EXHIBIT 4.1
CONFIDENTIAL MATERIAL HAS BEEN REDACTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION
VAN DER MOOLEN SPECIALISTS USA, LLC
AMENDED AND RESTATED
OPERATING AGREEMENT
VAN DER MOOLEN SPECIALISTS USA, LLC
AMENDED AND RESTATED
OPERATING AGREEMENT
AMENDED AND RESTATED OPERATING AGREEMENT, made as of August 1, 2001
(the "AGREEMENT"), of Van der Moolen Specialists USA, LLC, a New York limited
liability company (the "COMPANY"), by and among the individuals and entities set
forth on Schedule A hereto (each a "MEMBER" and together, the "MEMBERS").
WHEREAS, the Company's Operating Agreement was entered into as of July
19, 1999, and amended as of January 1, 2000 and amended and restated as of June
1, 2000 (as so amended and restated, the "OPERATING AGREEMENT");
WHEREAS, Mill Bridge IV, LLC, a New York limited liability company and
a member of the Company (Mill Bridge IV, LLC, its successors, assigns and
Affiliates being hereinafter referred to as "MB"), has acquired on the date
hereof 100% of the membership interests in Scavone, McKenna, Cloud & Co., LLC, a
New York limited liability company and a registered broker-dealer and a New York
Stock Exchange specialist unit ("SMC"), and 100% of the partnership interests in
▇▇▇▇▇ & ▇▇▇▇▇▇▇, a New York limited partnership and a registered broker-dealer
and a New York Stock Exchange specialist unit ("S&K");
WHEREAS, the business operations of SMC have been combined on the date
hereof with those of the Company (the "SMC COMBINATION" and, together with the
SMC Combination, the "COMBINATIONS"), pursuant to that certain Combination
Agreement, dated the date hereof, between the Company and SMC (the "SMC
COMBINATION AGREEMENT");
WHEREAS, the business operations of S&K have been combined on the date
hereof with those of the Company (the "S&K COMBINATION"), pursuant to that
certain Combination Agreement, dated the date hereof, between the Company and
S&K (the "S&K COMBINATION AGREEMENT");
WHEREAS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Close, II, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(collectively the "FORMER SMC MEMBERS") have been admitted as members of the
Company in connection with the SMC Combination;
WHEREAS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively the "FORMER S&K PARTNERS") have been
admitted as members of the Company in connection with the S&K Combination;
WHEREAS, each of ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("LANE") and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇") has withdrawn as a member of the Company;
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WHEREAS, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ has purchased a Membership in the NYSE;
WHEREAS, the A-B-C Agreement between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Company
described in Section 9.4 of the Operating Agreement has been terminated in
connection with the refinancing by ▇▇. ▇▇▇▇▇ of his NYSE Membership;
WHEREAS, the A-B-C Agreement between ▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Company
described in Section 9.4 of the Operating Agreement has been terminated and ▇▇.
▇▇▇▇▇ is leasing a NYSE Membership;
WHEREAS, the Members wish to amend and restate the Operating Agreement
of the Company to (i) reflect the withdrawal of each of Lane and ▇▇▇▇▇▇▇▇ and
the changes in the NYSE Memberships arrangements described above, (ii) provide
for the admission of the Former SMC Members and the Former S&K Partners as
Members of the Company, (iii) change the allocation among the Members of the
profits and losses of the Company, and (iv) effect certain other changes as set
forth herein.
NOW THEREFORE, in consideration of the foregoing premises and the terms
and conditions set forth in this Agreement, the Members hereby agree as follows:
ARTICLE I
ORGANIZATION
Section 1.1. Name. The business of the Company shall be conducted under
the name Van der Moolen Specialists USA, LLC or such other name as the
Management Committee shall determine from time to time.
Section 1.2. Principal Office. The principal business office of the
Company shall be located at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other
place as the Management Committee shall designate from time to time. The
Management Committee also may determine from time to time that the Company shall
have one or more additional offices at a location within or without the State of
New York as the Management Committee shall determine.
Section 1.3. Purpose. The purpose of the Company is to transact a
general business as brokers and dealers, floor specialists in stock, bonds or
other securities, and such other business as may be permitted under the rules of
The New York Stock Exchange, Inc. (the "NYSE"), and any other exchange on which
the Company is or shall be authorized to conduct business, subject to the rules
and regulations of such exchanges, the Securities and Exchange Commission, and
the National Association of Securities Dealers ("APPLICABLE LAW") and as the
Management Committee shall determine.
Section 1.4. Term. The Company shall continue in existence until it is
terminated in accordance with the provisions of this Agreement.
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Section 1.5. Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"FLOAT PERCENTAGE" shall mean the difference between 100% and the
Profit and Loss Percentages of all Members as set forth on Schedule A hereto. On
the date hereof, the Float Percentage is 11.4279%.
"MB CAPITAL ACCOUNT PERCENTAGE" shall mean the sum of (i) MB's Profit
and Loss Percentage from time to time, and (ii) the Float Percentage.
"SPECIAL ALLOCATION PERCENTAGE" shall mean, with respect to any Member
(other than MB and ▇▇▇▇▇▇▇▇), the sum of (x) the product of (A) a fraction, the
numerator of which is such Member's Profit and Loss Percentage as set forth on
Schedule A hereto and the denominator of which is 25.0000% minus the Float
Percentage minus ▇▇▇▇▇▇▇▇'▇ Profit and Loss Percentage as set forth on Schedule
A hereto, multiplied by (B) the Float Percentage, plus (y) such Member's Profit
and Loss Percentage as set forth on Schedule A hereto.
ARTICLE II
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
Section 2.1. Capital Accounts.
(a) A capital account (the "CAPITAL ACCOUNT") shall be maintained by
the Company for each Member. The Capital Account of each Member shall be
increased by the amount of any capital contributions (at net fair market value
in the case of any contributions of property other than cash) made by, and any
income or gain allocated to, such Member, and shall be decreased by the amount
of distributions (at net fair market value in the case of any distribution of
property other than cash) made to, and expenses and losses allocated to, such
Member.
(b) For purposes of determining the Capital Account of MB as of the
moment immediately following the Combinations, MB's Capital Account at such
moment, anything to the contrary in paragraph (a) above notwithstanding, shall
be increased by MB's Combination Capital Account. As used herein, the
capitalized term "Combination Capital Account" means an amount equal to the sum
of (i) MB's capital account in SMC, and (ii) MB's capital account in S&K, as of
the moment immediately before the SMC Combination or the S&K Combination, as the
case may be, determined in accordance with the SMC Combination Agreement or the
S&K Combination Agreement, as the case may be, minus the aggregate book value of
the assets of SMC and S&K, if any, that were not transferred to the Company in
either the SMC Combination or the S&K Combination.
Section 2.2. Stated Capital. The amount of the Company's Stated Capital
on the date hereof is set forth on Schedule A. From time to time, the Management
Committee may
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increase, and, subject to the Constitution and Rules of the NYSE and the
regulations under the Securities Exchange Act of 1934, as amended (the "34
ACT"), decrease the amount of the Company's Stated Capital. The Stated Capital
of each Member shall be maintained in an amount equal to the Company's Stated
Capital multiplied by that Member's Profit and Loss Percentage, as in effect
from time to time, except that MB's Stated Capital shall be maintained in an
amount equal to the Company's Stated Capital multiplied by the MB Capital
Account Percentage. The Stated Capital of each Member on the date hereof is set
forth opposite such Member's name on Schedule A. If at any time there shall be
an increase in the Company's Stated Capital, each Member shall maintain his
Capital Account (by means of an additional capital contribution, if required) so
that the amount thereof is not less than his Stated Capital at such time. If at
any time the Profit and Loss Percentages of the Members shall be changed
pursuant to Section 4.5, the Stated Capital of the Members shall be changed
accordingly, and each Member shall maintain his Capital Account (by means of an
additional capital contribution or distribution, if required) so that the amount
thereof is not less than his Stated Capital after such change.
Section 2.3. Limited Liability. No Member shall have any personal
liability for liabilities or obligations of the Company, and except to the
extent specifically set forth herein no Member shall have an obligation to make
a capital contribution to the Company (including, without limitation, upon
liquidation of the Company).
Section 2.4. Withdrawal of Capital. Except as specifically set forth in
this Agreement, no Member shall have the right to withdraw the amount in his
Capital Account.
Section 2.5. Loans. With the consent of the Management Committee and
subject to Applicable Law, any Member may provide funds to the Company as a
loan. Such loan shall bear interest, payable at the end of each calendar month,
at a rate determined by the Management Committee, which loan shall not bear an
interest rate or other conditions less favorable to the Company than would be
required by a commercial lender. All loans shall be repaid in accordance with
their terms prior to distributions to Members.
Section 2.6. Member's Securities. All securities, cash and other
property that may from time to time be held by the Company for a Member shall,
upon receipt by the Company, be treated as Company property and as a capital
contribution by the Member, provided, however, that as among the Members all
profits, losses, income and expense in connection with such property shall be
credited or charged to the Member individually and not treated as Company
profit, loss, income or expense. Upon termination of the Member's membership in
the Company, he shall have a claim against the Company with respect to such
property, but such claim shall be subordinate in right of payment and subject to
the prior payment by the Company or provision for payment by the Company in full
of claims of creditors of the Company arising out of any matter occurring before
the termination of the Member's membership.
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ARTICLE III
MEMBERS; ADMISSION AND TERMINATION
Section 3.1. Current Members and Profit and Loss Percentages. The
Members of the Company and their respective Profit and Loss Percentages on the
date hereof are set forth on Schedule A.
Section 3.2. Admission of New Members. From time to time, the
Management Committee may admit one or more new Members of the Company on such
terms and conditions as the Management Committee shall approve, including,
without limitation, the amount of capital to be contributed by a new Member, the
Profit and Loss Percentage of such new Member, and the effect thereof on the
Profit and Loss Percentages of the existing Members. Anything to the contrary
herein notwithstanding, if the admission of a new Member will have the effect of
reducing the Profit and Loss Percentage of Members (other than MB), the
admission of such new Member and the terms and conditions on which such new
Member shall be admitted shall require the approval of the lesser of (i) such
number of members of the Management Committee as own not less than 80% of the
Profit and Loss Percentages of all Members, or (ii) MB and 50 % by number of the
members of the Management Committee other then MB (such lesser number of
Management Committee members being hereinafter referred to as a "SUPERMAJORITY
VOTE"). No person shall become a Member, however, until such person is approved
pursuant to Applicable Law, provided Applicable Law requires approval of such
person's association with the Company, and until such person has executed and
delivered to the Company a writing in a form specified by the Management
Committee, signed by the prospective Member, agreeing to be bound by this
Agreement, and such other documents as the Management Committee may specify.
Section 3.3. Voluntary Termination of Membership. A Member may elect to
terminate his membership in the Company by giving the Management Committee at
least 90 days prior written notice; provided, however, that the Management
Committee may elect to have such termination become effective immediately or at
any time within 90 days after such notice of termination is received by the
Management Committee.
Section 3.4. Involuntary Termination of Membership.
(a) The Membership of a Member shall terminate upon his death;
(b) Subject to Section 4.10 hereof, the Management Committee may
terminate the membership of any Member for any reason, upon 30 days' notice to
such Member.
(c) The "TERMINATION DATE" of a Member shall be the date on which such
Member's termination becomes effective in accordance with Sections 3.3, 3.4(a)
or 3.4(b).
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Section 3.5. Effect of Termination.
(a) Subject to Section 13.12 hereof, if an individual ceases to be a
Member for any reason (a "TERMINATED MEMBER") such Terminated Member shall cease
to have any interest in the net profits and losses of the Company after the
Termination Date of such Member. The Terminated Member's remaining interest (the
"REMAINING INTEREST") in the Company shall consist solely of such terminated
Member's Capital Account (determined in accordance with Section 3.5(c)) and such
Terminated Member's A-B-C Membership Account (determined in accordance with
Article IX), if any.
(b) Subject to the approval of the NYSE and to Rule 15c3-1 under the 34
Act, the Company shall pay to the Terminated Member or his legal representative
an amount equal to such Member's Remaining Interest three months after such
Member's Termination Date; provided, however, that without the prior written
approval of the NYSE, no portion of the Remaining Interest may be paid to the
Terminated Member or his legal representative on less than six-month written
notice of such payment given no sooner than six months after such portion of the
Remaining Interest was contributed to the Company. Until such payment to the
Terminated Member or his legal representative is made, the Terminated Member's
Remaining Interest shall remain at the risk of the business of the Company.
Payment pursuant to this Section 3.5 shall be in full payment of the Terminated
Member's interest in the Company and in full satisfaction of any and all rights
and claims he may have as a result of his membership in the Company. The payment
to be made to a Terminated Member pursuant to this Section 3.5 shall be
subordinate in right of payment and subject to the prior payment or provision
for payment in full of all claims of all present or future creditors of the
Company accruing before the date on which payments are required or permitted to
be made hereunder.
(c) In determining the Capital Account of a Member for purposes of this
Section 3.5, all securities (but no other assets) shall be treated as if sold at
their fair market values on the Termination Date, and all other assets shall be
treated as having the value shown on the books of the Company on the Termination
Date; without limiting the generality of the foregoing, goodwill or any other
item not appearing on the books of the Company shall not be given any value.
(d) A Terminated Member's Profit and Loss Percentage shall be reduced
to zero as of such Member's Termination Date as provided in Section 3.5(a), and,
subject to Section 3.6, the Management Committee shall reallocate, by a
Supermajority Vote, the Terminated Member's prior Profit and Loss Percentage
among the remaining Members excluding MB. If the Management Committee is not
able to reallocate such prior Profit and Loss Percentage by a Supermajority
Vote, such Profit and Loss Percentage shall be allocated among the remaining
Members including MB in proportion to the Profit and Loss Percentage interests
of the remaining Members.
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Section 3.6 Reallocation of Profit and Loss Percentage of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
(a) The Profit and Loss Percentage of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇")
shall be reallocated, effective as of December 31, 2001, or as of the date
▇▇▇▇▇▇▇▇'▇ Membership Interest terminates in accordance with Sections 3.3,
3.4(a) or 4.10, among the persons whose names are set forth in the chart below
as set forth in such chart, provided that no such person shall receive any
portion of such Profit and Loss Percentage if such person is not a Member of the
Company as of the time ▇▇▇▇▇▇▇▇'▇ Membership Interest terminates.
Percentage of ▇▇▇▇▇▇▇▇'▇ Profit and Loss
Name Percentage to be Reallocated
---- ----------------------------
▇▇▇▇▇▇ ▇▇▇▇ [REDACTED]%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ [REDACTED]%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ [REDACTED]%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ [REDACTED]%
Total 100.0000%
(b) If a person to whom a portion of ▇▇▇▇▇▇▇▇'▇ Profit and Loss
Percentage of is to be reallocated in accordance with Section 3.6(a) is not, for
any reason whatsoever, a Member of the Company on the date on which such portion
of the Profit and Loss Percentage is to be reallocated to such person, then the
portion thereof that would have been so reallocated to such person as of such
date, shall be reallocated in the sole discretion of the Management Committee
and in accordance with Section 3.5(d) among the persons who are members of the
Company at such time. Nothing in Section 3.6(a) shall be interpreted to vest any
of the persons named therein to whom a portion of the Profit and Loss Percentage
is to be reallocated with any right to remain a Member of the Company or to hold
any particular Membership Interest in the Company, the determination of which
shall remain in the sole discretion of the Management Committee; provided,
however, that if a person to whom a portion of the Profit and Loss Percentage is
to be reallocated pursuant to Section 3.6(a) is a Member of the Company at the
time as of which such reallocation is to be made, then such person shall be
entitled to receive at such time (subject to all the other provisions of this
Agreement) the portion of the Profit and Loss Percentage that is then to be
reallocated to such person. In connection with such reallocation, such person
shall, to the extent necessary, make such cash capital contribution to the
Company as may be required under Section 2.2.
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ARTICLE IV
ALLOCATIONS, DISTRIBUTIONS AND SALARIES
Section 4.1. Distributions. The Company shall distribute to the
Members, in proportion to the Profits allocated to such Member under Section 4.3
at the time of distribution, cash or other property equal to the full amount of
the Company's profits for each year; provided, however, that the Management
Committee may determine that the amount to be distributed shall be less than
such profits and provided further that no distribution shall be made to any
Member in excess of the Capital Account of such Member. All distributions shall
be made at such times as the Management Committee shall determine.
Section 4.2. Withdrawals of Capital. In addition to the distributions
provided for in Section 4.1, if a Member's Stated Capital is reduced as a result
of a determination made by the Management Committee in accordance with the
Constitution and Rules of the NYSE to reduce the Company's Stated Capital, then,
subject to the provisions of Rule 15c3-1 under the 34 Act, the amount by which
such Member's Stated Capital has been reduced shall be distributed to that
Member; provided, however, that without the prior approval of the NYSE, no
portion of such amount may be distributed to that Member on less than six
months' written notice of such distribution given no sooner than six months
after such portion was contributed to the Company.
Section 4.3. Allocation of Profits and Losses. The net profits and
losses of the Company shall be allocated among the Members as follows:
(a) Profits shall be allocated
(i) first, to the Members in proportion to, and to the
extent that, the amount of losses previously
allocated to them pursuant to subparagraph (b)(ii)
below has exceeded the amount of profit allocated to
them pursuant to this subparagraph (i);
(ii) second, to the Members in proportion to, and to the
extent that, the amount of losses previously
allocated to them pursuant to subparagraph (b)(i)
below has exceeded the amount of profit allocated to
them pursuant to this subparagraph (ii); and
(iii) finally, 75.0000% to MB, 23.5721% to the Members
(other than MB) in accordance with their Profit and
Loss Percentages, and the Float Percentage to the
Members (other than MB and ▇▇▇▇▇▇▇▇) as determined by
the Management Committee by Supermajority Vote,
provided, however, that in the event the Management
Committee is not able to make a determination by
Supermajority Vote, the Float Percentage shall be
allocated to the Members (other than MB and
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▇▇▇▇▇▇▇▇) in proportion to their respective Special
Allocation Percentage.
(b) Losses shall be allocated:
(i) first, 75.0000% to MB, [REDACTED]% to ▇▇▇▇▇▇▇▇ and
[REDACTED]% to the Members (other than MB and
▇▇▇▇▇▇▇▇) in proportion to their respective Special
Allocation Percentage until any Member's Capital
Account is reduced to zero;
(ii) second, to the Members with positive Capital Account
balances in proportion to such balances until the
Capital Accounts of all Members are reduced to zero;
(iii) finally, 75.0000% to MB, [REDACTED]% to ▇▇▇▇▇▇▇▇ and
[REDACTED]% to the Members (other than MB and
▇▇▇▇▇▇▇▇) in proportion to their respective Special
Allocation Percentage.
The foregoing notwithstanding, (1) gain from the sale of an A-B-C LOM Membership
shall be allocated in proportion to the amount of Distributable Cash
distributable to the Members pursuant to Section 9.3., and (2) deductions and
losses from the amortization of any goodwill or the right to do business as a
specialist on the floor of the NYSE arising from SMC or S&K or any other
business for which MB has paid an amount in respect of such goodwill or right to
do business as a specialist shall be allocated solely to MB.
Section 4.4. Section 704(c) Allocation. If at any time a Member shall
make a contribution of property other than cash, then notwithstanding Section
4.3, for federal, state and local income tax purposes, income, gain, loss and
deduction with respect to such property shall be shared by the Members so as to
take account of the variation between the federal income tax basis of the
property to the Company and its fair market value at the time of contribution
utilizing a method selected by the Management Committee that is authorized
pursuant to Section 704(c) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and regulations thereunder.
Section 4.5. Change of Profit and Loss Percentages. Subject to Section
4.10, the Profit and Loss Percentages of the Members may be changed from time to
time by the Management Committee; provided that no decrease in the aggregate
Profit and Loss Percentage allocated to the Members other than MB shall be
effected without a Supermajority Vote. In making any such change, the Management
Committee shall take into account the relative contributions to the business of
the Company made by Members other than MB. A change in the Profit and Loss
Percentages shall become effective on the date specified by the Management
Committee, which shall not be earlier than 15 days after written notice of the
change is given to all Members.
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Section 4.6. Withholding of Tax. Each Member that is not a United
States person (as defined in the Code) recognizes that the Company is obligated
to withhold U.S. federal taxes from such Member in accordance with certain
provisions of the Code as they now and may hereafter exist (including Section
1446 of the Code). If the amount required to be withheld with respect to such a
Member exceeds the amount that otherwise would have been distributed to such
Member, such Member shall pay to the Company the amount of such excess within
ten days after written demand therefor by the Company. Any amount withheld from
a Member as tax shall be treated as a distribution to the Member.
Section 4.7. Salaries. There shall be a "Base Salary Pool" in respect
of each calendar year in an amount equal to the sum of (i) $[REDACTED] times the
number of Members (other than MB and ▇▇▇▇▇▇▇▇) at the beginning of such year
plus, (ii) [REDACTED]% of the Company's Stated Capital as of the beginning of
such year times the aggregate Profit and Loss Percentages of all Members (other
than MB and ▇▇▇▇▇▇▇▇) at the beginning of such year. The amount of the Base
Salary Pool shall be paid as salaries to the Members (other than MB and
▇▇▇▇▇▇▇▇) in such amounts as may from time to time be determined by the
Management Committee, and shall be treated as guaranteed payments for tax
purposes. For the period from the date of this Agreement to December 31, 2001,
the amount of the Base Salary Pool amount shall be adjusted and pro-rated based
on the number of days from the date of this Agreement to December 31, 2001. If a
Member (other than MB or ▇▇▇▇▇▇▇▇) should become a Terminated Member, the amount
of the Base Salary Pool shall be reduced by the amount of the unpaid annual base
salary that such Terminated Member would have received from the Base Salary Pool
in the year in which his Termination Date occurs. The amount of the Base Salary
Pool may be increased from time to time by the Management Committee.
Section 4.8. Bonuses. There shall be a "Bonus Pool" equal to not less
than [REDACTED]% of the net profits of the Company for each year, after
deduction for all salaries, all interest paid to Members in respect of their
NYSE Memberships, and the Support Fee (as defined in Section 4.9). The
Management Committee shall determine the precise amount of the Bonus Pool and
the Members (other than MB and ▇▇▇▇▇▇▇▇) of the Company to whom it shall be
paid. For the period from the date of this Agreement to December 31, 2001, the
net profits of the Company for purposes of determining the Bonus Pool shall be
the net profits between the date of this Agreement and December 31, 2001. The
Management Committee may, by Supermajority Vote, increase or decrease the
[REDACTED]% (or such higher or lower percentage to which such [REDACTED]% has
been increased or decreased by one or more prior applications of this sentence).
Payments from the Bonus Pool shall be treated as a guaranteed payment for tax
purposes and be charged as an expense of the Company and not against the shares
of profits of the Members to whom such payments are made.
Section 4.9. Support Fee. MB shall receive from the Company a Support
Fee ("SUPPORT FEE") in respect of each calendar year in an amount equal to the
product of (i) the MB Capital Account Percentage, times (ii) the Company's
Stated Capital at the beginning of such year, times (iii) 10%. The Support Fee
shall be payable to MB in equal installments on
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the last business day of each calendar month, and shall be treated as guaranteed
payments for tax purposes. For the period from the date of this Agreement to
December 31, 2001, the amount of the Support Fee shall be adjusted and pro-rated
based on the number of days from the date of this Agreement to December 31,
2001. The amount of the Support Fee may not be increased except by Supermajority
Vote.
Section 4.10. Special Provisions Regarding ▇▇▇▇▇▇▇▇.
(a) Provided that ▇▇▇▇▇▇▇▇ maintains at all times a balance of not less
than $1,000,000 in his Capital Account, for the period commencing on the date
hereof and ending on December 31, 2001, ▇▇▇▇▇▇▇▇'▇ Profit and Loss Percentage
shall be [REDACTED]%, subject to dilution on a pro-rata basis in the event the
Company issues Membership Interests to new Members. If his Capital Account
balance falls below $1,000,000 ( a "▇▇▇▇▇▇▇▇ TERMINATION EVENT"), ▇▇▇▇▇▇▇▇'▇
Profit and Loss Percentage shall be reduced to zero, and his membership in the
Company shall terminate as of the end of the month in which such ▇▇▇▇▇▇▇▇
Termination Event occurs, unless, not later than ten days after notice from the
Company that the balance in his Capital Account has fallen below $1,000,000, he
shall make a capital contribution in cash to the Company as contemplated by
Section 4.10(b)(ii). If ▇▇▇▇▇▇▇▇ timely makes such capital contribution then,
notwithstanding the occurrence of the preceding ▇▇▇▇▇▇▇▇ Termination Event, his
Profit and Loss Percentage shall not be reduced as a result of that ▇▇▇▇▇▇▇▇
Termination Event, and his Membership Interest shall not terminate as of the end
of the month in which the balance in his Capital Account falls below $1,000,000.
(b) Distributions to ▇▇▇▇▇▇▇▇ shall be subject to the following
requirements:
(i) Such distributions shall be in accordance with the provisions
of this Operating Agreement and in compliance with the
applicable rules and regulations of the NYSE.
(ii) Prior to December 31, 2001, no distribution shall be made to
▇▇▇▇▇▇▇▇ if such distribution would cause his Capital Account
balance to fall below $1,000,000, and, if an allocation of
loss to him pursuant to his Profit and Loss Percentage would
cause his Capital Account balance to fall below $1,000,000,
▇▇▇▇▇▇▇▇ shall have the right, but not the obligation, to make
a cash capital contribution to the extent necessary to restore
his Capital Account balance to $1,000,000.
(c) On or promptly after December 31, 2001 (or sooner if ▇▇▇▇▇▇▇▇'▇
Termination Date occurs prior to December 31, 2001 as provided in Section
4.10(d)), the Company shall distribute to ▇▇▇▇▇▇▇▇ any remaining balance in his
Capital Account.
(d) ▇▇▇▇▇▇▇▇ shall remain as a Member until the earlier of (i) December
31, 2001 (on which date his Membership Interest shall automatically terminate)
or (ii) the date his Membership Interest is terminated pursuant to this
Agreement. In his capacity as a
11
Member, ▇▇▇▇▇▇▇▇ shall devote only so much time as he shall deem in his absolute
discretion necessary or appropriate for the conduct of the Company's business.
ARTICLE V
MANAGEMENT
Section 5.1. Management by Management Committee
(a) The management of the Company shall be vested in a management
committee (the "MANAGEMENT COMMITTEE") which shall determine all questions of
business, policy and operations of the Company except to the extent otherwise
specifically provided in this Agreement. Decisions to be made by the Management
Committee include all matters dealing with the status of any Member in the
Company or any Member's relationship to the other Members, the Base Salary to be
received by a Member, the Profit and Loss Percentage of any Member, the
termination of a Member or the admission of a Member.
(b) In addition to the matters described in Sections 3.2, 3.5(d), 4.5,
4.8, and 4.9, which shall each require a Supermajority Vote as provided therein,
the following actions shall require a Supermajority Vote:
(i) the election of any person (other than MB) to serve as a
member of the Management Committee;
(ii) any merger or consolidation of the Company with or into any
other entity or any other transaction or series of related
transactions (other than a sale of Membership Interests by MB)
that in any of the foregoing cases would have the effect of
causing any person other than MB to own beneficially or of
record Membership Interests representing a 50% or greater
Profit and Loss Percentage;
(iii) the issuance of any debt security by the Company or any
borrowings by the Company, in either case in excess of 50% of
the Company's Stated Capital at the time of such transaction,
other than short term borrowings in the ordinary course of
business consistent with past practice; and
(iv) the entry by the Company into a new line of business.
(c) All decisions of the Management Committee shall be made in its
absolute discretion. The Management Committee shall perform its duties in good
faith, and any decision of the Management Committee made in good faith shall not
be subject to review by the Members or by any court or arbitrator. No member of
the Management Committee shall be liable to the Company or to any Member for any
loss or damage, unless the loss or
12
damage shall have been the result of gross negligence or willful misconduct of
such member of the Management Committee.
Section 5.2. Management Committee Membership and Voting
(a) The Management Committee initially shall consist of six (6)
members, but such number may be reduced (but not below three (3)) or increased
by a Supermajority Vote. On the date hereof, the members of the Management
Committee shall be: MB; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. If any member of the Management
Committee ceases to be a Member of the Company for any reason, such person's
membership on the Management Committee automatically shall terminate upon such
Member's Termination Date. A member of the Management Committee may resign at
any time by notice to the other members of the Management Committee, and the
Management Committee may remove a member of the Management Committee by notice
to such member; such resignation or removal shall be effective at the time
specified in the notice. The resignation or removal of a member of the
Management Committee shall not, in and of itself, affect the interest of the
Member in the Company. Any vacancy in the Management Committee, whether by a
member of the Management Committee ceasing to be such a member or by an increase
in the size of the Management Committee, shall be filled by a Supermajority
Vote.
(b) Members of the Management Committee shall not receive compensation
for acting as such, but the Management Committee may take into account the
services of such members in determining the salary, if any, or the Profit and
Loss Percentages of Members of the Company.
(c) All votes of the Management Committee shall be by the Profit and
Loss Percentage of the member of the Management Committee casting the vote.
Except as otherwise specifically set forth in this Agreement, a vote of a
majority of the Profit and Loss Percentage of the members of the Management
Committee shall be required for action by the Management Committee.
(d) A quorum for any meeting of the Management Committee shall consist
of members holding a majority of the Profit and Loss Percentage held by the
members of the Management Committee, but in no event fewer than 3 members,
including 2 members other than MB; provided that if any meeting of the
Management Committee is adjourned for lack of a quorum, member(s) of the
Management Committee holding at least 60% of the Profit and Loss Percentage held
by all members of the Management Committee may give notice to the members of the
Management Committee specifying the date, time and place to which such meeting
is to be reconvened (which shall not be sooner than 48 hours after the date and
time of the adjourned meeting) and the matters to be decided at such reconvened
meeting. Once such meeting is reconvened, the members of the Management
Committee attending such reconvened meeting (even though less than a quorum)
shall be entitled to decide such matters as they would ordinarily be able to
decide at a Management Committee meeting attended by such members. A member may
participate at a Management Committee
13
meeting by means of conference telephone or similar communications equipment
permitting all participants to hear each other. Proxies shall be permitted.
(e) The Management Committee shall be permitted to take action without
holding a meeting by the written consent of the member(s) of the Management
Committee holding the Profit and Loss Percentages that would be necessary to
decide such action.
(f) The day-to-day management of the Company shall be carried out by
the individual members of the Management Committee in accordance with procedures
and policies determined by the Management Committee.
Section 5.3. Notice of Management Committee Meetings. Regular meetings
of the Management Committee shall be held once a quarter without notice on the
first Tuesday of each calendar quarter, or the first business day thereafter if
such day is a holiday, at 8:00 A.M. at the principal office of the Company, or
at such other dates, times or places as may be fixed by the Management
Committee. Subject to Section 5.2(d), special meetings of the Management
Committee may be called by MB or by any other three members upon five days prior
written notice to the other members of the Management Committee. Notice of a
special meeting may be waived before or after such meeting by a writing signed
by each member who is entitled to but did not receive such notice. Attendance at
a special meeting by a member shall constitute waiver of notice.
Section 5.4. Approval by Members. Notwithstanding anything to the
contrary in this Agreement, the following actions shall require the prior
approval of Members of the Company holding an aggregate Profit and Loss
Percentage of at least 80%:
(i) the dissolution of the Company or the winding up or
liquidation of its affairs;
(ii) any sale of all or substantially all of the assets of the
Company; or
(iii) any amendment to this provision of the Agreement;
(iv) any public offering of equity interests in the Company;
(v) the voluntary commencement by the Company of any proceeding
under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency, bankruptcy or
liquidation or similar law or the decision to acquiesce in any
petition, proceedings or other action commenced under any such
law by any Person other that the Company;
(vi) any transaction, other than securities trading in the ordinary
course, by the Company with any Member of the Company or any
Affiliate or Associate of any Member. For the purposes hereof,
an "Affiliate" of any Person shall mean a person controlled
by, controlling or under common control with such Person and
an "Associate" of such Person shall have the meaning set forth
in Rule 12b-2 promulgated under the 34 Act.
14
Section 5.5. Indemnification.
(a) The Company shall indemnify and hold harmless, and advance expenses
to, any person (the "INDEMNIFIED PARTY") who becomes a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, by reason of such Indemnified Party's activities on behalf of the
Company, as a Member of the Company or a member of the Management Committee, or
as an officer, shareholder, member, director, agent or employee of either such
Member, against losses, damages, claims or expenses actually and reasonably
incurred by the Indemnified Party in connection with such action, suit or
proceeding, for which such Indemnified Party has not otherwise been reimbursed
(including reasonable attorneys' fees, judgments, fines and amounts paid in
settlement); provided, however, that no indemnification may be made to or on
behalf of any Indemnified Party if a judgment or other final adjudication
adverse to such Indemnified Party establishes (a) that his or her acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or (b) that such person
personally gained a financial profit or other advantage to which he or she was
not legally entitled.
(b) The members of the Management Committee shall not be liable to the
Company or the Members (i) for mistakes of judgment or for any act or omission
suffered or taken by it, or for losses due to any such mistakes, action or
inaction, except to the extent that the mistake, action, or inaction was caused
by the gross negligence or willful misconduct of such member of the Management
Committee or (ii) for the willful misfeasance, negligence, bad faith or other
conduct of any independent contractor of the Company selected by the Management
Committee, provided that such independent contractor was selected, engaged or
retained and continued in good faith.
(c) A member of the Management Committee may consult with legal counsel
or accountants selected in each case by the Management Committee and any action
or omission suffered or taken in good faith in reliance and accordance with the
written opinion or advice of any such counsel or accountants (provided such have
been selected with reasonable care) shall be full protection and justification
with respect to the action or omission so suffered or taken.
(d) In the event that any Member shall, notwithstanding the provisions
of Section 609 of the Act to the contrary (and solely as a result of the
inapplicability, or deemed inapplicability of such provision of the Act), become
liable under a judgement , decree or order of a court, or in any other manner,
for a debt, obligation or liability of the Company, then the Company shall
indemnify such Member and hold such Member harmless from and against any such
liability of such Member (together with reasonable attorneys' fees and expenses
in defending against any claimant seeking to impose any such liability) to the
extent that it related to or arose out of any action taken or any transaction
effected by the Management Committee under this Agreement or any action which
the Management Committee failed to take or any transaction which the Management
Committee failed to effect and which the Members or the Management Committee was
obligated to take or effect
15
under this Agreement. Nothing in the preceding provisions of this paragraph
shall affect the rights of the Company against a Member for the acts or
omissions to act of that Member.
(e) Neither a Member nor a member of the Management Committee shall be
personally liable to any other Member for any payment to the other Member with
respect to the other Member's interest in the Company, any and all of which
payments shall be made solely from, and to the extent of, the Company's assets.
Section 5.6. Tax Matters Partner. The "tax matters partner" for
purposes of Subchapter C of Chapter 63 of Subtitle F of the Code shall be
designated from time to time by the Management Committee.
ARTICLE VI
MEETINGS OF MEMBERS AND VOTING
Section 6.1. Meetings. Meetings of the Members may be called by the
Management Committee or by Member(s) holding a majority of Profit and Loss
Percentage upon not less than five nor more than sixty days' prior written
notice to each Member. Such notice shall set forth the time and place of the
meeting. If no place for the meeting is designated, the place of meeting shall
be the principal office of the Company. Member(s) holding 80% of the Profit and
Loss Percentage shall constitute a quorum at any meeting of Members, whether
present in person or by proxy.
Section 6.2. Manner of Acting. If a quorum is present at a meeting, the
affirmative vote of Member(s) holding a majority of Profit and Loss Percentage
shall be the act of the Members, unless the vote of a greater or lesser
proportion or number is otherwise required by the Act, by the Articles of
Organization or by this Agreement.
Section 6.3. Action by Members. Any action required or permitted to be
taken at a meeting of Members may be taken without a meeting if the action is
evidenced by a written consent describing the action taken, executed by each
Member and delivered to the Management Committee for inclusion in the Company
records.
Section 6.4. Waiver of Notice. When any notice is required to be given
to any Members, a waiver thereof in writing executed by the person entitled to
such notice, whether before, at or after the time stated therein, shall be
equivalent to the giving of such notice.
ARTICLE VII
TRANSFERS OF MEMBERSHIP INTERESTS
Section 7.1. Restrictions on Transfer. A Member may not sell, exchange,
encumber or otherwise transfer all or any part of his membership interest except
with the prior written consent of the Management Committee, which consent may be
withheld in its sole discretion. Any such transfer without such consent shall be
null and void and confer no
16
rights on the transferee as against the Company or any non-transferring Member.
Before a permitted transferee shall be admitted to the Company as a Member, the
additional conditions set forth in Section 7.2 must be satisfied.
Section 7.2. Conditions.
(a) A permitted transferee shall be admitted as a Member only upon
satisfaction of the following conditions:
(i) the document of transfer shall be in writing, signed
by the transferor and the transferee, and a copy of
such document shall be delivered to the Company;
(ii) the transferee shall execute and deliver to the
Company a written agreement, in form and substance
satisfactory to the Management Committee, pursuant to
which the transferee agrees to be bound by this
Agreement;
(iii) the transfer shall be in compliance with the rules of
the NYSE and the National Association of Securities
Dealers, Inc. and all applicable securities laws.
(b) In the event a transfer is made in accordance with the terms of
this Article, unless otherwise required by the Code:
(i) the effective date of such transfer shall be the date
on which all of the conditions to the effectiveness
of the transfer have been satisfied; and
(ii) the Company shall be entitled to treat the transferor
Member as the absolute owner of the transferred
membership interest in all respects and shall incur
no liability for distributions or allocation made
pursuant to this Agreement in good faith to such
transferor until such time as all of the conditions
to the effectiveness of the transfer have been
satisfied.
(c) All costs incurred by the Company associated with the admission of
a substitute or additional Member contemplated by this Article (including
reasonable attorney's fees) shall be borne by the transferee.
Section 7.3. Sales by MB Subject to Tag-Along Rights.
(a) In the event that MB proposes to effect a sale, transfer or
assignment (a "TRANSFER") of an interest in the Company greater than a 50%
membership interest (the "MB INTEREST") to a Person other than an affiliate of
Van der Moolen Holding N.V., then MB shall promptly give written notice (the "MB
NOTICE") to the Company and the other Members at least twenty-five days prior to
the closing of such Transfer. The MB Notice
17
shall describe in reasonable detail the proposed Transfer including, without
limitation, the name of, and the MB Interest in the Company to be purchased by,
the transferee, the purchase price of the MB Interest in the Company to be so
sold, any other significant terms of such sale and the date such proposed sale
is expected to be consummated.
(b) Each Member shall have the right, exercisable upon written notice
to MB within fifteen days after receipt of the MB Notice, to participate in such
sale of the MB Interest in the Company on the same terms and conditions as set
forth in the MB Notice, and to sell to the proposed transferee, simultaneously
with and conditioned upon the closing of the sale of the MB Interest, a
percentage of such Member's interest in the Company which is equal to the
percentage of MB's interest being sold by MB. If a Member gives notice of his
intention to participate in such sale, he shall be obligated to do so, provided
that such sale is on substantially the terms described in the MB Notice, and
shall execute and deliver to the prospective transferee agreements containing
representations, warranties, indemnities and other covenants substantially
identical to those being made by MB.
(c) Any Member shall effect its participation in the sale pursuant to
the agreements referred to above with the proposed transferee by delivering on
the date scheduled for such sale to MB for delivery to the prospective
transferee such transfer documents as are necessary to effect the transfer of
that portion of its interest as such Member is entitled to sell in accordance
with this Section 7.3. Such transfer documents shall be delivered to MB on such
date for delivery to such transferee in consummation of the sale of the
interests pursuant to the agreements referred to above with the proposed
transferee and MB shall concurrently therewith remit to each such Member that
portion of the sale proceeds received from the prospective transferee to which
such Member is entitled by reason of its participation in such sale.
(d) The exercise or non-exercise of the rights of the Members hereunder
to participate in one or more sales made by MB shall not adversely affect their
rights to participate in subsequent sales subject to this Section 7.3.
(e) In no event shall MB receive special consideration or a control
premium not available to the other Members in connection with any sale
contemplated by this Section 7.3.
(f) The Members acknowledge and confirm that the provisions of this
Section 7.4 and of Section 7.5 shall not apply to any transfer, sale,
assignment, or Sale of Business (as defined in Section 7.5(c)) to an affiliate
of MB.
Section 7.4. Grant to MB of Bring-Along Rights.
(a) Each Member hereby agrees to cooperate fully with MB and the
purchaser in any Sale of the Business (as such term is defined below) and, to
execute and deliver all documents (including purchase agreements) and
instruments as MB and the purchaser reasonably request in order to effect such
Sale of the Business, including, without limitation, the making of all
representations, warranties, indemnities and similar arrangements, but
18
excluding employment agreements and covenants not to compete (the determination
of whether or not to enter into any such employment agreements and covenants not
to compete being in the sole and absolute discretion of each Member).
(b) In no event shall MB receive special consideration or a control
premium not available to the other Members in connection with a sale
contemplated by this Section 7.4
(c) As used in this Section 7.4, a "SALE OF THE BUSINESS" shall mean
any transaction or series of transactions (whether structured as a sale of
membership interests in the Company, merger, consolidation, reorganization,
recapitalization, asset sale or otherwise) negotiated on an arm's length basis,
with an unaffiliated bona fide third party which results in the sale or transfer
of all or substantially all of the assets of the Company or the interests in the
Company, in which transaction all consideration payable to the Members is
distributed pro rata pursuant to the interests in the Company held by such
Members.
Section 7.5. "Piggyback" Rights.
(a) If the Company intends to register equity securities on Form ▇-▇,
▇▇▇▇ ▇-▇ or Form S-3 or any corresponding form applicable at the time under the
Securities Act of 1933 (the "33 ACT") as then in effect (or any similar statute
then in effect) (a "REGISTRATION"), the Company will give written notice to each
Member of its intention to do so, at least 20 days prior to the time of the
filing of any registration statement or qualification papers, and at the written
request of any Member given within 5 days after receipt of any such notice
(which request shall specify the equity interests intended to be sold or
disposed of by such Member and shall describe the nature of any proposed sale or
other disposition thereof which may include a distribution over a reasonable
period of time), the Company will use its best efforts to cause such equity
interests to be registered or qualified to the extent required to permit the
sale or other disposition thereof (in accordance with the methods described by
such Members if and to the extent the registration form on which the Company is
registering its sale of equity securities permits such methods of sale and
distribution) (such right of each Member to participate in the proposed public
offering, a "PIGGY-BACK RIGHT"). The equity interests that any Member intends to
sell shall be subject to underwriters' cutbacks resulting from the underwriters'
conclusion (expressed in a written notice (the "CUTBACK NOTICE") delivered to
the Company and the Members) that the inclusion of all of the equity interests
requested to be included in the proposed public offering would exceed the number
which could be sold in such offering without a reduction in the selling price
anticipated to be received for the equity securities to be sold in such offering
or that would otherwise materially adversely affect the distribution of the
equity interests to be sold in such public offering. The Cutback Notice shall
specify the amount of equity interests which such managing underwriter believes
can be so sold in such offering (the "PIGGYBACK ALLOTMENT"). The Piggyback
Allotment shall be allocated among the Members seeking to participate in such
public offering pro-rata based on their respective Profit and Loss Percentages.
Notwithstanding anything herein to the contrary, no Member (other than MB) shall
have the right to "piggy-back" on a Registration if (i) there have been three
prior Registrations in which one or more Members (other than MB) have
participated as sellers
19
pursuant to the exercise of their piggy-back rights, and (ii) MB itself does not
exercise its piggy-back right with respect to such Registration.
(b) All out-of-pocket expenses, disbursements and fees in connection
with any action to be taken under this Section 7.5 shall be borne by the
Company, including the reasonable fees and expenses of one counsel for all
participating Members, which counsel shall be selected by the Member or Members
having a majority of the Piggyback Allotment. Notwithstanding the foregoing, all
underwriter commissions and transfer taxes attributable to the sale of a
Member's equity securities shall be borne or paid for by such Member and not by
the Company.
(c) In the event of any registration under the provisions of this
Section 7.5, the Company, to the extent permitted by law, will indemnify any
Member participating in such registration, its respective officers and
directors, if any, and each Person, if any, who controls such Member within the
meaning of Section 15 of the 33 Act, against all losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained in the
registration statement or prospectus (and as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading and will reimburse
such Member, its officers and directors and any Person, if any, who controls
such Member within the meaning of Section 15 of the 33 Act, against any
reasonable legal or other expenses reasonably incurred by such Member, officer,
director or Person in connection with investigating or defending any such
losses, claims, damages and liabilities, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission contained
in information furnished in writing to the Company by such Member participating
in such registration or by underwriters expressly for use therein. The
obligation of the Company under this Section 7.5 to register securities for any
of the Members shall be subject to the condition that each such Member and the
underwriters involved in the offering shall furnish to the Company in writing
such information as shall be reasonably requested by the Company for use in
connection with the preparation of any such registration statement or prospectus
and, to the extent permitted by law, shall indemnify the Company, its directors
and officers, any other underwriter, the other Members participating in such
registration and each Person, if any, who controls the Company, any other
underwriter of such other Members, within the meaning of Section 15 of the 33
Act, against all losses, claims, damages and liabilities caused by any untrue
statement or omission contained in information so furnished in writing to the
Company by such Member or such underwriter expressly for use therein.
(d) If the indemnification provided for in this Section 7.5 from the
indemnifying party is unavailable to any indemnified party hereunder in respect
of any losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages or liabilities, as
20
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party under this Section 7.5 as a result
of the losses, claims, damages and liabilities referred to above shall be deemed
to include any reasonable legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 7.5(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to herein.
(e) If, at any time prior to the effective date of the registration
statement relating to such public offering, the Company shall decide not to
register such equity interests, the Company shall be relieved of any obligation
to separately register the equity interests of the Requesting Members seeking to
participate in such public offering, provided that the Company shall pay all
reasonable expenses properly incurred by its Members seeking to exercise their
rights under this Section 7.5 in connection with such terminated public
offering.
ARTICLE VIII
REPORTS AND TAX MATTERS
Section 8.1. Fiscal Year. The fiscal year of the Company shall be the
calendar year.
Section 8.2. Books, Records and Reports.
(a) Accurate books, records and reports as required by Section 1102 of
the Act and other records relating to the assets, liabilities, operations,
transactions and financial condition of the Company shall be maintained by the
Company. The Company books and records may be kept under such permissible method
of accounting as the Management Committee may determine. The Company books shall
be maintained at the principal office of the Company, and each Member shall have
the right upon reasonable notice given to the Company to inspect, extract and
copy such books during regular business hours of the Company.
(b) The Company shall file all required tax returns and reports with
the appropriate authorities, and timely shall send to each person who was a
Member during a year a statement setting forth the share of each Member in the
net income, net loss and other relevant items of the Company for the year for
federal, state and local income tax purposes.
21
(c) Within 90 days after the close of each fiscal year, the Company
shall furnish to each Member the financial statements of the Company for that
fiscal year.
Section 8.3. Classification as a Partnership. It is the intention of
all of the Members that the Company be classified as a partnership for federal,
state and local income tax purposes for so long as such a classification is
permitted by law. The Company shall take whatever action may be necessary to
carry out this intention, and neither the Company nor any Member shall take any
action or position that is inconsistent with this intention.
ARTICLE IX
NYSE MEMBERSHIPS
Section 9.1. NYSE Memberships. (a) All Members of the Company who have
Memberships in the NYSE, either as owners of regular Memberships or under A-B-C
Agreements, agree to contribute the use of their respective Memberships in the
NYSE to the Company. All Members who are lessees of Memberships in the NYSE
shall use such Memberships solely for the benefit of the Company. All dues,
assessments or other expenses of maintaining the respective Memberships of the
Members in the NYSE shall be borne by the Company and charged as an expense of
the business, except that any assessments for the Gratuity Fund, as established
under the Constitution and Rules of the NYSE, shall be paid by the individual
Membership owner, and neither the Company nor any other Member of the Company
shall have or assert any claim to any Gratuity Fund benefits payable to the
beneficiaries of the deceased Member which may be made in accordance with the
Constitution and Rules of the NYSE.
Section 9.2. Member-Owned Seats. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ are owners of regular Memberships in the NYSE. In the event of
the retirement or termination of the interest in the Company of any of them for
any reason, the Membership in the NYSE of such person shall be his sole
property. The Company shall pay to each of them (other than ▇▇▇▇ ▇▇▇▇▇▇▇), as an
expense of the business, an annual rent equal to the average of the annual rent
payable from time to time on the Former LOM Member Leases. Payments shall be
made in 12 equal installments monthly in arrears on the last business day of
each month. As used herein, the capitalized term "Former LOM Member Leases"
shall mean the NYSE Membership lease agreements from time to time in effect
among the members and/or employees of the Company, as lessees, any of A. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇, ▇. ▇▇▇▇ Reighly, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., as lessors, and the
Company, as guarantor.
22
Section 9.3. A-B-C- Memberships.
(a) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. hold their Memberships
pursuant to A-B-C Agreements, as set forth in Article X. ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇, an employee of the Company, hold their respective Memberships pursuant
to separate A-B-C Agreements with the Company. The provisions of this Section
9.3 shall apply to each of those four (4) Memberships (each such Membership, an
"A-B-C LOM MEMBERSHIP").
(b) The Company's cost of each A-B-C LOM Membership shall be deemed to
be the amount shown on the books of the Company.
(c) Each Person that was a Member immediately prior to the date hereof
shall have an account (an "A-B-C MEMBERSHIP ACCOUNT") with respect to each A-B-C
LOM Membership, which shall be fixed at an amount equal to (i) the amount of
such member's A-B-C Membership Account with respect to that A-B-C LOM Membership
as shown on the books of the Company as of the most recent to date prior to July
19, 1999 on which such account was determined, (ii) increased (or decreased, but
not below zero) by an amount equal to the product of (x) the increase (or
decrease) in value of the A-B-C LOM Membership between such determination date
and July 19, 1999, multiplied by (y) the Member's Profit and Loss Percentage
immediately prior to July 19, 1999. For purposes of this paragraph (c), the
value of such Membership on July 19, 1999 (the "VALUATION DATE") shall be deemed
to be the average of the last two sales of an Exchange Membership on the
Exchange's auction market on or prior to July 19, 1999, provided that both such
sales have closed within 30 days prior to such date, or if two sales shall not
have closed within 30 days prior to such date, the last sales price prior to
such date (the "VALUATION FORMULA"). Except to the extent specifically set forth
in this Section 9.3 and in Section 3.5, no Member shall have an interest in, or
be entitled to be paid, the amount of the Member's A-B-C Membership Account.
(d) Promptly after the sale of an A-B-C LOM Membership, the Company
shall distribute to the Members an aggregate amount of cash ("DISTRIBUTABLE
CASH") equal to the excess of the net proceeds from the sale of such Membership
over the cost of such Membership. To the extent Distributable Cash does not
exceed the amount of A-B-C Membership Accounts with respect to such Membership,
Distributable Cash shall be distributed to Members that have such accounts in
proportion to the amount in such account of each such Member. Any Distributable
Cash in excess of that distributed pursuant to the preceding sentence shall be
distributed to all Members (including Members receiving a distribution pursuant
to the preceding sentence) in proportion to their Profit and Loss Percentages in
effect on the date of sale. No distribution pursuant to this Section 9.3 (d)
shall be made, however, if such distribution would violate the rules of the
NYSE.
(e) Payment to a Terminated Member with respect to his A-B-C Membership
Account shall be as set forth in Section 3.5. For purposes of paragraph (c)
above, the A-B-C Membership Account of a Terminated Members shall be treated as
being zero, and neither
23
such account becoming zero nor a payment pursuant to Section 3.5 shall change
the amount of any other Member's A-B-C Membership Account.
(f) The Company shall pay to each Member who has an A-B-C Membership
Account, as an expense of the business, interest in arrears on the last business
day of each month on the amount of such Member's A-B-C Membership Account at a
rate of interest established by the Management Committee from time to time which
shall not be less than 10% per annum (the "MEMBERSHIP INTEREST RATE").
Section 9.4 MB Arrangements. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ hold their
Memberships pursuant to A-B-C Agreements as set forth in Article X. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ hold their Memberships pursuant to separate A-B-C
Agreements with the Company dated as of July 19, 1999. ▇▇▇▇▇▇ ▇. Day holds his
Membership pursuant to a separate A-B-C Agreement with the Company. The
provisions of this Section 9.4 shall apply to each of those five (5)
Memberships.
The Company's cost of each Membership referred to above in this Section
9.4 shall be deemed to be the amount shown on the books of the Company as the
amount advanced in connection with the purchase of such Membership.
In the event of the sale or disposition of any Membership referred to
above in this Section 9.4, MB shall be entitled to receive from the Company an
amount equal to the proceeds arising from the sale or disposition thereof over
the cost thereof, whether such sale or disposition arises in connection with the
dissolution of the Company, the retention of such Membership by the holder
thereof, the sale of such Membership to a third party, or otherwise. In the
event MB should withdraw from the Company under circumstances where the Company
continues in business as a registered broker-dealer and specialist on the
Exchange, the Company shall pay MB in respect of each of such Memberships an
amount equal to the excess of (i) the value of such Membership (determined in
accordance with the Valuation Formula), over (ii) the cost thereof. Such payment
shall be made, subject to the approval of the Exchange, on the date MB withdraws
from the Company, or as soon thereafter as the Exchange gives its approval. The
Company shall pay to MB, as an expense of the business, interest in arrears on
the last business day of each month at the Membership Interest Rate on an amount
equal to the excess of (x) the value of such Memberships (determined in
accordance with the Valuation Formula) over (y) the cost thereof.
ARTICLE X
A-B-C MEMBERSHIPS
Section 10.1. Options Regarding A-B-C Memberships. Upon:
(i) the dissolution of the Company; or
24
(ii) the Company ceasing to be a Member firm under the Constitution
of the NYSE; or
(iii) the receipt of the Member or his legal representative(s) of
written notice that the Company will on a stated date cease to
be a Member firm of the NYSE; or
(iv) the death of an individual holding an A-B-C Membership
described in Sections 9.3 or 9.4, (collectively, an "A-B-C
MEMBERSHIP"), his being declared incompetent, or either his
giving written notice to the Management Committee or his
receiving written notice from the Management Committee that
his Membership in, or employment with, the Company shall
terminate on the date specified in such notice, each
individual holding an A-B-C Membership or his legal
representation (an "A-B-C MEMBER"), shall have the unqualified
right during a period of thirty (30) days thereafter (except
that in the case of the death of such individual such period
shall be deemed to expire ten (10) days after the appointment
of a legal representative(s) or committee of the individual)
to elect by notice thereof given to the Management Committee
to exercise the following option hereinafter called Option "A"
within the period specified above.
Option "A": To retain said A-B-C Membership upon payment to the Company
of the amount necessary to purchase another Membership in the NYSE, which amount
shall be determined as provided below, plus an amount sufficient to pay any and
all state, local and federal income, sales and other taxes, levies, fees or
similar expenses that may be paid or payable by the Company or its Members in
connection with such A-B-C Member's exercise of this Option "A", and it is
agreed that upon the exercise of this Option "A" all transfer and other related
fees then imposed by the NYSE will be paid by the A-B-C Member. The amount
necessary to purchase another Membership in the NYSE shall be either (1) if the
Company purchases a replacement Membership (within 20 days from the date notice
is received by the Company that the member wishes to elect Option "A"), then the
replacement cost to the Company, or (2) if no replacement Membership is
purchased by the Company within 20 days after receiving notice of the A-B-C
Member's intent to elect Option "A", then the offer price of a Membership, as
posted in the market for Memberships maintained by NYSE (said price to reflect
the offering price at the close of business on the 20th day described above).
During the period of time mentioned above, such A-B-C Member may waive
his right to exercise Option "A" by giving notice to the Management Committee.
Upon either
(i) The Management Committee's receiving notice within the
above-mentioned period that such A-B-C Member elects not to
retain said A-B-C Membership; or
25
(ii) Upon the expiration of said time period without said Option
"A" having been exercised, the Management Committee shall have
the unqualified right during a period of thirty (30) days from
the earlier of the date of such receipt or the date of
expiration of said time period to elect one of the two
following options on behalf of the Company (hereinafter
called, respectively, Option "B" and Option "C").
Option "B": To require the A-B-C Member to sell said A-B-C Membership
and pay the net proceeds over to the Company after deduction for all transfer
and other related fees then imposed by the NYSE; or
Option "C": To require the A-B-C Member to transfer said A-B-C
Membership for a nominal consideration to a person designated by the Management
Committee and satisfactory to the NYSE. If Option "C" is exercised all transfer
and other related fees then imposed by the NYSE will be paid by the Company.
If, the Company has not timely elected either Option "B" or Option "C",
then the individual or his legal representative(s) shall promptly sell the A-B-C
Membership and pay the proceeds over to the Company.
Section 10.2. A-B-C Procedures. The Company, in accordance with the
Rules of the NYSE, has released and hereby releases the Member from any
obligation to repay the funds advanced to the Member to assist him in financing
his acquisition of his A-B-C Membership, except as provided in the A-B-C
Agreement portion of this Agreement.
Each individual holding a Membership pursuant to an A-B-C Agreement
hereby appoints such Member as may be designated by the Management Committee as
his agent and attorney-in-fact to sell and transfer his Membership on such terms
and conditions as said attorney-in-fact may elect, and to receive the proceeds
thereof, and to receipt therefor and release the NYSE, (a) in the event that
said individual does not within said thirty (30) days period choose to retain
his Membership and pay the Company as above provided; or (b) in case said
individual shall cease to be a Member or employee of the Company or become
incompetent or die.
The proceeds of the sale of any A-B-C Membership in accordance with
Option "A" or Option "B" shall be paid to the persons beneficially interested
therein pursuant to Sections 9.3 or 9.4, as the case may be.
No individual holding his Membership pursuant to an A-B-C Agreement
shall lease said Membership without the consent of the Management Committee, and
any rentals paid thereon shall be remitted to the Company. If such individual
shall (a) die; (b) become incompetent; or (c) cease to be a Member or employee
of the Company within the period of said lease, the time for said Member or his
legal representative(s) to exercise Option "A" shall date from the date of the
expiration of the lease or its sooner termination.
26
ARTICLE XI
DISSOLUTION AND TERMINATION
Section 11.1. Dissolution of the Company. The Company shall dissolve
and be terminated upon the first to occur of:
(i) the written agreement of the Member(s) holding in the
aggregate of 80% of Profit and Loss Percentage;
(ii) except as set forth below in this Section 11.1, the occurrence
of any other event that, under the Act or as otherwise
provided by law, causes a dissolution and termination of the
Company.
The bankruptcy, death, dissolution or incapacity of a Member, or a Member
ceasing to be a Member for any other reason whatsoever, shall not cause a
dissolution of the Company, and the Company shall continue notwithstanding the
occurrence of any such event.
Section 11.2. Liquidator.
(a) Upon dissolution of the Company, the Management Committee shall
designate a person or persons to act as liquidator of the Company (the
"LIQUIDATOR"). The Liquidator shall, with reasonable speed, wind up the affairs
of the Company and liquidate the property of the Company. The Liquidator shall
determine the time, manner and terms of any sale of property of the Company. The
Liquidator shall distribute any proceeds in the following order of priority:
(i) in satisfaction of the claims of creditors of the Company
other than Members;
(ii) in satisfaction of the claims of Members as creditors of the
Company;
(iii) the balance remaining shall be distributed to Members in
proportion to their Capital Accounts, after giving effect to
all transactions through the date of final distribution.
(b) If any Member shall be indebted to the Company, then until payment
of such amount by him, the Liquidator shall retain such Members distributive
share of property of the Company and apply the same to the payment of such
indebtedness.
(c) The Liquidator shall comply with all requirements of the NYSE, the
Act and other applicable law pertaining to the winding up of a limited liability
company that engages in the business described in Section 1.3, following which
the Company shall stand liquidated and terminated.
Section 11.3. Source of Distributions. Each Member shall look solely to
the assets of the Company for distributions of any nature with respect to the
Company, and shall have
27
no recourse therefor (upon dissolution or otherwise) against the Liquidator, the
members of the Management Committee, or any of the Members.
Section 11.4. Limitation on Capital Withdrawals and Distributions.
Notwithstanding anything to the contrary herein contained, in the event of a
dissolution of the Company pursuant to Section 11.1, each Member agrees that any
withdrawal from such Member's Capital Account on any such dissolution which
would cause the Company's aggregate indebtedness to exceed the percentages
specified in NYSE Rules 326(a) and 326(b) during the six months immediately
preceding the date of the dissolution (if such Rules are applicable to the
Company) may be postponed for a period of up to six months of the stated date of
dissolution, as the Liquidator may deem necessary to ensure compliance with said
Rules, and any such capital or balances so retained by the Company after the
date of termination shall continue to be subject to all debts and obligations of
the Company.
ARTICLE XII
SPECIAL PROVISIONS
Section 12.1. Compliance with Rules. Each Member shall comply with all
laws applicable to the business of the Company, with all rules and regulations
of the NYSE, the Securities and Exchange Commission and any state regulatory
authority, and, with respect to shares of Van der Moolen Holding N.V. ("VMH"),
the rules and regulations of the Amsterdam Stock Exchange applicable to
employees and officers of the VMH group of companies.
Section 12.2. Duties Full Time. Each individual Member shall not do any
act detrimental to the best interests of the Company, and, without the prior
written approval of the Management Committee, shall not fail to devote his full
time and attention to the business of the Company. Each Member accurately shall
account for all transactions connected with the business of the Company.
Section 12.3. Conduct of Members. Each Member shall give, whenever
requested by the Management Committee, a true account of all business
transactions arising out of or connected with the conduct of the business of the
Company, and shall not employ either the capital or the credit standing of the
Company in any business other than the business of the Company. Each Member
agrees that he will not do any act detrimental to the best interests of the
Company, or which would make it impossible to carry on the ordinary business of
the Company.
Section 12.4. Limitation on Guarantees. Without the prior written
consent of the Management Committee, no Member may make, endorse or accept in
the Company's name any note, ▇▇▇▇ draft or check as accommodation for any
person, or enter into any bond as surety or guarantor, or otherwise become
surety for any person, or make use of the Company name in any way except in the
business and for the benefit of the Company.
28
Section 12.5. Authority to Bind Company. Without the prior written
consent of the Management Committee, no Member shall have the authority to bind
the Company in any manner.
Section 12.6. Powers of Attorney.
(a) The Management Committee shall have full power and authority on
behalf of all of the Members of this Company, at any time and from time to time
to (i) designate one or more of the employees of the Company to assign
securities registered in the name of the Company, to execute powers of
substitution, and to guarantee the signatures of others to assignments of
securities, with the same effect as if the name of the Company had been signed
under like circumstances by one of the Members of the Company; (ii) adopt and
authorize the use of a mechanically reproduced facsimile signature of the
Company in connection with the assignment of securities registered in the name
of the Company; (iii) designate one or more of the employees of the Company to
sign written contracts covering "seller's option", "when issued", and "when
distributed" transactions in the name of the Company with the same effect as if
the name of the Company; and (iv) execute and file with any National Securities
Exchange, in the name and on behalf of the Company, any and all such powers of
attorney, agreements and other instruments (including agreements of
indemnification) as may by any such Exchange be required to evidence action
under (i), (ii) or (iii) above.
(b) Each Member, upon executing this Operating Agreement, specifically
ratifies and approves all such powers of attorney, agreements and other
instruments (including agreements of indemnification) as may theretofore have
been executed and filed on behalf of this Company with any National Securities
Exchange and which are still in force, in connection with designating one or
more employees of the Company to assign securities registered in the name of the
Company and to guarantee the signatures of others to assignments of securities,
in connection with adopting a mechanically reproduced facsimile signature for
use as the signature of the Company, or in connection with designating one or
more employees of the Company to sign written contracts covering "seller's
option", "when issued" and "when distributed" transactions in the name of the
Company.
Section 12.7. Confidentiality.
(a) Each Member recognizes and acknowledges that confidential
information of various kinds may exist, from time to time, with respect to the
business and assets of the Company. Accordingly, each Member covenants that,
except with the prior written consent of the Management Committee or except
pursuant to his ordinary duties on behalf of the Company, or as required by law,
the Member shall at all times (both while a Member and for a period of 5 years
after his Termination Date) keep confidential and not divulge, furnish or make
accessible to anyone (except the Company's authorized representatives) any
confidential information to which the Member has or shall become privy relating
to the business or assets of the Company. The provisions of this Section 12.7
shall not apply to any information to the extent it is or shall become generally
known to the public or the trade
29
(without the commission of a tortious act by such Member) or to the extent it is
or shall become available in trade or other publications.
(b) So long as a Member is a Member of the Company and for a period of
twenty-four months after his Termination Date, such Member shall not solicit,
directly or indirectly, for his own account or on behalf of any other entity
(other than the Company) of which he is then an employee, or in which he is then
a stockholder, partner or member, the performance of services by any individual
who is an employee of or member in the Company at any time on or after the date
hereof.
(c) Each Member acknowledges that any violation of the provisions of
this Section and of Section 12.8 may result in irreparable harm to the business
or assets of the Company for which money damages alone would not adequately
compensate. Accordingly, each Member consents and agrees that, if the Member
violates any of such provisions, the Company shall be entitled to an injunction
to be issued by any court of competent jurisdiction restraining such Member from
committing or continuing any violation of any such provisions.
Section 12.8. Non-Competition. For a period of twenty-four (24) months
after a Member ceases for any reason (other than death) to be a Member of the
Company, such Member shall neither act as a specialist, nor be employed by, or
be a partner, stockholder, or member in, any NYSE member organization that acts
as a specialist, in any security of any issuer (or any affiliate thereof) for
which the Company is or becomes a specialist on the NYSE at any time on or after
the date hereof through the Termination Date of such Member (a "SPECIALIST
SECURITY"). Upon his Termination Date, such Member shall be deemed to have (a)
withdrawn, without protest and without payment, such Member's registration for
each and every Specialist Security, and (b) relinquished any interest in, or
right or claim to, any interest, right or claim (of the Company or otherwise) in
respect of each and every Specialist Security. Such Member shall upon his
Termination Date execute and deliver to the Company such instruments and
agreements as the Company may reasonably request confirming the foregoing
provisions of this Section.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1. Notices. All notices or other communications required or
permitted to be given pursuant to the Agreement shall be in writing and
delivered personally or sent by facsimile, courier service, or by registered or
certified mail, postage prepaid, to a Member at the address set forth on the
Schedule A, or such other address as a Member may have given notice. Any notice
or other communication to be given to the Management Committee shall be given in
the manner provided above to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. or to such other individual
Member or Members of the Management Committee as the Management Committee may
from time to time designate in each case with a copy to MB. All notices shall be
treated as having been given when received.
30
Section 13.2. Governing Law. This Agreement shall be governed by the
laws of the State of New York.
Section 13.3. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Members and their respective heirs,
executors, administrators, successors and permitted assigns. Any person
acquiring and claiming an interest in the Company shall be subject to and bound
by all the terms, conditions and obligations of this Agreement to which his
predecessor in interest was subject or bound, without regard to whether such
person has executed this Agreement or a counterpart hereof or any other document
contemplated hereby. No person shall have any rights or obligations relating to
the Company greater than those set forth in this Agreement, and no person shall
acquire an interest in the Company or become a Member thereof except as
permitted by the terms of this Agreement.
Section 13.4. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same instrument.
Section 13.5. Additional Assurances. Upon the request of the Management
Committee, each Member shall perform all further acts and execute, acknowledge
and deliver any documents that the Management Committee deems reasonably
necessary to effectuate the provisions of this Agreement.
Section 13.6. Entire Agreement. This Agreement sets forth the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether oral or written,
among any of the parties with respect to the subject matter hereof (including,
without limitation, all prior operating agreements of the Company).
Section 13.7. Amendment and Waiver. This Agreement may be amended only
by written agreement of Members holding Profit and Loss Percentages of more than
80% after obtaining the approval of the NYSE and any other necessary regulatory
approvals for such amendment; provided, however, that if the amendment is to
evidence or reflect an action taken by the Management Committee under or
pursuant to this Agreement, then such amendment shall require the affirmative
vote of the Member or Members holding the Profit and Loss Percentages necessary
to take such action. Any amendment approved by the required affirmative vote
shall be effective when signed by the Member or Members holding the Profit and
Loss Percentages necessary to approve such amendment . The failure by any party
to insist upon the strict performance of any provision of this Agreement or to
exercise any right in any one or more instances or circumstances will not be
construed as a waiver or relinquishment of such provision or right currently or
in the future.
Section 13.8. Headings. The Article and Section headings contained in
this Agreement are for convenience of reference only and do not constitute a
part of this Agreement.
31
Section 13.9. Severability. If any provision of this Agreement is
determined to be invalid or unenforceable, the validity or enforceability of any
other provision hereof will not be affected thereby.
Section 13.10. Number and Gender. All pronouns in this Agreement shall
be treated as referring to the masculine, feminine or neuter, and to the
singular or plural, as the context requires.
Section 13.11. Arbitration. Any dispute under or arising out of this
Agreement shall be submitted to the Board of Arbitration of the NYSE. Such
arbitration proceeding shall be conducted under the rules of the NYSE, and the
decision of such Board shall be final and binding on the Members.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Members have caused this Agreement to be
executed as of the date first set forth above.
MILL BRIDGE IV, LLC
By:
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▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Manager
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ CLOSE, II ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
34
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
35
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ VERDIGLIONI
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
36
TABLE OF CONTENTS
ARTICLE 1
ORGANIZATION
Page
----
SECTION 1.1 Name 2
SECTION 1.2 Principal Office 2
SECTION 1.3 Purpose 2
SECTION 1.4 Term 2
SECTION 1.5 Defined Terms 3
ARTICLE II
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
Page
----
SECTION 2.1 Capital Accounts 3
SECTION 2.2 Stated Capital 3
SECTION 2.3 Limited Liability 4
SECTION 2.4 Withdrawal of Capital 4
SECTION 2.5 Loans 4
SECTION 2.6 Member's Securities 4
ARTICLE III
MEMBERS; ADMISSION AND TERMINATION
Page
----
SECTION 3.1 Current Members and Profit and Loss Percentages 5
SECTION 3.2 Admission of New Members 5
SECTION 3.3 Voluntary Termination of Membership 5
SECTION 3.4 Involuntary Termination of Membership 5
SECTION 3.5 Effect of Termination 6
SECTION 3.6 Reallocation of Profit and Loss Percentage of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7
ARTICLE IV
ALLOCATION, DISTRIBUTIONS AND SALARIES
Page
----
SECTION 4.1 Distributions 8
SECTION 4.2 Withdrawals of Capital 8
SECTION 4.3 Allocation of Profits and Losses 8
SECTION 4.4 Section 704(c) Allocation 9
SECTION 4.5 Change of Profit and Loss Percentages 9
SECTION 4.6 Withholding of Tax 10
i
SECTION 4.7 Salaries 10
SECTION 4.8 Bonuses 10
SECTION 4.9 Support Fee 10
SECTION 4.10 Special Provisions Regarding ▇▇▇▇▇▇▇▇ 11
ARTICLE V
MANAGEMENT
Page
----
SECTION 5.1 Management by Management Committee 12
SECTION 5.2 Management Committee Membership and Voting 13
SECTION 5.3 Notice of Management Committee Meetings 14
SECTION 5.4 Approval by Members 14
SECTION 5.5 Indemnification 15
SECTION 5.6 Tax Matters Partner 16
ARTICLE VI
MEETINGS OF MEMBERS AND VOTING
Page
----
SECTION 6.1 Meetings 16
SECTION 6.2 Manner of Acting 16
SECTION 6.3 Action by Members 16
SECTION 6.4 Waiver of Notice 16
ARTICLE VII
TRANSFERS OF MEMBERSHIP INTERESTS
Page
----
SECTION 7.1 Restrictions of Transfer 16
SECTION 7.2 Conditions 17
SECTION 7.3 Sales by MB Subject to Tag-Along Rights 17
SECTION 7.4 Grant to MB of Bring-Along Rights 18
SECTION 7.5 "Piggyback" Rights 19
ARTICLE VIII
REPORTS AND TAX MATTERS
Page
----
SECTION 8.1 Fiscal Years 21
SECTION 8.2 Books, Records and Reports 21
SECTION 8.3 Classification as a Partnership 22
ii
ARTICLE IX
NYSE MEMBERSHIPS
Page
----
SECTION 9.1 NYSE Memberships 22
SECTION 9.2 Member-Owned Seats 22
SECTION 9.3 A-B-C Memberships 23
SECTION 9.4 MB Arrangements 24
ARTICLE X
A-B-C MEMBERSHIPS
Page
----
SECTION 10.1 Options Regarding A-B-C Memberships 24
SECTION 10.2 A-B-C Procedures 26
ARTICLE XI
DISSOLUTION AND TERMINATION
Page
----
SECTION 11.1 Dissolution of the Company 27
SECTION 11.2 Liquidator 27
SECTION 11.3 Source of Distributions 27
SECTION 11.4 Limitation on Capital Withdrawals and Distributions 28
ARTICLE XII
SPECIAL PROVISIONS
Page
----
SECTION 12.1 Compliance with Rules 28
SECTION 12.2 Duties Full Time 28
SECTION 12.3 Conduct of Members 28
SECTION 12.4 Limitation on Guarantees 28
SECTION 12.5 Authority to Bind Company 29
SECTION 12.6 Powers of Attorney 29
SECTION 12.7 Confidentiality 29
SECTION 12.8 Non-Competition 30
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Page
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SECTION 13.1 Notices 30
SECTION 13.2 Governing Law 31
SECTION 13.3 Successors and Assigns 31
iii
SECTION 13.4 Counterparts 31
SECTION 13.5 Additional Assurances 31
SECTION 13.6 Entire Agreement 31
SECTION 13.7 Amendment and Waiver 31
SECTION 13.8 Headings 31
SECTION 13.9 Severability 32
SECTION 13.10 Number and Gender 32
SECTION 13.11 Arbitration 32
iv
SCHEDULE A
TO
OPERATING AGREEMENT
OF
VAN DER MOOLEN SPECIALISTS USA, LLC
DATED AS OF AUGUST 1, 2001
MEMBERS
STATED PROFIT AND LOSS
NAME ADDRESS CAPITAL ($) PERCENTAGE (%)
---- ------- ----------- --------------
Mill Bridge IV, LLC ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇. [REDACTED] 75.0000
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇ ▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ Close, II [REDACTED] [REDACTED] [REDACTED]
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
A-i
▇▇▇▇ ▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇ ▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
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▇▇▇▇▇ ▇. ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
A-ii
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇ ▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇ ▇. ▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
▇▇▇▇▇▇ ▇▇▇▇▇ [REDACTED] [REDACTED] [REDACTED]
Float Percentage [REDACTED] [REDACTED]
TOTAL [REDACTED] 100.0000%
A-iii