EXHIBIT 4.1
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
GLOBAL EXPRESS CAPITAL REAL ESTATE INVESTMENT FUND I, LLC
(A NEVADA LIMITED LIABILITY COMPANY)
DATED AS OF JUNE 20, 2002
TABLE OF CONTENTS
PAGE
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ARTICLE I INTERPRETATION ............................................... B-1
SECTION 1.1 Definitions ................................................ B-1
SECTION 1.2 Terms Defined Elsewhere .................................... B-4
SECTION 1.3 Captions ................................................... B-5
SECTION 1.4 Construction ............................................... B-5
ARTICLE II THE COMPANY AND ITS BUSINESS ................................ B-5
SECTION 2.1 Formation of Company ....................................... B-5
SECTION 2.2 Name ....................................................... B-5
SECTION 2.3 Term of Company ............................................ B-5
SECTION 2.4 Purposes of Company ........................................ B-5
SECTION 2.5 Registered Office and Registered Agent
and Principal Business Office .............................. B-5
SECTION 2.6 Filings .................................................... B-5
SECTION 2.7 Names of Members ........................................... B-6
SECTION 2.8 Recapitalization, Acquisitions, Restructuring and Mergers .. B-6
ARTICLE III COMPANY INTERESTS AND CAPITALIZATION ....................... B-6
SECTION 3.1 Capital Contribution of the Manager ........................ B-6
SECTION 3.2 Capital Contributions of Members ........................... B-6
SECTION 3.3 No Withdrawal of Capital Contributions;
Return of Capital Contributions ............................ B-7
SECTION 3.4 No Obligation to Restore Negative Balances
in Capital Accounts ........................................ B-7
SECTION 3.5 Liability of Manager and Member
and their Affiliates ....................................... B-7
SECTION 3.6 Contributions of Existing Loans ............................ B-7
ARTICLE IV ALLOCATIONS OF PROFITS, LOSS AND CAPITAL ACCOUNTS ........... B-7
SECTION 4.1 Allocation of Net Income and Net Loss ...................... B-7
SECTION 4.2 Other Allocation Provisions ................................ B-8
SECTION 4.3 Allocations for Income Tax Purposes ........................ B-11
SECTION 4.4 Withholding ................................................ B-11
SECTION 4.5 Capital Accounts ........................................... B-11
ARTICLE V DISTRIBUTIONS ................................................ B-12
SECTION 5.1 Distributions .............................................. B-12
SECTION 5.2 Certain State and Local Taxes .............................. B-12
SECTION 5.3 Timing of Distributions .................................... B-13
SECTION 5.4 Limitations on Distributions ............................... B-13
SECTION 5.5 Reserves ................................................... B-13
SECTION 5.6 Tax Distributions .......................................... B-13
SECTION 5.7 Incorrect Distributions .................................... B-13
SECTION 5.8 Distributions in Kind ...................................... B-13
PAGE
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Article VI DISTRIBUTION REINVESTMENT PLAN .............................. B-14
Section 6.1 Members' Reinvested Distributions .......................... B-14
Section 6.2 Purchase of Additional Units ............................... B-14
Section 6.3 Statement of Account ....................................... B-14
Section 6.4 Unit Certificate ........................................... B-14
Section 6.5 Continued Suitability Requirements ......................... B-14
Section 6.6 Changes or Termination of the Plan ......................... B-14
ARTICLE VII MANAGEMENT ................................................. B-15
Section 7.1 Management Powers of the Manager ........................... B-15
Section 7.2 Manager's Obligations ...................................... B-16
Section 7.3 Procedures ................................................. B-17
Section 7.4 Manager's Duty to Devote Time .............................. B-17
Section 7.5 Conduct of Manager; Limited Liability
of the Manager ............................................. B-17
Section 7.6 Indemnification ............................................ B-17
Section 7.7 Certain Transactions between the Company and
the Manager and its Affiliates ............................. B-18
Section 7.8 Removal of Manager; Successor .............................. B-19
Section 7.9 No Borrowing ............................................... B-19
ARTICLE VIII BOOKS OF ACCOUNT; BANK ACCOUNTS; TAXES .................... B-19
SECTION 8.1 Books of Account ........................................... B-19
SECTION 8.2 Bank Accounts .............................................. B-20
SECTION 8.3 Tax Returns ................................................ B-20
SECTION 8.4 Tax Matters Partner ........................................ B-20
SECTION 8.5 Books and Records .......................................... B-20
SECTION 8.6 Financial Reports and Returns .............................. B-20
ARTICLE IX ADMISSION OF MEMBERS ........................................ B-21
Section 9.1 Admission of Members ....................................... B-21
ARTICLE X TRANSFERS OF INTERESTS OF MEMBERS ............................ B-21
SECTION 10.1 General Prohibition ....................................... B-21
SECTION 10.2 General Conditions to Permitted Transfer .................. B-21
SECTION 10.3 Void Transfers ............................................ B-23
SECTION 10.4 Permitted Transfers ....................................... B-23
SECTION 10.6 Legends ................................................... B-23
ARTICLE XI DEATH, LEGAL INCOMPETENCY, OR WITHDRAWAL OF A MEMBER ........ B-24
SECTION 11.1 Effect of Death or Legal Incompetency of
a Member of the Company ................................... B-24
SECTION 11.2 Rights of Personal Representative ......................... B-24
SECTION 11.3 Withdrawal of Members other than Managers ................. B-24
ARTICLE XII DISSOLUTION AND TERMINATION ................................ B-25
SECTION 12.1 Dissolution ............................................... B-25
SECTION 12.2 Liquidation ............................................... B-26
SECTION 12.3 Termination ............................................... B-26
ARTICLE XIII AMENDMENT OF AGREEMENT AND POWER OF ATTORNEY .............. B-26
SECTION 13.1 Amendments ................................................ B-26
SECTION 13.2 Amendment of Certificate of Formation ..................... B-26
SECTION 13.3 Power of Attorney ......................................... B-26
PAGE
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ARTICLE XIV MISCELLANEOUS PROVISIONS ................................... B-27
SECTION 14.1 Notices ................................................... B-27
SECTION 14.2 Severability .............................................. B-27
SECTION 14.3 Counterparts .............................................. B-27
SECTION 14.4 Entire Agreement .......................................... B-27
SECTION 14.5 Further Assurances ........................................ B-28
SECTION 14.6 Successors and Assigns .................................... B-28
SECTION 14.7 Waiver of Action for Partition ............................ B-28
SECTION 14.8 Creditors ................................................. B-28
SECTION 14.9 Remedies .................................................. B-28
SECTION 14.10 Writing Requirement ...................................... B-28
SECTION 14.11 Waiver ................................................... B-28
SECTION 14.12 Applicable Law ........................................... B-28
SECTION 14.13 Signatures ............................................... B-28
MEMBER SIGNATURE PAGE .................................................. B-29
SCHEDULE A ............................................................. B-30
AMENDED AND RESTATED OPERATING AGREEMENT
OF
GLOBAL EXPRESS CAPITAL REAL ESTATE FUND I, LLC
AMENDED AND RESTATED OPERATING AGREEMENT, dated as of June 20, 2002 (the
"Agreement"), by Conrex International Financial, Inc., doing business as Global
Express Capital Mortgage, has been executed for the purpose of forming Global
Express Capital Real Estate Fund I, LLC, a limited liability company (the
"Company") pursuant to the provisions of the NRS (as defined below) between the
Manager and the Members (as defined below) listed on Schedule A, annexed hereto,
as the same shall be updated by the Manager from time to time, and that have
executed this Agreement by signing one of the counterpart signature pages
annexed hereto.
RECITALS:
A. The Company has been established as a limited liability company under and
subject to the laws of the State of Nevada for the purpose of making or
acquiring entire or fractional interests in loans, including bridge loans,
made to Persons in connection with the acquisition by such Persons of
improved or unimproved land or the development and construction of
commercial or single or multiple family residential real estate in the
United States and which will be secured by first or second mortgages or
deeds of trust or similar security (the "Loans").
B. The Manager shall be the Manager of the Company and without limiting any
other rights, powers or duties specified in this Agreement, shall have all
of the rights, powers and duties specified under LLC Law.
C. The Manager has determined the amended terms and conditions that will
govern the Company and wishes to reduce such terms and conditions to
writing in this Agreement which amends and replaces the Operating
Agreement of the Company entered into as of July 20, 2001 and January 15,
2001 by the Managing Member.
The Members for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, agree as follows:
ARTICLE I
INTERPRETATION
SECTION 1.1 DEFINITIONS. Unless otherwise expressly provided herein or
unless the context clearly requires otherwise, the following terms as used in
this Agreement shall have the following meanings:
"AFFILIATE." (i) Any officer, member, partner, director or controlling
shareholder of the Person in question; (ii) any Person controlling, controlled
by or under common control with any Person described in (i) above; (iii) any
officer, member, director, trustee or general partner of any Person described in
(i) or (ii) above; and (iv) any Person who is a member, other than as a limited
partner, with any Person described in (i) or (ii) above in a joint venture,
limited liability company, general partnership or similar form of unincorporated
business association. For purposes of this definition, the term 'control' shall
also mean the control or ownership of 10% or more of the beneficial interest in
the Person to whom referred.
"CAPITAL ACCOUNT." With respect to each Member, a single account
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established and maintained for such Member in accordance with the principles of
Sections 1.704-1(b)(2)(iv) and 1.704-2 of the Regulations. Subject to the
preceding sentence, each Capital Account will initially equal the amount of the
Capital Contribution made by such Member at the time such Member is admitted as
a Member in the Company and, throughout the term of the Company, will be (i)
increased by the amount of (A) Net Income and income and gains allocated to such
Member pursuant to Article IV and (B) the amount of any cash and the Value of
any property (net liabilities secured by the property that the Company is
considered to assume or take subject to pursuant to the provisions of Section
752 of the Code) subsequently contributed by such Member to the Company and (ii)
decreased by the amount of (A) Net Losses and deductions and expenditures
described in Section 705(a)(2)(B) of the Code, allocated to such Member pursuant
to Article IV and (B) the amount of cash and the Value of (net of liabilities
secured by the property that the Member is considered to assume or take subject
to pursuant to the provisions of Section 752 of the Code) of any property
distributed to such Member pursuant to Articles V and XI.
"CAPITAL CONTRIBUTIONS." Any contributions made to the Company pursuant to
Article III by the Members or any one Member, as the case may be (or the
predecessor holders of the Interests of such Members).
"CASH RETURN." With respect to any Member for any period, the Member's Pro
Rata Share of the amount received by the Company on all cash and cash
equivalents held by the Company and attributable to such Member during such
period.
"CERTIFICATE OF FORMATION." The Certificate of Formation of the Company,
and any amendments thereto, executed and filed in accordance with LLC Law.
"CLOSING." The date of the initial closing of the sale of Units.
"CODE." The Internal Revenue Code of 1986, as amended, and as may be
amended from time to time.
"COMMISSIONER." The Commissioner of the Internal Revenue Service.
"FISCAL YEAR." The fiscal year of the Company as determined in accordance
with Section 8.1 of this Agreement.
"FORECLOSURE LOANS." Loans that have payments that are more than ninety
(90) days late or with respect to which the Company or the Manager has commenced
a foreclosure proceeding or other legal action to collect delinquent payments.
"INDEMNIFIED PERSON." Any Member; any Affiliate of a Member; any officer,
director, manager, shareholder, partner, member, employee, representative or
agent of any Member; and any employee or agent of the Company.
"INTEREST." The ownership interest of a Member in the Company as reflected
in the records maintained by the Company at its offices, as the same may, from
time to time, be required to be amended (which shall be considered personal
property for all purposes), consisting of such Member's share in allocations and
distributions.
"LATE FEES AND EXTENSION FEES." With respect to any Loan, any fees
received past its due date and any fees received for the extension of such Loan.
"LLC LAW." Chapter 86 of the Nevada Revised Statutes, as amended from time
to time.
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"Manager." Conrex International Financial, Inc. a Nevada corporation,
qualified to do business in Nevada under the name Global Express Capital
Mortgage, or any Person replacing Global Express Capital Mortgage.
"MEMBER." An owner of the Units in the Company, unless the instruments
through which the Units were Transferred to the owner did not also convey the
transferor's status as a Member.
"NASD." National Association of Securities Dealers, LLC
"NET INCOME OR NET LOSS," respectively, for any period means the income or
loss of the Company for such period as determined in accordance with the method
of accounting followed by the Company for Federal income tax purposes,
including, for all purposes, any income exempt from tax and any expenditures of
the Company which are described in Section 705(a)(2)(B) of the Code; provided,
however, that in determining Net Income and Net Loss and every item entering
into the computation thereof, solely for the purpose of adjusting the Capital
Accounts of the Members (and not for tax purposes), (i) any income, gain, loss
or deduction attributable to the taxable disposition of any of the Company's
assets shall be computed as if the adjusted basis of such asset of the Company
on the date of such disposition equaled its book value as of such date, (ii) if
any of the Company's assets is distributed in kind to a Member, the difference
between its Value and its book value at the time of such distribution shall be
treated as gain or loss, and (iii) any depreciation, cost recovery and
amortization as to any of the Company's assets shall be computed by assuming
that the adjusted basis of such asset of the Company equaled its Book Value
determined under the methodology described in Section 1.704-1(b)(2)(iv)(g)(3) of
the Regulations; provided, further, that any item (computed with the adjustments
in the preceding provision) allocated under Section 4.2 hereof shall be excluded
from the computation of Net Income and Net Loss.
"NET PROCEEDS." The net cash proceeds (or deemed net proceeds) from the
repayment of the principal of the Loans invested in or purchased by the Company.
"NET PROCEEDS OF FORECLOSURE LOANS." All proceeds after payment of
expenses, or set-aside of reserves therefor received with respect to any
Foreclosure Loans, whether through a work-out of such Foreclosure Loan,
settlement, collection of a judgment, net proceeds of operation or sale of any
property received by the Company in a foreclosure proceeding or otherwise.
"NRS." The Nevada Revised Statutes, as amended from time to time.
"PERSON." An individual, corporation, partnership, limited liability
company, trust, unincorporated organization, association or other entity.
"PRESUMED TAX LIABILITY" means, for any Member for any Fiscal Year, an
amount equal to the product of (a) the amount of taxable income allocated to
such Member for that Fiscal Year and (b) the Presumed Tax Rate.
"PRESUMED TAX RATE" means the highest effective combined Federal and state
income tax rate applicable during such Fiscal Year to a natural person residing
in one of the States in which individual Members reside, based on the highest
marginal Federal income tax rate and the highest marginal state income tax rates
(after giving effect to the Federal income tax deduction for such state taxes
and disregarding the effects of Section 67 and 68 of the Code).
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"PRO RATA SHARE." With respect to a Member, the proportionate share of the
Member in such amount, determined by computing the percentage of such amount
equal to the Capital Account of such Member divided by the aggregate Capital
Accounts of all Members.
"PROSPECTUS." The final prospectus filed with the Securities and Exchange
Commission for the public offering of the Units
"REGULATIONS." The Treasury Regulations promulgated under the Code as such
regulations may be amended from time to time (including the corresponding
provisions of succeeding regulations.)
"Reinvested Distributions." Distributions reinvested by Members pursuant
to the Company's Distribution Reinvestment Plan as set forth in Article VI of
this Agreement.
"RETURN" shall mean with respect to any Member for any Loan for any
period, the amount that would be earned in proportion to such Member's Pro Rata
Share during such period of the principal amount of the Loan, but only to the
extent received by the Company.
"SUBSCRIPTION AGREEMENT." The document that is an exhibit to and part of
the Prospectus that every Person who buys Units of the Company must execute and
deliver with full payment for the Units and which, among other provisions,
contains the written consent of each Member to the adoption of this Agreement.
"SUBSTITUTED MEMBER." Person admitted to the Company as a substituted
Member under Article X.
"TRANSFER/TRANSFERRED." The mortgage, pledge, hypothecation, transfer,
sale, assignment, gift or other disposition, in whole or in part, of an
Interest, whether voluntarily, by operation of law or otherwise.
"UNITS." The units of equity in the Company evidencing the Interests that
are (a) issued to Members upon their admission to the Company under the
Subscription Agreement and the Prospectus, (b) issued to Members who participate
in the Plan, or (c) Transferred to those who become Substituted Members.
"VALUE." Fair market value.
SECTION 1.2 TERMS DEFINED ELSEWHERE. The following terms have been defined
in the locations set forth below.
DEFINED TERM LOCATION
------------------------
Adjusted Capital Account.................................... Section 4.2(c)
Agreement................................................... Caption
Certificates................................................ Section 7.1(c)(iii)
Company..................................................... Caption
Company Counsel............................................. Section 7.7(d)
Family Member .............................................. Section 10.4(b)(i)
Loans....................................................... Recital A
Permitted Transferee........................................ Section 10.4(b)
Rules....................................................... Section 7.7(d)
TMP......................................................... Section 8.4
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SECTION 1.3 CAPTIONS. The captions used in this Agreement are inserted for
convenience and identification only and are in no way intended to define or
limit the scope, extent or intent of this Agreement or any of the provisions
hereof.
SECTION 1.4 CONSTRUCTION. Unless the context otherwise requires, the terms
defined in Sections 1.1 and 1.2 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The use of the neuter gender herein shall be deemed to
include the masculine and feminine genders wherever necessary or appropriate;
the use of the masculine gender shall be deemed to include the neuter and
feminine genders wherever necessary or appropriate and the use of the feminine
gender shall be deemed to include the neuter and masculine genders wherever
necessary or appropriate.
ARTICLE II
THE COMPANY AND ITS BUSINESS
SECTION 2.1 FORMATION OF COMPANY. The Company has been organized as a
limited liability company pursuant to the provisions of LLC Law. The rights and
liabilities of the Members, the management of the affairs of the Company and the
conduct of its business shall be as provided in the NRS, except as herein
otherwise expressly provided.
SECTION 2.2 NAME. The name of the Company shall be Global Express Capital
Real Estate Investment Fund I, LLC, but the Manager, in its discretion, may
change the name of the Company at any time and from time to time upon written
notice to the Members.
SECTION 2.3 TERM OF COMPANY. The existence of the Company shall be deemed
to have commenced as of the date of the initial filing of the Certificate of
Formation with the office of the Secretary of State of the State of Nevada on
November 22, 2000 and shall terminate on December 31, 2016, unless earlier than
dissolved or terminated in accordance with Article XII of this Agreement or as
provided by law.
SECTION 2.4 PURPOSES OF COMPANY. The Company may engage in any lawful act
or activity for which limited liability companies may be formed under LLC Law
and engage in any and all activities necessary or incidental.
SECTION 2.5 REGISTERED OFFICE AND REGISTERED AGENT AND PRINCIPAL BUSINESS
OFFICE. The registered office of the Company required by LLC Law to be
maintained in the State of Nevada shall be ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ or at such other location as may hereafter be determined
by the Manager. The registered agent of the Company in the State of Nevada shall
be the initial registered agent named in the Certificate of Formation or such
other Person or Persons as the Manager may designate from time to time. The
principal office of the Company shall be at such place as the Member may
designate from time to time, and the Company shall maintain records there as
required by LLC Law.
SECTION 2.6 FILINGS. (a) The Manager is authorized to execute, file and
record all such certificates and documents, including amendments to the
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Certificate of Formation, and to do such other acts as may be appropriate to
comply with all requirements for the formation, continuation and operation of a
limited liability company, the ownership of property, and the conduct of
business under the laws of the State of Nevada and any other jurisdiction in
which the Company may own property or conduct business, including, without
limitation, qualification of the Company as a foreign limited liability company
in any state in which such qualification is required. The Manager is authorized
to execute, file and publish, or cause to be filed and published, with the
proper authorities in each jurisdiction where the Company conducts business,
such certificates or documents in connection with the conduct of business
pursuant to a fictitious name or similar statute.
(b) The Members from time to time shall execute, acknowledge, verify,
file, record and publish all such applications, certificates and other
documents, and do or cause to be done all such other acts as the Manager may
deem necessary or appropriate to comply with the requirements of law for the
formation, qualification and operation of the Company as a limited partnership
in all jurisdictions in which the Company shall desire to conduct business.
SECTION 2.7 NAMES OF MEMBERS. The name of each Member is set forth on the
signature pages hereto and the name, address and Capital Contribution of each
Member are set forth on the records maintained by the Company at its offices for
such purpose. If necessary, such records shall from time to time be amended to
reflect any changes to the information set forth therein.
SECTION 2.8 RECAPITALIZATION, ACQUISITIONS, RESTRUCTURING AND MERGERS. The
Company may participate in or be a party to any recapitalization, sale of
substantially all of its assets, restructuring or merger in accordance with and
as allowed by LLC Law and subject to any other applicable terms of this
Agreement and LLC Law; provided, however, that no recapitalization, sale of
substantially all of its assets, restructuring or merger which adversely affects
the Members shall proceed without the approval of Members with Capital Accounts
that are more than two-thirds of the Capital Account of all Members.
ARTICLE III
COMPANY INTERESTS AND CAPITALIZATION
SECTION 3.1 CAPITAL CONTRIBUTION OF THE MANAGER. (a) The Manager has
contributed $10.00 to the capital of the Company in cash or property, however,
the Manager is not a Member of the Company.
(b) The Manager shall not be required to contribute any additional capital
to the Company or, except as expressly set forth in this Agreement, to lend any
funds to the Company.
SECTION 3.2 CAPITAL CONTRIBUTIONS OF MEMBERS. The Members shall acquire
Units in accordance with the terms of the Subscription Agreement or any future
subscription material approved by the Manager. The names, addresses, date of
admissions and Capital Contributions of the Members shall be set forth in a
schedule maintained by the Manager in the form attached hereto as Schedule A.
The Manager shall update the schedule to reflect the then current ownership of
Units without any further need to obtain the consent of any Member, and the
schedule, as revised from time to time by the Manager, shall be presumed correct
absent manifest error. Any Member shall have a right to inspect such schedule
upon written request to the Manager.
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"Capital Contribution" shall include cash contributions or otherwise,
including contributions of entire or fractional interest in pre-existing Loans,
a rollover of assets from a qualified plan, such as an Individual Retirement
Account, or automatic reinvestment of distributions pursuant to the Company's
Reinvestment Distribution Plan set forth in Article VI of this Agreement.
SECTION 3.3 NO WITHDRAWAL OF CAPITAL CONTRIBUTIONS; RETURN OF CAPITAL
CONTRIBUTIONS. (a) No Member shall be entitled to withdraw, reduce or demand any
part of its Capital Contribution or to receive any distributions from the
Company, except as expressly provided in Article 5, Section 6.1 and Section 11.3
of this Agreement. No Member shall have the right to receive interest on its
Capital Contribution.
(b) None of the Members, nor any of their respective Affiliates, nor any
officer, member, director, shareholder, employee or agent of the Members or
their Affiliates, shall be personally liable for the return or repayment of any
Capital Contribution.
SECTION 3.4 NO OBLIGATION TO RESTORE NEGATIVE BALANCES IN CAPITAL
ACCOUNTS. No Member shall have an obligation, at any time during the term of the
Company or upon its liquidation, to pay to the Company or any other Member or
third party an amount equal to the negative balance in such Member's Capital
Account.
SECTION 3.5 LIABILITY OF MANAGER AND MEMBERS AND THEIR AFFILIATES. Except
as otherwise provided by applicable law, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company; neither the Manager nor
any Member nor any Affiliates of the Manager or any Member shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Manager or Member or being an Affiliate with either of them.
SECTION 3.6 CONTRIBUTIONS OF EXISTING LOANS. The Manager, in its sole
discretion, may accept, in lieu of cash, an initial contribution of entire or
fractional interests in pre-existing Loans. For purposes of acknowledging a
contribution of interest in pre-existing Loans on the Member's Capital Account
and for determining the number of Units that will be issued to such contributing
Member, the Value of any pre-existing Loan (or interest therein) contributed to
the Company shall be deemed equal to the then outstanding principal balance of
the Loan, together with any accrued but unpaid interest (or a proportionate
share of the Loan balance with respect to the contribution of a fractional Loan
interest).
ARTICLE IV
ALLOCATIONS OF
PROFITS, LOSSES AND CAPITAL ACCOUNTS
SECTION 4.1. ALLOCATION OF NET INCOME AND NET LOSS. Except as provided in
Section 4.2, the Company's Net Income or Net Loss, as the case may be, and each
item of income, loss and deduction entering into the computation thereof, for
each Fiscal Year shall be allocated as follows:
(a) Net Income and Net Loss for such Fiscal Year shall be allocated as
follows:
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(i) Net Income arising out of each Loan shall be allocated to the
Members to the extent of their respective Return on such Mortgage Loan at
the time such Net Income is earned.
(ii) Net Income or Net Loss arising out of cash and cash equivalents
held by the Company shall be allocated to the Members in the same
proportion as the Cash Return to which such Net Income pertains at the
time such Net Income is earned or the Net Loss is incurred.
(iii) Net Income equal to the Late Fees and Extensions Fees arising
out of a Loan shall be allocated to the Members in proportion to their Pro
Rata Share of such Loan at the time such Net Income is earned.
(iv) Net Income and Net Loss arising out of the Foreclosure Loans
shall be allocated to the Members in proportion to their Pro Rata Share of
such Foreclosure Loan at the time the Net Income is earned or the Net Loss
is incurred.
(v) All other Net Income shall be allocated to the Manager and Net
Losses not allocated pursuant to clauses (i) through (iii) above shall be
allocated to the Manager to the extent of expenses paid by the Manager.
(vi) All other Net Losses shall be allocated with Net Income
previously allocated.
(b) Notwithstanding the provisions of Sections 4.1 (a) hereof, in the
Fiscal Year in which the Company is liquidated, the Manager shall allocate Net
Income, Net Loss and items of income, gain, loss and deduction to the extent
possible to cause distributions to the Members pursuant to Section 103 of the
Code to equal the distributions the Members would have received were liquidating
distributions effected pursuant to Article V hereof.
SECTION 4.2. OTHER ALLOCATION PROVISIONS.
(a) Items of tax expense payable by the Company or withheld on income
received by the Company shall be included in the computation of Net Income and
Net Loss and allocated pursuant to Section 4.1 hereof, provided, that where an
item of tax expense payable by the Company or where a withholding tax on income
or payments received by the Company is allocated, under applicable law, with
respect to income allocable to some (but not all) of the Members or to the
extent income allocable to some of the Members is exempt from tax in the hands
of the Company, such tax expense or withholding shall be allocated, as
reasonably determined by the Manager, only to such Members to whom allocations
of income are subject to tax in the hands of the Company and distributions to
the Members shall be adjusted appropriately.
(b) If there is a net decrease in "Company minimum gain" (within the
meaning of Section 1.704-2(d) of the Regulations) for a Fiscal Year, then there
shall be allocated to each Member items of income and gain for that Fiscal Year
equal to that Member's share of the net decrease in "Company minimum gain"
(within the meaning of Section 1.704-2(g)(2)of the Regulations) subject to the
exceptions set forth in Sections 1.704-2(f)(2), (3) and (5) of the Regulations,
provided, that if the Company has any discretion as to an exception set forth
pursuant to Section 1.704-2(f)(5)of the Regulations, the Manager may exercise
such discretion on behalf of the Company. The Manager shall, if the application
of the "minimum
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gain chargeback" requirement pursuant to Section 1.704-2(f)(4) of the
Regulations would cause a distortion in the economic arrangement among the
Members, ask the Commissioner of the Internal Revenue Service to waive the
"minimum gain chargeback" requirement. The foregoing is intended to be a
"minimum gain chargeback" provision as described in Section 1.704-2(f) of the
Regulations and shall be interpreted and applied in all respects accordingly.
If during the Fiscal Year there is a net decrease in Member nonrecourse
debt minimum gain (as determined in accordance with Section 1.704-2(i)(3) of the
Regulations), then, in addition to the amounts, if any, allocated pursuant to
the preceding paragraph, any Member with a share of that Member nonrecourse debt
minimum gain (determined in accordance, with Section 1.704-2(i)(5)-2 of the
Regulations as of the beginning of the Fiscal Year shall, subject to exceptions
set forth in Section 1.704-2(i)(4)of the Regulations (provided, that if the
Company has any discretion as to an exception, the Manager may exercise such
discretion on behalf of the Company) shall be allocated items of income and gain
for the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to
that Member's share of the net decrease in the Member nonrecourse debt minimum
gain. The Manager shall, if the application of the Member nonrecourse debt
minimum gain chargeback requirement would cause a distortion in the economic
arrangement among the Members, ask the Commissioner to waive the minimum gain
chargeback requirement pursuant to Sections 1.704-2(f)(4) and 1-704-2(i)(4)of
the Regulations. The foregoing is intended to be the "chargeback of Member
nonrecourse debt minimum gain" required by Section 1.704-2(i)(4) of the
Regulations and shall be interpreted and applied in all respects accordingly.
(c) If during any Fiscal Year a Member unexpectedly receives an
adjustment, allocation or distribution described in Sections
1.704-1(b),(2)(ii)(d), (5) or (6) of the Regulations, which causes or increases
a deficit balance in the Member's Adjusted Capital Account, there shall be
allocated to the Member items of income and gain (consisting of a pro rata
portion of each item of Company income, including gross income, and gain for
such year) in an amount and manner sufficient to eliminate such deficit as
quickly as possible. The foregoing is intended to be a "qualified income offset"
provision as set forth in Section 1.704-1 (b)(2)(ii)(d) of the Regulations and
shall be interpreted and applied in all respects accordingly.
A Member's "Adjusted Capital Account", at any time, shall equal the
Member's Capital Account at such time (x) increased by the sum of (A) the amount
of the Member's share of Company minimum gain (as defined in Sections
1.704-2(g)(1) and (3) of the Regulations, (B) the amount of the Member's share
of Member nonrecourse debt minimum gain (as defined in Section 1.704-2(i)(5) of
the Regulations), and (C) any amount of the deficit balance in its Capital
Account the Member is obligated to restore on liquidation of the Company or
other amount that the Member is treated as obligated to restore pursuant to
Sections 1.704-1 (b)(2)(ii)(c) and (y) of the Regulations, decreased by
reasonably expected adjustments, allocations and distributions set forth in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)of the Regulations. This definition
shall be interpreted consistently with Section 1.704-1 (b)(2)(ii)(d)of the
Regulations.
(d) If any Member has a deficit in its Adjusted Capital Account, such
Member shall be specially allocated items of Company income and gain in the
amount of such deficit as rapidly as possible, provided, that an allocation
pursuant to this Section 4.2(d). shall be made if and only to the extent that
such Member would have a deficit in its Adjusted Capital Account after all other
allocations provided for in this Agreement have been tentatively made as if this
Section 4.2(d) were not in this Agreement.
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(e) Notwithstanding anything to the contrary in this Article
(i) Company losses, deductions or expenditures described in Section
705(a)(2)(b) of the Code, that are attributable to a particular Member
nonrecourse liability shall be allocated to the Member that bears the
economic risk of loss for the liability in accordance with the rules of
Section 1.704-2(i) of the Regulations; and,
(ii) Company losses, deductions or expenditures described in Section
705(a)(2)(b) of the Code, that are attributable to Company nonrecourse
liabilities shall be allocated to the Members in proportion to their
Capital Contributions.
(f) Notwithstanding any provision of Section 4.1 hereof, no allocation of
Net Losses, shall be made to a Member if it would cause the Member to have a
negative balance in its Adjusted Capital Account. Allocations of Net Losses that
would be made to a Member but for this Section 4.2(f) shall instead be made to
other Members pursuant to Section 4.1 to the extent not inconsistent with this
Section 4.2(f). To the extent allocations of Net Losses cannot be made to any
Member because of this Section 4.2(f), such allocations shall be made to the
Members in accordance with Section 4.1 hereof notwithstanding this Section
4.2(f).
(g) To the extent that any item of income, gain, loss or deduction has
been specially allocated pursuant to Paragraphs (c), (d), (f) or (h) of this
Section 4.2 and such allocation is inconsistent with the way in which the same
amount otherwise would have been allocated under Section 4.1, subsequent
allocations under Section 4.1 shall be made, to the extent possible and without
duplication, in a manner consistent with Paragraphs (b), (c), (d), (f), and
(h)of Section 4.2 hereof, which negate as rapidly as possible the effect of all
such inconsistent allocations under said Paragraphs (c), (d), (f) and (h).
(h) Except to the extent otherwise required by the Code and Regulations,
if an Interest in the Company or part thereof is Transferred in any Fiscal Year,
the Net Income, Net Loss and items of income, gain, loss, deduction and credit
allocable to the Interest in the Company for such Fiscal Year shall be
apportioned between the transferor and the transferee in proportion to the
number of days in such Fiscal Year that such Interest is held by each of them,
except that, if they agree between themselves and so notify the Manager within
thirty (30) days after the Transfer, then at their option and expense, (i) all
items or (ii) extraordinary items, including capital gains and losses, may be
allocated to the Person who held the Interest on the date such items were
realized or incurred by the Company.
(i) In determining the Members' share of the excess nonrecourse
liabilities of the Company, if any, for purposes of Section 1.752-3(a)(3) of the
Regulations, the Members' share of Company profits shall be proportional to the
Members' Capital Contributions.
(j) Any allocations made pursuant to this Article IV shall be made in the
following order:
(i) Section 4.2(b);
(ii) Section 4.2(c);
(iii) Section 4.2(e);
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(iv) Section 4.2(g);
(v) Section 4.2(a);
(vi) Section 4. 1; and
(vii) Section 4.2(d).
These provisions shall be applied as if all distributions and allocations
were made at the end of the Fiscal Year. Where any provision depends on the
Capital Account of any Member, that Capital Account shall be determined after
the operation of all preceding provisions for the Fiscal Year. These allocations
shall be made consistently with the requirements of Section 1.704-2(j)of the
Regulations.
(k) The Manager may vary the allocations provided for in Article IV to the
extent it believes it reasonably necessary to comply with the requirements of
Sections 1-704-1(b)and 1.704-2 of the Regulations, provided, that any variations
in the amounts allocated to a Member shall not materially affect the amounts
distributed to such Member.
SECTION 4.3. ALLOCATIONS FOR INCOME TAX PURPOSES. The income, gains,
losses, deductions and credits of the Company shall be allocated in the same
manner as the items entering into the computation of Net Income and Net Loss
were allocated under Section 4.1 and 4.2; provided, however, that solely for
Federal, state and local income and franchise tax purposes not for book or
Capital Account purposes--income, gain, loss and deduction with respect to any
property properly carried, on the Company's books at a book value other than the
tax basis of such property shall be allocated in a manner determined in the
Manager's discretion, so as to take into account (consistently with Section
704(c) of the Code and Section 1.704-3 of the Regulations) the difference
between such property's book value and its tax basis.
SECTION 4.4. WITHHOLDING. The Company shall comply with withholding
requirements under Federal, state and local laws and shall remit amounts
withheld to and file required forms with the applicable jurisdictions. To the
extent the Company is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Member, the amount
withheld shall be deemed to be a distribution in the amount of the withholding
to that Member. In the event of any claimed over-withholding, Members shall be
limited to an action against the applicable jurisdiction. If the amount withheld
has not been withheld from actual distributions, the Company may, at its option,
(i) require the Member to reimburse the Company for such withholding, which
reimbursement shall be treated as a reduction in the deemed distribution to the
Members referred to in the previous sentence by such Member, or (ii) reduce any
subsequent distributions by the amount of such withholding. Each Member agrees
to furnish the Company with any representations and forms as shall reasonably be
requested by the Company to assist it in determining the extent of, and in
fulfilling, its withholding obligations.
SECTION 4.5 CAPITAL ACCOUNTS. The Company shall establish and maintain a
separate Capital Account for each Member and its legal representatives,
successors and permitted assigns in accordance with the definition of "Capital
Account" in Article I above.
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ARTICLE V
DISTRIBUTIONS
SECTION 5.1. DISTRIBUTIONS. Except for any distributions expressly
required or permitted to be made under this Article V and subject to Sections
5.4 and 5.5, the amount and timing of all distributions of cash and of property
other than cash, including, interest in pre-existing Loans, rollovers and
Reinvested Distributions, will be at the discretion of the Manager. All
distributions pursuant to this Section 5.1 will be made to the Members as
follows:
(a) An amount equal to the excess of (x) the cumulative Returns of each
Member over (y) all amounts previously distributed to the Members pursuant to
this Section 5.1 (a), shall be distributed to the Members in proportion to each
Member's share of such excess of (x) over (y);
(b) An amount equal to the excess of (x) the cumulative Cash Return of
each Member over (y) all amounts previously distributed to the Members pursuant
to this Section 5.1 (b), shall be distributed to the Members in proportion to
each Member's share of such excess of (x) over (y);
(c) An amount equal to the excess of (x) the cumulative total over all
Loans for all periods the amounts equal to the product of (I) the Late Fees and
Extension Fees earned on each Loan for each period times (II) each Member's Pro
Rata Share for such period over (y) all amounts previously distributed to the
Members pursuant to this Section 5.1(c), shall be distributed to the Members in
proportion to each Member's share of such excess of (x) over (y);
(d) An amount equal to the excess of (x) the product of (I) the principal
repayment on any Loan (to the extent of the Company's purchase price on Loans
that were acquired by the Company) times (II) each Member's Pro Rata Share at
the time such principal repayment is made over (y) all amounts previously
distributed to the Members pursuant to this Section 5.1(d), shall be distributed
to the Members in proportion to each Member's share of such excess of (x) over
(y);
(e) An amount equal to the excess of (x) each Member's Pro Rata Share of
the Net Proceeds of the Foreclosure Loans over (y) all amounts previously
distributed to the Members pursuant to this Section 5.1(e), shall be distributed
to the Members in proportion to each Member's share of such excess of (x) over
(y);
(f) Any cash or other property, other than Loans and capital contributions
that have not been invested, remaining after the distributions set forth in
Paragraphs (a), (b), (c), (d) and (e) of this Section 5.1 and after retention of
any reserves deemed appropriate by the Manager, in its sole discretion, shall be
distributed to the Manager.
SECTION 5.2. CERTAIN STATE AND LOCAL TAXES. Notwithstanding Section 5.1
above, if the Manager, or any direct or indirect shareholder or other equity
owners of the Manager (other than a C corporation or an individual) is required
to recognize state or local income or franchise taxes, in the state of Nevada,
Texas or any other state or interest or penalties in respect thereof, with
respect to any allocations or distributions made to the Members with respect to
any Fiscal Year, the Company shall distribute to the Manager an amount which,
after deducting all Federal, state and local income
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taxes payable by the Manager as a result of receiving the distribution (taking
into account the deductibility of state and local income taxes against Federal
income tax and the deductibility, if any, of local income taxes against state
taxes) shall equal the amount of such state or local income or franchise taxes
or interest or penalties, and the distributions to the Member's shall be reduced
to the extent of the distributions hereunder.
SECTION 5.3. TIMING OF DISTRIBUTIONS. Unless as otherwise provided in this
Agreement, the Manager shall use reasonable efforts to make the distributions
provided in Sections 5.1(a) and (b) above, on a monthly basis by the fifth day
of each month. All other distributions shall be made at the sole discretion of
the Manager.
SECTION 5.4. LIMITATIONS ON DISTRIBUTIONS. Notwithstanding anything herein
contained to the contrary, no distribution under this Agreement shall be made if
such distribution would violate LLC Law. A Member who receives a distribution in
violation of LLC Law shall be liable to return the distribution to the Company
if the Member knew that, immediately after giving effect to the distribution,
all liabilities of the Company, other than liabilities for which the recourse of
creditors is limited to specified property of the Company, exceed the Value of
the assets of the Company (except that the Value of property that is subject to
a liability for which recourse of creditors is limited shall be included in the
assets of the Company only to the extent that the Value of that property exceeds
that liability).
SECTION 5.5. RESERVES. In connection with any distribution to a Member
under this Article V, the Manager shall cause the Company to establish such
reserves as it deems reasonably necessary for any contingent or unforeseen
Company liabilities, and, at the expiration of such period as shall be deemed
advisable by the Manager, the balance shall be distributed to such Member (or
such Member's legal representative).
SECTION 5.6 TAX DISTRIBUTIONS. For each Fiscal Year, the Company shall,
during such Fiscal Year or the immediately subsequent Fiscal Year, but no later
than sixty (60) days following the end of such Fiscal Year, use its best efforts
to distribute to each Member, with respect to such Fiscal Year, if a
distribution equal to or exceeding such amount has not been previously made, an
amount equal to such Member's Presumed Tax Liability for such Fiscal Year. Any
amount distributed pursuant to this Section 5.6 shall be deemed to be advance
distributions of amounts otherwise distributable to the Members pursuant to
Section 5.1 and shall reduce the amounts that would subsequently otherwise be
distributable to the Members pursuant to Section 5.1 in the order they would
otherwise have been distributable.
SECTION 5.7 INCORRECT DISTRIBUTIONS. To the extent distributions pursuant
to this Article V were incorrectly made, as determined by the financial
statements of the Company, the recipients shall promptly repay all incorrect
payments and the Company shall have the right to set off any current or future
sums owing to such recipients against any such incorrectly paid amount.
SECTION 5.8 DISTRIBUTIONS IN KIND. In the event any proceeds available for
distribution consist of items other than cash (I.E., notes, mortgages, payments
in kind), the Members shall be entitled to their shares of each such asset in
the same proportions as if such distribution were cash distributions in an
amount equal to the Value thereof.
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ARTICLE VI
DISTRIBUTION REINVESTMENT PLAN
SECTION 6.1 MEMBERS' REINVESTED DISTRIBUTIONS. A Member may elect to
participate in the Company's Distribution Reinvestment Plan (the "Plan") at the
time of his purchase of Units, by electing to do so in the Subscription
Agreement executed by the Member. The Member's participation in the Plan
commences after the Company has accepted the Member's Subscription Agreement.
Subsequently, a Member may revoke any previous election or make a new election
to participate in the Plan by sending written notice to the Company. The notice
shall be effective for the month in which the notice is received, if received at
least ten (10) days before the end of the calendar month. Otherwise the notice
is effective the following month. The Company will not reinvest proceeds from a
capital transaction unless the Company has sufficient funds to pay any state or
federal income tax due to the disposition or refinancing of mortgages.
SECTION 6.2 PURCHASE OF ADDITIONAL UNITS. Under the Plan, participating
Members use distributions to purchase additional Units at one thousand dollars
($1,000.00) per Unit. Members may reinvest fractionalized distributions under
the Plan and for each $1,000.00 in distributions reinvested, such Member will
acquire one Unit. The Manager will credit Units purchased under the Plan to the
Member's Capital Account as of the first day of the month following the month in
which the Reinvested Distribution is made. If a Member revokes a previous
election to participate in the Plan, subsequent to the month in which the
Company receives the revocation notice, the Company shall make distributions in
cash to the Member instead of reinvesting the distributions in additional Units.
SECTION 6.3 STATEMENT OF ACCOUNT. Within ten (10) days after the end of
each month in which the Reinvested Distributions have been credited to Members
participating in the Plan, the Manager will mail to participating Members a
statement of account describing the Reinvested Distributions received, the
number of incremental Units purchased, the purchase price per Unit (if other
than one thousand dollars ($1,000.00) per Unit), and the total number of Units
held by the Member.
SECTION 6.4 UNIT CERTIFICATE. The Manager shall mail to each Member
participating in the Plan semi-annually a certificate evidencing the aggregate
number of Units held by the Member.
SECTION 6.5 CONTINUED SUITABILITY REQUIREMENTS. Each Member who is a
participant in the Plan must continue to meet the investor suitability standards
described in the Subscription Agreement and prospectus (subject to minimum
requirements of applicable securities laws) to continue to participate in
reinvestments. It is the responsibility of each Member to notify the Manager
promptly if he no longer meets the suitability standards set forth in the
prospectus for a purchase of Units in the offering. The Members acknowledge that
the Company is relying on this notice in issuing the Units, and each Member
shall indemnify the Company if he fails to so notify the Company and the Company
suffers any damages, losses or expenses, or any action or proceeding is brought
against the Company due to the issuance of Units to the Member.
SECTION 6.6 CHANGES OR TERMINATION OF THE PLAN. The terms and conditions
of the Plan may be amended, supplemented, suspended or terminated for any reason
by the Manager at any time by mailing notice thereof at least thirty
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(30) days before the effective date of the action to each participating Member
at his last address of record.
ARTICLE VII
MANAGEMENT
Section 7.1 MANAGEMENT POWERS OF THE MANAGER. (a) The Manager shall manage
the Company, and without limiting any other rights, powers or duties specified
in this Agreement, shall have all of the rights, powers and duties specified
under LLC Law. Except as expressly limited by the provisions of this Agreement
and LLC Law, the Manager shall have the full, exclusive and absolute right,
power and authority to manage and control the Company and the property, assets,
affairs and business thereof. Except as so expressly limited, the Manager shall
have all of the rights, powers and authority conferred upon it by law or under
the provisions of this Agreement. Except as expressly provided herein or as
otherwise required by LLC Law, the Members shall have no voice or participation
in the management of the Company's business, and no power to bind the Company or
to act on behalf of the Company in any manner whatsoever.
(b) The Manager shall have the power and authority to effectuate the
purposes of the Company as set forth in the Preambles of this Agreement and to
make, or acquire interests, in Loans. The Manager shall not permit the Company
to undertake any activity that would cause the Company to be an investment
company required to be registered under the Investment Company Act of 1940, as
amended, or cause some or all of the Company's assets to be "plan assets" or the
trading and investment activity of the Company to constitute "prohibited
transactions" under the Code and the Employee Retirement Income Security Act of
1974, as may be amended.
(c) Without limiting the generality of the foregoing Sections 7.1(a) and
(b), the Manager shall have the power on behalf of the Company to:
(i) authorize and engage in transactions and dealings on behalf of
the Company, including transactions and dealings with any Member or any
Affiliate of any Member;
(ii) call meetings of Members or any class or series thereof, on
reasonable notice, for such purposes as the Manager shall determine, and,
in the Manager's sole discretion, establish permit Members to vote by
proxy at such meetings; the Members with capital accounts that constitute
a majority of the capital accounts of all Members or class of Members for
whom the meeting is called shall constitute a quorum at any such meeting;
(iii) issue Certificates (the "Certificates") representing the
Interests of the Members as set forth in Section 8.1(a) of this Agreement;
(iv) determine and make distributions, in cash or otherwise, on
Interests, in accordance with the provisions of this Agreement and the LLC
Law;
(v) establish a record date with respect to all actions to be taken
hereunder that require a record date to be established, including with
respect to allocations, dividends and voting rights;
(vi) redeem, repurchase or exchange, on behalf of the Company,
Interests which may be so redeemed, repurchased or exchanged;
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(vii) appoint (and dismiss from appointment) attorneys and agents on
behalf of the Company, and employ (and dismiss from employment) any and
all persons providing legal, accounting or financial services to the
Company, or such other employees or agents as the Manager deems necessary
or desirable for the management and operation of the Company, including
any Member or any Affiliate of any Member;
(viii) open accounts and deposit, maintain and withdraw funds in the
name of the Company in banks, savings and loan associations, brokerage
firms or other financial institutions;
(ix) effect a dissolution of the Company and act as liquidating
trustee or the Person winding up the Company's affairs, all in accordance
with the provisions of this Agreement and LLC Law;
(x) bring and defend, on behalf of the Company, actions and
proceedings, at law or in equity, before any court or governmental,
administrative or other regulatory agency, body or commission or
otherwise;
(xi) prepare and cause to be prepared reports, statements and other
relevant information for distribution to Members, as may be required or
determined to be necessary or desirable by the Manager from time to time;
(xii) effect: (a) a sale or exchange of all or substantially all of
the assets of the Company, (b) a merger or consolidation or similar
transaction of the Company (whether the Company or another Person is the
surviving entity of such transaction), (c) a sale of all of the Interests
of the Company, or (d)any similar transaction; provided, however, that if
any transaction set forth in (a), (b), (c) or (d) above adversely affects
the Members, the vote of the Members whose aggregate Capital Accounts
equal or exceed two-thirds of the aggregate of all Members' Capital
Accounts shall be required to effect any such transaction;
(xiii) prepare and file all necessary returns and statements and pay
all taxes, assessments and other impositions applicable to the assets of
the Company; and
(xiv) execute all other documents or instruments, perform all duties
and powers and do all things for and on behalf of the Company in all
matters necessary or desirable or incidental to the foregoing.
The expression of any power or authority of the Manager in this
Agreement shall not in any way limit or exclude any other power or
authority which is not specifically or expressly set forth in this
Agreement.
Section 7.2 MANAGER'S OBLIGATIONS. The Manager shall, at its own expense,
operate the business of the Company in the ordinary course of business,
including without limitation, the servicing of Loans, management of cash and
cash equivalents, contracting with real estate mortgage brokers to locate
suitable real estate projects for mortgage loan financing or suitable loans to
be acquired, providing office space as necessary and telephones and any other
necessary telecommunications and office support and supplies. In addition, the
Manager shall through its affiliate, Global Express Securities, Inc. or through
any other duly licensed NASD broker-dealer that the Manager may select, at the
expense of the Manager or its Affiliates, conduct the public offering of the
Units, including without limitation, prepare and file a registration statement
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with the Securities and Exchange Commission and comply with all applicable state
securities laws, known as the "blue sky laws". Nothing herein shall require the
Manager to pay any of the expenses associated with any efforts to realize
proceeds from Foreclosure Loans and, notwithstanding anything to the contrary
set forth in this Agreement, the Manager may use, without limitation, the
Company's cash or advances made by the Manager or its Affiliates to pay any such
expenses.
Section 7.3 PROCEDURES. Any action requiring the affirmative approval or
vote of Members under this Agreement, unless otherwise specified herein, may be
taken by vote at a meeting called upon not less than ten (10) days notice to the
Members or, in lieu thereof, by consent of Members delivered to the Manager with
the required percentage of the Interests in the Company, followed by notice to
all the Members. To the extent any vote of the Members not covered by this
Agreement may be required under LLC Law or any other law, the Members shall vote
in accordance with the percentage that their Capital Accounts represent of the
aggregate of all Capital Accounts of Members. The Manager may establish such
additional and reasonable procedures (in the form of By-laws or otherwise)
relating to notice of the time, place or purpose of a meeting of the Members,
the waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, or any other matter with
respect to the exercise of any such right to vote and with respect to the
replacement of lost Certificates.
Section 7.4 MANAGER'S DUTY TO DEVOTE TIME. The Manager shall be
responsible for the conduct of the business of the Company as set forth in this
Agreement in such a manner as to maximize the value of the Company's assets, and
the Manager shall devote such resources to the Company business as shall be
necessary or useful to manage and supervise the Company's business and affairs
in a proper and efficient manner. The Manager and its affiliates shall be
entitled to devote themselves to other businesses, whether or not similar in
nature to, or competitive with, the business of the Company, and neither the
Company, nor the other Members, shall have any right, by virtue of this
Agreement, in and to such other businesses, to the income or profits derived
therefrom or any portion of the foregoing.
Section 7.5 CONDUCT OF Manager; LIMITED LIABILITY OF THE MANAGER. (a) The
Manager shall perform its duties hereunder in accordance with the applicable
provisions (and any successor provision) of LLC Law.
(b) The liability of the Manager shall be eliminated and limited to the
maximum extent permitted by Section 86.371 of LLC Law and any other applicable
section of LLC Law.
(c) The Manager shall have fiduciary responsibility for the safekeeping
and use of all funds, property and assets of the Company, whether or not in its
control, and shall not employ, or permit another to employ, such funds, property
or assets in any manner except as otherwise expressly set forth herein or for
the benefit of the Company.
Section 7.6 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, an Indemnified Person shall be entitled to indemnification from
the Company for any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Agreement; provided, however, that any indemnity under this Section 7.6 shall be
provided out of and to the extent of company assets only, and no Member shall
have any personal liability on account thereof. The right of indemnification
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pursuant to this Section 7.6 shall include the right to be paid, in advance, or
reimbursed by the Company for the reasonable expenses incurred by an Indemnified
Person who was, is, or is threatened to be made a named defendant or respondent
in a proceeding.
(b) The Manager shall have the power to purchase and maintain insurance in
reasonable amounts on behalf of itself and each of the employees and agents of
the Company against any liability incurred by them in their capacities as such,
whether or not the Company has the power to indemnify them against such
liability.
Section 7.7 CERTAIN TRANSACTIONS BETWEEN THE COMPANY AND THE MANAGING
MEMBER AND ITS AFFILIATES.
(a) Nothing herein shall preclude the Manager and its Affiliates from
receiving any of the following compensation, as more fully described in the
Prospectus, in connection with the Loans, provided, that such compensation does
not reduce the Return and/or Cash Return paid to the Members:
(i) loan origination or brokerage commissions;
(ii) loan evaluation and processing fees;
(iii) loan extension fees; and
(iv) equity participation fee of between 2% to 5% in the properties
securing or projects financed by the Loans.
(b) Nothing herein shall preclude the Manager and its Affiliates from
engaging in the following transactions with the Company, in connection with the
Loans, provided, that the Company receives principal and accrued interest
sufficient to pay the Members interest and the return in full of the principal
of the Loan:
(i) the purchase of any Loan from the Company;
(ii) the sale of any Loan to the Company; and
(iii) the purchase of any collateral securing a Foreclosure Loan.
(c) Affiliates of the Manager may maintain interests in any Loan in which
the Company has acquired a partial interest and maintain existing Loans or make
new Loans to borrowers that are also borrowers under Loans owned entirely or in
part by the Company.
(d) Counsel to the Company may also be counsel to the Manager or any
Affiliate of the Manager. The Manager may execute on behalf of the Company and
the Members any consent to the representation of the Company that counsel may
request pursuant to any applicable rules of professional conduct or similar
rules ("Rules"). The law firm engaged as legal counsel to the Company in
connection with the formation of the Company and the offer and sale of Units
("Company Counsel") is not involved in the underwriting, documentation or
routine servicing of Loans made or acquired by the Company. Each Member
acknowledges that Company Counsel does not and will not represent any Member,
and that in the absence of a clear and explicit written agreement, Company
Counsel shall owe no duties directly to any Member. Notwithstanding any
adversity that may develop, in the event any dispute or controversy arises
B - 18
between any Member and the Company, or between any Member or the Company, on the
one hand, and the Manager or its Affiliate, on the other hand, then each Member
agrees that Company Counsel may represent either the Company or such Manager or
its Affiliate, or both, in any such dispute or controversy to the extent
permitted by the Rules, and each Member hereby consents to such representation.
(e) Each Member further acknowledges that Company Counsel has represented
only the interests of the Manager and not the Members in connection with the
formation of the Company and the preparation and negotiation of this Agreement,
and each Member acknowledges that it has been afforded the opportunity to
consult with independent counsel with regard thereto.
Section 7.8 REMOVAL OF MANAGER; SUCCESSOR. (a) The Manager may be removed
from the Company for Cause (as defined below) and as otherwise specifically
provided in this Section 7.8. For purposes of this Agreement, "Cause" shall mean
the Manager (i) has been convicted of a felony, (ii) has committed fraud against
the Company or (iii) has acted or omitted to take action on behalf of the
Company which act or omission constitutes gross negligence or wilful misconduct.
Such removal shall be automatically effective upon a final determination by a
court of competent jurisdiction that an event or circumstances constituting
Cause has occurred or exists, provided, that any removal of the Manager for
Cause shall be effected by a vote of the Members whose aggregate Capital
Accounts exceed 50% of the aggregate of all Members' Capital Accounts at such
time. The Manager may also be removed, other than for Cause, after the Manager
has received distributions from the Company that equal or exceed 125% of the
aggregate expenses, including without limitation, expenses of, and commissions
payable, in connection with the public offering of Interests in the Company,
incurred by the Manager and its Affiliates in connection with the business of
the Company, provided, that any removal of the Manager pursuant to this Section
7.8 other than for Cause may be effected by a vote of the Members whose
aggregate Capital Accounts equal or exceed two-thirds of the aggregate of the
aggregate of all Members' Capital Accounts. In the event of the removal or
resignation of the Manager, nominations for a successor Manager may be made by
Members whose aggregate Capital Accounts exceed ten percent (10%) of the
aggregate of all Members' Capital Accounts at such time. Appointment of a
successor Manager shall be effected by a vote of the Members whose aggregate
Capital Accounts exceed 50% of the aggregate of all Members' Capital Accounts at
such time.
(b) If the Manager is removed from the Company pursuant to this Section
7.8 or otherwise withdraws or resigns as Manager, the Manager will have none of
the powers of a Manager.
Section 7.9 NO BORROWING. The Company will not borrow any funds from the
Loans then outstanding.
ARTICLE VIII
BOOKS OF ACCOUNT; BANK ACCOUNTS; TAXES
SECTION 8.1 BOOKS OF ACCOUNT. Complete books of account shall be kept by
the Manager at the principal office of the Company or at such other office as
the Manager may designate. The Fiscal Year of the Company shall begin on January
1 and end on December 31 or such other month as may hereafter be determined by
the Manager; provided, however, that the last Fiscal Year of the Company shall
end on the date the Company is terminated.
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SECTION 8.2 BANK ACCOUNTS. The Company shall maintain one or more bank
accounts for such funds of the Company as it shall choose to deposit therein,
and withdrawals therefrom shall be made upon such signature or signatures as the
Manager shall determine.
SECTION 8.3 TAX RETURNS. The Company shall prepare income tax returns for
the Company and shall further cause such returns to be timely filed with the
appropriate authorities. It is contemplated that the Company will be classified
as a "partnership" for federal, state and local income tax purposes. The Company
and its Members will take such reasonable action as may be necessary or
advisable, as determined by the Manager, including the amendment of this
Agreement to cause or ensure that the Company shall be treated as a
"partnership" for federal, state and local income tax purposes. All elections by
the Company for Federal income tax or other tax purposes shall be made by the
Manager.
SECTION 8.4 TAX MATTERS PARTNER. The Manager shall act as the "tax matters
partner" ("TMP") of the Company, as such term is defined in Section 6231(a)(7)
of the Code, and shall have all the powers and duties assigned to the TMP under
Sections 6221 through 6232 of the Code and the Regulations thereunder. The
Members agree to perform all acts necessary under Section 6231 of the Code and
the Regulations thereunder to designate the Manager as TMP.
SECTION 8.5 BOOKS AND RECORDS. The Manager shall cause the Company to keep
the following books and records, which shall be maintained at the Company's
principal place of business and shall be available for inspection and copying
by, and at the sole expense of, the Members, or their duly authorized
representatives, during reasonable business hours and upon at least five (5)
business days' prior written notice to the Manager:
(a) A copy of the Certificate of Formation and any and all amendments
thereto, together with executed copies of any powers of attorney pursuant to
which the Certificate of Formation or any amendments thereto have been executed;
(b) Copies of the Company's federal, state, and local income tax or
information returns and reports, if any, for the six (6) most recent taxable
years;
(c) A copy of this Agreement and any and all amendments thereto, together
with executed copies of any powers of attorney pursuant to which this Agreement
or any amendments thereto have been executed;
(d) Copies of the financial statements of the Company, if any, for the six
(6) most recent Fiscal Years; and
(e) The Company's books and records as they relate to the internal affairs
of the Company for at least the current and past four (4) Fiscal Years.
SECTION 8.6 FINANCIAL REPORTS AND RETURNS. (a) The Manager shall cause to
be prepared and distributed to each Member, within ninety (90) days after the
end of each Fiscal Year, such information as is necessary for the Members'
preparation of their federal income tax returns and state income or other tax
returns.
(b) The Manager shall cause to be prepared and distributed to each Member,
within one hundred twenty (120) days after the end of each Fiscal Year, an
annual report which shall contain a balance sheet of the Company as of the end
of each
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Fiscal Year, an income statement and a report of the activities of the Company
during such Fiscal Year which shall include a statement of changes in financial
position for that Fiscal Year, which financial statements shall be audited by an
independent certified public accounting firm in accordance with generally
accepted auditing standards.
(c) For as long as the Company is required to file quarterly reports on Form
10-Q with the Securities and Exchange Commission, the Manager shall cause to be
distributed to each Member, within sixty (60) days after the end of each of the
first three fiscal quarters of the Fiscal Year, the information contained in
such quarterly report for each quarter.
ARTICLE IX
ADMISSION OF MEMBERS
SECTION 9.1 ADMISSION OF MEMBERS. (a) Subject to paragraph (b) of this
Section 9.1, the Manager, at its option and in its sole discretion, may, on such
terms as it shall determine in its sole discretion, at any time and from time to
time, admit one or more Persons as Members. The Company shall only accept
initial Capital Contributions from Members in an amount not less than $2,000
($5,000 for residents of Nevada).
(b) Notwithstanding the provisions of paragraph (a) of this Section 9.1,
no Person may be admitted as an Member if such admission would (i) cause the
Company to be treated as an association taxable as a corporation for Federal
income tax purposes, (ii) cause the Company to be treated as a "publicly traded
Company" within the meaning of Section 7704 of the Code, (iii) violate or cause
the Company to violate any applicable Federal or state law, rule or regulation
including, without limitation, the Securities Act of 1933, as amended, or any
other applicable Federal or state securities laws, rules or regulations.
(c) Each Member shall automatically be bound by all of the terms and
conditions of this Agreement applicable to a Member. Each Member shall execute
such documentation as requested by the Manager pursuant to which such Member
agrees to be bound by the term and provisions of this Agreement.
(d) The Manager shall reflect each admission authorized under this Article
IX by preparing an amendment to Schedule A attached hereto, to reflect such
admission.
ARTICLE X
TRANSFERS OF INTERESTS OF MEMBERS
SECTION 10.1 GENERAL PROHIBITION. Except as otherwise expressly provided
for in this Agreement or as otherwise provided in LLC Law, a Member may not
Transfer its Interest without the prior written consent of the Manager, which
consent may be granted or denied in its sole discretion. The Manager shall
withhold consent to such Transfer where required under the terms of this
Agreement and may do so without any liability or accountability to any Member or
Person.
SECTION 10.2 GENERAL CONDITIONS TO PERMITTED TRANSFER. (a) No Transfer of
an Interest shall be effective unless permitted by the terms of this Agreement.
Notwithstanding any other provisions of this Article X, no interest of a Member
may be Transferred or assigned to any Person, nor may such transferee or
assignee be admitted as an Member if such Transfer, assignment or admission
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would (i) cause the Company to be treated as an association taxable as a
corporation for Federal income tax purposes, (ii) cause the Company to be
treated as a "publicly traded partnership" within the meaning of Section 7704 of
the Code, (iii) violate or cause the Company to violate any applicable Federal
or state law, rule or regulation including, without limitation, the Securities
Act of 1933, as amended, or any other applicable Federal or state securities
laws, rules or regulations. In addition, no Transfer shall be permitted unless
the following conditions are satisfied.
(i) such Transfer shall have been consented to in writing by the
Manager in accordance with the provisions of Section 9.1 hereof;
(ii) the transferee shall accept and adopt in writing, by an
instrument in form and substance satisfactory to the Manager, all of the
terms and provisions of this Agreement, as the same may be amended from
time to time, and shall have expressly assumed all of the obligations of
the transferring Member;
(iii) the transferee shall pay all filing, publication and recording
fees, if any, and all reasonable expenses, including, without limitation,
reasonable counsel fees and expenses incurred by the Company in connection
with such transaction;
(iv) the transferee shall execute such other documents or
instruments as counsel to the Company may require (or as may be required
by law) in order to effect the admission of such Person as a Member;
(v) the transferee shall execute a statement that it is acquiring
the Interest for its own account for investment and not with a view to the
distribution thereof and that it will Transfer the acquired Interest only
to a Person who so similarly represents and warrants;
(vi) if required by the Manager, the Company receives an opinion of
counsel (who may be counsel for the Company), in form and substance
satisfactory to the Manager, that such Transfer does not violate federal
or state securities laws or any representation or warranty of such
transferring Member given in connection with the acquisition of its
Interest; and
(vii) if required by the Manager, Company Counsel delivers to the
Company an opinion that such Transfer (a) will not result in a termination
of the Company under Section 708 of the Code; (b) will not cause the
Company to lose its status as a partnership for United States federal
income tax purposes; and (c) will not cause the Company to become subject
to the Investment Company Act of 1940.
(b) No Transfer of an Interest, where permitted by the terms of this
Agreement, shall be binding on the Company until all of the conditions to such
Transfer have been fulfilled. Upon the admission of a substitute or additional
Member, the Manager shall promptly cause any necessary documents or instruments
to be filed, recorded or published, wherever required, showing the substitution
or addition, as applicable, of the transferee as a substitute Member.
(c) A transferee of an Interest shall be entitled to receive distributions
of cash or other property from the Company attributable to the Interest acquired
by reason of such Transfer from and after the effective date of the Transfer of
such Interest to it; provided, however, that anything herein to the contrary
notwithstanding, the Company and the Manager shall be entitled to treat
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the transferor of such Interest as the absolute owner thereof in all respects,
and shall incur no liability for allocations of income, gain, losses, credits,
deductions or distributions that are made in good faith to such transferor until
such time as all of the conditions of such Transfer have been fulfilled, the
written instrument of Transfer has been received by the Company and the
effective date of Transfer has passed.
(d) A transferee shall be permitted to elect to participate in the
Company's Plan in accordance with Article VI of this Agreement.
(e) The effective date of a permitted Transfer of an Interest shall be no
earlier than the last day of the calendar month following receipt of notice of
assignment and such documentation as the Manager determines is required.
(f) The transferring Member shall cease to be a Member, and the transferee
shall become a Substituted Member, as to the Interest so Transferred as of the
effective date, and thereafter the transferring Member shall have no rights or
obligations with respect to the Company insofar as the Interest Transferred is
concerned.
SECTION 10.3 VOID TRANSFERS. Notwithstanding anything to the contrary in
this Agreement, any Transfer of an Interest in violation of the provisions of
this Agreement shall be void and shall not bind the Company.
SECTION 10.4 PERMITTED TRANSFERS. (a) A Member may Transfer its right to
receive distributions and allocations of Net Income and Net Loss and other
economic benefits under this Agreement to any Permitted Transferee (as defined
below); provided, however, that in no event shall any such transferee be
admitted as a substitute or additional Member of the Company or be entitled to
any other right of a Member under this Agreement (including, but not limited to,
the right to vote or consent) without the prior written consent of the Manager,
which consent may be withheld in its sole and absolute discretion; provided,
further, that if required by the Manager, a Transfer to a Permitted Transferee
may be conditioned upon the receipt of an opinion from Company Counsel to the
effect provided in Section 9.2(a)(vii).
(b) A "Permitted Transferee" means:
(i) a Member's spouse, children (including adopted children),
siblings or grandchildren (a "Family Member") or a trust of which one or
more Family Members are the sole beneficiaries;
(ii) with respect to a Member which is a partnership, corporation or
limited liability company, such Member's partners, shareholders, members,
directors, executive officers or managers, as the case may be, and to a
Family Member of any such person;
(iii) with respect to a Member which is a trust, the beneficiaries
of such trust; or
(iv) another Member.
SECTION 10.6 LEGENDS.
10.6.1 A legend in substantially the following form or such other
reasonable form as the Manager shall provide, shall be affixed to the
Certificates evidencing the Units:
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THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED TO ANY PERSON
EXCEPT IN ACCORDANCE WITH THE TERMS OF THE COMPANY'S OPERATING AGREEMENT,
AS AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE COMPANY'S
OFFICES.
10.6.2 Appropriate legends, including the following, under applicable
securities laws shall be affixed to certificates evidencing the Units and issued
or Transferred to purchasers in other states.
NOTICE TO CALIFORNIA RESIDENTS
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
ARTICLE XI
DEATH, LEGAL INCOMPETENCY, OR WITHDRAWAL OF A MEMBER
11.1 EFFECT OF DEATH OR LEGAL INCOMPETENCY OF A MEMBER OF THE COMPANY. The
death or legal incompetency of a Member shall not cause a dissolution of the
Company or entitle the Member or his estate to a return of his Capital Account.
11.2 RIGHTS OF PERSONAL REPRESENTATIVE. On the death or legal incompetency
of a Member, his personal representative shall have all the rights of that
Member for purposes of settling his estate or managing his property, including
the rights of assignment and withdrawal.
11.3 WITHDRAWAL OF MEMBERS OTHER THAN MANAGERS. With the sole discretion
of the Manager reasonably exercised, the Manager may modify, eliminate or waive
any such limitation on the withdrawal rights of a Member as set forth below, on
a case by case basis, so long as the modifying, waiving, or elimination of the
limitation does not: (a) adversely effect rights of the other Members as a
whole; or (b) results in the Company being classified as a "publicly traded
partnership" within the meaning of Section 7704(b) of the Code and the
Regulations thereunder. To withdraw or partially withdraw from the Company, a
Member must give written notice thereof to the Manager and may thereafter obtain
the Return in cash of his Capital Account, or the portion thereof, as to which
he requests withdrawal, within sixty-one (61) to ninety-one (91) days after the
written notice of withdrawal is delivered to the Manager, subject to the
following limitations:
11.3.1 Except with regard to the right of the personal
representative of a deceased Member, no notice of withdrawal shall be honored
and no withdrawal shall be made, of or for any Units, until the expiration of at
least one year from the date of purchase of those Units.
11.3.2 To assure that the payments to a Member or his representative
do not impair the capital or the operation of the Company, any cash payments in
return of an outstanding Capital Account shall be made by the Company only from
Net Proceeds and Capital Contributions.
11.3.3 A Member shall have the right to receive distributions in
cash from his Capital Account only to the extent that cash from Net Proceeds and
Capital Contributions are available. The Manager shall not be required to
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(i) establish a reserve fund for the purpose of making a cash distribution of
any Capital Account; (ii) use any other sources of the Company's funds other
than cash from Net Proceeds and Capital Contributions; (iii) sell or otherwise
liquidate any portion of the Company's investments in Loans or any other asset
in order to make a cash distribution of any Capital Account.
11.3.4 During the ninety (90) days following receipt of written
notice of withdrawal from a Member, the Manager shall not refinance any Loans of
the Company or reinvest any Net Proceeds or Capital Contributions in new loans
or other non-liquid investments unless and until the Company has sufficient
funds available in cash to distribute to the withdrawing Member the amount that
he is withdrawing from his Capital Account.
11.3.5 Subject to the restrictions on withdrawal contained in this
Agreement, the amount to be distributed to any withdrawing Member shall be an
amount equal to the amount of the Member's Capital Account as of the date of the
distribution, as to which the Member has given a notice of withdrawal under this
Section 11.3, notwithstanding that the amount may be greater or lesser than the
Member's proportionate share of the current Value of the Company's net assets.
11.3.6 Requests by Members for withdrawal will be honored in the
order in which the Manager receives them. If any request may not be honored, due
to any limitations imposed by this Section 11.3 (except the one year holding
limitation set forth in Subsection 11.3.1), the Manager will notify the
requesting Member in writing, whose request, if not withdrawn by the Member,
will be honored if and when the limitation no longer is imposed; and
11.3.7 If a Member's Capital Account would have a balance of less
than two thousand dollars ($2,000) following a requested withdrawal, the
Manager, at its discretion, may distribute to the Member the entire balance in
the account.
ARTICLE XII
DISSOLUTION AND TERMINATION
SECTION 12.1 DISSOLUTION. The Company shall be dissolved upon the earliest
to occur of the following:
(a) payment to the Company of all amounts due on the Loans, and if any Loans
have become Foreclosure Loans, the completion of all efforts of the
Company to realize the proceeds of such Loan and the underlying
collateral; or
(b) the express written consent of the Manager or the unanimous consent of the
Members; or
(c) the termination of the Company in accordance with Section 2.3; or
(d) the entry of a decree of judicial dissolution of the Company; or
(e) the withdrawal, removal, dissolution or bankruptcy of the Manager, unless,
if there is no remaining manager, a majority of the Members agree in
writing to continue the business of the Company and, within six (6) months
after the last remaining manager has ceased to be a manager, admit one or
more managers who agree to such election and join the Company as managers.
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SECTION 12.2 LIQUIDATION. (a) Upon the dissolution of the Company, the
Manager shall proceed, within a reasonable time, to sell or otherwise liquidate
the assets of the Company and, after paying or making due provision by the
setting up of reserves for all liabilities to creditors of the Company to
distribute the remaining assets to the Members, pro rata, in accordance with the
positive balance in their respective Capital Accounts.
(b) Upon dissolution, the Members shall look solely to the assets of the
Company for the return of their Capital Contributions. The winding up of the
affairs of the Company and the distribution of its assets shall be conducted
exclusively by the Manager, who hereby is authorized to do any and all acts and
things authorized by law for these purposes.
SECTION 12.3 TERMINATION. The Company shall terminate when all property
owned by the Company shall have been disposed of and the assets, after payment
of, or due provision has been taken for, and liabilities to Company creditors
shall have been distributed as provided in this Agreement. Upon such
termination, the Manager shall execute and cause to be filed a certificate of
discontinuance of the Company and any and all other documents necessary in
connection with the termination of the Company.
ARTICLE XIII
AMENDMENT OF AGREEMENT AND POWER OF ATTORNEY
SECTION 13.1 AMENDMENTS. Amendments to this Agreement which do not
adversely affect the right of any Member in any material respect may be made by
the Manager without the consent of any Member through use of the Power of
Attorney, if those amendments are for the purpose of admitting Members or
Substituted Members as permitted by this Agreement, including, without
limitation, amendments to Schedule A hereto to reflect the admission of such
Additional and Substituted Members and to reflect changes in the Capital
Contributions of the Members. Amendments to this Agreement other than those
described in the foregoing sentence may be made only if embodied in an
instrument signed by the Manager and by Members with Capital Accounts that
exceed 50% of the aggregate Capital Accounts of all Members; provided, however,
that, unless otherwise specifically contemplated by this Agreement, no amendment
to this Agreement shall, without the prior consent of each of the Members
adversely affected thereby, (i) increase the liability of any Member, (ii)
decrease any Member's interest in Net Income or items of income or gain and
distributions or (iii) increase any Member's interest in Net Loss or items of
deduction or loss. The Manager shall send to each Member a copy of any amendment
to this Agreement.
SECTION 13.2 AMENDMENT OF CERTIFICATE OF FORMATION. In the event this
Agreement shall be amended under Section 13.1, the Manager shall amend the
Certificate of Formation or any other governmental filings of the Company, to
the to reflect such change if it deems, such amendments to be necessary or
appropriate.
SECTION 13.3 POWER OF ATTORNEY. Each Member hereby irrevocably constitutes
and appoints the Manager as its true and lawful attorney-in-fact, with full
power of substitution, in its name, place and stead to make, execute, sign,
acknowledge (including swearing to), verify, deliver, record and file, on its
behalf the following: (i) any amendment to this Agreement which complies with
the provisions of this Agreement and (ii) the Certificate of Formation and any
other governmental filings and any amendment thereto required because this
Agreement is amended, including, without limitation, an amendment to effectuate
B - 26
any change in the membership of the Company or in the Capital Contributions of
the Members. This power-of-attorney is a special power-of-attorney and is
coupled with an interest in favor of the Manager and as such (i) shall be
irrevocable and continue in full force and effect notwithstanding the subsequent
death or incapacity of any party granting this power-of-attorney, regardless of
whether the Company or the Manager shall have had notice thereof, (ii) may be
exercised for a Member by a facsimile signature of the Manager or, after listing
all of the Members, including such Member, by a single signature of the Manager
acting as attorney-in-fact for all of them, and (iii) shall survive the delivery
of an assignment by a Member of the whole or any portion of its Interest in the
Company, except that where the assignee thereof has been approved by the Manager
for admission to the Company as a Substituted Member, this power-of-attorney
given by the assignor shall survive the delivery of such assignment for the sole
purpose of enabling the Manager to execute, acknowledge, and file any instrument
necessary to effect such substitution.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1 NOTICES. (a) All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
addressed to the Members at their addresses set forth on Schedule A or in the
records maintained by the Company or to such other addresses as may have been
specified in a written notice duly given to the other.
(b) Any notices addressed as aforesaid shall be deemed to have been given
(i) on the date of delivery, if delivered by hand or overnight courier, (ii) on
the date of transmission, if transmitted by facsimile, provided, that if
transmitted by facsimile such transmittal is confirmed, and (iii) three (3) days
after the deposit of same in the United States certified mail, return receipt
requested.
SECTION 14.2 SEVERABILITY. If any covenant, condition, term or provision
of this Agreement is illegal, or if the application thereof to any Person or in
any circumstance shall to any extent be judicially determined to be invalid or
unenforceable, the remainder of this Agreement, or the application of such
covenant, condition, term or provision to Persons or in circumstances other than
those to which it is held invalid or unenforceable shall not be affected
thereby, and each covenant, condition, term and provision of this Agreement
shall be valid and enforceable to the full extent permitted by law.
SECTION 14.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall, for all purposes, be deemed an original and
all of such counterparts, taken together, shall constitute one and the same
Agreement.
SECTION 14.4 ENTIRE AGREEMENT. This Agreement, the Exhibits hereto, and
any Subscription Agreement or other documents executed in connection herewith
represent the complete and entire agreement and understanding of the parties
hereto with respect to the matters covered therein and supersede any and all
previous written or oral negotiations, undertakings and commitments in writing
of any nature whatsoever.
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SECTION 14.5 FURTHER ASSURANCES. The Members will execute and deliver such
further instruments and do such further acts and things as may be required by
the Company to carry out the intent and purposes of this Agreement.
SECTION 14.6 SUCCESSORS AND ASSIGNS. Subject in all respects to the
limitations on transferability contained herein, this Agreement shall be binding
upon, and shall inure to the benefit of, the heirs, administrators, personal
representatives, successors and permitted assigns of the respective parties
hereto.
SECTION 14.7 WAIVER OF ACTION FOR PARTITION. Each of the parties hereto
irrevocably waives, during the term of the Company and during the period of its
liquidation following any dissolution, any right that it may have to maintain
any action for partition with respect to any of the assets of the Company.
SECTION 14.8 CREDITORS. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any of the creditors of the Company or any
other Person not a party to this Agreement.
SECTION 14.9 REMEDIES. The rights and remedies of the Members hereunder
shall not be mutually exclusive, and the exercise by any Member of any right to
which it is entitled shall not preclude the exercise of any other right it may
have.
SECTION 14.10 WRITING REQUIREMENT. Except as otherwise provided in this
Agreement, this Agreement may not be amended nor shall any waiver, change,
modification, consent or discharge be effected except by an instrument in
writing executed by or on behalf of the party seeking or against whom
enforcement of any amendment, waiver, change, modification, consent or discharge
is sought.
SECTION 14.11 WAIVER. No waiver or any breach or condition of this
Agreement shall be deemed to be a waiver of any other condition or subsequent
breach whether of the like or different nature.
SECTION 14.12 APPLICABLE LAW. This Agreement and the rights of the parties
hereto shall be interpreted in accordance with the laws of the State of Nevada
without giving effect to principles of conflict of laws.
SECTION 14.13 SIGNATURES. The signature of the Manager shall be sufficient
to bind the Company to any agreement or on any document, including, but not
limited to, documents drawn or agreements made in connection with the
acquisition, financing or disposition of any assets; provided, however, that the
action being taken in connection therewith shall be authorized under the terms
of this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Operating
Agreement the day and year first above written.
CONREX INTERNATIONAL FINANCIAL, INC.,
D/B/A GLOBAL EXPRESS CAPITAL MORTGAGE,
as Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
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MEMBER SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has caused this Amended and Restated
Operating Agreement of Global Express Capital Real Estate Investment Fund I, LLC
to be duly executed and delivered as of the date set forth below.
NAME OF MEMBER: ADDRESS FOR NOTICE (Please Print):
(Exact Name to appear on
Certificate)
______________________________________ ________________________________________
________________________________________
________________________________________
________________________________________
SIGNATURE: ___________________________ Attention:______________________________
By: __________________________________ Telecopy:_______________________________
Printed Name:_________________________ Tax Identification #:___________________
Title: _______________________________
Dollar Amount of Capital Contribution: $_____________________
Dated:________________________________
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SCHEDULE A
GLOBAL EXPRESS CAPITAL REAL ESTATE INVESTMENT FUND I, LLC
MEMBERS
AMOUNT OF CAPITAL
NAME AND ADDRESS CONTRIBUTION
---------------- -----------------
$
TOTAL $_____________
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