a Member
immediately prior to the sale or gift is not approved in writing by all of the
other Members, then the proposed transferee or donee shall have no right to
participate in the management of the business and affairs of the Company or to
become a Member.
(b) Promptly following any sale or gift of a Member's Economic Interest
which does not at the same time transfer the balance of the rights associated
with such Person's Membership Interest, the Company shall purchase from such
Person, and such Person shall sell to the Company for a purchase price of $100,
all such remaining rights and interests retained by such Person which
immediately prior to such sale or gift were associated with the transferred
Economic Interest. The acquisition by the Company of such Person's rights shall
not cause a dissolution of the Company, and such Person shall no longer be a
Member.
ARTICLE 13
DISSOLUTION AND TERMINATION
Section 13.1. Dissolution. The Company shall be dissolved upon the
occurrence of any of the following events:
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(a) upon expiration of the term specified in Section 2.5; or
(b) upon the withdrawal of the last remaining Member; or
(c) each Member covenants not to cause the dissolution of the
Company prior to the Notes issued by the Company being paid in their
entirety.
Section 13.2. Allocation of Net Profit and Loss in Liquidation. The
allocation of Net Profit, Net Loss and other items of the Company following the
date of dissolution, including but not limited to gain or loss upon the sale of
all or substantially all of the Company's assets, shall be determined in
accordance with the provisions of Articles 9 and 10 and shall be credited or
charged to the Capital Accounts of the Members in the same manner as Net Profit,
Net Loss, and other items of the Company would have been credited or charged if
there were no dissolution and liquidation.
Section 13.3. Winding Up, Liquidation and Distribution of Assets. Upon
dissolution, the Members shall immediately proceed to wind up the affairs of the
Company. The Company shall sell or otherwise liquidate all of the Company's
assets as promptly as practicable and shall apply the proceeds of such sale and
the remaining Company assets in the following order of priority:
(a) Payment of creditors to the extent otherwise permitted by
law, in satisfaction of liabilities of the Company, other than
liabilities for distributions to Members;
(b) To establish any reserves that the Members deem
reasonably necessary for contingent or unforeseen obligations of the
Company;
(c) By the end of the taxable year in which the liquidation
occurs (or, if later, within ninety (90) days after the date of such
liquidation), to the Members in proportion to the positive balances of
their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments for the taxable year during
which the liquidation occurs (other than those made pursuant to this
Paragraph (c).
Section 13.4. No Obligation to Restore Negative Capital Account Balance
on Liquidation. Notwithstanding anything to the contrary in this Agreement, if
any Member has a negative Capital Account balance (after giving effect to all
contributions, distributions, allocations and other Capital Account adjustments
for all taxable years, such Member shall have no obligation to make any Capital
Contribution to the Company, 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.
Section 13.5. Termination. Upon completion of the winding up,
liquidation and distribution of the assets, the Company shall be deemed
terminated.
Section 13.6. 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
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remaining property and assets have been distributed to the Members, the Members
shall file a certificate of cancellation as required by Section 203 of the Act.
Upon filing the certificate of cancellation, the existence of the Company shall
cease, except as otherwise provided in the Act.
Section 13.7. 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 property remaining after the payment
or discharge of liabilities of the Company is insufficient to return the
contributions of Members, no Member shall have recourse against any other
Member.
ARTICLE 14
INDEPENDENT ACTIVITIES OF MEMBERS
Any Member (except the Independent Member) may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others, including but not limited to, the ownership,
financing, management, employment by, lending to or otherwise participating in
businesses which are similar to or in competition with the business of the
Company, and neither the Company nor any of the Members shall have any right by
virtue of this Agreement in and to such independent ventures or to the income or
profits therefrom.
ARTICLE 15
MISCELLANEOUS PROVISIONS
Section 15.1. Notices. Any notice, demand, or communication required or
permitted under this Agreement shall be deemed to have been duly given if
delivered personally to the party to whom directed or, if mailed by registered
or certified mail, postage and charges prepaid, addressed (a) if to a Member, to
the Member's address specified on attached Schedule 1, and (b) if to the
Company, to the address specified in Section 2.3. Except as otherwise provided
herein, any such notice shall be deemed to be given when personally delivered
or, if mailed, three (3) business days after the date of mailing. A Member or
the Company may change its address for the purposes of notices hereunder by
giving notice to the others specifying such changed address in the manner
specified in this Section 15.1.
Section 15.2. Governing Law. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of Delaware.
Section 15.3. Amendments. This Agreement may not be amended except by
the unanimous written agreement of all of the Members and compliance with
Section 5.2(a) hereof.
Section 15.4. 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.
Section 15.5. Headings. The headings in this Agreement are inserted for
convenience only and shall not affect the interpretations of this Agreement.
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Section 15.6. Waivers. The failure of any Person to seek redress for
violation of or to insist upon the strict performance of any covenant or
condition of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
Section 15.7. Rights and Remedies Cumulative. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
shall not preclude or waive the right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
Section 15.8. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the application
thereof shall not be affected and shall be enforceable to the fullest extent
permitted by law.
Section 15.9. Heirs, Successors and Assigns. Each 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 heirs, legal representatives, successors and
assigns.
Section 15.10. Creditors. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any creditors of the Company.
Section 15.11. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
Section 15.12. Investment Representations. The Units have not been
registered under the Securities Act of 1933, the Securities Act of Delaware and
other state securities laws (collectively, the "Securities Acts") because the
Company is issuing the Units in reliance upon the exemptions from the
registration requirements of the Securities Acts, and the Company is relying
upon the fact that the Units are to be held by each Member for investment.
Accordingly, each Member hereby confirms the Units have been
acquired for such Member's own account, for investment and not with a view to a
transfer which would be considered to be a resale or distribution thereof and
may not be offered or sold to anyone unless there is an effective registration
or other qualification relating thereto under all applicable Securities Acts or
unless such Member delivers to the Company an opinion of counsel, satisfactory
to the Company, that such registration or other qualification is not required.
The Members understand that the Company is under no obligation to register the
Units or to assist any Member in complying with any exemption from registration
under the Securities Act.
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Executed by the Company and the undersigned Members effective as of the
date first above written.
GREATAMERICA LEASING RECEIVABLES
2000-1, L.L.C.
BY: GREATAMERICA LEASING RECEIVABLES
2000 CORPORATION, Member
By
---------------------------------
Name:
Title:
GREATAMERICA LEASING CORPORATION,
Member
By
---------------------------------
Name:
Title:
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SCHEDULE I
MEMBERSHIP INTERESTS
NAME UNITS VALUE
GreatAmerica Leasing Corporation 99 $990.00
GreatAmerica Leasing Receivables 2000 Corporation 1 $10.00