HomeMy WebLinkAboutVA200000021 Agreements 2000-07-12 N 07/1 2/00 13:52: 1 8
INQUIRE COMPREHENSIVE INFORMAT ON SYSTEM BE15 CIS00:
CISINQ02
PARCEL # : 07800-00-00-014A0
PARENT PARCEL #: -
OWNER(LAST,FIRST,MI,TITLE): S & B REALTY VENTURE LLC ,
PARCEL LOCATION: (HOUSE #) 1373 (STREET NAME) RICHMOND RD
(CITY) CHARLOTTESVILLE (ZIP) 22911
MAILING ADDRESS LEGAL DESCRIPTION
S & B REALTY VENTURE LLC 1 . PA\ITOPS
P 0 BOX 7726 2.
CHARLOTTESVILLE VA 3.
4. WILCO
ZIP CODE: 22906 - 01 /01 /2000 OWNER: VIRGINIA'S
HOUSING CONDITION : 1 GOOD GROSS LIVING AREA : 13,587
DEED BOOK REFERENCE: 1895 / 690 BASEMENT AREA : 0
PLAT BOOK REFERENCE: 420 / 155 BASEMENT(FINISHED): 0
HELP = "El " OR PUT CURSOR AT BOTTOM
07/07/0016:21 FAX 703 790 8016 WALTON & ADAMS P.C. V1002
OPERATING AGREEMENT
OF
S&B REALTY VENTURE,L.L.C.
THIS OPERATING AGREEMENT,dated as of January 1, 1999,by and among the
undersigned parties,who by their execution of this Operating Agreement have become
members of S&B REALTY VENTURE,L.L.C.,,a Virginia limited liability company(the
"Company"),provides as follows:
RECITALS:
The undersigned parties have caused the Company to be organized as a limited
liability company under the laws of the Commonwealth of Virginia effective as of the date
hereof, and they wish to enter into this Operating Agreement in order to set forth the terms
and conditions on which the management,business and financial affairs of the Company
shall be conducted.
AGREEMENT:
NOW, THEREFORE,in consideration of the foregoing recitals and the mutual
promises, covenants and conditions herein contained,the receipt and sufficiency of which
are hereby acknowledged,the parties do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.01 The following terms used in this Operating Agreement shall have the
following meanings (unless otherwise expressly provided herein):
1. "Act" shall mean the Virginia Limited Liability Company Act,Va.
Code Ann. § 13.1-1000 et seq.,as amended and in force from time to time.
2. "Articles" shall mean the articles of organization of the Company, as
amended and in force from time to time.
3. "Capital Account" shall mean as of any given date the amount
calculated and maintained by the Company for each Member as provided in Section 6.04
hereof.
4. "Capital Contribution" shall mean any contribution to the capital of
the Company by a Member in cash,property or services,or a binding obligation to
contribute cash,property or services,whenever made. "Initial Capital Contribution" shall
mean the initial contribution to the capital of the Company by a Member,as determined
pursuant to Section 6.01 hereof.
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5. "Code" shall mean the Internal Revenue Code of 1986 or
corresponding provisions of subsequent superseding federal revenue laws.
6. "Company" shall refer to S&B Realty Venture,L.L.C.
7. "Entity" shall mean any general partnership,limited partnership,
limited liability company,corporation,joint venture,trust,business trust,cooperative or
other association.
8. "Manager" shall mean a manager of the Company,whose rights,
powers and duties are specified in Article V hereof.
9. "Member" shall mean each Person that is identified as an initial
I lember in Article III hereof or is admitted as a Member(either as a transferee of a
Membership Interest or as an additional Member)as provided in Article VIII hereof.A
Person shall cease to be a Member at such time as he no longer owns any Membership
Interest.
10. "Member-Manager" shall mean a Manager who is a Member who (i)
owns at least a one-percent interest in each material item of the Company's income, gain,
loss, deduction, or credit,and (ii)maintains a Capital Account balance that represents at
least one percent of all the positive Capital Account balances of the Company,
Notwithstanding this definition of"Member-Manager," a Member may be a Manager of
the Company without meeting these requirements,but any such Member shall not qualify
as a"Member-Manager"under this Agreement.
11. "Membership Interest" shall mean the ownership interest of a
Member in the Company,which may be expressed as a percentage equal to such Member's
Capital Account divided by the aggregate Capital Accounts of all Members. The
Membership Interests may be recorded from time to time on a schedule attached to this
Operating Agreement.
12. "Operating Agreement" shall mean this Operating Agreement,as
originally executed and as amended from time to time.
13. "Person" shall mean any natural person or Entity,and the heirs,
executors,administrators,legal representatives, successors,and assigns of such Person
where the context so admits.
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ARTICLE II
PURPOSES AND POWERS OF COMPANY
2.01 Purposes. The purposes of the Company shall be to:
(a) Acquire,own,buy, sell, invest in,trade,manage,finance,refinance,
exchange,or otherwise dispose of stocks,securities,partnership interests, CDs,mutual
funds, commodities, and any and all investments whatsoever,that the Managers may from
time to time deem to be in the best interests of the Company;
(b) Own,acquire,manage,develop,operate,buy,sell, exchange,
finance,refinance,and otherwise deal with real estate,personal property,and any type of
business, as the Managers may from time to time deem to be in the best interests of the
Company;and
(c) Engage in such other activities as are related or incidental to the
foregoing purposes.
2.02 Powers. The Company shall have all powers and rights of a limited liability
company organized under the Act,to the extent such powers and rights are not proscribed
by the Articles.
ARTICLE III
NAMES AND ADDRESSES OF INITIAL MEMBERS;PRINCIPAL OFFICE
3.01 Names and Addresses of Initial Members. The names and addresses of the
initial Members are as follows:
Names and Addresses of Initial Members
Kenneth Brown
do Brown's Brown's Charlottesville Toyota-Mercedes/Chrysler-Plymouth
P. O. Box 7726
Charlottesville,VA 22906
William E. Schuiling
c/o Brown Automotive Group, Ltd.
10287 Lee I-Iighway
Fairfax,VA 22030
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3.02 Principal Office. The principal office of the Company shall initially be do
Brown's Toyota-Mercedes/Chrysler-Plymouth. The principal office may be changed
From time to time by the Managers.
ARTICLE IV
VOTING POWERS,MEETINGS,ETC.OF MEMBERS
4.01 In General, The Members shall not be entitled to participate in the day-to-
day affairs and management of the Company,but instead,the Members'right to vote or
otherwise participate with respect to matters relating to the Company shall be limited to
those matters as to which the express terms of the Act,the Articles or this Operating
Agreement vest in the Members the right to so vote or otherwise participate.
4.02 Actions Requiring Approval of Members.
(a) Notwithstanding any other provision of this Operating Agreement,
the approval of the Members shall be required in order for any of the following actions to
be taken on behalf of the Company:
(i) Amending the Articles or this Operating Agreement in any
manner that materially alters the preferences,privileges or relative rights of the Members.
(ii) Electing the Managers as provided in Article V hereof.
(iii) Taking any action which would make it impossible to carry
on the ordinary business of the Company.
(iv) Confessing a judgment against the Company in excess of
$5,000.
(v) Filing or consenting to filing a petition for or against the
Company under any federal or state bankruptcy,insolvency or reorganization act.
(vi) Loaning Company funds in excess of$25,000 to any person
including a Member.
(vii) Selling,mortgaging,assigning,pledging, encumbering or
hypothecating any real property owned by the Company.
(b) Unless the express terms of this Operating Agreement specifically
provide otherwise,the affirmative vote of the Members holding a majority of the
Membership Interests shall be necessary and sufficient in order to approve or consent to
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any of the matters set forth in Section 4.02(a)above or any other matters that require the
approval or consent of the Members.
4.03 Action by Members. In exercising their rights as provided above,the
Members shall act collectively through meetings and/or written consents as provided in
this Article.
4.04 Annual Meeting. The annual meeting of the Members shall be held on the
last Monday in January of each year at 10:00 a.m. or at such other time as shall be
determined by the Managers for the purpose of the transaction of such business as may
come properly before the meeting.
4.05 Special Meetings. Special meetings of the Members,for any purpose or
purposes,unless otherwise prescribed by statute,may be called by the Managers,and shall
be called by the Managers at the request of any two Members,or such lesser number of
Members as are Members of the Company.
4.06 Place of Meeting. The place of any meeting of the Members shall be the
principal office of the Company,unless another place,either within or outside the
Commonwealth of Virginia,is designated by the Managers.
4.07 Notice of Meetings. Written notice stating the place, day and hour of any
meeting of the Members and, if a special meeting,the purpose or purposes for which the
meeting is called, shall be delivered not less than 10 nor more than 60 days before the date
of the meeting,either personally or by mail,by or at the direction of the Managers,to each
Member, unless the Act or the Articles require different notice.
4.08 Conduct of Meetings. All meetings of the Members shall be presided over
by a chairperson of the meeting,who shall be a Manager,or a Member designated by the
Managers. The chairperson of any meeting of the Members shall determine the order of
business and the procedure at the meeting, including regulation of the manner of voting
and the conduct of discussion,and shall appoint a secretary of such meeting to take
minutes thereof
4.09 Participation by Telenhone or Similar Communications. Members may
participate and hold a meeting by means of conference telephone or similar
communications equipment by means of which all Members participating can hear and be
heard,and such participation shall constitute attendance and presence in person at such
meeting.
4.10 Waiver of Notice. When any notice of a meeting of the Members is
required to be given,a waiver thereof in writing signed by a Member entitled to such
notice,whether given before,at,or after the time of the meeting as stated in such notice,
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shall be equivalent to the proper giving of such notice.
4.11 Action by Written Consent. Any action required or permitted to be taken at
a meeting of Members may be taken without a meeting if one or more written consents to
such action are signed by the Members who are entitled to vote on the matter set forth in
the consents and who constitute the requisite number or percentage of such Members
necessary for adoption or approval of such matter on behalf of the Company. By way of
example and not limitation,the Members holding a majority of the Membership Interests
may take action as to any matter specified in Section 4.02 hereof by signing one or more
written consents approving such action,without obtaining signed written consents from
any other Members. Such consent or consents shall be filed with the minutes of the
meetings of the Members.Action taken under this Section shall be effective when the
requisite Members have signed the consent or consents,unless the consent or consents
specify a different effective date,
ARTICLE V
MANAGERS
5.01 Powers of Manager. Except as expressly provided otherwise in the Act,the
Articles or this Operating Agreement,the powers of the Company shall be exercised by or
under the authority of, and the business and affairs of the Company shall be managed by,
one or more Managers.The powers so exercised shall include but not be limited to the
following:
(a) Entering into,making and performing contracts, leases, agreements
and other undertakings binding the Company that may be necessary, appropriate or
advisable in furtherance of the purposes of the Company.
(b) Opening and maintaining bank accounts,investment accounts and
other arrangements, drawing checks and other orders for the payment of money, and
designating individuals with authority to sign or give instructions with respect to those
accounts and arrangements. Company funds shall not be commingled with funds from
other sources and shall be used solely for the business of the Company.
(c) Collecting funds due to the Company.
(d) Acquiring,utilizing for the Company's purposes,maintaining and
disposing of any assets of the Company.
(e) To the extent that funds of the Company are available therefor,
paying debts and obligations of the Company.
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(f) Borrowing money or otherwise committing the credit of the
Company for Company activities,and voluntarily prepaying or extending any such
borrowings.
(g) Employing from time to time persons,firms or corporations for the
operation and management of various aspects of the Company's business,including,
without limitation,managing agents,contractors,subcontractors, architects,engineers,
laborers, suppliers, accountants and attorneys on such terms and for such compensation as
the Managers shall determine,notwithstanding the fact that the Managers or any Member
may have a financial interest in such firms or corporations.
(h) Making elections available to the Company under the Code
(i) Registering the Company as a tax shelter with the Secretary of the
Treasury and furnishing to such Secretary lists of investors in the Company,if required
pursuant to applicable provisions of the Code.
(j) Obtaining general liability,property and other insurance for the
Company, as the Managers deem proper.
(k) Taking such actions as may be directed by the Members in
furtherance of their approval of any matter set forth in Section 4.02 hereof.
(1) Doing and performing all such things and executing,acknowledging
and delivering any and all such instruments as may be in furtherance of the Company's
purposes and necessary and appropriate to the conduct of its business.
5.02 Election,Etc. of Managers.
(a) The Members hereby unanimously elect Kenneth Brown and
William E. Schuiling as the initial Managers of the Company,to serve until the first annual
meeting of the Members and until their respective successors shall be duly elected and
qualified.
(b) The Members chall elect one or more Persons as Managers at each
annual meeting of the Company to serve until the next annual meeting of the Company or
until their respective successors are duly elected and qualified.In addition,if any Person
resigns or otherwise vacates the office of Manager,the Members shall elect a replacement
Manager to serve the remaining term of such office,unless one or more other Persons then
serve as Managers and the Members determine not to fill such vacancy.A Person may be
removed as a Manager by the Members with or without cause at any time.A Manager may,
but shall not be required to,be elected from among the Members.A Manager may be a
natural person or an Entity.Notwithstanding any of the foregoing provisions,the rights of
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the Members to elect and remove Managers shall be subject to the restrictions set forth in
Section 5.03 hereof.
5.03 Voting Agreement. For so long as Kenneth Brown and William E.
Schuiling(the"Founding Members")are Members and have not consented otherwise in
writing,each Member agrees at all times to vote his entire Membership Interest(whether in
the election of Managers or in any vote to remove a Manager)so as to cause the Founding
Members, or such Person(s)whom they designate by mutual agreement,to be the two sole
and exclusive Managers of the Company.If either of the Founding Members ceases to be a
Member,and the other Founding Member continues as a Member,each Member hereby
agrees at all times to vote his entire Membership Interest(whether in the election of
Managers or in any vote to remove a Manager) so as to cause the Founding Member who
continues to be a Member,and his designee,if any,to be the sole and exclusive Managers
c f the Company.At such time as both of the Founding Members have ceased to be
Members,the covenants contained in this Section shall terminate.
5.04 Action by Two or More Managers. Unless otherwise expressly provided by
the Act,the Articles,or the terms of this Operating Agreement,the vote,approval or
consent of a majority of the Managers, determined on a per capita basis, shall be necessary
and sufficient for the Managers to take any action on behalf of the Company that the
Managers are authorized to take pursuant to the Act,the Articles or this Operating
Agreement.
5.05 Execution of Documents and Other Actions. The Managers may delegate to
one or more of their number the authority to execute any documents or take any other
actions deemed necessary or desirable in furtherance of any action that they have
authorized on behalf of the Company as provided in Section 5.04 hereof. The Initial
managers designate Kenneth Brown as the Manager to execute such documents or take
such other actions. The Managers may from time to time replace such designee and/or
designate any other Manager to take such action on behalf of the Company.
5.06 Single Manager. If at any time there is only one Person serving as a
Manager,such Manager shall be entitled to exercise all powers of the Managers set forth in
this Section, and all references in this Section and otherwise in this Operating Agreement
to "Managers" shall be deemed to refer to such single Manager.
5.07 Tax Matters Manager. Kenneth Brown is designated as the Tax Matters
Manager(or "Tax Matters Manager" as defined in the Code).
5.08 Reliance by other Persons. Any Person dealing with the Company, other
than a Member,may rely on the authority of a particular Manager or Managers in taking
any action in the name of the Company, if such Manager or Managers provide to such
Person a copy of the applicable provision of this Operating Agreement and/or the
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resolution or written consent of the Managers or Members granting such authority,
certified in writing by such Manager or Managers to be genuine and correct and not to have
been revoked,superseded or otherwise amended.
5.09 Manager's Expenses and Fees. A Manager shall be entitled,but not
required, to receive a reasonable salary for services rendered on behalf of the Company or
in his capacity as a Manager. The amount of such salary shall be determined by the
Managers and consented to by the Members,which consent shall not be unreasonably
withheld. The Company shall reimburse any Manager for reasonable out-of-pocket
expenses that were or are incurred by the Manager on behalf of the Company with respect
to the start-up or operation of the Company,the on-going conduct of the Company's
business, or the dissolution and winding up of the Company and its business.
5.10 Competition. During the existence of the Company,the Managers shall
devote such time to the business of the Company as may reasonably be required to conduct
its business in an efficient and profitable manner.The Managers,for their own account and
for the account of others,may engage in business ventures,including the acquisition of real
estate properties or interests therein and the development,operation,management and/or
syndication of real estate properties or interests therein,which may compete with the
business of the Company.Each Member hereby expressly consents to the continued and
future ownership and operation by the other Members or the Managers of such properties
and waives any claim for damages or otherwise, or rights to participate therein or with
respect to the operation and profits or losses thereof.
5.11 Indemnification. The Company shall indemnify each Manager,whether
serving the Company or,at its request,any other Entity,to the full extent permitted by the
Act. The foregoing rights of indemnification shall not be exclusive of any other rights to
which the Managers may be entitled. The Managers may,upon the approval of the
Members,take such action as is necessary to carry out these indemnification provisions
and may adopt, approve and amend from time to time such resolutions or contracts
implementing such provisions or such further indemnification arrangements as may be
permitted by law.
5.12 Liability of Managers. So long as the Managers act in good faith with
respect to the conduct of the business and affairs of the Company,no Manager shall be
liable or accountable to the Company or to any of the Members, in damages or otherwise,
for any error of judgment,for any mistake of fact or of law,or for any other act or thing
r - that he may do or refrain from doing in connection with the business and affairs of the
Company, except for willful misconduct or gross negligence or breach of fiduciary duty,
and further except for breaches of contractual obligations or agreements between the
Managers and the Company.
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•
ARTICLE VI
CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS
6.01 Initial Capital Contributions. Each Member,upon the execution of this
Operating Agreement,shall make as an initial Capital Contribution the amount shown on
Exhibit A,which is attached hereto.The initial Capital Contribution to be made by any
Person who hereafter is admitted as a Member and acquires his Membership Interest from
the Company shall be determined by the Members_
6.02 Additional Capital Contributions. No Member shall be required to make
any Capital Contribution in addition to his Initial Capital Contribution.The Founding
Members,as defined in Section 5.03,may make additional Capital Contributions to the
Company with the consent of the Members. Otherwise,the Members may make additional
Capital Contributions to the Company only if such additional Capital Contributions are
made pro rata by all the Members or all the Members consent in writing to any non-pro
rata contribution.The fair market value of any property other than cash or widely traded
securities to be contributed as an additional Capital Contribution shall be(a) agreed upon
by the contributing Member and a majority in interest of the Members before contribution,
or(b) determined by a disinterested appraiser selected by the Managers.
6.03 Interests and Return of Capital Contribution. No Member shall receive any
interest on his Capital Contribution. Except as otherwise specifically provided for herein,
the Members shall not be allowed to withdraw or have refunded any Capital Contribution.
6.04 Capital Accounts. Separate Capital Accounts shall be maintained for each
Member in accordance with the following provisions:
(a) To each Member's Capital Account there shall be credited the fair
market value of such Member's Initial Capital Contribution and any additional
Capital Contributions,such Member's distributive share of profits,and the amount
of any Company liabilities that are assumed by such Member.
(b) To each Member's Capital Account there shall be debited the
amount of cash and the fair market value of any Property distributed to such
Member pursuant to any provision of this Operating Agreement,such Member's
distributive share of losses,and the amount of any liabilities of such Member that
are assumed by the Company or that are secured by any property contributed by
such Member to the Company.
(c) In the event any interest in the Company is transferred in accordance
with the terms of this Operating Agreement,the transferee shall succeed to the
Capital Account of the transferor in proportion to the percentage of the transferor's
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interest transferred.
(d) The Capital Account shall also include a pro rata share of the fair
market value of any property contributed by a person who is not a Member,such
value to be the same value reported for federal gift tax purposes if a gift tax return
is filed,and if not,the value in the case of real property shall be determined by an
independent M.A.I.appraiser actively engaged in appraisal work in the area where
such property is located and selected by the Managers, and otherwise by the
certified public accountant or accountants then serving the Company.
(e) If any Member makes a non-pro rata Capital Contribution to the
Company or the Company makes a non-pro rata distribution to any Member,the
Capital Account of each Member shall be adjusted to reflect the then fair market
value of the assets held by the Company immediately before the Capital
Contribution or distribution.
6.05 Loans to the Company. If the Company has insufficient funds to meet its
obligations as they come due and to carry out its routine,day-to-day affairs,then,in lieu of
obtaining required funds from third parties or selling its assets to provide required funds,
the Company may,but shall not be required to,borrow necessary funds from one or more
of the Members as designated by the Managers;provided that the terms of such borrowing
shall be commercially reasonable and the Company shall not pledge its assets to secure
such borrowing.
6.06 Effect of Sale or Exchange. In the event of a permitted sale or other transfer
of a Membership Interest in the Company,the Capital Account of the transferor shall
become the Capital Account of the transferee in proportion to the percentage of the
transferor's interest transferred.
6.07 Distributions. All distributions of cash or other property(except upon the
Company's dissolution,which shall be governed by the applicable provisions of the Act
and Article IX hereof)shall be made to the Members in proportion to their respective
Membership Interests.All distributions of cash or property shall be made at such time and
in such amounts as determined by the Managers.All amounts withheld pursuant to the
Code or any provisions of state or local tax law with respect to any payment or distribution
to the Members from the Company shall be treated as amounts distributed to the relevant
Member or Members pursuant to this Section_
6.08 Allocations. Except as otherwise provided in Section 6.09 hereof,all items
of income, gain, loss,deduction and credit,whether resulting from the Company's
operations or in connection with its dissolution, shall be allocated to the Members for
federal, state and local income tax purposes in proportion to their respective Membership
Interests.
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6.09 Allocation with Respect to Property. If,at any time during the Company's
existence,any Member contributes to the Company property with an adjusted basis to the
contributing Member which is more or less than the agreed fair market value and such
property is accepted by the Company at the time of its contribution,the taxable income,
gain, loss, deductions and credits with respect to such contributed property for tax purposes
only(but not for purposes of calculating the Members'respective Capital Accounts) shall
be shared among the Members so as to take account of the variation between the basis of
the property to the Company and its agreed fair market value at the time of contribution,
pursuant to Section 704(c)of the Code.
ARTICLE VII
RECORDS,REPORTS,ETC_
7.01 Records. The Company shall maintain and make available to the Members
its records to the extent provided in the Act.
7.02 Financial and Operating Statements and Tax Returns. Within seventy-five
(75)days from the close of each fiscal year of the Company,the Managers shall cause to
be delivered to each Member a statement setting forth such Member's allocable share of all
tax items of the Company for such year,and all such other information as may be required
to enable each Member to prepare his federal, state and local income tax returns in
accordance with all then applicable laws,rules and regulations.The Managers also shall
cause to be prepared and filed all federal, state and local income tax returns required of the
Company for each fiscal year.
7.03 Banking. The funds of the Company shall be kept in one or more separate
bank accounts in the name of the Company in such banks or other federally insured
depositories as may be designated by the Managers,or shall otherwise be invested in the
name of the Company in such manner and upon such terms and conditions as may be
designated by the Managers.All withdrawals from any such bank accounts or investments
established by the Managers hereunder shall be made on such signature or signatures as
may be authorized from time to time by the Managers.Any account opened by the
Managers for the Company shall not be commingled with other funds of the Managers or
interested persons.
7.04 Power of Attorney.
(a) Each Member does hereby irrevocably constitute and appoint the
Managers serving in office from time to time, and each of them,as such Member's true and
lawful attorney, in his name,place and stead,to make,execute,consent to, swear to,
acknowledge,record and file from time to time any and all of the following:
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(i) Any certificate or other instrument that may be required to be
filed by the Company or the Members under the laws of the Commonwealth of Virginia or
under the applicable laws of any other jurisdiction in order to conduct business in any such
jurisdiction,to the extent the Managers deem any such filing to be necessary or desirable.
(ii) Any amendment to the Articles adopted as provided in this
Operating Agreement.
(iii) Any certificates or other instruments that may be required to
effectuate the dissolution and termination of the Company pursuant to the provisions of
this Operating Agreement.
(b) It is expressly understood, intended and agreed by each Member for
himself,his successors and assigns that the grant of the power of attorney to the Managers
pursuant to subsection(a)is coupled with an interest,is irrevocable,and shall survive the
death or legal incompetency of the Member or such assignment of his Membership
Interest.
(c) One of the ways that the aforementioned power of attorney may be
exercised is by listing the names of the Members and having the signature of the Manager
or Managers, as attorney-in-fact, appear with the notation that the signatory is signing as
attorney-in-fact of the listed Members.
ARTICLE VIII
ASSIGNMENT;RESIGNATION
8.01 Ass gnment Generally. Except as provided in Sections 8.02, 8.03,and 8.04
of this Operating Agreement,each Member hereby covenants and agrees that he will not
sell,assign,transfer,mortgage,pledge,encumber,hypothecate or otherwise dispose of all
or any part of his interest in the Company to any person,firm, corporation,trust or other
entity without first offering in writing to sell such interest to the Company. The Company
shall have the right to accept the offer at any time during the 30 days following the date on
which the written offer is delivered to the Company.The consent of all the Managers shall
be required to authorize the exercise of such option by the Company.If the Company shall
fail to accept the offer within the 30 day period,such interest may during the following 60
days be disposed of free of the restrictions imposed by this Operating Agreement;
provided,however,that the purchase price for such interest shall not be less and the terms
of purchase for such interest shall not be more favorable than the purchase price and terms
of purchase that would have been applicable to the Company had the Company purchased
the interest.Any interest not so disposed of within the 60-day period shall thereafter •
remain subject to the terms of this Operating Agreement.Notwithstanding the preceding
sentence,no assignee of a Membership Interest shall become a Member of the Company
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except upon the consent of a majority of the non-assigning Member-Managers;or,if there
are no Member-Managers.upon the consent of a majority of the non-assigning Members.
8.02 Gift to Family Member. Notwithstanding Section 8.01,a Member shall not
be required to offer to sell his Membership Interest to the Company prior to transferring his
Membership Interest to his spouse or any of his descendants,or to a trust the sole
beneficiaries of which are one or more of his spouse and his descendants,provided that
such transfer is by way of inter vivos gift or testamentary or intestate succession,
Notwithstanding the preceding sentence,no assignee of a Membership Interest by way of
inter vivos gift shall become a Member of the Company except upon the consent of a
majority of the non-assigning Member-Managers; or,if there are no non-assigning
Member-Managers,upon the consent of a majority of the non-assigning Members.
8.03 Transfers from Custodianships. Notwithstanding Section 8.01,any
Membership Interest that is held by a custodian for a minor under the laws of the
Commonwealth of Virginia or any other state shall be fully transferrable and assignable to
the minor,without an offer being made to the Company,when the minor reaches the age of
termination of such custodianship under the applicable statute.
8.04 Purchase of Certain Membership Interests.
(a) If an Option Event(as defined below) occurs with respect to any
Member(an"Option Member"),the Company shall have the option to purchase the Option
Member's Membership Interest upon the terms and conditions set forth in this Section 8.04.
For purposes of the foregoing,an"Option Event" shall mean(i)the occurrence of any
event set forth in Section 9.01(c)hereof,if the Company is continued as provided therein,
(ii)the death of a Member,or(iii)the inability of a Member to pay his debts generally as
they become due,or any assignment by a Member for the benefit of his creditors, or the
filing by a Member of a voluntary petition in bankruptcy or similar insolvency
proceedings, or the filing against a Member of an involuntary petition in bankruptcy or
similar insolvency proceeding that is not dismissed within ninety(90)days thereafter. The
term "Option Member" shall include an Option Member's personal representative or trustee
in bankruptcy,to the extent applicable.
(b) Upon any Option Event occurring to an Option Member,the Option
Member shall deliver written notice of the occurrence of such Option Event to the
Company. The Company shall have the option,but not the obligation,to purchase the
Option Member's Membership Interest at any time during the sixty(60) day period
immediately following the date on which it receives notice of the occurrence of the Option
Event. Such option shall entitle the Company to purchase such Membership Interest for the
fair market value of such Membership Interest. The fair market value of the interest shall
be the amount that the Option Member would receive in exchange for his entire interest in
the Company if the Company sold all of its assets, subject to their liabilities,at their fair
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market value as of the date on which the Option Event occurred and distributed the net
proceeds from such sale in complete liquidation of the Company. The consent of all the
Managers shall be required to authorize the exercise of such option by the Company. Such
option must be exercised by delivery of a written notice from the Company to the Option
Member during the aforementioned period. Upon delivery of such notice the exercise of
such option shall be final and binding on the Company and the Option Member.
(c) If the foregoing option is not exercised,the business of the Company
shall continue,and the Option Member shall retain his Membership Interest.
(d) The fair market value of the Option Member's Membership Interest
shall be determined as expeditiously as possible by a disinterested appraiser mutually
selected by the Option Member and the Company(the Company's selection being made by
the Managers).If the Option Member and the Company are unable to agree on a
disinterested appraiser,then the Option Member and the Company shall each select a
disinterested appraiser and if the disinterested appraisers selected are not able to agree as to
the fair market value of the interest,then the two disinterested appraisers shall select a third
disinterested appraiser who shall determine the fair market value.The determination of the
fair market value of the Option Member's Membership Interest by the appraiser or
appraisers shall be conclusive and binding on all parties.All costs of an appraiser mutually
selected by the Option Member and the Company or the two disinterested appraisers shall
be shared equally by the Option Member and the Company.All costs of an individually
selected appraiser shall be borne by the parties selecting such appraiser.
(e) If the option to purchase the Option Member's Membership Interest
is exercised by the Company,then not later than thirty(30)days after the date on which the
appraisal described above is complete(the "Appraisal Date"),the Company shall make a
distribution of property(which may be cash or other assets of the Company)to the Option
Member with a value equal in amount to the fair market value of the Option Member's
Membership Interest;provided,however,that at the election of the Company such
distribution to the Option Member may be made in five(5)equal annual installments,the
first of which shall be made on the thirtieth(30th)day after the Appraisal Date and one of
which shall be made on the same date in each of the four years thereafter,provided, further,
however,that notwithstanding an election by the Company to make the distribution to the
Option Member in five equal annual installments,the Company may accelerate without
penalty all of such installments at any time or any part of such installment at any time.If
the Company elects to make distributions to the Option Member in five equal annual
installments as provided herein,the Company,in addition to such annual installments,
shall pay the Option Member additional amounts computed as if the Option Member were
entitled to interest on the undistributed amount of the total distribution to which the Option
Member is entitled hereunder at an annual rate equal to the annual Federal Med-Term Rate
in effect under Section 1274(d)of the Code,as determined on the 30th day after the •
Appraisal Date,which additional amounts,computed like interest,shall be due and payable
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on the same dates as the annual installments of the distribution payable to the Option
Member hereunder.Any unpaid capital contributions of the Option Member and any
damages occurring to the Company as a result of the Option Event shall be taken into
account in determining the net amount due the Option Member at the closing, and any
excess of such unpaid capital contributions or damages over the amount due at closing
shall be netted against subsequent installment payments as they become due.
(f) If at a time when the Company has an option to purchase an Option
Member's Membership Interest, it is prohibited from purchasing all or any portion of such
Membership Interest pursuant to the Act or any loan agreement or similar restrictive
agreement,the Option Member and the remaining Members shall,to the extent permitted
by law,take appropriate action to adjust the value of the Company's assets from book value
to a fair valuation based on accounting practices and principles that are reasonable under
fie circumstances in order to permit the Company to purchase such Membership Interest. If
the Company becomes obligated to purchase an Option Member's Membership Interest
under this Section and the above action cannot be taken or does not create sufficient value
to permit the Company to do so,the Company shall be obligated to purchase the portion of
the Membership Interest it is permitted to purchase.
(g) In order to fund any obligations under this Operating Agreement,the
Company or the Members may maintain such life insurance policies on the lives of one or
more Members as the Members determine from time to time to be desirable.
8.05 Absolute Prohibition. Notwithstanding any other provision in this Article
VIII,the Membership Interest of a Member, in whole or in part,or any rights to
distributions therefrom,shall not be sold,exchanged, conveyed,assigned,pledged,
hypothecated,subjected to a security interest or otherwise transferred or encumbered, if, as
a result thereof,the Company would be terminated for federal income tax purposes in the
opinion of counsel for the Company or such action would result in a violation of federal or
state securities laws in the opinion of counsel for the Company.
8.06 Members Acquiring Membership Interest from Company. No Person, other
than the initial Members,who acquires a Membership Interest from the Company shall be
admitted as a Member of the Company,except upon the unanimous consent of the
Members.
8.07 Resignation. No Member shall be entitled to resign from the Company
except upon the unanimous written consent of the Members.Any attempted resignation,
without such consent, shall be of no force or effect.
8.08 Effect of Prohibited Action. Any transfer or other action in violation of this
Article shall be void ab initio and of no force or effect whatsoever.
1&
07/07/00 16:30 FAX 703 790 8016 WALTON & ADAMS P.C. VI()is
8.09 Rights of an Assignee. If an assignee of a Membership Interest is not
admitted as a Member because of the failure to satisfy the requirements of Section 8.01,
8.02 or 8.05 hereof,such assignee shall nevertheless be entitled to receive such
distributions from the Company as the assigning Member would have been entitled to
receive under Sections 6.07 and 9.04(c)of this Operating Agreement with respect to such
Membership Interest had the assigning Member retained such Membership Interest.
ARTICLE IX
DISSOLUTION AND TEERMINATION
9.01 Events of Dissolution. The Company shall be dissolved upon the first to
occur of the following:
(a) Any event that under the Articles requires dissolution of the
Company;
(b) The unanimous written consent of the Members to the dissolution of
the Company;
(c) The bankruptcy of a Member-Manager unless the Company is
continued by the consent of a majority in interest of the remaining Members.If there are no
remaining Member-Managers,then the bankruptcy of a Member shall cause the Company
to be dissolved unless the Company is continued with the consent of a majority in interest
of the remaining Members;
(d) The entry of a decree of judicial dissolution of the Company as
provided in the Act; and
(e) Any event not set forth above that under the Act requires dissolution
of the Company.
9.02 Liquidation. Upon the dissolution of the Company,it shall wind up its
affairs and distribute its assets in accordance with the Act by either or a combination of
both of the following methods as the Members shall determine:
(a) Selling the Company's assets and,after the payment of Company
liabilities,distributing the net proceeds therefrom to the Members in proportion to their
Membership Interests and in satisfaction thereof;and/or
(b) Distributing the Company's assets to the Members in kind with each
Member accepting an undivided interest in the Company's assets, subject to its liabilities,
in satisfaction of his Membership Interest. The interest conveyed to each Member in such
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assets shall constitute a percentage of the entire interests in such assets equal to such
Member's Membership Interest.
9.03 Orderly Liquidation. A reasonable time as determined by the Managers not
to exceed eighteen(18)months shall be allowed for the orderly liquidation of the assets of
the Company and the discharge of liabilities to the creditors so as to minimize any losses
attendant upon dissolution.
9.04 Distributions. Upon liquidation,the Company assets(including any cash on
hand) shall be distributed in the following order and in accordance with the following
priorities:
(a) First,to the payment of the debts and liabilities of the Company and
the expenses of liquidation,including a sales commission to the selling agent,if any;then
(b) Second,to the setting up of any reserves that the Managers (or the
person or persons carrying out the liquidation)deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Company. At the expiration of
such period as the Managers(or the person or persons carrying out the liquidation)shall
deem advisable,but in no event to exceed 18 months,the Company shall distribute the
balance thereof in the manner provided in the following subsection;then
(c) Third,to the Members in proportion to their respective Membership
Interests.
(d) In the event of a distribution in liquidation of the Company's
property in kind,the fair market value of such property shall be determined by a qualified
and disinterested M.A.I. appraiser, selected by the Managers(or the person or persons
carrying out the liquidation), and each Member shall receive an undivided interest in such
property equal to the portion of the proceeds to which he would be entitled under the
immediately preceding subsection if such property were sold at such fair market value.
9.05 Taxable Gain or Loss. Taxable income, gain and loss from the sale or
distribution of Company property incurred upon or during liquidation and termination of
the Company shall be allocated to the Members as provided in Section 6.08 above.
9.06 No Recourse Against Members. Except as provided by law,upon
dissolution,each Member shall look solely to the assets of the Company for the return of
his Capital Contribution.If the Company property remaining after the payment or
discharge of the debts and liabilities of the Company is insufficient to return the Capital
Contribution of each Member, such Member shall have no recourse against any other
Member.
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ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 Attorneys'Fees. In the event any Member brings an action to enforce any
provisions of this Operating Agreement against the Company or any other Member,
whether such action is at law,in equity or otherwise,the prevailing party shall be entitled,
in addition to any other rights or remedies available to it,to collect from the non-prevailing
party or parties the reasonable costs and expenses incurred in the investigation preceding
such action and the prosecution of such action,including but not limited to reasonable
attorneys'fees and court costs.
10.02 Notices. Whenever,under the provisions of the Act or other law,the
Articles or this Operating Agreement,notice is required to be given to any Person,it shall
not be construed to mean exclusively personal notice unless otherwise specifically
provided,but such notice may be given in writing,by mail,addressed to the Company at
its principal office from time to time and to any other Person at his address as it appears on
the records of the Company from time to time,with postage thereon prepaid.Any such
notice shall be deemed to have been given at the time it is deposited in the United States
mail.Notice to a Person may also be given personally or by telegram or telecopy sent to
his address as it appears on the records of the Company.The addresses of the initial
Members as shown on the records of the Company shall originally be those set forth in
Article III hereof.Any Person may change his address as shown on the records of the
Company by delivering written notice to the Company in accordance with this Section.
10.03 Apnlication of Virginia Law. This Operating Agreement, and the
interpretation hereof, shall be governed exclusively by its terms and by the laws of the
Commonwealth of Virginia,without reference to its choice of law provisions, and
specifically the Act.
10.04 Amendments, No amendment or modification of this Operating Agreement
shall be effective except upon the unanimous written consent of the Members_
10.05 Construction. Whenever the singular number is used in this Operating
Agreement and when required by the context,the same shall include the plural,and the
masculine gender shall include the feminine and neuter genders,and vice versa.
• _ 10.06 Headings. The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe,interpret,define,or limit the
scope,extent or intent of this Operating Agreement or any provision hereof.
10.07 Waivers. The failure of any party to seek redress for violation of or to insist
upon the strict performance of any covenant or condition of this Operating Agreement shall
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not prevent a subsequent act,which would have originally constituted a violation,from
having the effect of an original violation.
10.08 Rights and Remedies Cumulative.The rights and remedies provided by this
Operating Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive the right to use any or all other remedies. Such rights and
remedies are given in addition to any other rights the parties may have by law, statute,
ordinance or otherwise.
10.09 Severability.If any provision of this Operating Agreement or the
application thereof to any Person or circumstance shall be invalid, illegal or unenforceable
to any extent,the remainder of this Operating Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.
10.10 Heirs, Successors and Assigns. Each and all of the covenants,terms,
provisions and agreements herein contained shall be binding upon and inure to the benefit
of the parties hereto and,to the extent permitted by this Operating Agreement,their
respective heirs, legal representatives, successors and assigns.
10.11 Creditors. None of the provisions of this Operating Agreement shall be for
the benefit of or enforceable by any creditor of the Company.
10.12 Counterparts. This Operating Agreement may be executed in counterparts,
each of which shall be deemed an original,but all of which shall constitute one and the
same instrument.
10.13 Entire Agreement. This Operating Agreement sets forth all of the promises,
agreements,conditions and understandings between the parties respecting the subject
matter hereof and supersedes all prior negotiations,conversations, discussions,
correspondence,memoranda and agreements between the parties concerning such subject
matter.
The undersigned,being all the Members of the Company,hereby agree,
acknowledge and certify that the foregoing Operating Agreement constitutes the sole and
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entire Operating Agreement of the Company,unanimously adopted by the Members of the
Company as of the date first written above.
MEMBERS:
Kenneth Brown
S � Th
William - Schuiling
-42t.--
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EXHIBIT A
Name Contribution No.of Units %Ownership
Kenneth Brown $500.00 5 50%
William E. Schuiling $500.00 5 50%
Contracts:\S&e.OA
22