Exhibit 10.1
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EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
OF
CENTERBROOK HOLDINGS LLC
SCHEDULES
Schedule A - Addresses for Notices
Schedule B - Allocations
EXHIBITS
Exhibit A - Members and Membership Interests
LIMITED LIABILITY COMPANY AGREEMENT
OF
CENTERBROOK HOLDINGS LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT OF CENTERBROOK HOLDINGS LLC, a
Delaware limited liability company (the "COMPANY"), dated as of June 28, 2006,
is entered into by and among Charter Mac Corporation, a Delaware corporation,
and IXIS Financial Products Inc., a Delaware corporation, as the members.
WHEREAS, the Company was formed under the Delaware Limited Liability
Company Act (6 Del. C. ss. 18-101, et seq.) (as amended from time to time, the
"COMPANY ACT"), by the filing of a Certificate of Formation of the Company with
the Delaware Secretary of State on December 20, 2005 (as amended from time to
time, the "CERTIFICATE");
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties do hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ADDITIONAL CAPITAL" has the meaning set forth in 4.2(a).
"ADMINISTRATOR" means Charter Capital LLC, as Administrator under the
Administrative Services Agreement, or any successor pursuant to the terms of the
Administrative Services Agreement.
"ADMINISTRATIVE SERVICES AGREEMENT" means the Administrative Services
Agreement dated as of June 28, 2006 between the Company and the Administrator,
or any successor agreement with a successor Administrator, as amended from time
to time.
"AFFILIATE" means, with respect to any Entity, any Person which, directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, any such Entity and, if such Person is an
individual, any member of the immediate family (including without limitation
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
The term "control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, PROVIDED
that, in any event, any Person that owns directly or indirectly securities
having 5% or more of the voting power for the election of directors or other
governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
"AGREEMENT" means this Limited Liability Company Agreement, as originally
executed and as amended, modified, supplemented or restated from time to time,
as the context requires.
"AVAILABLE CASH" means, with respect to the applicable period, the excess,
if any, of
(a) the gross cash receipts of the Company and its Subsidiaries for
such period from all sources whatsoever, including cash released by the
Board of Managers from previously established reserves, plus any previously
undistributed Available Cash from any prior period, over
(b) the total cash paid by the Company and its Subsidiaries during
such period for all purposes of the Company whatsoever.
Notwithstanding the foregoing, Available Cash shall not include any cash
received by the Company, but set aside at the discretion of the Board of
Managers, as reserves.
"BOARD OF MANAGERS" means, the five members comprising the management
committee of the Company, four of which are appointed from time to time by the
Charter Member, and one of which is appointed from time to time by the Special
Member.
"CAPITAL CONTRIBUTION" means, with respect to any Member, any cash which
such Member contributes or is deemed to contribute to the Company pursuant to
Section 4.1 or 4.2.
"CAPITAL MODEL" has the meaning set forth in the Centerbrook Operating
Agreement.
"CENTERBROOK" means Centerbrook Financial LLC, a Delaware limited liability
company.
"CENTERBROOK OPERATING AGREEMENT" means the Limited Liability Company
Agreement of Centerbrook, dated as of June 28, 2006, entered into by the
Company, as amended from time to time.
"CERTIFICATE" has the meaning set forth in the preamble.
"CHARTERMAC" means CharterMac, a Delaware statutory trust.
"CHARTERMAC EVENT" means any of the following: (a) any representation or
warranty made by CharterMac in the CharterMac Guarantee shall prove to have been
incorrect when made or deemed made; (b) CharterMac shall fail to observe or
perform any covenant contained in Section 4.01 of the CharterMac Guarantee and
such failure shall continue unremedied for a period of 5 or more Business Days;
and (c) CharterMac shall fail to observe or perform any covenant contained in
Section 4.02 of the CharterMac Guarantee.
"CHARTERMAC GUARANTEE" means the Guarantee Agreement, dated as of June 28,
2006, between IXIS Financial Products Inc. and CharterMac, as amended from time
to time.
"CHARTER MEMBER" means Charter Mac Corporation, a Delaware corporation, in
such Person's capacity as a member of the Company, including its permitted
successors and assigns.
"CHARTER MEMBER INTEREST" means the Membership Interest of the Charter
Member in the Company.
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"COMMITMENT PERIOD" has the meaning set forth in Section 4.1(a).
"COMMITMENTS" means the Original Commitments and the Special Commitments.
"COMPANY" has the meaning set forth in the preamble.
"COMPANY ACT" has the meaning set forth in the preamble.
"COMPANY AUDITOR" means Deloitte & Touche LLP.
"COMPANY YEAR" means each fiscal year of the Company, which shall be the
calendar year beginning on January 1 and ending on December 31.
"CREDIT ENHANCEMENT BUSINESS" means any of the following:
(a) Credit enhancement of tax exempt or taxable multi-family revenue
bonds or other debt obligations relating to multi-family real estate,
including multi-family real estate that is newly constructed or under
construction or rehabilitation or relating to existing properties.
(b) Credit enhancement of TOB Tax-Exempt Certificates relating to
individual or pooled multi-family housing revenue bonds held by a trust or
other investment vehicle.
(c) Credit enhancement of Tax Credit Investments, including the
returns and tax benefits realized by Pass Through Entities which invest
directly or through Pass Through Entities in multi-family properties
anticipated to be entitled to Tax Credits, including Local Partnerships.
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(d) Issuance of recapture bonds to be provided to the IRS to avoid a
recapture of Tax Credits in accordance with Section 42 of the Code
following a change of ownership of multi-family real estate or the entities
owning such multi-family real estate.
"ENTITY" means any general partnership, limited partnership, corporation,
joint venture, trust, business trust, statutory trust, real estate investment
trust, limited liability company, limited liability partnership, cooperative,
association or other legal entity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"FORCED SALE" means the sale of all or substantially all of the assets and
properties of the Company in a bona fide arm's length transaction to or with a
Person not otherwise an Affiliate of the Company or CharterMac or a Subsidiary
thereof or any of the Company's Members.
"GAAP" means United States generally accepted accounting principles, as in
effect from time to time.
"INDEMNITEE" means
(a) any Person that is made a party to, or is a witness in, or is
threatened to be made a party to or a witness in, or is otherwise involved
in, any threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative, by reason of such
Person's status as
(i) a Member or an Affiliate of a Member,
(ii) an officer or director of the Company,
(iii) a director or officer of a Member or an Affiliate of a
Member,
(iv) a director, trustee, member, or officer of any other Entity,
if such Person is serving in such capacity at the request of the
Company or the Board of Managers,
(v) a member of the Board of Managers, or
(vi) the Administrator, or an officer or director of the
Administrator; and
(b) such other Persons (including Affiliates of a Member or the
Company) as the Board of Managers may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole
and absolute discretion.
"INTEREST RATE" means the prime rate of interest published from time to
time by Bank of America, N.A., or its successor, or, if such rate is not
published, as determined by the Board of Managers by any other reasonable means.
"IRS" means the Internal Revenue Service of the United States.
"IXIS BOARD MEMBER" means the member of the Board of Managers appointed by
the Special Member, if the Special Member is IXIS Financial Products Inc. or any
Affiliate thereof.
"LIEN" means any lien, security interest, mortgage, deed of trust, charge,
claim, encumbrance, pledge, option, right of first offer or first refusal and
any other right or interest of others of any kind or nature, actual or
contingent, or other similar encumbrance of any nature whatsoever.
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1 hereof.
"LIQUIDATOR" has the meaning set forth in Section 13.2 hereof.
"LOCAL PARTNERSHIPS" has the meaning set forth in the definition of "Tax
Credit Investments".
"MEMBER" means the Charter Member, Special Member or any other holder of
Membership Interests in the Company other than an Other Equity holder admitted
as a member of the Company, and "MEMBERS" means the Charter Member, the Special
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Member and each other holder, if any, of Membership Interests in the Company
other than an Other Equity holder admitted as a member of the Company
collectively.
"MEMBERSHIP INTEREST" means an ownership interest in the Company of a
Member representing a Capital Contribution by such Member and includes a limited
liability company interest and any and all benefits to which the holder of such
Membership Interest may be entitled as provided in this Agreement or in the
Company Act, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Membership Interest shall be expressed
as a number of Units.
"ORIGINAL COMMITMENT" has the meaning set forth in Section 4.1(a).
"ORIGINAL COMMITMENT PERMITTED PURPOSES" has the meaning set forth in
Section 4.1(a).
"ORIGINAL MEMBERS" means the Charter Member and the Special Member.
"OTHER EQUITY" has the meaning set forth in Section 4.3(a).
"PASS THROUGH ENTITY" means any entity which is a pass through entity for
federal income tax purposes.
"PERCENTAGE INTEREST" means, at any time, with respect to a Member, the
ratio that (i) the number of such Member's Units at such time bears to (ii) the
total number of Units of all Members of the Company at such time, expressed as a
percentage. The initial Percentage Interest for each Member as of the date of
this Agreement shall be set forth in Exhibit A attached hereto.
"PERSON" means an individual or Entity.
"PUT DEFAULT" means the failure of Charter Mac Corporation to purchase any
or all of the Units and warrants as required and in accordance with Section 4 of
the Warrant Agreement.
"QUARTER" means each of the three month periods ending on March 31, June
30, September 30 and December 31.
"RATING AGENCY" has the meaning set forth in the Centerbrook Operating
Agreement.
"REGULATIONS" means the final, temporary or proposed Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"SPECIAL COMMITMENT" has the meaning set forth in Section 4.1(b).
"SPECIAL COMMITMENT PERMITTED PURPOSES" has the meaning set forth in
Section 4.1(b).
"SPECIAL MEMBER" means IXIS Financial Products Inc., a Delaware
corporation, in such Person's capacity as a member of the Company, including its
permitted successors and assigns.
"SUBSIDIARY" means, with respect to any Person, any Entity of which a
majority of
(a) the voting power of the voting equity securities or
(b) the outstanding equity interests,
is owned, directly or indirectly, by such Person.
"SUBSTITUTED MEMBER" means any Person to whom Units are Transferred in
accordance with Article 11 hereof and who is admitted to the Company as a member
of the Company in connection therewith.
"TAX CREDITS" means new market tax credits, low-income housing tax credits,
state low-income housing tax credits, historic rehabilitation tax credits, state
historic rehabilitation tax credits, home ownership tax credits (if such credits
are enacted as part of the Code) and similar tax credits established by state
programs, as well as depreciation and losses derived from the single-family and
multi-family affordable housing transactions owned by any Local Partnerships
that are allocated to the limited partner or member of such Local Partnership in
accordance with Section 42 of the Code and any applicable state legislation.
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"TAX CREDIT INVESTMENTS" means ownership interests in limited partnerships
or limited liability companies (the "LOCAL PARTNERSHIPS") in respect of which
certain Tax Credits are allocated to such Local Partnerships.
"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition of
all or substantially all of the assets of the Company or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Company.
"TOB TAX-EXEMPT CERTIFICATES" has the meaning set forth in the Centerbrook
Operating Agreement.
"TRANSFER" as a noun, means any sale, assignment, conveyance, pledge,
hypothecation, gift, encumbrance or other transfer, and as a verb, means to
sell, assign, convey, pledge, hypothecate, give, encumber or otherwise transfer.
"WARRANT AGREEMENT" means the Unitholder and Warrant Agreement, dated as of
June 28, 2006, among the Company, IXIS Financial Products Inc. and Charter Mac
Corporation, as amended from time to time.
"WIND-DOWN EVENT" has the meaning set forth in the Centerbrook Operating
Agreement.
"UNIT" means a fractional, undivided share of the Membership Interests of
all Members issued pursuant to Sections 4.1 and 4.2. The number of Units
outstanding in the Company are set forth in Exhibit A, as such Exhibit may be
amended from time to time in accordance with Section 14.1.
Certain additional terms and phrases have the meanings set forth in the
preamble and text of this Agreement.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 Continuation
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The Members hereby agree to continue the Company under and pursuant to
the Company Act. Except as expressly provided herein to the contrary, the rights
and obligations of the Members and the administration and termination of the
Company shall be governed by the Company Act. The Membership Interest of each
Member shall be personal property for all purposes.
2.2 Name
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The name of the Company shall continue to be Centerbrook Holdings LLC.
The Company's business may be conducted under any other name or names deemed
advisable by the Board of Managers.
2.3 Registered Office and Agent; Principal Office
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The address of the registered office of the Company in the State of
Delaware and the name and address of the registered agent for service of process
on the Company in the State of Delaware is Corporation Service Company, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The principal office of
the Company shall be ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other place
as the Board of Managers may from time to time designate by notice to the
Members. The Company may maintain offices at such other place or places within
or outside the State of Delaware as the Board of Managers deems advisable.
2.4 Term
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The term of the Company commenced on the date of filing of the
Certificate and shall continue until the Company is dissolved pursuant to the
provisions of Article 13 or as otherwise provided by law.
2.5 Authorized Person
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The Charter Member is hereby designated as the "authorized person" of
the Company within the meaning of the Company Act, and shall execute, deliver
and file or authorize persons to execute, deliver or file any amendments and/or
restatements of the Certificate and any other certificates (and any corrections,
amendments and/or restatements thereof) required or permitted by the Company Act
to be filed with the Secretary of State of the State of Delaware.
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ARTICLE 3
PURPOSE
3.1 Purpose and Business
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The purpose and nature of the business to be conducted by the Company
is to directly and through Centerbrook and other directly or indirectly owned
Subsidiaries engage in the Credit Enhancement Business.
3.2 Powers
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In connection with carrying out the purpose and business of the
Company set forth in Section 3.1, and subject to the terms and conditions of
this Agreement, the Company shall have full power and authority to enter into,
perform, and carry out contracts of any kind, to borrow money and to issue
evidences of indebtedness, whether or not secured by mortgage, trust deed,
pledge or other Lien, and, directly or indirectly, to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Company.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 Capital Contributions of the Members
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(a) ORIGINAL COMMITMENTS. On the terms and conditions set forth in
this Section 4.1 and for any Original Commitment Permitted Purpose, (i) the
Charter Member hereby unconditionally commits to make capital contributions
to the Company in cash up to an aggregate amount of $270 million as a
capital contribution at any time and from time to time during the period of
five (5) years commencing on the date hereof (the "COMMITMENT PERIOD") and
(ii) the Special Member hereby unconditionally commits to make capital
contributions to the Company in cash up to an aggregate amount of $30
million as a capital contribution at any time and from time to time during
the Commitment Period (each such commitment, a "ORIGINAL Commitment"). The
Board of Managers, in its sole discretion, shall have the right (but shall
not be obligated notwithstanding any fiduciary duty it may have to the
Company, the Members or the creditors of the Company) to call upon the
Original Members to make contributions at any time and from time to time
during the Commitment Period up to, and ratably in proportion to, the
aggregate amount of their respective Original Commitments for the following
purposes (collectively, the "ORIGINAL COMMITMENT PERMITTED PURPOSES"): (1)
in order to pay operating expenses of the Company and (2) to make a capital
contribution to Centerbrook for use by Centerbrook (v) to incur new credit
enhancement obligations in the Credit Enhancement Business, (w) to meet
then-existing credit enhancement obligations in the Credit Enhancement
Business or to comply with requirements set forth by the Rating Agencies
applicable to Centerbrook, (x) to pay "Administrative Expenses" (as defined
in the Centerbrook Operating Agreement) and other operating expenses of
Centerbrook, (y) to provide funds necessary to comply with the Capital
Model, and (z) to make "Project Investments" (as defined in the Centerbrook
Operating Agreement). The Original Members acknowledge that their
obligation to make said capital contributions is absolute and unconditional
and the rights of the Company shall not be subject to any defense, set-off,
counterclaim or recoupments which the Original Members may have against the
Company or by reason of any indebtedness or liability at any time owing by
the Company to the Original Members or by the Original Members to each
other. Any request by the Board of Managers under this clause (a) shall be
given by notice to the Original Members in writing of (i) the total amount
of the Original Commitment being called and each Original Member's pro rata
share thereof, (ii) the related Original Commitment Permitted Purpose, and
(iii) the date each Original Member's capital is due and payable, which
date shall be not less than 10 business days after such notice has been
given.
(b) SPECIAL COMMITMENTS. On the terms and conditions set forth in this
Section 4.1 and for any Special Commitment Permitted Purpose, from and
after the date on which the Original Commitments have been fully called,
(i) the Charter Member hereby unconditionally commits to make capital
contributions to the Company in cash up to an aggregate amount of $54
million as a capital contribution at any time and from time to time during
the Commitment Period and (ii) the Special Member hereby unconditionally
commits to make capital contributions to the Company in cash up to an
aggregate amount of $6 million as a capital contribution at any time and
from time to time during the Commitment Period (each such commitment, a
"SPECIAL COMMITMENT"). The Board of Managers, in its sole discretion, shall
have the right (but shall not be obligated notwithstanding any fiduciary
duty it may have to the Company, the Members or the creditors of the
Company) to call upon the Original Members to make contributions at any
time and from time to time during the Commitment Period up to, and ratably
in proportion to, the aggregate amount of their respective Special
Commitments for the following purposes (collectively, the "SPECIAL
COMMITMENT PERMITTED PURPOSES"): to make a capital contribution to
Centerbrook for use by Centerbrook (x) to cure any "Capital Model
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Deficiency Amount" as determined by the Capital Model in connection with
the then-existing credit enhancement obligations of Centerbrook and (y) as
shall be required in order for Centerbrook to maintain its "AAA" (or
equivalent) counterparty rating with the Rating Agencies (if applicable) or
to otherwise prevent an event of the type described in Section 12.1(f) of
the Centerbrook Operating Agreement from occurring. The Original Members
acknowledge that their obligation to make said capital contributions is
absolute and unconditional and the rights of the Company shall not be
subject to any defense, set-off, counterclaim or recoupments which the
Original Members may have against the Company or by reason of any
indebtedness or liability at any time owing by the Company to the Original
Members or by the Original Members to each other. Any request by the Board
of Managers under this clause (a) shall be given by notice to the Original
Members in writing of (i) the total amount of the Special Commitment being
called and each Original Member's pro rata share thereof, (ii) the related
Special Commitment Permitted Purpose, and (iii) the date each Original
Member's capital is due and payable, which date shall be not less than 10
business days after such notice has been given.
(c) FAILED CONTRIBUTIONS. If a Member fails to make any Capital
Contribution requested under clause (a) or clause (b) above prior to the
expiration of the applicable due date (any such non-contributing party is
referred to in this clause (c) as the "DEFAULTING MEMBER"; and each Member
that actually funded its pro rata share of the requested Capital
Contribution is referred to in this clause (c) as a "CONTRIBUTING MEMBER"),
the Board of Managers shall give prompt notice of such failure and the
amount of the requested Capital Contribution not funded to the Company
(such amount is hereinafter referred to as the "FAILED CONTRIBUTION") and
within 30 business days after the date of such notice, a Contributing
Member may elect to fund the Failed Contribution. The Board of Managers
shall continue to have the option to call for the Defaulting Member's pro
rata share of the capital called pursuant to clause (a) or clause (b)
above, but, with respect to capital calls under clause (b) above, the Board
of Managers may, in its sole discretion, call for additional capital under
said clause (b) from the other Members without calling for additional
capital from the Defaulting Member.
(d) UNITS. Each Member shall be issued one Unit in the Company for
each $100,000 (or fraction thereof) of its Capital Contribution and each
Capital Contribution shall be made by the applicable Member in cash. Except
as provided in this Section 4.1 and in Section 4.2, no other Units shall be
issued by the Company. EXHIBIT A shall be amended upon each Capital
Contribution to reflect the additional capital contributed by the relevant
Member and any resulting adjustment to a Member's Percentage Interest.
4.2 Additional Capital Contributions
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(a) If the Board of Managers determines, in its sole discretion, (i)
at any time that the Members' Commitments have not been fully utilized, for
any purpose related to the Credit Enhancement Business other than an
Original Commitment Permitted Purpose or a Special Commitment Permitted
Purpose and (ii) from and after the date on which the Members' Commitments
have been fully utilized, for any purpose related to the Credit Enhancement
Business (PROVIDED that any capital contributions to be made by the Company
to any Subsidiary of the Company shall be permitted only if such Subsidiary
is a Subsidiary of the Company in which no interest therein is owned by
CharterMac or its Affiliates (other than the Company)) that the Company
requires additional capital contributions (the "ADDITIONAL CAPITAL"), then
the Board of Managers or its designee shall have the right (but shall not
be obligated notwithstanding any fiduciary duty it may have to the Company,
the Members or the creditors of the Company) to give notice to the Members
in writing (the "CALL NOTICE") of (i) the total amount of Additional
Capital required and each Member's pro rata share thereof, (ii) the reason
the Additional Capital is requested, and (iii) the date each Member's share
of the Additional Capital is due and payable, which date shall be not less
than 45 business days after the notice has been given.
(b) Each Member shall have the right to fund its pro rata portion of
the amount of each request for Additional Capital, but no Member shall be
obligated to fund any such request. If a Member elects, at its sole option,
to not contribute the Additional Capital requested in clause (a) above
prior to the expiration of the applicable due date (each Member that
actually funded its pro rata share of the requested Capital Contribution is
referred to in this clause (b) as a "CONTRIBUTING MEMBER"), the Board of
Managers shall give prompt notice of such election and the amount of the
capital contribution not funded to the Company (such amount is hereinafter
referred to as the "Declined Contribution") and within 30 business days
after the date of such notice, any Contributing Member may elect to fund
the Declined Contribution.
(c) If, at any time, the Special Member's Percentage Interest is less
than 5% (which Percentage Interest shall be determined for purposes of this
clause (c) excluding from the denominator thereof Units owned by Persons
other than the Special Member, the Charter Member and their respective
Affiliates) and the aggregate amount of the Capital Contributions made by
the Special Member is less than $50,000,000, the Special Member shall no
longer have the right to appoint a member of the Board of Managers. If the
Special Member loses its right to appoint a member to the Board of
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Managers, but, thereafter, its Percentage Interest or aggregate capital
contribution exceeds either of such levels, its right to appoint a member
of the Board of Managers shall be reinstated, for so long as either of such
levels are met. If the Special Member does not have the right to appoint a
member of the Board of Managers pursuant to this Section 4.2(c), then the
Company shall permit a representative of the Special Member (the
"OBSERVER") to attend each meeting of the Board of Managers (in person or
via telephone), in a non-voting capacity. The Company shall send to the
Observer the notice of the time and place of each such meeting in the same
manner and at the same time as it shall send such notice to the members of
the Board of Managers. The Company shall also provide the Observer with
copies of all reports, minutes, consents and other information at the same
time and in the same manner as such information is provided to the members
of the Board of Managers.
4.3 Issuance of Additional Membership Interests; Admission of Additional
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Members
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(a) The Board of Managers is authorized, without the consent of any
Member (except as provided in Section 7.2), to cause the Company or its
Subsidiaries to issue additional classes of equity (the "OTHER EQUITY") in
one or more series or classes, or in one or more series of any such class
which may be senior to the Units, which may include preferred equity
entitling the investor to receive statutory credits or other recognition in
consideration of its ratings under the Community Reinvestment Act or other
similar federal or state legislation, on such terms and conditions, as the
Board of Managers shall establish in each case, subject to Delaware law,
including, without limitation, (i) the allocations of items of Company
income, gain, loss, deduction and credit with respect to the holder of the
Other Equity, (ii) the rights of the holder of the Other Equity to share in
Company distributions, and (iii) the rights of the holder of the Other
Equity upon dissolution and winding up of the Company. The Special Member
shall have the right to acquire, on the same terms and conditions, its pro
rata share, based on its Percentage Interest, of the Other Equity issued
pursuant to this clause (a). The Company shall provide the Special Member
not less than 30 days notice describing the Other Equity to be offered, the
proposed offering price of the Other Equity, and the other terms and
conditions on which it intends to offer the Other Equity. If the Special
Member elects to participate in such offering and purchase its pro rata
share of the Other Equity, it shall do so by providing the Company written
notice thereof by the end of such 30 day period.
(b) Without the consent of any other Person (except as provided in
Section 7.2), the Board of Managers shall have the authority to amend this
Agreement to the extent necessary to reflect the rights of the holders of
the Other Equity or additional Membership Interests issued in accordance
with Section 4.3(a).
(c) The Board of Managers is authorized to issue warrants on the terms
set forth in the Warrant Agreement and to issue Units on exercise thereof
on the terms set forth in the Warrant Agreement.
4.4 No Third Party Beneficiary
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To the maximum extent permitted by law and except for the rights of
Indemnitees under Section 7.5, no creditor or other third party having dealings
with the Company shall have the right to enforce the rights or obligations of
any Member to make Capital Contributions or loans or to pursue any other right
or remedy hereunder or at law or in equity, it being understood and agreed that
the provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns. In extending credit to the Company, to the maximum extent permitted by
law, no creditor can rely on any Member's obligation to make Capital
Contributions or loans to the Company.
ARTICLE 5
DISTRIBUTIONS
5.1 Regular Distributions
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Except for distributions pursuant to Section 13.2 in connection with
the dissolution and winding up of the Company, and subject to the provisions of
Sections 5.3, 5.4 and 10.5, Available Cash shall be distributed at such times as
shall be determined by the Board of Managers, to each Member, pro rata, in
accordance with such Member's respective Percentage Interest.
5.2 Distributions Upon Liquidation
------------------------------
Proceeds from a Terminating Capital Transaction and any other cash
received or reductions in reserves made after the dissolution and during the
period of winding up of the Company shall be distributed to the Members in
accordance with Section 13.2.
8
5.3 Limitations on Distributions
----------------------------
Notwithstanding any other provision contained in this Agreement, the
Company, and the Board of Managers on behalf of the Company, shall not be
required to make any distribution to a Member in respect of its interest in the
Company if such distribution would violate the Company Act or other applicable
law.
ARTICLE 6
ALLOCATIONS
6.1 Allocations
-----------
Items of income, deduction, gain and loss, if any, in each taxable
year of the Company shall be allocated to the Members, in accordance with
Schedule B.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
7.1 Management
----------
(a) Subject to this Section 7.1 and Section 7.2(f) and Section 7.2(g),
full, complete and exclusive discretion to manage and control the business
and affairs of the Company is and shall be vested in the Board of Managers,
and no Member shall have any authority to act for or bind the Company or
any right to participate in or exercise control or management power over
the business and affairs of the Company. In addition to the powers now or
hereafter granted a managing member of a limited liability company under
applicable law or which are granted to the Board of Managers under any
other provision of this Agreement, the Board of Managers shall have full
power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Company, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof.
(b) The Board of Managers may from time to time delegate all or any
portion of its authority to others, including without limitation agents,
officers and other employees of itself or the Company which it or the
Company may appoint, hire or contract with at the Company's expense. Such
persons may include persons employed by the Charter Member and its
Affiliates, including persons providing services pursuant to the
Administrative Services Agreement.
(c) (i) Each of the Members agrees that, subject to Section 7.2, each
member of the Board of Managers or a designee thereof is authorized to
execute, deliver and perform all agreements and transactions on behalf of
the Company without any further act, approval or vote of the Members to the
fullest extent permitted under the Company Act or other applicable law,
rule or regulation.
(ii) To the fullest extent permitted by law, the execution,
delivery or performance by a member of the Board of Managers, a
designee thereof or the Company of any agreement authorized or
permitted under this Agreement shall not constitute a breach by the
Board of Managers of any duty that the Board of Managers may owe the
Company or the Members or any other Persons under this Agreement or of
any duty stated or implied by law or equity.
7.2 Board of Managers
-----------------
(a) The Board of Managers shall consist of five (5) members and shall
have such powers as set forth in this Agreement. Four (4) of the members
shall be appointed by the Charter Member (the "CHARTER BOARD MEMBERS") and
one (1) of the members shall be appointed by the Special Member, if the
Special Member is IXIS Financial Products Inc. or its Affiliate.
Notwithstanding anything in this Agreement to the contrary or any duty
(fiduciary or otherwise) that might otherwise have existed at law or in
equity, and to the fullest extent permitted by applicable law, (i) the IXIS
Board Member shall not be deemed to owe any duty (including fiduciary
duties) to any Member or any other Person (other than the Special Member),
including without limitation in connection with (x) the business of the
Company and its Subsidiaries, (y) any action by any Manager or Member
pursuant to this Agreement or (z) any approval or withholding of consent
contemplated by this Agreement, (ii) whenever in this Agreement the IXIS
Board Member is permitted or required to make a decision or to give or
withhold approval or consent, the IXIS Board Member shall be entitled to
act in its sole discretion and in the interests of the Special Member,
(iii) the IXIS Board Member shall not have any obligation to otherwise
consider the interests of any of the other Members in exercising any rights
pursuant to this Agreement and (iv) each of the IXIS Board Member, its
9
officers and employees, and their respective agents and/or representatives
shall not be liable to any Member or any other Person (other than the
Special Member) for any action or inaction in connection with this
Agreement.
(b) The Charter Member or Special Member, as the case may be, may
appoint any alternate for each member appointed to the Board of Managers
who shall have the powers of the Board of Managers member in his absence or
inability to serve. The Charter Member or Special Member, as the case may
be, shall have the sole power to remove any member or alternate member of
the Board of Managers appointed by it, by delivery of written notice to the
other Member of such removal. Vacancies on the Board of Managers shall be
filled by the Member which appointed the Board of Managers member
previously holding the position which is then vacant.
(c) The Board of Managers, shall (but shall not be obligated
notwithstanding any fiduciary duty it may have to the Company, the Members
or the creditors of the Company), in its sole discretion, be entitled to
call upon the Members to make loans to the Company on a pro rata basis in
accordance with their Percentage Interests and on such terms as shall be
determined by the Board of Managers, in lieu of calling for Additional
Capital pursuant to Section 4.2. Notwithstanding the authority of the Board
of Managers to call upon the Members to make loans pursuant to this Section
7.2(c), no Member shall be obligated to make such loans to the Company.
(d) Subject to Section 7.2(f) and Section 7.2(g) each Board of
Managers member shall be entitled to cast one vote with respect to any
decision made by the Board of Managers, PROVIDED that the members who are
actually present at a meeting of the Board of Managers shall be entitled to
cast the vote of a member not present at such meeting, with the written
consent of such non-attending member on whose behalf a vote is being cast.
(e) The Board of Managers shall meet at least once each quarter at the
offices of the Company (unless such meeting shall be waived by all members
thereof) or on the call of either the Charter Member or Special Member or
three members of the Board of Managers upon 10 days' notice to the Members
and all members of the Board of Managers by telephone, electronic mail,
telecopy (with receipt confirmed by sender's fax machine). An agenda for
each meeting shall be prepared in advance by the Member or the members of
the Board of Managers who called the meeting. Three members of the Board of
Managers shall constitute a quorum, except in such cases as stipulated in
Section 7.2(f) or Section 7.2(g) when the consent of the IXIS Board Member
or the Special Member, as the case may be, is required for the proposed
action to be taken, in which case a quorum shall only be deemed to be
present if the IXIS Board Member or the Special Member, as the case may be,
is also present. Subject to Section 7.2(f) and Section 7.2(g), the vote of
a majority of the members of the Board of Managers shall be required for
all actions of the Board of Managers and for all matters on which the Board
of Managers can act under this Agreement. The Board of Managers may act
without a meeting if the action taken is approved in advance in writing by
a majority of the Members including the IXIS Board Member or the Special
Member, as the case may be, where the consent of the IXIS Board Member or
the Special Member, as the case may be, is required pursuant to Section
7.2(f) or Section 7.2(g).
(f) Notwithstanding anything to the contrary set forth in this
Agreement, the Board of Managers shall not, without the consent of the IXIS
Board Member (unless and to the extent that the Special Member's right to
select a member of the Board of Managers has been terminated (and not
reinstated) under Section 4.2(c)), which may be granted in its sole and
absolute discretion, cause the Company to:
(i) amend, waive or otherwise modify, or terminate, this
Agreement or the Administrative Services Agreement, PROVIDED that the
Board of Managers may amend this Agreement to reflect the rights of
Additional Units or Other Equity permitted to be issued under this
Agreement, subject only to the consent of the IXIS Board Member as to
the form of such amendment and, notwithstanding anything to the
contrary contained herein, the Special Member may not withhold its
consent based on the substance of such amendment;
(ii) approve the budget under the Administrative Services
Agreement for any calendar year if the aggregate amount in such budget
exceeds 110% of the aggregate amount in the budget for the immediately
preceding calendar year, PROVIDED that if such immediately preceding
calendar year is less than a full calendar year, the calculation shall
be based on the annualized amount set forth in the budget for such
immediately preceding calendar year; or approve any expenditures under
the budget as then in effect for any calendar year under the
Administrative Services Agreement if the aggregate expenditures under
such budget would exceed 110% of the aggregate amount originally set
forth in such budget.
(iii) change the lines of business of the Company or any of its
Subsidiaries to any lines of business other than a line of business
specified in Section 3.1 of this Agreement;
10
(iv) sell, assign or transfer assets of the Company or any of its
Subsidiaries (including equity interests in Centerbrook or any other
Subsidiary of the Company) outside the ordinary course of business,
except to the extent permitted under the Warrant Agreement or in
connection with a Forced Sale permitted under clause (xiv) below;
(v) merge or consolidate with, or convert into, another Entity or
acquire the assets of another Entity other than the acquisition of
investments made by Centerbrook or other Subsidiaries which
investments are related to the Credit Enhancement Business;
(vi) issue to the Charter Member or its Affiliates additional
Units or Other Equity which are senior in any respect to the Units
owned by the Special Member;
(vii) permit any transactions between (x) the Company and/or
Centerbrook or any other Subsidiary of the Company on the one hand and
(y) the Charter Member or any of its Affiliates (other than the
Company and its wholly-owned Subsidiaries) or any non-wholly-owned
Subsidiary of the Company on the other hand, unless such transaction
is on arm's length terms no less favorable than that which could be
obtained from an independent third party, other than the
Administrative Services Agreement and the issuance of Units to the
Charter Member in accordance with the terms hereof;
(viii) issuance of any equity interest in Centerbrook or any
other Subsidiary of the Company to the Charter Member or any of its
Affiliates (other than the Company or any of its Subsidiaries);
(ix) file a petition in bankruptcy or consent to the institution
of a bankruptcy proceeding with respect to, or otherwise permit the
liquidation, dissolution or winding up of, the Company, Centerbrook or
any of its Subsidiaries, except in connection with a Forced Sale
permitted under clause (xiv) below;
(x) appoint any successor Administrator under the Administrative
Services Agreement (or appoint any Person to fulfill any of the
obligations or duties contained in the Administrative Services
Agreement) or consent to the assignment by the Administrator of its
rights and obligations under the Administrative Services Agreement;
(xi) transfer or assign its obligations under the Centerbrook
Operating Agreement;
(xii) permit any changes to the Capital Model that could permit
at any time the ratio of (x) the aggregate amount of equity capital
contributed to Centerbrook up to such time DIVIDED BY (y) the
aggregate notional amount of all CDS (as defined in the Centerbrook
Operating Agreement) in the CDS Program (as defined in the Centerbrook
Operating Agreement) at such time to be lower than 0.05;
(xiii) form or acquire, or permit any of its Subsidiaries to form
or acquire, any non-wholly-owned Subsidiaries to the extent that any
ownership interest therein is held by CharterMac or any of its
Affiliates (other than the Company or any of its wholly-owned
Subsidiaries);
(xiv) sell all or substantially all of the assets and properties
of the Company, PROVIDED that, subject to the rights of the Special
Member under Section 4.01(c) of the Warrant Agreement, the Company
shall be permitted to enter into a Forced Sale without such consent at
any time after the fifth anniversary of the date hereof so long as the
Company shall have provided written notice thereof to the "Holders"
(as defined in the Warrant Agreement), which notice shall set forth
the consideration (including amount and type) and the other terms and
conditions thereof, at least 20 days prior to the consummation
thereof; and
(xv) at any time that the Board of Managers consists of three or
more members that are also employees of Holdings, enter into any
employment agreement, profits interests agreement, incentive plan
agreement or any other employment related agreement with any employee
or prospective employee of the Company.
(g) Notwithstanding anything to the contrary set forth in this
Agreement, at any time that the Special Member's right to select a member of the
Board of Managers has been terminated (and not reinstated) under Section 4.2(c),
the Board of Managers shall not, without the consent of the Special Member,
which may be granted in its sole and absolute discretion, cause the Company to:
11
(i) amend, waive or otherwise modify this Agreement or the
Administrative Services Agreement, PROVIDED that the Board of Managers
may amend this Agreement to reflect the rights of Additional Units or
Other Equity permitted to be issued under this Agreement, subject only
to the consent of the Special Member as to the form of such amendment
and, notwithstanding anything to the contrary contained herein, the
Special Member may not withhold its consent based on the substance of
such amendment;
(ii) change the lines of business of the Company or any of its
Subsidiaries to any lines of business other than a line of business
specified in Section 3.1 of this Agreement;
(iii) sell, assign or transfer assets of the Company or any of
its Subsidiaries (including equity interests in Centerbrook or any
other Subsidiary of the Company) to CharterMac or any of its
Affiliates;
(iv) issue to the Charter Member or its Affiliates additional
Units or Other Equity which are senior in any respect to the Units
owned by the Special Member;
(v) permit any transactions between (x) the Company and/or
Centerbrook or any other Subsidiary of the Company on the one hand and
(y) the Charter Member or any of its Affiliates (other than the
Company and its wholly-owned Subsidiaries) or any non-wholly-owned
Subsidiary of the Company on the other hand, unless such transaction
is on arm's length terms no less favorable than that which could be
obtained from an independent third party, other than the
Administrative Services Agreement and the issuance of Units to the
Charter Member in accordance with the terms hereof;
(vi) issuance of any equity interest in Centerbrook or any other
Subsidiary of the Company to the Charter Member or any of its
Affiliates (other than the Company or any of its Subsidiaries);
(vii) form or acquire, or permit any of its Subsidiaries to form
or acquire, any non-wholly-owned Subsidiaries to the extent that any
ownership interest therein is held by CharterMac or any of its
Affiliates (other than the Company or any of its wholly-owned
Subsidiaries);
(viii) sell all or substantially all of the assets and properties
of the Company, PROVIDED that, subject to the rights of the Special
Member under Section 4.01(c) of the Warrant Agreement, the Company
shall be permitted to enter into a Forced Sale without such consent at
any time after the fifth anniversary of the date hereof so long as the
Company shall have provided written notice thereof to the "Holders"
(as defined in the Warrant Agreement), which notice shall set forth
the consideration (including amount and type) and the other terms and
conditions thereof, at least 20 days prior to the consummation
thereof; and
(ix) at any time that the Board of Managers consists of three or
more members that are also employees of Holdings, enter into any
employment agreement, profits interests agreement, incentive plan
agreement or any other employment related agreement with any employee
or prospective employee of the Company.
7.3 Reimbursement of the Board of Managers
--------------------------------------
(a) The Board of Managers shall be reimbursed for all out-of-pocket
expenses that it incurs on behalf of the Company.
(b) Such reimbursement shall be in addition to (but without
duplication of) any reimbursement made as a result of indemnification
pursuant to Section 7.5 hereof.
7.4 Transactions with Affiliates
----------------------------
(a) (i) The Company may lend or contribute funds or other assets to
Subsidiaries and such Subsidiaries may borrow funds from the Company, on
terms and conditions established in the sole and absolute discretion of the
Board of Managers.
(ii) The foregoing authority shall not create any right or
benefit in favor of any Affiliate or any other Person.
12
(b) The Company may in the ordinary course of business Transfer assets
to Subsidiaries and entities which thereby become Subsidiaries upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the Board of Managers, in its sole and absolute
discretion, may determine.
(c) The Company may enter into an Administrative Services Agreement,
in respect of services to be performed, directly or indirectly, for the
benefit of the Company, the Members, any Subsidiaries of the Company or any
Affiliate of any of them, on terms to be approved by the Members.
(d) One of the principal purposes for the formation of the Company is
to engage in the Credit Enhancement Business with respect to tax exempt
bonds owned by CharterMac and its Affiliates and returns to investors in
investment programs sponsored by CharterMac or its Affiliates. Accordingly,
the Board of Managers, without the consent of the Members, shall have the
authority to enter into agreements directly or through Centerbrook and its
directly or indirectly owned Subsidiaries to engage in the Credit
Enhancement Business with CharterMac and its Affiliates and it shall not
constitute a breach of duty, including any fiduciary duty, to enter into
such transactions, PROVIDED that the Board of Managers reasonably
determines in each case that the credit enhancement transaction meets the
requirements set forth in this Agreement and the operating agreement of the
applicable Subsidiary and is on arm's length terms no less favorable than
that which could be obtained from an independent third party.
(e) Nothing in this Section 7.4 shall limit Section 7.2(f) or Section
7.2(g).
7.5 Indemnification
---------------
(a) (i) To the fullest extent permitted by Delaware law, the Company
shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including,
without limitation, reasonable attorneys' fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from
any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that such Indemnitee becomes
subject to or liable for by reason of the formation, operation, dissolution
or termination of the Company or the actions of such Indemnitee in
connection with the conduct of the affairs of the Company, except to the
extent it is finally determined by a court of competent jurisdiction, from
which no further appeal may be taken, that such Indemnitee's action
constituted intentional acts or omissions constituting willful misconduct
or gross negligence.
(ii) Any indemnification pursuant to this Section 7.5 shall be
made only out of the assets of the Company, and neither the Charter
Member nor Special Member shall have any obligation to contribute to
the capital of the Company, or otherwise provide funds, to enable the
Company to fund its obligations under this Section 7.5.
(b) Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Company in advance of the
final disposition of the proceeding so long as such Indemnitee or a Person
on such Indemnitee's behalf shall have provided the Company with a written
undertaking to reimburse the Company for all amounts advanced if it is
ultimately determined that such Indemnitee is not entitled to
indemnification hereunder.
(c) The indemnification provided by this Section 7.5 shall be in
addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote or consent of the
Members, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise
provided in a written agreement pursuant to which such Indemnitee is
indemnified.
(d) Notwithstanding any duty otherwise existing at law or in equity,
and to the fullest extent permitted by law, the members of the Board of
Managers shall not be subject to a fiduciary duty to the Company or the
Members and each member of the Board of Managers shall be entitled to vote
or consent based on the interests of, and in accordance with the directions
of, the Member appointing him or her.
(e) The Company may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as
the Board of Managers shall determine, against any liability that may be
asserted against or expenses that may be incurred by such Person in
connection with the Company's activities, regardless of whether the Company
would have the power to indemnify such Person against such liability under
the provisions of this Agreement.
13
(f) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.5 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(g) (i) The provisions of this Section 7.5 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(ii) Any amendment, modification or repeal of this Section 7.5 or
any provision hereof shall be prospective only and shall not in any
way affect the Company's liability to any Indemnitee under this
Section 7.5, as in effect immediately prior to such amendment,
modification, or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.6 Liability of the Members of the Board of Managers and the Members
-----------------------------------------------------------------
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the Members and the members of the Board of Managers shall not
be liable for monetary damages to the Company or any Members for losses
sustained or liabilities incurred as a result of errors in judgment or
mistakes of fact or law or of any act or omission unless such member of the
Board of Managers' or the Member's actions constitute intentional acts or
omissions constituting willful misconduct or gross negligence.
(b) The members of the Board of Managers and the Members shall not be
responsible for any misconduct or negligence on the part of any agent
appointed by the Board of Managers in good faith.
(c) Notwithstanding any duty that might otherwise have existed under
law or equity, whenever this Agreement or any other agreement contemplated
hereby provides any Indemnitee or their respective Affiliates is permitted
or required to make a decision (i) in its "discretion" or under a grant of
similar authority or latitude, the Indemnitee or such Affiliate shall, to
the fullest extent permitted by law, be entitled to consider such interests
and factors as it desires and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Company or any
Member, or (ii) in its "good faith" or under another express standard, any
Indemnitee or Affiliate thereof shall act under such express standard and
shall not be subject to any other or different standards, imposed by this
Agreement, any other agreement contemplated hereby or applicable law or
equitable principles, unless otherwise required by a mandatory provision of
applicable law.
(d) The provisions of this Agreement, to the extent they restrict or
eliminate the duties and liabilities of any Indemnitee or Affiliate thereof
otherwise existing at law or in equity, are agreed by the Members to
completely replace such other duties and liabilities of the Indemnitee or
their Affiliates.
7.7 Other Matters Concerning the Board of Managers
----------------------------------------------
(a) The members of the Board of Managers may rely and shall be
protected in acting, or refraining from acting, upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, or other paper or document believed by it
in good faith to be genuine and to have been signed or presented by the
proper party or parties.
(b) The members of the Board of Managers may consult with legal
counsel, accountants, appraisers, management consultants, investment
bankers, architects, engineers, environmental consultants and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which the
members of the Board of Managers reasonably believe to be within such
Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith if taken in accordance with such
opinion.
(c) In the event an attorney in fact is acting on behalf of the
members of the Board of Managers, such attorney in fact shall, to the
extent provided by the members of the Board of Managers in their power of
attorney, have full power and authority to do and perform each and every
act and duty which is permitted or required to be done by the members of
the Board of Managers hereunder.
14
7.8 Reliance by Third Parties
-------------------------
(a) Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Company shall be entitled to assume that the Board
of Managers has full power and authority, without consent or approval of
any Member or any other Person, to encumber, sell or otherwise use in any
manner any and all assets of the Company and to enter into any contracts on
behalf of the Company, and take any and all actions on behalf of the
Company, and such Person shall be entitled to deal with the Board of
Managers as if the Board of Managers were the Company's sole party in
interest, both legally and beneficially.
(b) To the fullest extent permitted by law, each Member hereby waives
any and all defenses or other remedies which may be available against such
Person to contest, negate or disaffirm any action of the Board of Managers
in connection with any such dealing, other than in connection with actions
requiring consent pursuant to Section 7.2(f) and Section 7.2(g).
(c) In no event shall any Person dealing with the Board of Managers or
its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or
expediency of any act or action of the Board of Managers or their
representatives.
(d) Each and every certificate, document or other instrument executed
on behalf of the Company by the Board of Managers or its representatives at
the direction of the Board of Managers shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that
(i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force
and effect;
(ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for
and on behalf of the Company; and
(iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Company.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF THE MEMBERS
8.1 Limitation of Liability
-----------------------
The Members shall have no liability under this Agreement except for
intentional acts or omissions constituting willful misconduct or gross
negligence.
8.2 Management of Business
----------------------
The Members shall not take part in the day-to-day operations or
management of the Company, transact any business in the Company's name or have
the power to sign documents for or otherwise bind the Company, except through
the Board of Managers.
8.3 Outside Activities of the Members
---------------------------------
(a) Notwithstanding any duty otherwise existing at law or in equity,
any Member or member of the Board of Managers and any officer, director,
employee, agent, trustee, Affiliate or shareholder of any Member shall be
entitled to and may engage in or possess an interest in any other business
venture, of every nature and description, independently or with others,
whether or not competitive with the business of the Company, except as
separately agreed in writing between the Special Member and the Charter
Member.
(b) Notwithstanding any duty otherwise existing at law or in equity,
neither the Company nor any Member shall have any rights by virtue of this
Agreement in any business ventures, or the income derived therefrom, of any
Member outside of the business contemplated by this Agreement and/or any
exhibits hereto.
15
8.4 Rights of Members Relating to the Company
-----------------------------------------
(a) In addition to the other rights provided by this Agreement or by
the Company Act, and except as limited by Section 8.4(d), the Company shall
promptly provide to the Members all information reasonably requested by any
or all of them in connection with any filing requirements (whether related
to tax or otherwise) applicable to any Member.
(b) In addition to the other rights provided by this Agreement or by
the Company Act, and except as limited by Section 8.4(d), each Member shall
have the right, PROVIDED that such request is for a purpose reasonably
related to such Member's interest as a Member in the Company, upon written
demand with a statement of the purpose of such demand and at such Member's
own expense:
(i) to obtain a copy of the Company's federal, state and local
income tax returns for each Company Year;
(ii) to obtain a current list of the name and last known
business, residence or mailing address of any Member;
(iii) to obtain a copy of this Agreement and the Certificate and
all amendments or restatements thereto, together with executed copies
of all powers of attorney pursuant to which this Agreement, the
Certificate and all amendments and/or restatements thereto have been
executed.
(c) In addition to the other rights provided by this Agreement or by
the Company Act and except as limited by Section 8.4(d) hereof, the Board
of Managers shall send to each Member at the Company's expense, within the
time periods set forth below:
(i) as soon as available and in any event within 120 days after
the close of each Company Year, (a) the statements of income of the
Company for such Company Year, (b) the related balance sheets
(including any related notes thereto) of the Company as at the end of
such Company Year, (c) the related statements of equity and cash flows
for the Fiscal Year, (d) the related notes to the financial statements
and (d) an opinion of the Company Auditor, which opinion shall state
that the final statements of income, retained earnings and cash flows
and balance sheet (including the related notes thereto) delivered
under this clause fairly present the financial condition and results
of operations of the Company as at the end of, and for, such Company
Year in accordance with GAAP;
(ii) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each Company Year of
the Company, (a) the statements of income of the Company for each such
quarter and (b) the related balance sheets (including any related
notes thereto) of the Company as at the end of such quarter and the
related statements of cash flows for the period from the beginning of
such Company Year to the end of such quarter;
(iii) as soon as available with respect to each Company Year,
annual budgets of the Company, Centerbrook and each of their
Subsidiaries;
(iv) as soon as available, copies of (a) any auditors' reviews
pursuant to Section 2.11(g) of the Centerbrook Operating Agreement,
(b) all reports and notices pursuant to Section 9.2 of the Centerbrook
Operating Agreement, (c) each "Distribution Schedule" (as defined in
the Centerbrook Operating Agreement) delivered pursuant to Section
13.2 of the Centerbrook Operating Agreement and (d) all other notices
and reports delivered under or pursuant to the Centerbrook Operating
Agreement; and
(v) upon the occurrence thereof, notice of any event described in
Section 12.1(i) of the Centerbrook Operating Agreement.
(d) Notwithstanding any other provision of this Section 8.4, the
Company may keep confidential from each Member, for such period of time as
the Board of Managers reasonably believes is necessary, any information
that
(i) the Company is required by law to keep confidential; or
16
(ii) the Company is required by agreements with an unaffiliated
third party to keep confidential, to the extent that such Member shall
not have agreed to keep any such information confidential on
substantially similar terms and conditions as shall have been agreed
by the Company in such agreement;
PROVIDED that, notwithstanding the provisions of this Section 8.4(d),
the Members shall in any event be entitled to obtain copies of the Company's tax
returns and information reasonably needed by either Member to prepare tax
returns as provided in Section 8.4(b)(i).
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting
----------------------
(a) The Board of Managers shall keep or cause to be kept at the
principal office of the Company those records and documents required to be
maintained by the Company Act and other books and records deemed by the
Board of Managers to be appropriate with respect to the Company's business,
and to provide to the Members any information, lists and copies of
documents required to be provided pursuant to Section 8.4(a) hereof.
Subject to Section 8.4(d), any Member (or its duly authorized
representative), at the expense of such Member, shall have the right at any
time to inspect and copy from such books, records and documents during
normal business hours upon reasonable notice, PROVIDED that such inspection
and copying do not interfere with the normal business operations of the
Company; and PROVIDED, FURTHER, that such inspection is for a purpose
reasonably related to such Member's interest as a Member of the Company.
(b) Any records maintained by or on behalf of the Company in the
regular course of its business may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device, PROVIDED that the records so maintained are convertible
into clearly legible written form within a reasonable period of time.
ARTICLE 10
TAX MATTERS
10.1 Preparation of Tax Returns
--------------------------
(a) The Board of Mangers shall arrange for the preparation and timely
filing of all returns of Company income, gains, deductions, losses and
other items required of the Company for federal and state income tax
purposes and shall use commercially reasonable efforts to furnish, within
one hundred eighty (180) days of the close of each taxable year, the tax
information reasonably required by the Members for federal and state income
tax reporting purposes. In addition, the Board of Managers shall, within
seventy-five (75) days after the close of each taxable year, furnish the
Members with a list of states where Company income is reportable for such
taxable year, together with an estimate of such income allocable to each
such state.
10.2 Tax Elections
-------------
(a) The Board of Managers shall, in its sole and absolute discretion,
determine whether to make any available election pursuant to the Code;
PROVIDED, HOWEVER, that, to the extent any such election affects the amount
or timing of recognition of gain or taxable income or loss by the Members,
such election shall only be made with the consent of the Members, which
shall not be unreasonably withheld.
(b) The Board of Managers shall have the right to seek to revoke any
tax election it makes, PROVIDED, HOWEVER, that, to the extent any such
revocation of election affects the amount or timing of recognition of gain
or taxable income or loss by the Members, such revocation of election shall
only be made with the consent of the Members, which shall not be
unreasonably withheld.
10.3 Tax Matters Member
------------------
(a) The Charter Member shall serve as the "tax matters partner" of the
Company for federal income tax purposes.
17
(b) Upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Company, the tax matters
partner shall furnish the IRS with the name, address, taxpayer
identification number, and profit interest of each of the Members; PROVIDED
that such information is provided to the Company by the Members. The
Members shall have the right at their expense to participate in any audits.
(c) Except as otherwise provided in this Agreement, the tax matters
partner is authorized, but not required:
(i) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Company
items required to be taken into account by a Member for income tax
purposes (such administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters partner may
expressly state that such agreement shall bind all Members, PROVIDED
that no action shall be taken without the consent of the Board of
Managers and such settlement agreement shall not bind any Member:
(A) who (within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the
tax matters partner shall not have the authority to enter into a
settlement agreement on behalf of such Member; or
(B) who is a "NOTICE PARTNER" (as defined in Section
6231(a)(8) of the Code) or a member of a "NOTICE GROUP" (as
defined in Section 6223(b)(2) of the Code);
(ii) in the event that a notice of a final administrative
adjustment at the Company level of any item required to be taken into
account by a Member for tax purposes (a "final adjustment") is mailed
to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with
the Tax Court or the filing of a complaint for refund with the United
States Claims Court or the District Court of the United States for the
district in which the Company's principal place of business is
located;
(iii) to intervene in any action brought by any other Member for
judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the
IRS and, if any part of such request is not allowed by the IRS, to
file an appropriate pleading (petition or complaint) for judicial
review with respect to such request;
(v) to enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item required to be
taken account of by a Member for tax purposes, or an item affected by
such item; and
(vi) to take any other action on behalf of the Members or the
Company in connection with any tax audit or judicial review proceeding
to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the Board of
Managers set forth in Section 7.6 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
(d) (i) The tax matters partner shall receive no compensation for its
services as such.
(ii) All third party costs and expenses incurred by the tax
matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Company.
(iii) Nothing herein shall be construed to restrict the Company
from engaging an accounting firm to assist the tax matters partner in
discharging its duties hereunder, so long as the compensation paid by
the Company for such services is reasonable.
18
10.4 Organizational Expenses
-----------------------
The Company shall elect to deduct expenses, if any, incurred by it in
organizing the Company as provided in Section 709 of the Code.
10.5 Withholding
-----------
(a) The Members hereby authorize the Company to withhold from, or pay
on behalf of or with respect to, such Member any amount of federal, state,
local, or foreign taxes that the Board of Managers determines that the
Company is required by law to withhold or pay with respect to any amount
distributable or allocable to such Member pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by
the Company pursuant to Sections 1441, 1442, 1445, or 1446 of the Code.
Prior to withholding, the Board of Managers shall endeavor to (i) provide
reasonable advance notice to the Members, which shall provide the basis for
withholding and (ii) if requested, discuss the need to withhold with the
Members. The Board of Managers shall permit a Member who is subject to
withholding to contest the obligation to withhold at its own expense.
(b) (i) Any amount paid on behalf of or with respect to a Member shall
constitute a loan by the Company to such Member, which loan shall be repaid
by such Member within fifteen (15) days after notice from the Board of
Managers that such payment must be made unless
(A) first, the Company withholds such payment from a
distribution which would otherwise be made to the Member; or
(B) second, the Board of Managers determines, in its sole
and absolute discretion, that such payment may be satisfied out
of the available funds of the Company which would, but for such
payment, be distributed to the respective Member.
(ii) Any amounts withheld pursuant to the foregoing clauses (A)
or (B) shall be treated as having been distributed to such Member.
(c) (i) Each Member hereby unconditionally and irrevocably grants to
the Company a security interest in such Member's Membership Interest to
secure such Member's obligation to pay to the Company any amounts required
to be paid pursuant to this Section 10.5.
(ii) (A) In the event that a Member fails to pay when due any
amounts owed to the Company pursuant to this Section 10.5, the
non-defaulting Member may, in its sole and absolute discretion, elect
to make the payment to the Company on behalf of such defaulting
Member, and in such event shall be deemed to have loaned such amount
to such defaulting Member and shall succeed to all rights and remedies
of the Company as against such defaulting Member.
(B) Without limitation, in such event, the non-defaulting
Member shall have the right to receive distributions that would
otherwise be distributable to such defaulting Member until such
time as such loan, together with all interest thereon, has been
paid in full, and any such distributions so received by the
non-defaulting Member shall be treated as having been distributed
to the defaulting Member and immediately paid by the defaulting
Member to the non-defaulting Member in repayment of such loan.
(iii) Any amount payable by a Member hereunder shall bear
interest at the Interest Rate plus four (4) percentage points, but in
no event higher than the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due
(i.e., fifteen (15) days after demand) until such amount is paid in
full.
(iv) Each Member shall take such actions as the Company or the
Board of Managers shall request in order to perfect or enforce the
security interest created hereunder.
19
ARTICLE 11
TRANSFERS AND RESIGNATIONS
11.1 Transfer
--------
(a) No Membership Interest shall be Transferred, in whole or in part
except in accordance with this Article 11, and any Transfer or purported
Transfer of a Membership Interest not made in accordance with this Article
11 shall, to the fullest extent permitted by law, be null and void.
(b) The bankruptcy (as defined in the Company Act) of a Member, in and
of itself, shall not cause such Member to cease to be a Member or to
dissolve or terminate the Company.
11.2 Transfer of Membership Interests
--------------------------------
(a) A Member may Transfer, in whole or in part, its Membership
Interest to any Person and such Person shall be admitted to the Company as
a Substitute Member, PROVIDED that (i) subject to clause (b) below, the
affirmative consent of the Charter Member shall have been obtained for any
such Transfer, (ii) subject to clause (b) below, the affirmative consent of
the Special Member shall have been obtained for any such Transfer by the
Charter Member or any of its Affiliates, (iii) such Transfer shall not be
permitted (A) if it results in (x) the Company being classified as a
publicly traded partnership for purposes of Section 7704 of the Code, (y) a
violation of the federal securities laws or in the Company being treated as
an investment company under the Investment Company Act of 1940, as amended,
or (z) a violation of, or make the Company subject to the requirements of
ERISA or result in the assets of the Company being treated as "plan assets"
under ERISA, or (B) if the transferee is not treated as a United States
person within the meaning of section 7701(a)(30) of the Code, (iv) the
applicable Substituted Member shall have delivered to the Board of Managers
evidence of acceptance in a form reasonably satisfactory to the Board of
Managers of all of the terms and conditions of this Agreement and (v) any
Transfer by a Member that is a "Holder" under the Warrant shall comply with
Section 3 of the Warrant Agreement.
(b) Notwithstanding clause (a)(i) above, the following Transfers shall
not require the consent of either the Charter Member or the Special Member:
(i) any Transfer of Units contemplated by or pursuant to the
Warrant Agreement;
(ii) any Transfer of a Membership Interest by a Member to any
Affiliate of such Member or any member, manager or partner thereof;
(iii) any Transfer by the Charter Member of its Membership
Interest (x) so long as a "Change of Control" (as defined in the
Warrant Agreement) has not occurred and would not occur as a result of
such Transfer or (y) at any time that the Special Member's right to
select a member of the Board of Managers has been has been terminated
(and not reinstated) under Section 4.2(d) hereof;
(iv) any Transfer of a Membership Interest by the Special Member
after the occurrence and during the continuance of (x) an event
described in clauses (b) through (e) of the definition of "Triggering
Event" in the Warrant Agreement, (y) a Put Default or (z) a CharterMac
Event; and
(v) any bona fide pledge or assignment of a security interest to
a financial institution by the Charter Member or the Special Member in
all or any portion of a its Membership Interest to secure full
recourse obligations of such Member and, following a default, such
financial institution (or its transferee or nominee) may exercise its
default remedies and may acquire the Member Interest of such Member
and become a Member;
(c) A Substituted Member who has been admitted as a Member in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Member under this
Agreement. Upon the admission of a Substituted Member, without the need for
any additional act or consent of any Person, the Board of Managers shall
amend Exhibit A to reflect the name, address, number of Units, and to
eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Member.
20
11.3 General Provisions
------------------
(a) No Member may resign from the Company other than as a result of a
permitted Transfer of all of such Member's Units in accordance with this
Article 11.
(b) Any Member which shall Transfer all of its Units in a Transfer
permitted pursuant to this Article 11 shall cease to be a Member upon the
effective date of the Transfer.
(c) (i) Solely for purposes of making such allocations, each of such
items for the calendar month in which the Transfer or assignment occurs
shall be allocated to the transferee Member, and none of such items for the
calendar month in which an exchange, transfer or assignment occurs shall be
allocated to the transferor Member, PROVIDED, HOWEVER, that the Board of
Managers may adopt such other conventions relating to allocations in
connection with transfers, assignments, or exchanges as it determines are
necessary or appropriate.
(ii) All distributions of Available Cash attributable to Units,
with respect to which the Company Record Date is before the date of
such transfer, assignment, or exchange of such Units, shall be made to
the transferor Member, and in the case of a transfer or assignment
other than an exchange, all distributions of Available Cash thereafter
attributable to such Units shall be made to the transferee Member.
ARTICLE 12
ADMISSION OF MEMBERS
12.1 Amendment of Agreement and Certificate
--------------------------------------
For the admission to the Company of any Member in accordance with the
provisions of this Agreement, without the need for any additional act or consent
of any Person (except for any consent required under any other section of this
Agreement), the Board of Managers shall take all steps necessary and appropriate
under the Company Act to amend the records of the Company and, if necessary, to
prepare as soon as practical an amendment of this Agreement (including an
amendment of Exhibit A) and, if required by law, shall prepare and file an
amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
13.1 Dissolution
-----------
(a) The Company shall not be dissolved by the admission of Substituted
Members or by the admission of a successor Charter Board Member or IXIS
Board Member or the admission of any other Person as a Member in accordance
with the terms of this Agreement.
(b) The Company shall dissolve, and its affairs shall be wound up,
only upon the first to occur of any of the following ("LIQUIDATING
EVENTS"):
(i) an election to dissolve the Company made by the Board of
Managers;
(ii) entry of a decree of judicial dissolution of the Company
pursuant to Section 18-802 of the Company Act;
(iii) the sale of all or substantially all of the assets and
properties of the Company; and
(iv) any time there are no members of the Company, unless the
Company is continued without dissolution in accordance with the
Company Act.
13.2 Winding Up
----------
(a) (i) Upon the occurrence of a Liquidating Event, the Company shall
continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors
and Members.
21
(ii) No Member shall take any action that is inconsistent with,
or not necessary to or appropriate for, the winding up of the
Company's business and affairs.
(iii) The Board of Managers, or, in the event there is no
remaining member of the Board of Managers, any other Person elected
with the consent of the Members to act as liquidating trustee (the
Board of Managers or such other Person being referred to herein as the
"LIQUIDATOR"), shall be responsible for overseeing the winding up and
dissolution of the Company and shall take full account of the
Company's liabilities and property and the Company property shall be
liquidated as promptly as is consistent with obtaining the fair value
thereof, and the proceeds therefrom shall be applied and distributed
in the following order, unless otherwise required by mandatory
provisions of applicable law:
(A) First, to the satisfaction of all of the Company's debts
and liabilities to creditors other than the Members (whether by
payment or reasonable provision for payment thereof);
(B) Second, to the satisfaction of all of the Company's
debts and liabilities to the Members (whether by payment or
reasonable provision for payment thereof) in proportion to their
outstanding principal balances thereof;
(C) The balance, if any, to the Members to the extent of and
in accordance with the Percentage Interests, after giving effect
to all contributions, distributions, and allocations for all
periods.
(iv) The Board of Managers or its designee shall not receive any
additional compensation for any services performed pursuant to this
Article 13.
(v) Any distributions pursuant to this Section 13.2(a) shall be
made by the end of the Company's taxable year in which the dissolution
occurs (or, if later, within 90 days after the date of the
dissolution).
(b) (i) Notwithstanding the provisions of Section 13.2(a) hereof which
require liquidation of the assets of the Company, but subject to the order
of priorities set forth therein, if the Liquidator determines that an
immediate sale of part or all of the Company's assets would be impractical
or would cause undue loss to the Members, the Liquidator may, in its sole
and absolute discretion, defer for a reasonable time the liquidation of any
asset except those necessary or advisable to satisfy liabilities of the
Company (including those to Members as creditors) or distribute to the
Members, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 13.2(a) hereof, undivided interests in such Company
assets as the Liquidator deems not suitable for liquidation.
(ii) Any such distributions in kind shall be made only if, in the
good faith judgment of the Liquidator, such distributions in kind are
in the best interests of the Members, and shall be subject to such
conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time.
(iii) The Liquidator shall determine the fair market value of any
property distributed in kind using such reasonable method of valuation
as it may adopt.
(c) In the reasonable discretion of the Liquidator, a pro rata portion
of the distributions that would otherwise be made to the Members pursuant
to this Article 13 may be:
(i) distributed to a trust established for the benefit of the
Members for the purposes of liquidating Company assets, collecting
amounts owed to the Company, and paying any contingent, conditional or
unmatured liabilities or obligations of the Company or the Board of
Managers arising out of or in connection with the Company; the assets
of any such trust shall be distributed to the Members from time to
time, in the reasonable discretion of the Liquidator, in the same
proportions as the amount distributed to such trust by the Company
would otherwise have been distributed to the Members pursuant to this
Agreement; or
(ii) withheld or escrowed to provide a reasonable reserve for
Company liabilities (contingent, conditional, unmatured or otherwise)
and to reflect the unrealized portion of any installment obligations
22
owed to the Company, PROVIDED that such withheld or escrowed amounts
shall be distributed to the Members in the manner and order of
priority set forth in Section 13.2(a) hereof as soon as practicable.
13.3 No Obligation to Contribute Deficit
-----------------------------------
If any Member has a deficit balance in his Capital Account (as defined
in Schedule B) (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
dissolution occurs), such Member shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit, and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever.
13.4 Rights of the Members
---------------------
Except as otherwise provided in this Agreement, each Member shall look
solely to the assets of the Company for the return of its Capital Contributions
and shall have no right or power to demand or receive property other than cash
from the Company.
13.5 Notice of Dissolution
---------------------
In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election by one or more Members pursuant to Section
13.1 hereof, result in a dissolution of the Company, the Board of Managers
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Members.
13.6 Termination of Company and Cancellation of Certificate
------------------------------------------------------
Upon the completion of the winding up of the Company's affairs, as
provided in Section 13.2 hereof, the Company shall be terminated by the filing
of a certificate of cancellation with the Secretary of State of the State of
Delaware pursuant to the Company Act, and all qualifications of the Company as a
foreign limited liability company in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to
terminate the Company in jurisdictions other than Delaware shall be taken.
13.7 Reasonable Time for Winding Up
------------------------------
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Company and the liquidation of its assets pursuant
to Section 13.2 hereof in order to minimize any losses otherwise attendant upon
such winding up, and the provisions of this Agreement shall remain in effect
among the Members during the period of winding up.
13.8 Waiver of Partition
-------------------
Each Member hereby waives any right to partition of the Company
property.
ARTICLE 14
AMENDMENT OF OPERATING AGREEMENT; MEETINGS
14.1 Amendments
----------
Subject to Sections 4.3(b), 7.2(f), 7.2(g) and 12.1, this Agreement
may only be amended, supplemented or otherwise modified with the prior
written consent of the Charter Member.
14.2 Meetings of the Members
-----------------------
(a) (i) Meetings of the Members may be called from time to time by the
Board of Managers and shall be called upon the receipt by Board of Managers
of a written request by either Member.
(ii) Notice of any such meeting shall be given to all Members not
less than seven (7) days nor more than thirty (30) days prior to the
date of such meeting.
(iii) The request shall state the nature of the business to be
transacted.
(iv) Members may vote in person or by proxy at such meeting.
23
(v) Whenever the vote or consent of the Members is permitted or
required under this Agreement, such vote or consent may be given at a
meeting of the Members or may be given in accordance with the
procedure prescribed in Section 14.2(b) hereof.
(b) (i) Any action required or permitted to be taken at a meeting of
the Members may be taken without a meeting and without prior notice if a
written consent setting forth the action so taken is signed by the Members
required to consent to such action.
(ii) Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote at a
meeting.
(iii) Such consent shall be filed with the Board of Managers.
(iv) An action so taken shall be deemed to have been taken at a
meeting held on the effective date of the consent as certified by the
Board of Managers.
(c) (i) Each Member may authorize any Person or Persons to act for him
by proxy on all matters in which a Member is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting.
(ii) Every proxy must be signed by the Member or his attorney in
fact and a copy thereof delivered to the Company.
(iii) No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy.
(iv) Every proxy shall be revocable at the pleasure of the Member
executing it, such revocation to be effective upon the Board of
Managers' receipt of written notice of such revocation from the Member
executing such proxy.
(d) Each meeting of the Members shall be conducted by the Board of
Managers or such other Person as the Board of Managers may appoint pursuant
to such rules for the conduct of the meeting as the Board of Managers or
such other Person deems appropriate.
ARTICLE 15
GENERAL PROVISIONS
15.1 Addresses and Notice
--------------------
Any notice, demand, request or report required or permitted to be
given or made to a Member under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by overnight delivery
or via facsimile to such Member at the address set forth in Schedule A or such
other address of which such Member shall notify the Board of Managers in
writing.
15.2 Titles and Captions
-------------------
All article or section titles or captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement and shall in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "ARTICLES" and
"SECTIONS" are to Articles and Sections of this Agreement.
15.3 Pronouns and Plurals
--------------------
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
15.4 Further Action
--------------
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
24
15.5 Binding Effect
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.6 Creditors
---------
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Company.
15.7 Waiver
------
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
15.8 Counterparts
------------
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
15.9 Applicable Law
--------------
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of laws thereof.
15.10 Invalidity of Provisions
------------------------
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
15.11 Entire Agreement
----------------
This Agreement, together with the Administrative Services Agreement,
the Warrant Agreement and the Registration Rights Agreement dated as of the date
hereof between IXIS Financial Products Inc. and the Company, contains the entire
understanding and agreement among the Members with respect to the subject matter
hereof and thereof and supersedes any other prior written or oral understandings
or agreements among them with respect thereto.
15.12 Merger
------
Subject to Section 7.2(f) and Section 7.2(g), solely upon the consent
of the Board of Managers and without the need for the consent of any other
Person, including any Member, the Company may merge with, or consolidate into,
or convert into, any Person or Entity in accordance with the Company Act and any
other applicable law.
15.13 Acquisition of Debt
-------------------
The Charter Member shall not acquire any debt, additional Units or
Other Equity that have been issued by the Company or any of its Subsidiaries to
third parties from such third parties without the consent of the Special Member.
25
Signature Page to Limited Liability Company Agreement of Centerbrook
Holdings LLC by and among the undersigned and the other parties thereto.
CHARTER MEMBER:
CHARTER MAC CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SPECIAL MEMBER:
IXIS FINANCIAL PRODUCTS INC.
By: /s/ ▇. ▇▇▇▇▇▇▇
--------------
Name: ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
26
SCHEDULE A
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ADDRESSES FOR NOTICES
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If to the Charter Member, to:
Charter Mac Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
Proskauer Rose LLP
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Special Member, to:
IXIS Financial Products Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
A-1
SCHEDULE B
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ALLOCATIONS
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1. DEFINED TERMS
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"ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member, its
Capital Account as of the end of the relevant year, as adjusted by (i) crediting
to such Capital Account any amount that such Member is obligated to restore
pursuant to the provisions of Section 1.704-1(b)(2)(ii)(c) of the Regulations or
is deemed obligated to restore pursuant to Regulation Section 1.704-2(g)(1) and
1.704-2(i)(5); and (ii) debiting from such Capital Account items described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6). This definition of Adjusted Capital Account is intended
to comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"CAPITAL ACCOUNT" means, with respect to any Member, the capital
account maintained in accordance with Sections 1.704-1(b) and 1.704-2 of the
Regulations, and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Board of Managers shall reasonably determine
that it is prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto are computed in order to comply with such Regulations,
the Board of Managers may make such modification; PROVIDED that it does not have
an adverse effect on the amounts distributable to any Member pursuant to Article
13 hereof upon the dissolution of the Company.
"COMPANY MINIMUM GAIN" means "company minimum gain" as that term is
defined in Regulations Section 1.704-2(d), substituting the term "Company" for
the term "partnership" as the context requires.
"DEPRECIATION" means, with respect to any asset of the Company for any
Company Year or other period, the depreciation, depletion, amortization or other
cost recovery deduction, as the case may be, allowed or allowable for federal
income tax purposes in respect of such asset for such Company Year or other
period; PROVIDED, HOWEVER, that if there is a difference between the Gross Asset
Value and the adjusted tax basis of such asset at the beginning of such Company
Year or other period, Depreciation for such asset shall be an amount that bears
the same ratio to the beginning Gross Asset Value of such asset as the federal
income tax depreciation, depletion, amortization or other cost recovery
deduction for such Company Year or other period bears to the beginning adjusted
tax basis of such asset; PROVIDED, FURTHER, that if the federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
asset for such Company Year or other period is zero, Depreciation of such asset
shall be determined with reference to the beginning Gross Asset Value of such
asset using any reasonable method selected by the Board of Managers.
"EXERCISING MEMBER" has the meaning set forth in Section 2.5(d)(i) of
this Schedule B.
"GROSS ASSET VALUE" means, with respect to any asset of the Company,
such asset's adjusted basis for federal income tax purposes, except as follows:
(a) if the Board of Managers reasonably determines that an adjustment
is necessary or appropriate to reflect the relative economic interests of
the Members, the Gross Asset Values of all Company assets shall be adjusted
in accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of the Regulations
to equal their respective gross fair market values, without reduction for
liabilities, as reasonably determined by the Board of Managers, as of the
following times:
(i) a Capital Contribution (other than a de minimis Capital
Contribution) to the Company by a new or existing Member as
consideration for a Membership Interest; or
(ii) the distribution by the Company to a Member of more than a
de minimis amount of Company assets as consideration for the
repurchase of a Membership Interest; or
(iii) the liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations;
(b) the Gross Asset Values of Company assets distributed to any Member
shall be the gross fair market values of such assets (taking Section
7701(g) of the Code into account) without reduction for liabilities, as
reasonably determined by the Board of Managers as of the date of
distribution; and
(c) the Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent
that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations;
PROVIDED, HOWEVER, that Gross Asset Values shall not be adjusted pursuant
to this subsection (c) to the extent that the Board of Managers reasonably
determines that an adjustment pursuant to subsection (a) above is necessary
or appropriate in connection with a transaction that would otherwise result
in an adjustment pursuant to this subsection (c).
At all times, Gross Asset Values shall be adjusted by any Depreciation
taken into account with respect to the Company's assets for purposes of
computing Net Income and Net Loss.
"MEMBER NONRECOURSE DEDUCTION" means "partner nonrecourse deduction" as
that term is defined in Regulations Section 1.704-2(i), substituting the term
"Member" for the term "partner" as the context requires.
"MEMBER NONRECOURSE LOAN" means a loan made to, or credit arrangement for
the benefit of, the Company by a Member or by a person related to a Member (as
defined in Regulations Section 1.752-4(b), substituting the term "Member" for
the term "partner" as the context requires) which by its terms exculpates the
Members from personal liability on the debt, but under which such Member or
related person bears the ultimate economic risk of loss within the meaning of
Regulations Section 1.752-2.
"NET INCOME" or "NET LOSS" means, for each Company Year or other applicable
period, an amount equal to the Company's taxable income or loss for such year or
period as determined for federal income tax purposes by the Board of Managers,
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a) of the Code shall be included in taxable income or
loss), adjusted as follows:
(a) by including as an item of gross income any tax exempt income
received by the Company and not otherwise taken into account in computing
Net Income or Net Loss;
(b) by treating as a deductible expense any expenditure of the Company
described in Section 705(a)(2)(B) of the Code (or which is treated as a
Section 705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i)
of the Regulations) and not otherwise taken into account in computing Net
Income or Net Loss, including amounts paid or incurred to organize the
Company (unless an election is made pursuant to Section 709(b) of the Code)
or to promote the sale of interests in the Company and by treating
deductions for any losses incurred in connection with the sale or exchange
of Company property disallowed pursuant to Section 267(a)(1) or 707(b) of
the Code as expenditures described in Section 705(a)(2)(B) of the Code;
(c) by taking into account Depreciation in lieu of depreciation,
depletion, amortization and other cost recovery deductions taken into
account in computing taxable income or loss;
(d) by computing gain or loss resulting from any disposition of
Company property with respect to which gain or loss is recognized for
federal income tax purposes by reference to the Gross Asset Value of such
property rather than its adjusted tax basis;
(e) in the event of an adjustment of the Gross Asset Value of any
Company asset which requires that the Capital Accounts of the Company be
adjusted pursuant to Sections 1.704 1(b)(2)(iv)(e), (f) and (g) of the
Regulations, by taking into account the amount of such adjustment as if
such adjustment represented additional Net Income or Net Loss; and
(f) by not taking into account in computing Net Income or Net Loss
items separately allocated to the Members.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
2. ALLOCATIONS
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2.1 Allocations of Net Income
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Net Income of the Company for any Company Year or other period shall
be allocated to the Members in proportion to their respective Percentage
Interest.
C-3
2.2 Allocation of Net Losses
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Net Losses for any Company Year or other period shall be allocated to
the Members in proportion to their respective Percentage Interest.
Notwithstanding the foregoing, (i) to the extent that any allocation of Net
Losses pursuant to this Section 2.2 would cause or increase a deficit
balance in a Member's Adjusted Capital Account, such portion of such Net
Losses shall be reallocated among the Members with positive Adjusted
Capital Account balances, pro rata in accordance with such positive
balances, until no Member has a positive Adjusted Capital Account balance
and (ii) to the extent that any allocations were made pursuant to clause
(i) above, then Net Income shall be allocated to the Members until the
aggregate amount of Net Income allocated under this clause (ii) is equal to
the aggregate amount of Net Loss allocated pursuant to clause (i) above.
2.3 Allocation Adjustment Upon Issuance of Member Interests
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The Board of Managers shall have the authority to adjust the
allocations of Net Income and Net Losses for the issuance of Membership
Interests pursuant to this Schedule B and the issuance of other Membership
Interests as authorized by the Board of Managers, PROVIDED that any such
adjustment shall not affect any Member disproportionately without such
Member's prior written consent and shall not disproportionately benefit the
Charter Member.
2.4 Certain Special Allocations
---------------------------
Notwithstanding any other provision of this Agreement, the following
allocations shall be made prior to any other allocations under this
Agreement and in the following order of priority:
(a) (i) If there is a net decrease in Company Minimum Gain during any
Company Year or period so that an allocation is required by
Regulations Section 1.704-2(f), items of income and gain shall be
allocated to the Members in the manner and to the extent required by
such Regulation. This provision is intended to be a minimum gain
chargeback within the meaning of Regulations Section 1.704-2(f)(1) and
shall be interpreted and applied consistently therewith.
(ii) If there is a net decrease in the minimum gain attributable
to a Member Nonrecourse Loan during any Company Year or period so that
an allocation is required by Regulations Section 1.704-2(i)(4)
(minimum gain chargeback attributable to a member nonrecourse debt),
items of income and gain shall be allocated in the manner and to the
extent required by such Regulation.
(b) If, at the close of any Company Year, allocations of Net Income or
Net Losses pursuant to the other provisions of this Section 2, would not
prevent or would cause any Member to have a negative Adjusted Capital
Account balance, then gross income of the Company for such year and each
subsequent year (if necessary) shall be allocated to such Member to the
extent required to eliminate, as quickly as possible, such negative
Adjusted Capital Account balance. This Section 2.4(b) is intended to comply
with the qualified income offset requirement of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) Nonrecourse Deductions, if any, for any Company Year or period
shall be allocated to the Members in proportion to their Percentage
Interests.
(d) Member Nonrecourse Deductions shall be allocated to the Member
that bears the economic risk of loss with respect to the loan giving rise
to such deduction within the meaning of Regulations Section 1.752-2.
2.5 Allocation for Income Tax Purposes
----------------------------------
(a) For federal, state and local income tax purposes, all items of
taxable income, gain, loss, and deduction for each Company Year or period
shall be allocated among the Members in accordance with the manner in which
the corresponding items were allocated under Sections 2.1, 2.2, 2.3, 2.4(b)
and 2.4(c) of this Schedule B.
(b) If property is contributed to the Company by a Member and there is
a difference between the basis of such property to the Company for federal
income tax purposes and the fair market value at the time of its
contribution, then items of income, gain, deduction and loss with respect
to such property, as computed for federal income tax purposes (but not for
book purposes), shall be allocated (in any permitted manner determined by
the Board of Managers) among the Members so as to take account of such
book/tax difference as required by Code Section 704(c).
C-4
(c) If property (other than property described in Section 2.5(b)) of
the Company is reflected in the Adjusted Capital Accounts of the Members
and on the books of the Company at a book value that differs from the
adjusted basis of such property for federal income tax purposes by reason
of a revaluation of such property, then items of income, gain, deduction
and loss with respect to such property, as computed for federal income tax
purposes (but not for book purposes), shall be allocated (in any permitted
manner determined by the Board of Managers), with the prior written consent
of each affected Member (which consent shall not be unreasonably withheld),
among the Members in a manner that takes account of the difference between
the adjusted basis of such property for federal income tax purposes and its
book value in the same manner as differences between adjusted basis and
fair market value are taken into account in determining the Members' shares
of tax items under Code Section 704(c).
(d) (i) In connection with the exercise of the rights under the
Warrant Agreement, allocations shall be made in respect of the Units
issued upon such exercise in a manner consistent with the allocations
described in Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s)
or in accordance with then applicable law, as determined by the Board
of Managers in good faith after consultation with the Company's legal
and tax advisors, and with the value of the Company, to the extent
relevant, determined with the prior written consent of the Special
Member (which consent shall not be unreasonably withheld). Solely for
federal income tax purposes, any unrealized income, gain, loss, or
deduction in assets of the Company (that has not been reflected in the
Adjusted Capital Account previously) shall first be allocated to the
Member exercising the Warrant ("Exercising Member") to the extent
necessary to reflect such Member's share in partnership capital, and
second to the Members in accordance with Section 704(b) and (c) of the
Code and the Treasury Regulations promulgated thereunder using
"traditional method" as set forth under Regulations Section
1.704-3(b), in any permitted manner determined by the Board of
Managers.
(ii) If, after making the allocations described in clause (i)
above, the Exercising Member's Adjusted Capital Account does not
reflect its right to share in the Company's capital, then, solely for
federal income tax purposes, the Company's capital shall be
reallocated (in any permitted manner determined by the Board of
Managers) between the Members and the Exercising Member so that the
Exercising Member's Adjusted Capital Account does reflect its right to
share in the Company's capital. The Board of Managers shall make
corrective allocations beginning with the taxable year of the exercise
of the rights under the Warrant Agreement as described in Proposed
Treasury Regulation Section 1.704-1(b)(4)(x).
(e) The Members are aware of the income tax consequences of the
allocations made by this Section 2, and hereby agree to be bound by the
provisions of this Section 2 in reporting their shares of income, gain,
loss and deduction for income tax purposes.
2.6 Remedial Allocations
--------------------
The foregoing provisions are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied as provided in
such Regulations. If the Board of Managers shall reasonably determine that
the manner in which the Capital Accounts or Adjusted Capital Accounts, or
any increases or decreases thereto, are computed, or the manner in which
any allocations are made under Article 13 of this Agreement should be
adjusted in order to comply with Section 704(b) and Section 704(c) of the
Code and Regulations thereunder, the Board of Managers shall make such
modifications; PROVIDED that the Board of Managers shall not modify the
manner of making distributions pursuant to this Agreement. Without limiting
the generality of the foregoing, the Board of Managers shall apply Sections
2.1 and 2.2 of this Schedule B, in conjunction with Section 2.3 of this
Schedule B in a manner that does not result in the duplication of the
allocation of items of income, gain, deduction or loss. All elections,
decisions and other matters concerning the allocations hereunder among the
Members, and accounting procedures, not specifically and expressly provided
for by the terms of this Agreement, including, but not limited to, the
election pursuant to Section 754 of the Code (or corresponding provisions
of subsequent law) to adjust the basis of the Company's assets as provided
by Sections 734 and 743 of the Code, shall be reasonably determined by the
Board of Managers.
2.7 Proration of Allocations
------------------------
If there is a transfer of Units, a daily net allocation of the items
or amounts of net taxable income or loss allocated pursuant to this Section
2 shall be computed by dividing the items or amounts for the period by the
number of days in the period. The quotient obtained shall be applied to the
former Member and the present Member in proportion to the number of days
each of them was a Member in the Company for such Company Year; PROVIDED
that (i) any item or amount arising from the acquisition or disposition of
Company assets outside of the ordinary course of business shall be taken
into account as of the date thereof and (ii) the Board of Managers may, in
its discretion, elect any other reasonable method for allocating net
taxable income or loss between the transferor and transferee
C-5
EXHIBIT A
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MEMBERS AND MEMBERSHIP INTERESTS
Capital Number of Percentage
Name Contribution Units Price Per Unit Interest
---------------------------- ------------ --------- -------------- ----------
Charter Mac Corporation $29,700,000 297 $100,000 90%
IXIS Financial Products Inc. $ 3,300,000 33 $100,000 10%