EXHIBIT 10(a)
OPERATING AGREEMENT
OF
NOBILITY 21, LLC
A TENNESSEE LIMITED LIABILITY COMPANY
EFFECTIVE AS OF JULY 17, 1997
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
FORMATION OF COMPANY
Section 2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3 Principal Place of Business, Registered Office and
Registered Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.4 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.5 Management . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
INITIAL MEMBERS AND INTERESTS
Section 3.1 Membership Interests . . . . . . . . . . . . . . . . . . 4
Section 3.2 Registration . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.3 Prestige . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV
BUSINESS OF COMPANY
Section 4.1 Permitted Businesses . . . . . . . . . . . . . . . . . . 5
Section 4.2 First Right to Buy Contracts . . . . . . . . . . . . . . 5
Section 4.3 Purchase of Contracts . . . . . . . . . . . . . . . . . 5
Section 4.4 Loan Program . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.5 Sales and Services Agreement . . . . . . . . . . . . . . 6
Section 4.6 Dealer Agreement . . . . . . . . . . . . . . . . . . . . 6
Section 4.7 Collection Fee Income to Dealers . . . . . . . . . . . . 6
Section 4.8 Loans to 21st Century . . . . . . . . . . . . . . . . . 7
Section 4.9 Investment of Company Capital . . . . . . . . . . . . . 7
Section 4.10 Transaction Flow Chart . . . . . . . . . . . . . . . . . 7
ARTICLE V
RIGHTS AND DUTIES OF MANAGERS
Section 5.1 Management . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.2 Tenure . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3 Number and Election of Managers . . . . . . . . . . . . 8
Section 5.4 Certain Powers of Chief Manager and Secretary . . . . . 8
Section 5.5 Restrictions on Authority of the Managers . . . . . . . 8
Section 5.6 Restriction on Managers' Authority . . . . . . . . . . . 9
Section 5.7 Liability for Certain Acts . . . . . . . . . . . . . . . 9
Section 5.8 Managers Have No Exclusive Duty to Company . . . . . . . 9
Section 5.9 Indemnity of the Managers, Employees and Other Agents . 10
Section 5.10 Resignation . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.11 Removal . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.12 Vacancies . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 6.1 Limitation on Liability . . . . . . . . . . . . . . . . 10
Section 6.2 No Liability for Company Obligations . . . . . . . . . . 10
Section 6.3 List of Members . . . . . . . . . . . . . . . . . . . . 10
Section 6.4 Limitation of Actions . . . . . . . . . . . . . . . . . 10
Section 6.5 Company Books . . . . . . . . . . . . . . . . . . . . . 11
Section 6.6 Priority and Return of Capital . . . . . . . . . . . . . 11
Section 6.7 Liability of a Member to the Company . . . . . . . . . . 11
Section 6.8 Members Have No Exclusive Duty to Company . . . . . . . 11
Section 6.9 Restrictions on Authority of Members . . . . . . . . . . 12
ARTICLE VII
MEETINGS OF MEMBERS
Section 7.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . 12
Section 7.2 Special Meetings . . . . . . . . . . . . . . . . . . . . 12
Section 7.3 Place of Meetings . . . . . . . . . . . . . . . . . . . 12
Section 7.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . 12
Section 7.5 Meeting of All Members . . . . . . . . . . . . . . . . . 12
Section 7.6 Record Date . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.7 Voting Lists . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.8 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.9 Voting and Approval Rights . . . . . . . . . . . . . . . 13
Section 7.10 Manner of Acting . . . . . . . . . . . . . . . . . . . . 13
Section 7.11 Proxies . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.12 Action by Members Without a Meeting . . . . . . . . . . 13
Section 7.13 Meeting by Telephone . . . . . . . . . . . . . . . . . . 14
Section 7.14 Waiver of Notice . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
Section 8.1 Members' Capital Contributions . . . . . . . . . . . . . 14
Section 8.2 Additional Capital Contributions and Loans by Members . 14
Section 8.3 Payment of Capital Call . . . . . . . . . . . . . . . . 15
Section 8.4 Failure to Meet Capital Call . . . . . . . . . . . . . . 15
Section 8.5 Termination of Capital Call Obligations . . . . . . . . 17
Section 8.6 Capital Accounts . . . . . . . . . . . . . . . . . . . . 17
Section 8.7 Withdrawal or Reduction of Members' Capital
Contributions . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
DISTRIBUTION TO MEMBERS
Section 9.1 Allocations of Profits and Losses from Operations . . . 19
Section 9.2 Distributions . . . . . . . . . . . . . . . . . . . . . 19
Section 9.3 Limitation Upon Distributions . . . . . . . . . . . . . 19
Section 9.4 Accounting Principles . . . . . . . . . . . . . . . . . 19
Section 9.5 Interest on and Return of Capital Contributions . . . . 19
Section 9.6 Loans to Company . . . . . . . . . . . . . . . . . . . . 19
ARTICLE X
BOOKS AND RECORDS
Section 10.1 Accounting Period . . . . . . . . . . . . . . . . . . . 20
Section 10.2 Records, Audits and Reports . . . . . . . . . . . . . . 20
Section 10.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . 20
Section 10.4 Tax Matters Member . . . . . . . . . . . . . . . . . . . 20
ARTICLE XI
TRANSFERABILITY
Section 11.1 General . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.2 Term of Restriction . . . . . . . . . . . . . . . . . . 21
Section 11.3 Option to Purchase and Sale Upon the Dissolution or
Bankruptcy of Member . . . . . . . . . . . . . . . . . . 21
Section 11.4 Future Interests . . . . . . . . . . . . . . . . . . . . 22
Section 11.5 Purchase of Membership Interest by Members . . . . . . . 22
Section 11.6 Sale to Third Party . . . . . . . . . . . . . . . . . . 22
Section 11.7 Co-Sale Rights . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE XII
ADDITIONAL MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XIII
DISSOLUTION AND TERMINATION
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.2 Effect of Dissolution . . . . . . . . . . . . . . . . . 24
Section 13.3 Winding Up . . . . . . . . . . . . . . . . . . . . . . . 24
Section 13.4 Articles of Termination . . . . . . . . . . . . . . . . 24
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.1 Application of Tennessee Law . . . . . . . . . . . . . . 25
Section 14.2 No Action for Partition . . . . . . . . . . . . . . . . 25
Section 14.3 Further Assurances . . . . . . . . . . . . . . . . . . . 25
Section 14.4 Waivers . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14.5 Rights and Remedies Cumulative . . . . . . . . . . . . . 25
Section 14.6 Heirs, Successors and Assigns . . . . . . . . . . . . . 25
Section 14.7 Creditors . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 25
Section 14.9 Federal Income Tax Elections . . . . . . . . . . . . . . 26
Section 14.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 14.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . 26
Section 14.12 Invalidity . . . . . . . . . . . . . . . . . . . . . . . 26
Section 14.13 Determination of Matters Not Provided for in This
Operating Agreement. . . . . . . . . . . . . . . . . . . 26
Section 14.14 Time . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 14.15 Adoption of Act . . . . . . . . . . . . . . . . . . . . 26
MEMBERS' SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . 27
EXHIBIT A - Register of Membership Interests . . . . . . . . . . . . . 28
EXHIBIT B - Sales and Services Agreement . . . . . . . . . . . . . . . 29
EXHIBIT C - Master Dealer Agreement . . . . . . . . . . . . . . . . . . 37
EXHIBIT D - Transaction Flow Chart . . . . . . . . . . . . . . . . . . 41
OPERATING AGREEMENT
OF
NOBILITY 21, LLC
This Operating Agreement is entered into as of July 17, 1997, by and among
21st CENTURY MORTGAGE CORPORATION and NOBILITY HOMES, INC.
_________________________________________
Nobility Homes is a manufacturer and retail dealer of manufactured
homes. 21st Century is a regulated mortgage corporation which originates,
finances, sells and services manufactured housing contracts. The Members
desire to organize the Company whose purpose will be to assist the
origination, financing, selling and servicing of Homes.
_________________________________________
ARTICLE I
DEFINITIONS
The following terms used in this Operating Agreement shall have the
following meanings (unless otherwise expressly provided herein):
(a) "Act" shall mean the Tennessee Limited Liability Company Act,
contained in Tenn. Code ▇▇▇. Section ▇▇-▇▇▇-▇▇▇ et seq., as
amended from time to time.
(b) "Articles of Organization" shall mean the Articles of
Organization of the Company as filed with the Secretary of State
of Tennessee as the same may be amended from time to time.
(c) "Capital Call" shall have the meaning ascribed to such term in
Section 8.2 of this Operating Agreement.
(d) "Capital Contribution" shall mean any contribution to the
capital of the Company in cash or property by a Member whenever
made.
(e) "Chief Manager" shall mean the position identified at Tenn. Code
▇▇▇. Section ▇▇-▇▇▇-▇▇▇, as amended from time to time, and the
person, or any other persons that succeed him in that capacity,
selected by the Members for that position.
(f) "Code" shall mean the Internal Revenue Code of 1986 or
corresponding provisions of subsequent superseding federal
revenue laws.
(g) "Company" shall refer to Nobility 21, LLC.
(h) "Contracts" shall mean retail installment contracts or other
lien instruments covering the Homes.
(i) "Credit Approval Notice" shall mean the notice issued by 21st
Century to Nobility Homes after receipt of an application for
the purchase of a Contract which contains the terms under which
21st Century will purchase a Contract.
(j) "Credit Approval Rate" means the rate of interest identified in
the Credit Approval Notice as the minimum rate at which 21st
Century will accept and purchase the Contract.
(k) "Financial Rights" shall have the meaning ascribed to such term
in the Act.
(l) "Governance Rights" shall have the meaning ascribed to such term
in the Act.
(m) "Homes" shall mean new and used manufactured homes manufactured
or sold by Nobility Homes, whether now existing or hereafter
sold.
(n) "Initial Capital Contribution" shall mean the initial
contribution to the capital of the Company pursuant to this
Operating Agreement.
(o) "Majority in Interest" shall have the meaning ascribed to such
term in the Act.
(p) "Majority Vote" shall mean one or more Membership Interests of
Members which taken together hold Governance Rights of the
members in excess of fifty percent (50%) of the aggregate of all
Governance Rights held by the Members.
(q) "Manager" shall mean any manager of the Company elected by the
Members according to the terms of this Operating Agreement,
including but not limited to the Chief Manager.
(r) "Member" shall have the meaning ascribed in the Act and shall
mean any Member of the Company.
(s) "Membership Interest" shall have the meaning ascribed in the
Act.
(t) "Nobility Homes" means Nobility Homes, Inc., a Florida
corporation, and its successors and assigns.
(u) "Operating Agreement" shall mean this Operating Agreement as
originally executed and as amended from time to time.
(v) "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.
(w) "Prestige" shall mean Prestige Home Centers, Inc., a Florida
corporation wholly owned by Nobility Homes, and its successors
and assigns.
(x) "Selling Member" shall have the meaning ascribed to such term in
Section 11.4 of this Operating Agreement.
(y) "Treasury Regulations" shall include proposed, temporary and
final regulations promulgated under the Code in effect as of the
date of filing the Articles of Organization and the
corresponding sections of any regulations subsequently issued
that amend or supersede such regulations.
(z) "21st Century" means 21st Century Mortgage Corporation, a
Delaware corporation, and its successors and assigns.
(aa) "Withdrawal Event" shall have the meaning ascribed to such term
in Section 13.1(a)(iii) of this Operating Agreement.
ARTICLE II
FORMATION OF COMPANY
Section 2.1 Formation. On the date hereof, the organizer of the
Company caused the Company to be organized as a limited liability company
by delivering the executed Articles of Organization to the Secretary of
State of Tennessee in accordance with the provisions of the Act. This
Operating Agreement shall become effective upon its signing by the Members
and the acceptance of the Articles of Organization by the Tennessee
Secretary of State. The organizer of the Company resigns effective
immediately upon the signing of this Operating Agreement by the Members.
Section 2.2 Name. The name of the Company is Nobility 21, LLC.
Section 2.3 Principal Place of Business, Registered Office and
Registered Agent. The principal place of business, registered office and
registered agent of the Company are set forth in the Articles of
Organization. The Company may locate its places of business and registered
office at any other place or places as the Chief Manager may from time to
time deem advisable.
Section 2.4 Term. The term of the Company shall commence on the date
the Articles of Organization are filed with the Secretary of State and
shall continue thereafter until December 31, 2050, or unless earlier
dissolved in accordance with the provisions of this Operating Agreement or
the Act.
Section 2.5 Management. The Company shall be member-managed.
ARTICLE III
INITIAL MEMBERS AND INTERESTS
Section 3.1 Membership Interests. At the time of the execution of this
Operating Agreement, the Members, their Initial Capital Contributions and
their Membership Interests are as follows:
Initial
Governance Financial Capital
Name Rights Rights Contribution
21st Century 50% 50% $250,000
Nobility Homes 50% 50% $250,000
The Members, their addresses and their Membership Interests, as
amended from time to time, are listed on Exhibit A.
Section 3.2 Registration. The Members have been advised that the
Membership Interest of the Company will not be registered under any
federal or state securities laws. Each Member represents and warrants as
follows:
(a) That it is entering into this Agreement and is acquiring the
Membership Interest for its own account, solely for investment
purposes, and not with a view to resell the Membership Interest;
(b) That it has such knowledge and experience in business and
financial matters which enable it to be capable of evaluating
the risk and merits of this investment;
(c) That it is able to bear the economic risks of this investment;
(d) That any security that may be issued will not be resold or
otherwise transferred to or assigned without appropriate
compliance with the registration provisions of the Securities
Act of 1933 and applicable state Blue Sky Laws or exemptions
therefrom and that the certificate to be issued to the
subscriber will contain an appropriate restriction to this
effect; and
(e) That it has been provided with or permitted access to all
information which it deems material to formulating an investment
decision and that such information has been sufficient to make
an informed investment decision.
Section 3.3 Prestige. Nobility Homes hereby represents that Prestige
Home Centers, Inc. is a Florida corporation whose stock is wholly owned by
Nobility Homes. To the extent Nobility Homes incurs any obligations under
the terms of this Agreement, it will also cause Prestige to incur those
obligations to the extent such obligations are applicable to Prestige.
ARTICLE IV
BUSINESS OF COMPANY
Section 4.1 Permitted Businesses. The business of the Company shall be:
(a) To accomplish any lawful business whatsoever or which shall at
any time appear conducive to or expedient for the protection or
benefit of the Company and its assets.
(b) To exercise all other powers necessary to or reasonably
connected with the Company's business which may be legally
exercised by limited liability companies under the Act.
(c) To engage in all activities necessary, customary, convenient, or
incident to any of the foregoing.
Section 4.2 First Right to Buy Contracts. Subject to the existence of
a loan program, Nobility Homes hereby grants to 21st Century the first
right to purchase Contracts subject to the terms and conditions of the
Sales and Services Agreement attached hereto as Exhibit B. Nobility Homes
shall also cause Prestige to grant to 21st Century the first right to
purchase Contracts.
Section 4.3 Purchase of Contracts. In consideration of Nobility Homes
granting to 21st Century the first right to purchase Contracts, 21st
Century agrees to purchase the Contracts from Nobility Homes (and, to the
extent applicable, Prestige) according to the terms of the loan program
offered by 21st Century and ratified by the Members holding a Majority
Vote using underwriting criteria established by 21st Century. 21st Century
shall have no obligation to purchase a Contract until it has evidenced
such acceptance by written notice to Nobility Homes (and, to the extent
applicable, Prestige). All such purchases of Contracts shall be based upon
approval using 21st Century's underwriting criteria.
Section 4.4 Loan Program. 21st Century agrees to offer to Nobility
Homes (and, to the extent applicable, Prestige) a loan program plan (i.e.,
downpayment terms, fixed or variable rates, annual percentage rates,
maximum loan amount, computation, allowable insurance, form of
documentation, origination fee and other similar items) comparable to the
prevailing plans offered by two of the largest for-profit national
manufactured housing lenders, which lenders will be determined by the
Members holding a Majority Vote. The Members initially designate Green
Tree Financial and Bank America Home Finance Division of the Bank of
America (collectively, the "Benchmark Lenders") as the comparable lenders
for the purposes of this Agreement. 21st Century may designate new
Benchmark Lenders from time to time upon providing notice to Nobility
Homes. The Members holding a Majority Vote will ratify or reject the loan
programs proposed by 21st Century.
21st Century will establish a benchmark rate (the "Benchmark Rate")
for each loan program offered by 21st Century. The Benchmark Rate shall be
approximately equivalent to the prevailing average annual percentage rate
of the Benchmark Lenders for similar types of loans being purchased in the
marketplace. The loan programs offered by 21st Century shall compete in
the financing marketplace with the Benchmark Lenders, particularly with
regard to products and services offered. The Credit Approval Rate shall
equal the Benchmark Rate for those Contracts to be purchased by 21st
Century subject to its first right to buy Contracts described in Section
4.2 of this Operating Agreement.
21st Century may also agree to purchase Contracts, and Nobility Homes
(and, to the extent applicable, Prestige) may agree to sell Contracts,
using a Credit Approval Rate in excess of the Benchmark Rate with the
terms of such purchase and sale of Contracts to be acceptable to 21st
Century and Nobility Homes (and, to the extent applicable, Prestige).
Nobility Homes will deliver to 21st Century all loan applications for
any Home in a form acceptable to 21st Century. 21st Century shall have two
(2) business days from the date of receipt of the application within which
to respond to Nobility Homes (and, to the extent applicable, Prestige) as
to whether it is willing to purchase the Contract applicable to each such
loan application by issuing a Credit Approval Notice to Nobility Homes
(and, to the extent applicable, Prestige). In the event 21st Century does
not issue a Credit Approval Notice with a Credit Approval Rate equal to
the Benchmark Rate within such two (2) day period or otherwise rejects the
loan application, Nobility Homes (and, to the extent applicable, Prestige)
may thereafter offer the Contract for sale to any other purchaser or
lender.
Section 4.5 Sales and Services Agreement. The Company will enter into
a sales and services agreement with 21st Century in the form attached
hereto as Exhibit B, and the Members hereby authorize the Chief Manager or
Secretary to sign such agreement on behalf of the Company. The Sales and
Services Agreement shall not be amended by the Company without the consent
of the Members holding a Majority Interest.
Section 4.6 Dealer Agreement. Nobility Homes (and, to the extent
applicable, Prestige) will enter into dealer agreements (the "Dealer
Agreement") each in the form attached hereto as Exhibit C prior to the
purchase of Contracts by 21st Century.
Section 4.7 Collection Fee Income to Dealers. In consideration of (i)
Nobility Homes' (and, to the extent applicable, Prestige's) delivery to
21st Century of all loan applications of Nobility Homes' customers for
which 21st Century has an appropriate loan program and for whom Nobility
Homes (and, to the extent applicable, Prestige) are assisting in arranging
financing and (ii) services provided by Nobility Homes (and, to the extent
applicable, Prestige) to 21st Century in connection with the Contract,
such services to include but not be limited to assisting the financing,
closing, marketing and servicing of the Contracts, 21st Century agrees to
pay Collection Fee Income to Nobility Homes (and, to the extent
applicable, Prestige). "Collection Fee Income" shall be an amount equal
to, at the option of Nobility Homes, (i) (a) the customer annual
percentage rate stated on a Contract purchased by 21st Century according
to the terms of this Agreement less (b) the Credit Approval Rate or, at
the option of Nobility Homes, (ii) a premium equal to one-fourth of one
percent (.25%) of the principal amount financed under the terms of the
Contract for each one-eighth of one percent (1/8%) increase in the
customer annual percentage rate (stated in a Contract) in excess of the
Credit Approval Rate. Such Collection Fee Income shall be paid to Nobility
Homes (and, to the extent applicable, Prestige) at the option of Nobility
Homes either (i) from the collection of monthly payments from the customer
which shall be paid within ten (10) days of month end, (ii) at the time
the Contract is purchased from Nobility Homes (and, to the extent
applicable, Prestige) or (iii) a combination of (i) and (ii) above.
Section 4.8 Loans to 21st Century. The Members hereby authorize and
direct the Company to loan all or part of its capital to 21st Century. The
proceeds of such loan shall be used by 21st Century first for the purchase
of Contracts or, in the event Contracts acceptable for purchase under the
terms of this Agreement are not available, as otherwise agreed upon by
Members holding a Majority Vote. Such loans shall be evidenced by
promissory notes whose obligations are secured by liens or security
interests in the Contracts granted by 21st Century to the Company and all
other related loan documents required by the Company. 21st Century will
pay a rate of interest on such loans equal to the same rate paid by 21st
Century to any of its lenders for short term borrowings.
Section 4.9 Investment of Company Capital. The capital of the Company
which is not loaned to 21st Century pursuant to the terms of this
Agreement or distributed to the Members will be invested in the
investments selected by the Chief Manager.
Section 4.10 Transaction Flow Chart. A Flow Chart which summarizes the
structure by which 21st Century, Nobility Homes and the Company will
accomplish the transactions described in Article IV is attached hereto as
Exhibit D.
ARTICLE V
RIGHTS AND DUTIES OF MANAGERS
Section 5.1 Management. The business and affairs of the Company shall
be managed by its Chief Manager. Except for situations in which the
approval of the Members is expressly required by this Operating Agreement
or by applicable law, the Chief Manager shall have full and complete
authority, power and discretion to (a) manage and control the business,
affairs, and properties of the Company, (b) make all decisions regarding
those matters and (c) perform any and all other acts or activities
customary or incident to the management of the Company's business.
The Members shall elect a Secretary of the Company to serve in such
capacity until his successor is elected and to perform the services of the
Secretary as described in the Act. The Members hereby select ▇▇▇ ▇▇▇▇▇▇▇▇
as Chief Manager and ▇▇▇▇▇▇▇ ▇. ▇▇▇ as Secretary/Treasurer and each
Manager shall serve in such capacity until such time as his or her
successor shall have been appointed by the Members according to the terms
of this Operating Agreement.
Section 5.2 Tenure. The Chief Manager and Secretary/Treasurer shall
serve in such capacity until their successors shall have been elected by
Members possessing a Majority Vote.
Section 5.3 Number and Election of Managers. The Members may fix the
number of Managers of the Company in addition to the Chief Manager. Any
Manager shall hold office until the next annual meeting of Members or
until his successor has been elected and qualified. Managers shall be
elected by the affirmative vote of Members holding a Majority Vote.
Managers other than the Chief Manager shall have the power and authority
permitted to them under the terms of the Act and granted to them by the
Members.
Section 5.4 Certain Powers of Chief Manager and Secretary. Subject to
the provisions of the Act, this Operating Agreement and the actions of the
Members, without limiting the generality of Section 5.1, the Chief Manager
and Secretary shall have power and authority granted to them by the Act.
The Chief Manager shall specifically have the power to:
(a) execute and deliver on behalf of the Company the Sales and
Service Agreement between the Company and 21st Century dated as
of the date hereof; and
(b) establish a banking relationship with any bank including such
accounts with such bank as the Chief Manager deems necessary,
appropriate or desirable and execute and deliver all resolutions
as required by such bank in connection with the establishment of
such accounts approved by the Chief Manager and to authorize all
signatories with respect to such accounts.
Section 5.5 Restrictions on Authority of the Managers. Except as
specifically provided by the terms of this Operating Agreement, the
Managers shall not have the authority to, and covenant and agree that they
shall not, do any of the following acts without the approval of the
Members holding a Majority Vote:
(i) Cause or permit the Company to engage in any activity that
is not consistent with the purposes of the Company as set
forth herein;
(ii) Sell or otherwise dispose of all or substantially all of
the Company's assets as part of a single transaction or
plan (except in the ordinary course of business, including
securitization or loan sale transactions);
(iii) Knowingly do any act in contravention of this
Operating Agreement;
(iv) Knowingly do any act which would make it impossible to
carry on the ordinary business of the Company, except as
otherwise provided in this Operating Agreement;
(v) Knowingly perform any act that would cause the Company to
conduct business in a state which has neither enacted
legislation which permits limited liability companies to
organize in such state nor permits the Company to register
to do business in such state as a foreign limited liability
company;
(vi) Cause the Company to voluntarily take any action that would
cause a bankruptcy of the Company;
(vii) Cause the Company to admit any additional Members
other than pursuant to the terms of this Operating
Agreement; or
(viii) Incur indebtedness of the Company, pledge assets of
the Company to secure indebtedness or similarly bind
the Company.
Section 5.6 Restriction on Managers' Authority. Unless authorized to
do so by this Operating Agreement or by the Members of the Company, no
Manager, attorney-in-fact, employee, or other agent of the Company shall
have any power or authority to bind the Company in any way, to pledge its
credit or to render it liable for any purpose.
Section 5.7 Liability for Certain Acts. Each Manager shall act in a
manner he believes in good faith to be in the best interest of the Company
and with such care as an ordinarily prudent person in a like position
would use under similar circumstances. A Manager is not liable to the
Company, its Members or other Managers for any action taken in managing
the business or affairs of the Company if he performs the duty of his
office in compliance with the standard contained in this Section. No
Manager has guaranteed nor shall have any obligation with respect to the
return of a Member's capital contributions or profits from the operation
of the Company. No Manager shall be liable to the Company or to any Member
for any loss or damage sustained by the Company or any Member except loss
or damage resulting from intentional misconduct or knowing violation of
law or a transaction for which such Manager received a personal benefit in
violation or breach of the provisions of this Operating Agreement. Each
Manager shall be entitled to rely on information, opinions, reports, or
statements, including but not limited to financial statements or other
financial data prepared or presented in accordance with the provisions of
the Act.
Section 5.8 Managers Have No Exclusive Duty to Company. The Managers
shall not be required to manage the Company as their sole and exclusive
function and they may have other business interests and may engage in
other activities in addition to and in competition with those relating to
the Company. Neither the Company nor any Member shall have any right, by
virtue of this Operating Agreement, to share or participate in such other
investments or activities of any Manager or to the income or proceeds
derived therefrom. The Managers shall incur no liability to the Company or
to any of the Members as a result of engaging in any other business
venture.
Section 5.9 Indemnity of the Managers. Employees and Other Agents. To
the fullest extent permitted under the Act, the Company shall indemnify
the Managers and make advances for expenses to them with respect to such
matters to the maximum extent permitted under applicable law. The Company
shall indemnify its employees and other agents who are not Managers to the
fullest extent permitted by law, provided that such indemnification in any
given situation is approved by Members owning a Majority Vote.
Section 5.10 Resignation. Any Manager of the Company may resign at any
time by giving written notice to the Members of the Company. The
resignation of a Manager who is also a Member shall not affect the
Manager's rights as a Member and shall not constitute a withdrawal of a
Member.
Section 5.11 Removal. At a meeting called expressly for that purpose,
any number of Managers may be removed at any time, with or without cause,
by the affirmative vote of Members holding a Majority Vote. The removal of
a Manager who is also a Member shall not affect the Manager's rights as a
Member and shall not constitute a withdrawal of a Member.
Section 5.12 Vacancies. The affirmative vote of Members holding a
Majority Vote may appoint any Manager for any term designated by such
Members.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 6.1 Limitation on Liability. Each Member's liability shall be
limited as set forth in this Operating Agreement, the Act and other
applicable law.
Section 6.2 No Liability for Company Obligations. No Member will have
any personal liability for any debts or losses of the Company beyond his
respective Capital Contributions except as provided by law.
Section 6.3 List of Members. Upon written request of any Member, the
Chief Manager shall provide a list showing the names, addresses, and
Membership Interests of all Members and Managers, and the other
information required by the Act.
Section 6.4 Limitation of Actions. Except as specifically provided in
this Operating Agreement, the Company shall not take any of the following
actions without the consent of all the Members:
(a) acquire any stock, membership interests, partnership interests
or substantially all of the assets of any other now existing or
newly formed entity;
(b) issue any Membership Interest or other securities convertible,
exchangeable or exercisable into Membership Interest of the
Company (including without limitation Membership Interest
options or warrants to purchase Membership Interest);
(c) make or permit any material change in the nature of the
Company's business as contemplated on the date hereof;
(d) consummate a merger involving the Company, in which the Company
is not the surviving entity, or any sale, lease or other
disposition of all or substantially all of the Company's assets
or any liquidation, dissolution, recapitalization or
reorganization of the Company;
(e) amend the articles of organization or operating agreement of the
Company;
(f) authorize or approve any liquidation, dissolution,
reorganization or bankruptcy of the Company;
(g) declare or pay any distributions with respect to the Members'
Membership Interests; or
(h) incur, create or assume any indebtedness for the borrowing of
money or incurred in connection with the purchase of any assets
or properties in any single transaction in excess of $10,000 in
the aggregate per year.
Section 6.5 Company Books. The Chief 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 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 Company shall distribute to the Members
no later than the fifteenth (15th) day of each month financial statements
for the previous month prepared by the Company in accordance with
generally accepted accounting principles.
Section 6.6 Priority and Return of Capital. Except as may be expressly
provided in this Operating Agreement, no Member shall have priority over
any other Member as to the return of Capital Contributions, profits,
losses, or distributions. This Section shall not apply to loans which a
Member has made to the Company.
Section 6.7 Liability of a Member to the Company. A Member who
receives the return in whole or in part of its capital contribution is
liable to the Company only to the extent now or hereafter provided by the
Act.
Section 6.8 Members Have No Exclusive Duty to Company. In addition to
purchasing Contracts from Nobility Homes, 21st Century may originate the
purchase of loans from other manufactured housing retailers, manufacturers
and other financial institutions (collectively, "Other Originators"). 21st
Century may purchase Contracts from Other Originators and engage in other
activities in addition to and in competition with those interests of
Nobility Homes. Neither the Company nor Nobility Homes shall have any
right by virtue of this Agreement to share or participate in such other
investment or activities of 21st Century or the income or proceeds derived
therefrom. 21st Century shall incur no liability to the Company or any
other Member as the result of engaging in any other business venture.
Section 6.9 Restrictions on Authority of Members. Unless authorized to
do so by this Operating Agreement or by the affirmative vote of Members
holding a Majority Vote or such greater percentage interest of the
Governance Rights as may be required by this Operating Agreement, no
Member shall have the power or authority to bind the Company in any way,
to sell, transfer, lease or otherwise convey or dispose of any asset of
the Company, to pledge the credit of the Company or to render the Company
liable for any purpose.
ARTICLE VII
MEETINGS OF MEMBERS
Section 7.1 Annual Meetings. The annual meeting of the Members shall
be held at such time as shall be determined by resolution of 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, unless otherwise prescribed by statute, may be called
by the Chief Manager or by Members holding at least twenty-five percent
(25%) of all of the Governance Rights of the Members.
Section 7.3 Place of Meetings. The Members may designate any place as
the place of meeting for any meeting of the Members.
Section 7.4 Notice of Meetings. Written notice stating the place, day
and hour of the meeting and the purposes for which the meeting is called
shall be delivered not less than ten (10) nor more than twenty (20) days
before the date of the meeting, either personally or by mail, to each
Member entitled to vote at such meeting. Such notice shall be deemed to be
delivered: (a) if sent by first class U.S. mail delivery, on the day of
receipt by the recipient or (b) if notice is sent by certified mail, from
the date received by recipient as evidenced by receipt signed by or on
behalf of recipient. If sent by reputable overnight courier service, such
notice shall be deemed to have been delivered one (1) calendar day after
being deposited with the overnight courier service, addressed to the
Member at his address as it appears on the books of the Company, with all
freight charges thereon prepaid.
Section 7.5 Meeting of All Members. If all of the Members shall meet
at any time and place, either within or outside of the State of Tennessee,
and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting any
lawful action may be taken.
Section 7.6 Record Date. For the purpose of determining 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.
Section 7.7 Voting Lists. At least ten (10) days before each meeting
of the Members, the Chief Manager or other agent having charge of the
membership records of the Company shall make a complete list of the
Members holding Governance Rights and otherwise entitled to vote at the
meeting and any adjournment thereof. The list shall include the name,
address and Membership Interest held by each Member. The list shall be
kept on file at the principal office of the Company for a period of at
least ten (10) days prior to any meeting and shall be subject to
inspection by any Member during such period or during the meeting.
Section 7.8 Quorum. Members holding a Majority Vote, 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, the Members so represented
may adjourn the meeting from time to time for a period not to exceed sixty
(60) days without further notice. 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 Members holding Governance Rights whose absence would cause
less than a quorum to be present.
Section 7.9 Voting and Approval Rights. Each Member shall have
Governance Rights provided in Section 3.1 of this Operating Agreement.
Section 7.10 Manner of Acting. If a quorum is present, the affirmative
vote of Members holding a Majority Vote represented at the meeting shall
be the act of the Members, unless the vote of a greater or lesser
proportion or number is otherwise required by the Act, by the Articles of
Organization or by this Operating Agreement.
Section 7.11 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 Chief 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.
Section 7.12 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 written consents describing the
action taken signed by all of the Members and delivered to the Chief
Manager for inclusion in the minutes or for filing with the Company
records. Action taken under this Section is effective when all of the
Members have signed the consent unless the consent specifies a different
effective date. The record date for determining Members entitled to take
action without a meeting shall be the date the first Member signs a
written consent.
Section 7.13 Meeting by Telephone. Action required or permitted to be
taken at a meeting of the Members may be taken by conference telephone
call during which each participant may simultaneously hear each other
participant.
Section 7.14 Waiver of Notice. When any notice is required to be given
to any Member, a waiver thereof in writing signed by the person entitled
to such notice, whether before, at, or after the time stated therein,
shall be equivalent to the giving of such notice. Attendance at any
meeting by any Member to whom notice of such meeting is required to be
given shall constitute waiver of notice of such meeting by such Member,
unless the Member attends such meeting for the sole and express purpose of
objecting at the beginning of the meeting to the transaction of any
business at the meeting because the meeting has not been lawfully called
or convened.
ARTICLE VIII
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
Section 8.1 Members' Capital Contributions. Each Member shall make its
respective Initial Capital Contribution as provided in Section 3.1 of this
Operating Agreement.
Section 8.2 Additional Capital Contributions and Loans by Members. In
the event 21st Century reasonably determines that (i) the Company is
required to purchase any type of security issued by a purchaser of the
Contracts or (ii) the Company has an additional need for capital in order
to meet any indemnification obligation owed to 21st Century (as
contemplated in Section 3 of the Sales and Services Agreement dated as of
the date hereof between the Company and 21st Century), the Members agree
to make additional capital contributions or loans (such capital
contributions or loans referred to hereinafter as the "Capital Call") to
the Company sufficient to allow the Company to purchase such securities or
meet such indemnification obligation. 21st Century shall determine the
amount of the necessary Capital Call. The remedies available to the
Members for any Member's failure to meet any Capital Call are described in
Section 8.4 of this Agreement.
In the event 21st Century requires a Capital Call from the Members
which results from the need to purchase securities issued by the purchaser
of Contracts as contemplated by Section 8.2(i) of this Agreement, 21st
Century shall determine whether such Capital Call shall take the form of
(a) equity contribution of capital by the Members to the Company or (b) a
loan by the Members to the Company. If the additional capital contribution
is the result of an indemnification obligation of the Company as
contemplated by Section 8.2(ii) of this Agreement, the Capital Call shall
take the form of an equity contribution of capital by the Members of the
Company and shall not take the form of a loan by the Members to the
Company.
If requested by 21st Century to purchase from 21st Century a
participation interest in such securities which have been purchased by
21st Century, the Company shall purchase a participation interest in a
proportion determined by 21st Century equal to the proportion of the
Contracts included as part of the securities. For example, if the
Contracts constitute ten percent (10%) of the retail installment contracts
included in the securities, the Company shall purchase a ten percent (10%)
participation interest in the securities held by 21st Century.
If the Capital Call results from the need to purchase securities
issued by the purchaser of the Contracts as contemplated by Section 8.2(i)
of this Agreement, the Members (subject to consent of 21st Century) may
loan to the Company the amount of additional funds needed on such terms as
determined by the Chief Manager but at an interest rate and principal
amortization identical to the securities purchased with the loan proceeds.
Approval of the Members holding a Majority Vote is required for loans
based upon terms which are not identical to the terms of securities
purchased with the loan proceeds. Repayment of all loans shall be treated
as an operating expense of the Company and payable before payment of any
type of distribution to any Member. The Company shall execute and deliver
such documents as are reasonable and necessary to evidence such security
interest granted by the Company, including, without limitation, security
agreements and UCC-l financing statements.
Section 8.3 Payment of Capital Call. Each Member shall be liable for
and required to pay to the Company such Member's pro-rata share of the
Capital Call based upon the Member's Financial Rights. The Chief Manager
shall follow these procedures for obtaining such capital contributions or
loans:
(a) Written notice setting forth the total amount and each Member's
pro-rata share of any Capital Call shall be forwarded to all
Members. Each Member's payment to the Company shall be due on or
before the fifteenth (15th) calendar day following the receipt
of the notice.
(b) Any Member who fails to respond to the notice within the time
permitted will be deemed to have rejected the Capital Call.
Failure of any Member to meet a Capital Call shall give rise to
the options set forth in Section 8.4 of this Agreement.
Section 8.4 Failure to Meet Capital Call.
(a) If a Member rejects or is deemed to have rejected the Capital
Call made for the purpose of purchasing securities as
contemplated by the term of Section 8.2(i) (and 21st Century has
determined that the Capital Call take the form of an equity
contribution) or to meet an indemnification obligation as
contemplated by the terms of Section 8.2(ii) of this Agreement
(which the terms of this Agreement require to take the form of
an equity contribution), or if a Member who accepted the Capital
Call for either of such purposes fails to pay his pro-rata share
of the Capital Call to the Company within fifteen (15) days from
the receipt of notice of the Capital Call, the Company shall
provide to all Members written notice of such rejection or
failure and the Member who has accepted the Capital Call and has
paid its pro-rata share of the Capital Call within fifteen (15)
days from the receipt of notice of the Capital Call may, at its
option, by majority vote of the Members holding Financial Rights
which have accepted the Capital Call and have paid its pro-rata
share of the Capital Call to the Company within the time
required, elect one of the following options:
(i) Require the Company to return any payments made pursuant
thereto to the Members making such payments.
(ii) Treat the funds paid to the Company in response to the
Capital Call as a loan to the Company at the maximum rate
of interest permitted by law.
(iii) Treat its payments in response to the Capital Call as
additional equity contribution to the Company. In
addition, such Member may elect to make additional
equity contributions to the Company up to the amount
of the Capital Call. In either of such events, the
Financial Rights in the Company held by the Members
shall be recomputed within thirty (30) days after the
date of the Capital Call but to be effective as of the
date of the Capital Call, based upon the adjusted
capital accounts of the Members. The Company shall, if
necessary, issue additional Financial Rights to the
Members making additional capital contributions so
that the percentage of (i) Financial Rights owned by
each Member to (ii) the total outstanding Financial
Rights held by all Members is the same percentage as
(i) the adjusted capital accounts of each Member to
(ii) the total adjusted capital accounts of the
Members. Any Member failing to meet, or rejecting, the
Capital Call shall also at the time of the
recomputation of the Financial Rights (as heretofore
provided) assign all of its Governance Rights to the
Members meeting the Capital Call on a pro-rata basis
determined by the recomputed Financial Rights of such
Members.
(iv) The right to make additional capital contributions as
provided in this Section 8.4(a) must be exercised within
ten (10) days of the date of the delivery of the notice of
the failure of a Member to respond to the Capital Call and
shall be shared pro-rata by all Members desiring to
participate who accepted and paid the Capital Call as
provided herein.
(b) If a Member rejects or is deemed to have rejected the Capital
Call made to purchase securities as contemplated by the terms of
Section 8.2(i) of this Agreement (and 21st Century has
determined that such Capital Call shall take the form of the
loan by the Members of the Company as permitted by the terms of
this Agreement), or if a Member who accepted the Capital Call
for such purpose fails to pay his pro-rata share of the Capital
Call to the Company within fifteen (15) days from the receipt of
notice of the Capital Call, the Company shall provide to all
Members written notice of such rejection or failure and the
Member who has accepted the Capital Call and has paid its pro-
rata share of the Capital Call within fifteen (15) days of the
date of notice of the Capital Call may, at its option, by
majority vote of the Members holding Financial Rights which have
accepted the Capital Call and have paid its pro-rata share of
the Capital Call to the Company within the time required, elect
one of the following options:
(i) Require the Company to return any payments made pursuant
thereto to the Members making such payments.
(ii) Treat its payments in response to the Capital Call as a
loan to the Company which shall bear an interest rate equal
to two percent (2%) in excess of the yield of the purchased
securities. In addition, such Member may elect to make
additional loans to the Company up to the amount of the
Capital Call with the interest rate on such loan to equal
two percent (2%) in excess of the yield on the purchased
securities.
(iii) The right to make additional loans as provided in this
Section 8.4(b) must be exercised within ten (10) days
of the date of the delivery of the notice of the
failure of a Member to respond to the Capital Call and
shall be shared pro-rata by all Members desiring to
participate who accepted and paid the Capital Call as
provided herein.
Section 8.5 Termination of Capital Call Obligations. Any Member may
upon providing six (6) months written notice to the other Member declare
its intent not to meet additional Capital Calls needed to purchase
securities as contemplated by Section 8.2(i) of this Agreement. The
obligation to meet such Capital Calls as provided under the terms of this
Agreement shall cease after such six (6) month period; provided, however,
that the Member's obligation to meet Capital Calls during such six (6)
month period shall remain in full force and effect as provided by the
terms of this Agreement.
Section 8.6 Capital Accounts.
(a) A separate capital account will be maintained for each Member.
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
subject to under Section 752 of the Code); (3) allocations to
such Member of net profits; (4) any items in the nature of
income and gain which are especially allocated to the Member
pursuant to the terms of this Operating Agreement; and (5)
allocations to such Member of income described in Section
705(a)(1)(B) of the Code. 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 subject to under Section 752 of the
Code); (3) allocations to such Member of expenditures described
in Section 705(a)(2)(B) of the Code; (4) any items in the nature
of deduction and loss that are specially allocated to the Member
pursuant to the terms of this Operating Agreement; and (5)
allocations to the account of such Member of net losses.
(b) 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 in accordance with Section
1.704-1(b)(2)(iv) of the Treasury Regulations.
(c) The manner in which capital accounts are to be maintained
pursuant to this Section is intended to comply with the
requirements of Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder. If in the opinion of the
Company's legal counsel the manner in which capital accounts are
to be maintained pursuant to the preceding provisions of this
Section should be modified in order to comply with Section
704(b) of the Code and the Treasury Regulations thereunder, then
notwithstanding anything to the contrary contained in the
preceding provisions of this Section, 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.
(d) Upon liquidation of the Company (or any Member's Membership
Interest), liquidating distributions will be made in accordance
with the positive capital account balances of the Members, as
determined after taking into account all capital account
adjustments for the Company's taxable year during which the
liquidation occurs. Liquidation proceeds will be paid in
accordance with the terms of this Operating Agreement. The
Company may offset damages for breach of this Operating
Agreement by a Member whose interest is liquidated (either upon
the withdrawal of the Member or the liquidation of the Company)
against the amount otherwise distributable to such Member.
(e) Except as otherwise required in the Act (and subject to Section
8.2), no Member shall have any liability to reserve all or any
portion of a deficit balance in such Member's capital account.
Section 8.7 Withdrawal or Reduction of Members' Capital Contributions.
(a) A Member shall not receive out of the Company's property any
part of such Member's 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.
(b) A Member, irrespective of the nature of such Member's Capital
Contribution, has only the right to demand and receive cash in
return for such Capital Contribution.
ARTICLE IX
DISTRIBUTION TO MEMBERS
Section 9.1 Allocations of Profits and Losses from Operations. The
profits and losses of the Company for each fiscal year will be allocated
to the Members in accordance with their Financial Rights.
Section 9.2 Distributions. All distributions of cash or properties
shall be made to the Members pro-rata in proportion to their respective
Financial Rights on the record date of such distribution. All
distributions of cash or properties shall be made at such time as
determined by the Chief Manager or Members holding a Majority Vote.
Notwithstanding the foregoing, provided that the Chief Manager
determines that such distribution will not violate any written agreement
or instrument to which the Company is a party or pursuant to which it is
bound, or any applicable provision of law, the Company shall, within one
hundred twenty (120) days after the close of any fiscal year in which the
cumulative profits of the Company exceed the cumulative losses of the
Company, distribute to each Member cash in an amount equal to such
Member's Tax Liability (as hereinafter defined) for such fiscal year. For
purposes of this Section 9.2, the term "Tax Liability" shall mean the
product of (a) the excess of such Member's allocable share of the
cumulative profits for such fiscal year over such Member's allocable share
of the cumulative losses of the Company for such fiscal year, and (b) the
aggregate rate of tax applied to such excess assuming that the Member's
income is subject only to federal and Tennessee (or other applicable state
income tax) income taxes at the highest marginal rates for ordinary income
or capital gain, as the case may be, and calculated by reducing the
federal tax to reflect the deductibility of state taxes for federal income
tax purposes. For purposes of this Section 9.2, expenses that would
constitute "miscellaneous itemized deductions" with respect to the Members
within the meaning of Treasury Regulations Section 1.67-1T(b) and 1.67-
2T(b) or their successor regulations shall not be taken into account.
Section 9.3 Limitation Upon Distributions. No distribution shall be
declared and 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.
Section 9.4 Accounting Principles. The profits and losses of the
Company shall be determined in accordance with generally accepted
accounting principles applied on a consistent basis.
Section 9.5 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 9.6 Loans to Company. Nothing in this Operating Agreement
shall prevent any Member from making secured or unsecured loans to the
Company by agreement with the Company. The Company shall repay any loans
prior to making any distribution to a Member.
ARTICLE X
BOOKS AND RECORDS
Section 10.1 Accounting Period. The Company's accounting period shall
be as determined from time to time by the Chief Manager.
Section 10.2 Records, Audits and Reports. Proper and complete records
and books of account shall be kept by the Chief Manager in which shall be
entered fully and accurately all transactions and other matters relating
to the Company's business. The books and records shall be at all times
maintained at the principal executive office of the Company and shall be
open to the reasonable inspection and examination of the Members, or their
duly authorized representatives during reasonable business hours. The
Company and 21st Century agree to require its accountants to provide and
respond to reasonable requests for information from the Members. The
Company shall also cause 21st Century to deliver to Nobility Homes a copy
of the annual audited financial statements of 21st Century and the
quarterly financial statements of 21st Century as prepared by 21st
Century. An annual audit of the Company's financial statements will be
done in the event the Company's financial results are deemed to be
material to the financial results of either Member by the independent
auditor examining the financial statements of that Member. The expense of
the Company's audit will be borne by the Company.
Section 10.3 Tax Returns. The Chief Manager shall cause the preparation
and timely filing of all tax returns required to be filed by the Company
pursuant to the Code and all other tax 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.
Section 10.4 Tax Matters Member.
(a) To the extent required by law, the Chief Manager shall serve as
the "tax matters member" or "tax matters partner" of the
Company, as that term is defined in the Code. The designation of
the Chief Manager as the "tax matters partner" shall not make
the Chief Manager a "partner" under any laws applicable to
partnerships other than the Code.
(b) As tax matters member, the Chief Manager shall be responsible
for all administrative and judicial proceedings for the
assessment and collection of tax deficiencies or the refund of
tax overpayments arising out of a Member's distributed share of
items of income, deduction, credit or any other Company item (as
defined in the Code or the regulations issued pursuant thereto)
allocated to the Members affecting any Member's tax liability.
(c) The Chief Manager, as tax matters member, shall promptly give
notice to all Members of any inquiries from the Internal Revenue
Service or of any administrative or judicial proceeding pending
before the Internal Revenue Service involving the Company or any
Company item and shall keep the Members advised of the progress
of such proceedings. Such notice shall be in compliance with
such regulations as are issued from time to time by the Internal
Revenue Service.
ARTICLE XI
TRANSFERABILITY
Section 11.1 General. No Member shall have the right to sell, assign,
pledge or otherwise transfer for consideration all or any part of his
Membership Interest except (a) with the consent of all the Members, (b) as
provided in this Operating Agreement or (c) by the Act. Any transfer of
the Membership Interest prohibited by this Agreement shall be void and
without effect or enforceability.
Section 11.2 Term of Restriction. The restriction on transferability of
Membership Interests shall be a continuing restriction, applicable at all
times to all outstanding Membership Interests in the Company. No action by
the Company shall be deemed to have freed any Membership Interest in the
Company or any portion thereof from such restriction. No action by any
Member or Members of the Company shall be deemed to have freed any
Membership Interest in the Company or any portion thereof from such
restriction unless all the Members holding Governance Rights have
specifically agreed in writing to free the Membership Interest from such
restriction. Any subsequent owner of all or any part of a Membership
Interest shall take such interest subject to the restrictions set forth
herein.
Section 11.3 Option to Purchase and Sale Upon the Dissolution or
Bankruptcy of Member. Subject to the terms of this Agreement and with the
consent of the Members holding a Majority Vote (other than the Selling
Member as hereinafter defined), in the event of the dissolution or
bankruptcy of the Member (the "Selling Member"), the remaining Members
shall have the right, at their option, exercisable by written notice to
the Selling Member within sixty (60) days after the date of such
dissolution or filing of any bankruptcy petition, to purchase the
Membership Interest of the Selling Member, and the legal representative of
the Selling Member shall be obligated to consummate the sale of such
Membership Interest. The purchase price of such Membership Interest of the
Selling Member shall be the fair market value of the Membership Interest
as determined by the Members; provided, however, that if the Members
cannot agree on the fair market value, they shall each select an
investment banker to set the fair market value. If such investment bankers
are unable to agree upon the fair market value, they shall mutually select
a third investment banker to determine the fair market value. The fair
market value determined by that investment banker shall be binding upon
all the parties. The fees and expenses of such investment banker incurred
in connection with the establishment of the fair market value of the
Membership Interest shall be borne by the Company. Notwithstanding the
foregoing, the remaining Members wishing to purchase the Membership
Interest of the Selling Member may rescind their offer to purchase without
incurring any liability or obligation within five (5) days after the
determination of the fair market value by the investment banker selected
by the Company. The sale of the Selling Member's Membership Interest shall
occur within thirty (30) days after final determination of the purchase
price.
Section 11.4 Future Interests. This Operating Agreement and the
restrictions and limitations herein shall apply to any Membership Interest
or portion thereof in the Company hereafter acquired by any person by any
means. It is the intent of the parties hereto that this Operating
Agreement shall be binding upon the respective successors, assigns,
representatives, trustees and attorneys-in-fact of any of the present or
future Members of the Company. The Members further agree and declare that
the terms, conditions, provisions and agreements set forth in this
Operating Agreement shall be binding upon any receiver, trustee, debtor-
in-possession, similar manager or agent in a bankruptcy or receivership
proceeding or other involuntary transferee of any Membership Interest or
portion thereof.
Section 11.5 Purchase of Membership Interest by Members. Nobility Homes
shall have the following rights with regard to the transfer of Membership
Interests provided such rights are exercised within six (6) months from
the date of this Agreement or at any time after five (5) years from the
date of this Agreement:
(a) Request in writing that 21st Century purchase Nobility Homes'
Membership Interests in the Company for a price equal to the
Fair Market Value (as hereinafter defined); or
(b) Purchase the Membership Interests in the Company owned by 21st
Century at a purchase price equal to the Fair Market Value (as
hereinafter defined).
For the purpose of this Agreement, "Fair Market Value" shall mean the
value of the Membership Interest as determined by mutual agreement of 21st
Century and Nobility Homes; provided, however, if the Members are unable
to agree on the Fair Market Value, then each Member shall select an
investment banker and the investment bankers will attempt to mutually
agree upon the Fair Market Value of the Membership Interest. If such
investment bankers are unable to mutually agree on the Fair Market Value,
then they shall mutually select a third investment banker to determine the
Fair Market Value of the Membership Interest. The Fair Market Value as
determined pursuant to this paragraph shall be final and binding on all
parties. The fees and expenses of all investment bankers performing
services described in this paragraph shall be borne by the Company.
Section 11.6 Sale to Third Party. If Nobility Homes requests 21st
Century to purchase its Membership Interests as permitted by the terms of
Section 11.5(a), and 21st Century rejects the request to purchase, 21st
Century hereby consents to Nobility Homes' sale of its Membership
Interests to a third party and such consent shall constitute the consent
for the purposes required by the terms of this Agreement.
Section 11.7 Co-Sale Rights. In the event a Member is permitted
according to the terms of this Agreement to sell all or any part of its
Membership Interests to a third party, each Member agrees that the other
Member shall have a co-sale right to sell an equal interest of its
Membership Interests to such third party and that no Member may sell its
Membership interests to such third party unless the other Member is also
permitted the right to sell an equal amount of its Membership Interests to
such third party.
ARTICLE XII
ADDITIONAL MEMBERS
From the date of the formation of the Company, any Person acceptable to
all the Members may become a Member of this Company.
ARTICLE XIII
DISSOLUTION AND TERMINATION
Section 13.1 Dissolution.
(a) The Company shall be dissolved upon the occurrence of any of the
following events:
(i) When the period fixed for the duration of the Company shall
expire pursuant to the terms of this Operating Agreement;
(ii) By the unanimous written agreement of all Members;
(iii) Subject to the terms of Section 13.1(b) of this
Operating Agreement, upon delivery of written notice
of termination by any Member to the Company and the
other Members; or
(iv) Upon the resignation, removal, bankruptcy, insolvency or
dissolution of a Member, merger in which the Company is not
the surviving organization, or the occurrence of any other
event which terminates the continued membership of a Member
in the Company pursuant to any provision of the Act (a
"Withdrawal Event"), unless the business of the Company is
continued by the consent of the remaining Members holding a
Majority in Interest within ninety (90) days after the
Withdrawal Event and there are at least two (2) remaining
Members.
(b) Notwithstanding the terms of Section 13.1 of this Operating
Agreement, a Member shall not have the right to withdraw and
cause the dissolution and termination of the Company for a
period beginning six (6) months from the date of this Agreement
and continuing until five (5) years from the date of this
Agreement, except in the event there is a change in management
of either Member after a six (6) month period but prior to the
five (5) years from the date of this Agreement. For 21st
Century, "change in management" shall mean if both of the
following officers are no longer an active officer of 21st
Century: ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇. In the case of
Nobility Homes, "change in management" shall mean if both of the
following officers are no longer an active officer of Nobility
Homes: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. In the event a
Member exercises any power to terminate its Membership Interest
by withdrawing in violation of the terms of this Operating
Agreement, the Company and the remaining Members may enforce all
legal and equitable remedies available against such withdrawing
Member.
(c) Notwithstanding the terms of Section 13.1 of this Operating
Agreement, the following events shall not cause a dissolution of
the Company:
(i) Acquisition of a Member's complete Membership Interest by
the Company; and
(ii) Assignment of a Member's Governance Rights as permitted by
the Act and the terms of the Operating Agreement to the
extent that the assigning Member retains no Governance
Rights.
Section 13.2 Effect of Dissolution. Upon dissolution, the Chief Manager
shall file a notice of dissolution pursuant to the terms of the Act, and
the Company shall cease to carry on its business, except as permitted by
the Act.
Section 13.3 Winding Up.
(a) If the Company is dissolved and its affairs are to be wound up,
the Chief Manager shall liquidate Company assets, allocate
profits and losses, discharge liabilities and distribute
remaining assets.
(b) Upon completion of the winding up, liquidation, and distribution
of the assets, the Company shall be deemed terminated.
(c) The Chief Manager shall comply with any applicable requirements
of the Act pertaining to the winding up of the affairs of the
Company and the final distribution of its assets.
Section 13.4 Articles of Termination. 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, articles of termination shall be executed and
verified by the person signing the articles which articles shall set forth
the information required by the Act. Originals of such articles of
dissolution shall be delivered to the Tennessee Secretary of State. Upon
the filing of the articles of dissolution, the existence of the Company
shall cease, except for the purpose of suits, other proceedings and
appropriate action as provided in the Act. The Chief Manager shall have
authority to distribute any Company property discovered after dissolution,
convey real estate and take such other action as may be necessary on
behalf of and in the name of the Company.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.1 Application of Tennessee Law. This Operating Agreement,
and the application of interpretation hereof, shall be governed
exclusively by its terms and by the laws of the State of Tennessee, and
specifically the Act.
Section 14.2 No Action for Partition. No Member has any right to
maintain any action for partition with respect to the property of the
Company.
Section 14.3 Further Assurances. The Members hereby covenant and agree
to execute and deliver, or cause to be executed and delivered, and to do
or make, or cause to be done or made, upon the reasonable, any and all
instruments, papers, deeds, acts or things, supplemental, confirmatory or
otherwise, as may be reasonably required by any Member for the purpose of
effecting the terms of this Agreement and operating the Company as
contemplated by the terms of this Operating Agreement.
Section 14.4 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 Operating Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the
effect of an original violation.
Section 14.5 Rights and Remedies Cumulative. The rights and remedies
provided by this Operating Agreement are cumulative and the use of any one
right or remedy by any party shall not preclude or waive the right to use
any or all other remedies. Such rights and remedies are given in addition
to any other rights the parties may have by law, statute, ordinance, or
otherwise.
Section 14.6 Heirs, Successors and Assigns. 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 Operating Agreement, their
respective heirs, legal representatives, successors, and assigns.
Section 14.7 Creditors. None of the provisions of this Operating
Agreement shall be for the benefit or enforceable by any creditors of the
Company.
Section 14.8 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement.
Section 14.9 Federal Income Tax Elections. All elections required or
permitted to be made by the Company under the Code shall be made by the
Chief Manager as determined in his sole discretion.
Section 14.10 Notices. Except where otherwise specifically provided
herein to the contrary, any and all notices, offers, demand, or elections
required or permitted to be made under this Operating Agreement
("Notices") shall be in writing, signed by the party giving such Notice,
and shall be deemed given and effective (i) sent by telecopy and confirmed
by certified mail, (ii) on the third (3rd) business day (which term means
a day when the United States Postal Service or its legal successor
("Postal Service") is making regular deliveries of mail on all of its
regularly appointed weekday rounds in Knoxville, Tennessee) following the
day (as evidenced by proof of mailing) upon which such notice is
deposited, postage prepaid, certified mail, return receipt requested, with
the Postal Service, and addressed to the other party at such party's
respective address as set forth below, or at such other address as the
other party may hereafter designate by Notice or (iii) when hand-delivered
(either in person by the party giving such notice, or by its designated
agent, or by commercial courier).
Section 14.11 Amendments. Any amendment to this Operating Agreement of
Membership shall be made in writing and signed by Members holding a
Majority Vote.
Section 14.12. Invalidity. The unenforceability of any particular
provision of this Operating Agreement shall not affect the other
provisions hereof, and the Operating Agreement shall be construed in all
respects as if such invalid or unenforceable provision were omitted. If
any particular provision herein is construed to be in conflict with the
provisions of the Act, the Act shall control and such invalid or
unenforceable provisions shall not affect or invalidate the other
provisions hereof, and this Operating Agreement shall be construed in all
respects as if such conflicting provisions were omitted.
Section 14.13 Determination of Matters Not Provided for in This Operating
Agreement. The Members holding a Majority Vote shall decide any questions
arising with respect to the Company and this Operating Agreement which are
not specifically or expressly provided for in this Operating Agreement or
under the Act.
Section 14.14 Time. TIME IS OF THE ESSENCE OF THIS OPERATING AGREEMENT,
AND TO ANY PAYMENTS, ALLOCATIONS, AND DISTRIBUTIONS SPECIFIED UNDER THIS
OPERATING AGREEMENT.
Section 14.15 Adoption of Act. Except as otherwise provided in the
Articles of Organization or this Operating Agreement, the Company hereby
adopts the provisions of the Act.
MEMBERS' SIGNATURE PAGE
Each of the undersigned agrees to become a Member in Nobility 21,
LLC, and each shall be bound by all the terms of the Operating Agreement
to which this signature page is attached.
21st CENTURY MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Chief Financial Officer
NOBILITY HOMES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
Nobility 21, Limited Liability Company
Operating Agreement - Exhibit A
Register of Membership Interests
Financial Governance Capital
Name and Address of Member Date Right Rights Contribution
21st Century Mortgage Corporation 7/17/97 50% 50% $250,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Nobility Homes, Inc. 7/17/97 50% 50% $250,000
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT B
SALES AND SERVICES AGREEMENT
by and between
21st CENTURY MORTGAGE CORPORATION,
a Delaware corporation
and
NOBILITY 21, LLC,
a Tennessee limited liability company
DATED: JULY ____, 1997
TABLE OF CONTENTS
Page
1. Assignment of Collections . . . . . . . . . . . . . . . . . . . 31
2. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 32
4. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . 33
5. Prior Transactions . . . . . . . . . . . . . . . . . . . . . . 33
6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 34
10. Modification; Waiver . . . . . . . . . . . . . . . . . . . . . 34
11. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13. Independent Contractor . . . . . . . . . . . . . . . . . . . . 34
14. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 34
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 34
SIGNATURE PAGE
SALES AND SERVICES AGREEMENT
This Sales and Services Agreement (the "Agreement") is made and entered
into as of July ____, 1997 by and between 21st CENTURY MORTGAGE
CORPORATION, a Delaware corporation ("21st Century"), and NOBILITY 21,
LLC, a Tennessee limited liability company (the "Company").
_______________________________
21st Century originates, finances, sells and services manufactured
housing sales contracts and sells insurance products for manufactured
housing. The Company promotes the purchase of manufactured housing sales
contracts (the "Contracts") originated from sales of manufactured homes
manufactured or sold by Nobility Homes, Inc. or its wholly owned
subsidiary Prestige Homes, Inc. (such corporations referred to
collectively hereinafter as "Nobility Homes"). 21st Century seeks to
purchase from Nobility Homes and resell or pledge the Contracts to third
party purchasers or lenders (collectively, the "Investors"). 21st Century
has agreed to assign to the Company a portion of the collections from the
sale of the Contracts to Investors by 21st Century. The Company has agreed
to indemnify 21st Century for certain losses incurred by 21st Century from
its sale of Contracts to Investors.
_______________________________
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the sufficiency of which are hereby acknowledged, 21st Century and
the Company agree as follows.
1. Assignment of Collections. 21st Century hereby agrees to assign to
the Company an amount equal to collections and proceeds received
from all Contracts including but not limited to (a) the collections
received on a monthly basis by 21st Century in connection with
Contracts pledged to Investors and (b) the proceeds from any sale of
the Contracts after deducting the following amounts:
(a) service fees paid to 21st Century based upon the schedule
attached hereto as Exhibit A;
(b) service fees (other than service fees already paid to 21st
Century) which may be paid to unrelated parties and not to
include any service fees described hereinafter;
(c) accrued interest due to Investors under the terms of the
agreements with the Investors;
(d) principal components due to Investors under the terms of the
agreements with the Investors;
(e) reserve funds for the Contracts which were required by
agreements with Investors;
(f) reimbursements from Contract obligors to 21st Century for
insurance escrow premiums paid by 21st Century;
(g) FHA insurance premiums paid by 21st Century in connection with
Contracts; and
(h) other costs which are incurred by 21st Century in connection
with payment to the Investors of all-in cost of funds as
required by the Investors.
The amount distributed to the Company is referred to collectively
hereinafter as the "Net Collections." 21st Century shall identify in
writing for the Company the Contracts which have been sold or pledged
to the Investors.
2. Payment. 21st Century shall deliver the Net Collections under the
terms of this Agreement by (a) the tenth (10th) day of each month or
the first business day thereafter in the event the tenth day is not
a day on which financial institutions are open or (b) the tenth
(10th) day after any sale of Contracts. Any amounts owed to the
Company by 21st Century under the terms of this Agreement will be
paid solely from payments or proceeds received by 21st Century
pursuant to the Contracts.
3. Indemnification. In consideration of 21st Century assigning the Net
Collections, the Company hereby agrees to indemnify, hold harmless
and release 21st Century and its officers, directors, employees,
stockholders and agents from and against:
(a) Any and all claims, expenses, demands, liabilities, suits,
damages or costs incurred as the result of a default by the
maker of any Contract whose Net Collections have been assigned
to the Company pursuant to the terms of this Agreement;
(b) All losses, expenses (including reasonable attorneys' fees and
expenses) and all other costs of repossession, refurbishing or
liquidation of any Contract whose Net Collections have been
assigned to the Company pursuant to the terms of this Agree-
ment; and
(c) Any and all other claims, expenses, demands, liabilities,
suits, damages or costs incurred in connection with the
Contracts whose Net Collections have been assigned to the
Company pursuant to the terms of this Agreement.
4. Reimbursement. In the event 21st Century incurs any loss which is
to be indemnified by the Company under the terms of this Agreement,
21st Century will give notice to the Company by means of written
report of the amount of the loss. The Company shall reimburse 21st
Century for any loss indemnified under the terms of this Agreement
within thirty (30) days following the date such notice is given by
21st Century except to the extent 21st Century is directly paid for
such loss.
5. Prior Transactions. For the purpose of determining the Contracts
attributable to the Company, 21st Century shall credit to the
Company the outstanding unpaid principal amount determined as of the
date of this Agreement of Contracts originated by Nobility Homes
prior to the date of this Agreement which have been purchased by
21st Century.
6. Termination. Either party shall have the right to terminate this
Agreement upon providing prior written notice to the other party.
Notwithstanding the termination of this Agreement, this Agreement
shall continue to remain in full force and effect for not less than
three hundred ninety-five (395) days after the final payment
received by 21st Century under any Contract whose Net Collections
have been assigned by 21st Century to the Company pursuant to the
terms of this Agreement as of the date of such termination.
7. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be deemed to have
been duly given if in writing and delivered personally, or mailed
first class, postage prepaid, registered or certified mail, as
follows:
If to 21st Century:
21st Century Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇
If to the Company:
Nobility 21, LLC
c/o 21st Century Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇
with a copy to:
Nobility Homes, Inc.
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇
21st Century and the Company may change the address to which such
communications are to be directed to it by giving written notice to
the other party in the manner provided in this Section.
8. Governing Law. This Agreement shall be construed in accordance with
Tennessee law.
9. Entire Agreement. This Agreement constitutes the entire agreement
among the parties in respect of the transaction contemplated hereby
and supersedes and prior agreements, arrangements and undertakings
relating to the subject matter hereof. No covenant or condition not
expressed in this Agreement shall affect or be effective to
interpret, change or restrict this Agreement.
10. Modification; Waiver. No modification, waiver, termination,
rescission, discharge or cancellation of this Agreement, and no
waiver or any provision of or default under this Agreement shall
affect the right of 21st Century or the Company thereafter to
enforce any other provision or to exercise any right or remedy in
this Agreement.
11. Assignment. All of the terms, covenants, representations,
warranties and conditions of this Agreement shall be binding upon,
and inure to the benefit of and be enforceable by, the parties
hereto and their respective successors, assigns and other legal
representatives. This Agreement and the rights and obligations
hereunder shall not be assigned without the written consent of the
parties hereto.
12. Costs. Except as otherwise expressly provided herein, each party
hereto shall be responsible for its own costs in connection with
this Agreement and the transactions contemplated hereby, including
without limitation fees and expenses of attorneys. Notwithstanding
the terms of this Agreement, the costs for enforcing the terms of
this Agreement as a result of either party failing to fulfill its
obligations hereunder, including all costs and expenses of any
attorneys, shall be paid by the party failing to perform its
obligations.
13. Independent Contractor. The parties expressly understand and agree
that 21st Century is acting as an independent contractor unrelated
to the Company. Nothing in this Agreement is intended to create a
relationship, express or implied, of employer or employee or
principal agent or partnership between 21st Century and the Company.
14. Further Assurances. The parties to this Agreement hereby covenant
and agree to execute and deliver, or cause to be executed and
delivered, and to do or make, or cause to be done or made, upon
reasonable requests, any and all instruments, papers, deeds or
things, supplemental, confirmatory or otherwise, as may be
reasonably required for the purpose of effecting the terms of this
Agreement.
15. Counterparts. This Agreement may be executed in any number of
counterparts and each shall be considered an original and together
they shall constitute one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
21st CENTURY MORTGAGE CORPORATION
By:______________________________
▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
NOBILITY 21, LLC
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Secretary/Treasurer
EXHIBIT A
SERVICE FEES SCHEDULE
OUTSTANDING PRINCIPAL SERVICE FEE EXPRESSED AS A
BALANCE OF CONTRACTS SERVICED PERCENTAGE OF THE OUTSTANDING
AS OF FIRST DAY OF EACH MONTH PRINCIPAL BALANCE OF ALL
CONTRACTS
$ 0.00 to $ 50,000,000 1.50%
$ 50,000,000 to $100,000,000 1.25%
In excess of $100,000,000 1.00%
EXHIBIT C
MANUFACTURED/MODULAR HOME DEALER AGREEMENT
THIS AGREEMENT made and entered into this day of _________________,
1997 between NOBILITY HOMES, INC., and all of its majority owned
subsidiaries ("Dealer"), whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and 21st CENTURY MORTGAGE CORPORATION ("Lender"),
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Lender and Dealer desire
to enter into an Agreement whereby Lender will purchase retail installment
contracts or other lien instruments (hereafter called "Contracts")
covering new and used manufactured/modular homes (hereafter called
"Property") sold by Dealer to its Customers, together with all of Dealer's
right, title and interest in the Property, all insurance policies,
guarantees and warranties in connection therewith, and all proceeds
thereof.
NOW, THEREFORE, in consideration of the premises contained herein
Lender and Dealer agree as follows:
1. Purchase Terms. The purchase by Lender of contracts shall be
without recourse except as described below, or as specifically
authorized by an officer of Dealer in regards to a specific Contract
sold to Lender. Lender will be under no obligation to purchase any
Contract from Dealer which Lender, in its sole discretion,
determines to be unacceptable. Purchase price of each Contract
acceptable to Lender shall be an amount equal to the unpaid balance
of the amount financed less Lender's finance charges thereon as
agreed upon (including but not limited to prepaid finance charges),
and less any charges stated in each Contract for any insurance
premiums. Upon purchase of a Contract from Dealer, all payments
accrued from the date of Customer's execution of the Contract shall
be paid to Lender and deemed fully earned; provided, however, such
payments shall be paid to Lender only if such Contract has been
funded within two (2) business days after the Lender has received a
complete Contract with all related supporting documents.
(a) Dealer will assign conventional contracts to Lender with
repurchase until two payments have been paid by customer to
Lender.
(b) Dealer will assign FHA Contracts to Lender with repurchase
until four payments have been paid by customer to Lender.
2. Dealer Warranties. Dealer warranties as follows: The facts presented
with each contract are true; the collateral shall be free and clear
of all liens and encumbrances except that created by such contracts,
the first and superior lien evidenced by such contracts will be
assigned to Lender; all contracts will be genuine and all things it
purports to be; Dealer has good title to the property and has the
right to transfer title; the contract is not usurious; the property
shall have been sold to Customer in a bona fide time sale
transaction; that all parties have the legal capacity to contract;
none of the parties are minors; that the documentation involved in
any contract shall be legally sufficient and enforceable; the
property shall have been properly delivered and accepted by
Customer, Dealer has fulfilled all obligations to Customer; down
payments shown on contracts will have been made in cash or its
equivalent Lender approved trade-in value and no part of the down
payment will have been directly or indirectly loaned by the Dealer
to the Customer.
Dealer agrees that in the event the Customer successfully asserts
against Lender and receives a judgment in a court of law or similar
judicial body for any claim, defense or counterclaim against payment
of any amount owing under a Contract or in defense of repossession
on the assertion, either oral or written, that the property is
defective, not as represented by Dealer, or that Dealer refuses to
honor any warranty or service agreement of Dealer or manufacturer,
then Dealer agrees to repurchase the affected Contract for an amount
equal to the sum of the unpaid balance of the amount financed under
such Contract plus accrued but unpaid finance charges plus Lender's
costs and expenses, including attorneys' fees incurred by Lender.
3. Dealer Default. The following shall constitute Dealer default:
Breach of any warranty contained herein, failure to perform any
covenants contained herein, failure to perform any other obligation
secured hereby when the same should be performed, filing of a
petition by or against Dealer under the bankruptcy or like law;
appointment of a receiver; or assignment for the benefit of
creditors. Also, the insolvency or cessation of business by Dealer,
or any surety or guarantor of Dealer's obligations, the
reorganization or merger of Dealer, the occurrence of any sale or
offer of sale by Dealer of all or a substantial part of Dealer's
assets other than in the ordinary course of business.
4. Dealer Obligation For Early Default. In the event of repossession
of Property financed with a Contract before payment of two (2)
monthly payments or before payment of four (4) bi-weekly payments on
a conventional loan by obligor under the Contract or before four (4)
monthly payments have been paid by obligor under an FHA insured
Contract, Dealer will repurchase such Contract for the unpaid
balance of the amount financed plus accrued but unpaid finance
charges plus Lender's costs and expenses, including attorneys' fees
incurred by Lender.
5. Dealer's Obligation in Event of Repossession. If an event of
default occurs under a Contract, the Dealer will, upon Lender's
request, repossess the manufactured home and at the direction of
Lender will refurbish the home. Dealer will resell the home from
Dealer's place of business for a price to be determined by the
Lender. Lender will reimburse Dealer for reasonable cost of
repossession and refurbishing the home. Lender will pay a commission
to Dealer in an amount agreed to between the parties, but in no
event shall the commission rate exceed 10% of the resale price;
provided, however, the Dealer will pay fifty percent (50%) of such
commission to the sales person selling the repossessed home. Lender
shall not be obligated to reimburse Dealer for the cost of
repossession, refurbishing or for the sales commission if the Dealer
is obligated to repurchase the Contract. If the Dealer is obligated
to repurchase the Contract and the customer defaults on the
Contract, the Dealer will pay to the Lender within thirty (30) days
of Lender's request the loan payoff amount due on the defaulted
Contract.
6. Lender Authorization to Sign. Dealer authorizes Lender or its agent
to sign and endorse Dealer's name upon checks or other forms of
payment that may come into possession of Lender. Lender is
authorized to sign Contracts, Certificates of Title, Manufacturer
Statement of Origin and other documents necessary to carry out the
intent of this Agreement. Lender may refinance, rewrite, extend,
substitute Customers, or in any other manner deal with the customers
and their contract without Dealer's consent and without affecting
Dealer's obligations under this Agreement.
Dealer agrees to cooperate in executing financing statements or other
documents necessary to enable Lender to perfect its security interest
in any such property. If Dealer fails to cooperate in executing
financing statements presented by Lender for signature, Dealer hereby
grants Lender an irrevocable power of attorney with all power to sign
all such financing statements as attorney-in-fact in Dealer's name as
debtor, if such signature is required under the applicable commercial
laws.
7. Additional Security Interest. Dealer hereby grants Lender a
security interest in any Collection Fee Income, reserve account or
other property rights established for Dealer's benefit prior to or
subsequent to the date of this Agreement, whether such reserve,
participation or other amounts earned by Dealer are considered to be
an account, general intangible or other category of tangible or
intangible personal property. Upon termination of this Agreement,
such security interest shall continue until all of Dealer's
obligations to Lender are satisfied.
8. Assignment By Lender. Lender is authorized to assign their rights
and obligations under this Agreement to others who would purchase
contracts covered by this Agreement.
9. Binding Effect. This Agreement shall be applicable to all contracts
purchased after the date of this Agreement. It shall bind the
parties and their respective heirs, successors, assigns and
affiliate companies.
10. Solicitation for Insurance. Lender has the right to sell casualty
and life insurance coverage placed on Contracts or provide
information to insurance companies for the purpose of sale or
solicitation of coverage on those customers who have not purchased
insurance through the Dealer or any affiliate of Dealer. This
provision does not prohibit Dealer from soliciting customers for
renewal of insurance coverage. Commissions received by Lender from
insurance coverage placed on Contracts (as reasonably determined by
Lender) shall be paid to Nobility 21, LLC or its successors and
assigns.
11. Payments To Employees. Lender will not pay anything of value
directly or indirectly to an employee of the Dealer without written
consent of Dealer.
IN WITNESS WHEREOF the foregoing Agreement is hereby executed and
sealed by the Parties this ____ day of_______________, 1997.
LENDER:
21st CENTURY MORTGAGE CORPORATION
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Secretary
DEALER:
NOBILITY HOMES, INC.
By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer