Exhibit E
OPERATING AGREEMENT
FOR
SEIDMAN AND ASSOCIATES, LLC.
Dated: November 9, 1994
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INDEX
Page No.
Article 1 - Definitions 1
Article 2 - Formation 5
Article 3 - Principal Office 5
Article 4 - Term and Duration 6
Article 5 - Purpose 7
Article 6 - Capital Contributions by the Member7
Article 7 - Additional Capital Contributions 9
Article 8 - Cash Contributions 10
Article 9 - Tax Allocations 11
Article 10 - Rights, Powers and Representation of
the Members 15
Article 11 - Managing Member 17
Article 12 - Books, Records and Reports 19
Article13 - Bank Accounts 20
Article 14 - Rights and Duties of Members 20
Article 15 - Tax Matters 21
Article 16 - Bankruptcy 21
Article 17 - Assignability or Transfer of Int 22
Article 18 - Admission of Substituted Members; Death
or Incapacity; Further Conditions 24
Article 19 - Liquidation 25
Article 20 - Gender 26
Article 21 - Further Assurances 26
Article 22 - Covenant Against Partition 26
Article 23 - Notices 26
Article 24 - Applicable Law 27
Article 25 - Captions 27
Article 26 - Counterparts 27
Article 27 - Binding Effect 27
Article 28 - Partial Invalidity 27
Article 29 - Integration 28
Exhibit A - Property Description
Exhibit B - Contract of Sale
Schedule A - Members' Percentage Interests
Schedule B - Example of the Operation of Section 8.3
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OPERATING AGREEMENT
FOR
SEIDMAN AND ASSOCIATES, LLC.
AGREEMENT made November 9, 1994 by and between LAWRENCE SEIDMAN
("Lawrence Seidman"), having an address at 19 Veteri Place, Wayne, New Jersey
07470; SONIA SEIDMAN ("Sonia Seidman"), having an address at 19 Veteri Place,
Wayne, New Jersey 07470; SEIDCAL Associates ("Seidcal"), a New Jersey general
partnership having an address c/o Cali Realty Corporation, 11 Commerce Drive,
Cranford, New Jersey 07016; PAUL SCHIMDT ("Schimdt"), having an address at 159
Clinton Place, Hackensack, New Jersey 07601; and RICHARD GREENBERG
("Greenberg"), having an address at 1235A Route 23 South, Wayne, New Jersey
07474 (hereinafter Lawrence Seidman, Sonia Seidman, Seidcal, Schimdt and
Greenberg may sometimes be referred to individually as a "Member" and
collectively as the "Members").
WITNESSETH:
WHEREAS, the Members desire to form a limited liability company (the
"Company") pursuant to the New Jersey Limited Liability Company Act (the"Act")
and adopt this Operating Agreement in connection therewith; and
WHEREAS, the purpose of the Company shall be to purchase stock in
private and public companies and manage and invest the funds of others for these
purposes and for any and all other purposes permitted pursuant to the Act; and
WHEREAS, the Members wish to set forth the terms and conditions as to
the manner in which the Company shall be operated and to set forth the rights,
obligations and duties of the Members to each other and to the Company; and
WHEREAS, by executing this Operating Agreement, each Member represents
that he has sufficient right and authority to execute this Operating Agreement
and not acting on behalf of any undisclosed or partially disclosed principal.
NOW, THEREFORE, in consideration of ten ($10) dollars and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows effective as of the date first
written above.
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, the following terms shall have
the definitions set forth below:
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"Additional Contribution": Each Member's pro-rata portion of a
Required Amount, determined by multiplying the Required Amount by each Member's
Interest.
"Additional Member": Any person or entity who acquires an additional
interest in the Company.
"Adjusted Capital Account": As defined in Section 9.4(h).
"Capital Account" or "Capital Accounts": As defined in Section 6.4.
"Capital Contributions": The respective capital contributions,
including any Additional Contribution,of each of Member to the Company.
"Capital Transaction" or "Capital Transactions": Sale, transfer,
assignment or exchange of stock purchases or other investment made by the
Company or other similar transactions which, in accordance with generally
accepted principles, are treated as a capital transaction.
"Certificate of Formation": The Certificate of Formation of the Company
filed with the Secretary of State of the State of New Jersey, pursuant to the
Act to form the Company, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"Code": The Internal Revenue Code of 1986, as amended, and any
reference to a particular section of the Code shall be deemed to include any
successor section to such section.
"Company": Seidman and Associates, LLC.
"Contributing Member": A Member which has made its Additional
Contribution.
"Default Loan": A loan to the Company of an amount equal to the
Additional Contribution not made by a Defaulting Member.
"Defaulting Member": A Member which fails to make his Additional
Contribution as required herein.
"Default Rate": A floating rate equal to the lesser of (a) ten (10%)
percent per annum in excess of the rate of interest announced from time to time
in The Wall Street Journal as the "prime rate" or "base rate" charged by
institutional commercial lenders, from time to time or (b) the maximum rate of
interest then permitted according to the laws of the State of New Jersey or
according to Federal law, to the extent applicable.
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"Gain from a Capital Transaction": The gain recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes. In the event
there is a revaluation of Company property and the Capital Accounts are adjusted
pursuant to Section 6.4(c), Gain from a Capital Transaction shall be computed by
reference to the "book items" and not the corresponding "tax items".
"Income": Net Proceeds and all other income or amounts, however
characterized, received by the Company.
"Interest": The respective percentage interest of each Member as set
forth on Schedule A.
"Loss from a Capital Transaction": The loss recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes. In the event
there is a revaluation of the Company property and the Capital Accounts are
adjusted pursuant to Section 6.4(c), Loss from a Capital Transaction shall be
computed by reference to the "book items" and not the corresponding "tax items".
"Managing Member": Lawrence Seidman, or such successor appointed by a
majority in interest of the remaining Members.
"Member": Each of the parties who has executed this Operating
Agreement and any party who may hereafter become an Additional Member or a
Substitute Member pursuant to this Operating Agreement.
"Member Nonrecourse Debt": Any nonrecourse debt of the Company for
which a Member bears the economic risk of loss, determined in accordance with
Treasury Regulation Section 1.704-2(b) (4).
"Member Nonrecourse Debt Deductions": With regard to any Member
Nonrecourse Debt, the amount of the net increase during any taxable year to the
Company in the amount of Minimum Gain Attributable to Member Nonrecourse Debt,
over the aggregate amount of any distributions during such year to the Member
who bears the economic risk of loss for such debt of proceeds of such debt that
are allocable to an increase in the Minimum Gain Attributable to such Member
Nonrecourse Debt. Such amounts shall be determined in accordance with Treasury
Regulation Section 1.704-2(i) (2).
"Minimum Gain": The amount of gain which would be recognized to the
Company for federal income tax purposes if all Company property secured by
Nonrecourse Liability were transferred to the creditor of such debt in
satisfaction thereof (and for no other consideration) in a taxable transaction.
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The amount of such gain shall be determined and calculated in accordance with
Treasury Regulation Section 1.704--2(g) (i).
"Minimum Gain Attributable to Member Nonrecourse Debt": The amount of
gain which would be recognized by the Company for federal income tax purposes if
all Company property secured by Member Nonrecourse Debt were transferred to the
creditor of such debt in satisfaction thereof (and for no other consideration)
in a taxable transaction. The amount of such gain shall be determined and
calculated in accordance with Treasury Regulation Section 1.704-2(f) (i) (4).
"Net Proceeds": The net proceeds available to the Company from a
Capital Transaction after deducting (i) all costs and expenses incurred in
connection therewith, (ii) any liens or other indebtedness which is satisfied or
refinanced as a result of such Capital Transaction, and (iii) reasonable
reserves established by the Company from time to time for working capital and
other purposes.
"Net Profit" and "Net Loss": The net income (including income exempt
from tax) and net loss (including expenditures that can neither be capitalized
nor deducted), respectively, of the Company, determined in accordance with the
method of accounting used by the Company for federal income tax purposes, but
computed without regard for Gain from Capital Transactions, Loss from Capital
Transactions and items of income or loss, if any, that are specifically
allocated to Members. In the event there is a revaluation of Company property
and the Capital Accounts are adjusted pursuant to Section 6.4(c), Net Profits
and Net Losses shall be computed by reference to the "book items" and not
corresponding "tax items".
"Nonrecourse Liability": Any Company debt for which no Member has any
economic risk of loss, determined in accordance with Treasury Regulation
Section 1.704-2(b) (3).
"Operating Agreement": This Operating Agreement as originally
executed and as amended, modified,supplemented or restated from time to time.
"Required Amount": The amount of cash required by the Company as
determined by a majority in interestof the Members.
"Substitute Member": Any transferee of a Member's Interests who is
admitted as a Member in the Company pursuant to Article 17 or 18.
"Unrecovered Additional Contributions": The aggregate amount of
Additional Contribution made by a Member pursuant to Section 7.1 hereof less
prior distributions to such Member of Income which is distributed to repay
outstanding Additional Contributions and any interest on any Default Loan
specially allocated to such Member.
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ARTICLE 2
FORMATION
2.1 The parties hereto do hereby form the Company under the name
of SEIDMAN AND ASSOCIATES, LLC.pursuant to the Act. Pursuant to the provisions
of the Act, the formation of the Company shall be effective upon the filing of
the Certificate of Formation.
In order to maintain the Company as a limited liability company under
the laws of the State of New Jersey, the Company shall from time to time take
appropriate action, including the preparation and filing of such amendments to
the Certificate of Formation and such other assumed name certificates,
documents, instruments and publications as may be required by law, including,
without limitation, action to reflect:
(i) a change in the Company name;
(ii) a correction of a defectively or erroneously executed
Certificate of Formation;
(iii) a correction of false or erroneous statements in the
Certificate of Formation or the desire of the Members
to make a change in any statement therein in order
that it shall accurately represent the agreement
among the Members; or
(iv) a change in the time for dissolution of the Company
as stated in the Certificate of
Formation and in this Agreement.
Section 2.2 Other Instruments. Each Member hereby agrees to execute and
deliver to the Company within five (5) days after receipt of a written request
therefor, such other and further documents and instruments, statements of
interest and holdings, designations, powers of attorney and other instruments
and to take such other action as the Company deems necessary, useful or
appropriate to comply with any laws, rules or regulations as may be necessary to
enable the Company to fulfill its responsibilities under this Operating
Agreement, to preserve the Company as a limited liability company under the Act
and to enable the Company to be taxed as a partnership for federal and state
income tax purposes.
ARTICLE 3
PRINCIPAL OFFICE
3.1 The Company's registered office in New Jersey shall be at 19 Veteri
Place, Wayne, New Jersey 07470. The Company's registered agent who is a resident
of New Jersey is Lawrence Seidman, whose business address 19 Veteri Place,
Wayne, New Jersey 07470. At any time, the Company may designate another
registered agent and/or office.
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3.2 The principal place of business of the Company shall be at 19
Veteri Place, Wayne, New Jersey 07470. At any time, the Company may change the
location of its principal place of business and may establish additional
offices.
ARTICLE 4
TERM AND DURATION
4.1 The Company shall commence upon the filing of the Certificate of
Formation, and shall continue in full force and effect until May 1, 2024,
provided, however, that the Company shall be dissolved prior to such date upon
the happening of any of the following events:
(a) The mutual written consent of the Members to dissolve the
Company.
(b) The sale or other divestiture of all or substantially all of the
assets of the Company and the distribution of the proceeds thereof to the
Members, including real estate or interests held or owned by the Company (other
than a transfer to a nominee of the Company for any Company purpose, which event
shall not be construed as an event of termination); provided, however, that (i)
if the Company receives a purchase money mortgage or other collateral security
in connection with such sale, the Company shall continue (A) until such mortgage
or security interest is paid in full or otherwise disposed of, or (B) in the
event of foreclosure of such mortgage, or security interest provided the Company
retains title therein; and (ii) the Company shall continue if the assets of the
Company are exchanged under Section 1031 of the Code.
(c) Upon the death, retirement, expulsion, bankruptcy or dissolution of
a Member or occurrence of any other event that terminates the continued
membership of a Member in the Company (a "Dissolution Event") unless the
business of the Company is continued by the unanimous consent of the remaining
Members within ninety (90) days following the Dissolution Event.
(d) The entry of a decree of judicial dissolution under Section
49 of the Act.
(e) The happening of any other prior event which pursuant to the terms
and provisions of this Operating Agreement shall cause a dissolution or
termination of the Company.
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4.2 Upon any dissolution of the Company, the distribution of the Company's
assets and the winding up of its affairs shall be concluded in accordance with
Article 19 of this Operating Agreement.
ARTICLE 5
PURPOSE
5.1 The business of the Company shall be for the purpose of:
(a) Purchasing stock in private and public companies and managing
and investing funds of others for
these purposes.
(b) Such other activities incident or appropriate to the foregoing,
including acting directly or in conjunction with others through joint ventures,
partnerships or otherwise.
5.2 The business of the Company shall also be for any lawful
purpose.
ARTICLE 6
CAPITAL CONTRIBUTIONS BY THE MEMBERS
6.1 (a) Upon execution hereof, or at such other times as determined by
the Managing Member, each Member shall contribute in cash to the capital of the
Company an amount in the aggregate equal to that set forth opposite his/her/its
name on Schedule A attached hereto.
(b) A Member's interest in the Company shall be represented by the
percentage interest held by such Member. Each Member's respective initial
interest in the Company is set forth opposite his/her name on Exhibit B attached
hereto.
6.2 No Member shall have the right to withdraw any part of his Capital
Contribution or receive any distribution, except in accordance with the
provisions of this Operating Agreement. No interest shall be paid on any Capital
Contribution.
6.3 No Member shall have any priority over any other Member with
respect to the return of Capital Contributions.
6.4 The Company shall maintain a capital account (a "Capital Account")
for each Member within the provisions of Treasury Regulation Section 1.704-1 (b)
(2) (iv) as such regulation may be amended from time to time. Without limiting
the foregoing, the Member's Capital Accounts shall be adjusted as follows:
(a) Subject to the last sentence of Section 6.4 (c), the Capital
Account of each Member shall be credited with (i) an amount equal to such
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Member's initial cash contribution and any additional cash contributions to the
Company and the fair market value of property or securities contributed to the
Company (net of liabilities secured by such property) if a contribution of
property or securities shall be permitted by the Company and (ii) such Member's
share of the Company's Net Profits and Gain from Capital Transactions (including
income and gain exempt from tax).
(b) Subject to the last sentence of Section 6.4 (c), the Capital
Account of each Member shall be debited by (i) the amount of cash distributions
to such Member and the fair market value of property and/or securities
distributed to the Member (net of liabilities secured by such property and/or
securities) and (ii) such Member's share of the Company's Net Loss and Net Loss
from Capital Transactions (including expenditures which are not permitted to be
capitalized or deducted for tax purposes).
(c) Upon the transfer of an interest in the Company, the Capital
Account of the transfer Member (as adjusted, if at all, as required by this
Section 6.4) that is attributable to the transferred interest will be carried
over to the transferee Member. The Capital Account will not be adjusted to
reflect any adjustment under Section 743 of the Code except as specifically
provided in Treasury Regulation Section 1.704-1 (b) (2) (iv) (m). Upon (i) the
"liquidation of the Company" (as hereinafter defined), (ii) the "liquidation of
a Member's interest in the Company" (as hereinafter defined), (iii) the
distribution of money, property or securities to a Member as consideration for
an interest in the Company, or (iv) the contribution of money or (if permitted
pursuant to (a) above) property and/or securities to the Company by a new or
existing Member as consideration for an interest in the Company, or upon any
transfer causing a termination of the Company for tax purposes within the
meaning of Section 708(b) (1) (B) of the Code, then adjustments shall be made to
the Members' Capital Accounts in the following manner: all property and
securities of the Company which are not sold in connection with such event shall
be valued at their then fair market value; such fair market value shall be used
to determine both the amount of gain or loss which would have been recognized by
the Company if the property and securities had been sold for its fair market
value (subject to any debt secured by the property and securities) at such time,
and the amount of Income, which would have been distributable by the Company
pursuant to Article 9 if the property and securities had been sold at such time
for said fair market value, less the amount of any debt secured by the property;
the Capital Accounts of the Members shall be adjusted to reflect the deemed
allocation of such hypothetical gain or loss in accordance with Article 10; and
the Capital Accounts of the Members (or of a transferee of a Member) shall
thereafter be adjusted to reflect "book items" and not "tax items" in accordance
with Treasury Regulation Sections 1.704-1 (b) (2) (iv) (g) and 1.704-1 (b) (4)
(i).
(d) For purposes of this Article 6, (i) the term "liquidation of the
Company" shall mean (A) a termination of the Company effected in accordance with
this Operating Agreement, which shall be deemed to occur, for purposes of
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Article 6, on the date upon which the Company ceases to be a going concern and
is continued in existence solely to wind-up its affairs, or (B) a termination of
the Company pursuant to Section 708(b)(1) of the Code; and (ii) the term
"liquidation of a Member's interest in the Company" shall mean the termination
of the Member's entire interest in the Company effected by a distribution, or a
series of distributions, by the Company to the Member.
ARTICLE 7
ADDITIONAL CAPITAL CONTRIBUTIONS
7.1 No Member shall be obligated to make additional capital
contributions to the Company. If the Managing Member, with the concurrence of
Members holding a majority in interest of the Company, shall determine there
shall be a Required Amount for any Company purpose, including, without
limitation, those purposes set forth in Article 5, then within fifteen (15) days
of notice of such requirement, each Member may, but shall not be obligated to,
contribute to the Company his Additional Contribution.
7.2 If a Member fails to make his Additional Contribution, in whole or
in part, as required in Section 7.1 above (the "Noncontributing Member"), then,
so long as any other Member shall make his Additional Contribution as provided
herein (each such Member making his Additional Contribution being hereinafter
referred to as "Contributing Member"), any Contributing Member shall have the
option (a) with the consent of a majority in interest of the Contributing
Members (i) to make a capital contribution equal to the Additional Contribution
not made by the Noncontributing Member or (ii) to make a Default Loan equal to
the Additional Contribution not made by the Noncontributing Member or (b) with
the unanimous written consent of each Contributing Member, to declare the
Company terminated as a result of the Noncontributing Member's default. In the
event that more than one Contributing Member desires to make an Additional
Contribution, or is permitted to make a Default Loan, on account of the
Noncontributing Member, each such Contributing Member shall be permitted to
participate in proportion to their respective Interests. All loans made pursuant
to this Section 7.2 shall bear interest at the Default Rate.
7.3 Upon the making of a capital contribution to the Company pursuant
to Section 7.2, the Interest of the Noncontributing Member and the Contributing
Members shall be adjusted as follows: (a) the Noncontributing Member's Interest
shall be decreased (but not below zero) by subtracting therefrom an amount equal
to the percentage equivalent of the quotient of (i) the Additional Contribution
not made by the Noncontributing Member giving rise to application of this
Section 7.3 multiplied by (A) 200% upon the first failure of the Noncontributing
Member to make an Additional Contribution, (B) 300% upon the second such failure
and (C) 400% upon the third such failure, divided by (ii) the aggregate amount
of all Capital Contributions made by the Members (including the Additional
Contributions received by the Company), and (b) the Contributing Members'
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Interest shall be increased by adding thereto an amount equal to the percentage
by which the Noncontributing Member's Interest was decreased pursuant to clause
(a) above. Upon the fourth and each subsequent failure of the Noncontributing
Member to make an Additional Contribution giving rise to the application of this
Section 7.3, a majority-in-interest of the Contributing Members shall have the
option, exercisable in their sole discretion, to cause the remaining Interest of
the Noncontributing Member to be forfeited and allocated to the Contributing
Members or to continue re-allocating the Interests of the Noncontributing Member
and Contributing Members as provided in the preceding sentence except that the
percentage multiple set forth in clause (i) (C) shall be increased 100% for each
failure of the Noncontributing Member to make an Additional Contribution. An
example of the operation of this Section 7.3 with respect to a re-allocation of
Interests upon the first failure of a Noncontributing Member to make an
Additional Contribution, is set forth in Schedule B attached hereto.
7.4 The obligations of the Members contained in this Section 7 are
personal and run only to the benefit of the Company and the Members and may not
be enforced by any third parties. No creditor of the Company may rely on the
foregoing provisions of this Article 7 or any other provision of this Operating
Agreement to make any contributions or returns to the Company, notwithstanding
any agreement, representation, intention, indication or otherwise to the
contrary.
ARTICLE 8
CASH DISTRIBUTIONS
8.1 The Company shall distribute Income to the Members at such times as
the Company shall determine (but not less often than quarterly), in the
following order of priority:
(a) first, to any Member who made a Default Loan, to the
payment of accrued and unpaid interest, and the then outstanding principal
balance of, any Default Loan, such distribution to be proportion to the
aggregate amount of interest, and the principal, owed. If more than one Member
participates in the making of a Default Loan, then distributions to such Members
on account of this Section 8.1(a) shall be made in proportion to the amounts so
loaned. If there shall be more than one instance in which a Default Loan has
been made, then Default Loans shall be repaid in the order in which they shall
have been outstanding the longest;
(b) second, to the Members in an amount equal to and in
proportion to their Unrecovered Additional Contributions;
(c) next, to the Members in an amount sufficient to give them
a ten percent (10%) return compounded annually on the aggregate of their Capital
Contributions and Additional Contributions;
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(d) next, to Sonia Seidman and the Managing Member in an
amount sufficient to pay to them, in the aggregate, up to twenty percent (20%)
of the net annual profits of the Company for each year calendar that the Company
is in existence to be paid 5% to the Managing Member and 15% to Sonia Seidman;
and
(e) the balance, if any, shall be distributed to the
Members in proportion to their Interests.
8.2 Notwithstanding Section 8.1, Net Proceeds from a Capital
Transaction which constitutes a liquidation of the Company, together with other
funds remaining to be distributed, shall be distributed to the Members no later
than the later of (a) the end of the taxable year of the Company in which such
liquidation occurs; or (b) within ninety (90) days after the date of such
liquidation event, after payment of all Company liabilities and expenses (or
adequate provision therefor), in accordance with Section 9.1, except that in no
event shall (x) a distribution be made to any Member if, after giving effect to
such distribution, all liabilities of the Company, other than liabilities to
Members on account of their Interests and liabilities for which the recourse of
creditors of the Company is limited to specified property of the Company, exceed
the fair value of the assets of the Company, except that the fair value of
property that is subject to a liability for which the recourse of creditors is
limited shall be included in the assets of the Company only to the extent that
the fair value of the property exceeds that liability and (y) the distribution
to a Member exceed the positive balance in such Member's Capital Account after
giving effect to all allocations to such Member under Article 9 of Net Profits,
Net Losses, and Gain and Loss from Capital Transactions so that liquidation
proceeds shall be distributed in accordance with each Member's positive Capital
Account balance (within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(b) as in effect on the date hereof). If a members shall
receive a distribution that should not have been made based upon the provisions
of Section 8.2 (x), the provisions of Section 42:2B-42 (b) of the act shall
apply . Section 42:2B-42(c) of the Act shall apply to all distributions made to
the Members.
ARTICLE 9
TAX ALLOCATIONS
10.1 Net Profits, Net Losses and any investment tax credit for each
fiscal year or part thereof shall be allocated to the Members in proportion to
their Interests.
10.2 Gain from a Capital Transaction shall be allocated in the
following order:
(a) There shall first be allocated to those Members, if any,
who have deficit balances in their Capital Accounts immediately prior to such
Capital Transaction an amount of such gain equal to the aggregate amount of such
deficit balances, which amount shall be allocated in the same proportion as such
deficit balances.
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(b) There shall next be allocated to each of the Members gain
in proportion to (but not greater than) the amount by which (x) the amount of
Net Losses theretofore allocated to each Member and not theretofore taken into
account under this Section 9.2(b), exceeds (y) the gain allocated to such Member
under Section 9.2(a).
(c) There shall next be allocated to each of the Members gain
equal to the amount by which (x) the aggregate proceeds derived from a Capital
Transaction distributable to each Member in accordance with the provisions of
Section 8.1 or 8.2 other than with respect to Default Loans, as the case may be,
exceeds (y) the positive balance, if any, in such Member's Capital Account after
such Member's Capital Account has been adjusted to reflect the gain allocated to
such Member pursuant to Sections 9.2(a) and 9.2(b); provided, however, that if
there shall be an insufficient amount of gain determined by this Section 9.2(c),
then the gain shall be allocated to the Members in proportion to the respective
amounts determined pursuant to this Section 9.2(c).
(d) Any remaining gain shall be allocated among the
Members in proportion to their
Interests.
(e) If the Company shall realize, upon a Capital Transaction,
gain which is treated as ordinary income under Sections 1245 or 1250 of the
Code, such ordinary income shall be allocated to the Members who receive the
allocation of the depreciation or cost recovery deduction that generated the
ordinary income in the same proportions as such deductions.
(f) Notwithstanding the foregoing, distributions of Income
made to a Member for interest and in repayment of the principal on any Default
Loan shall not be treated as Income for the purpose of allocating gain pursuant
to this Section 9.2 or for any other purpose. Any interest on a Default Loan
shall be treated as a "guaranteed payment" for purposes of Section 707(c) of the
Code.
10.3 Losses from Capital Transactions shall be allocated in the
following order:
(a) There shall first be allocated to those Members, if any,
whose positive balances in their Capital Accounts exceed their Unrecovered
Additional Contributions, an amount of such loss equal to such excess amount,
which amount shall be allocated in the same proportion as such excess amounts.
(b) There shall next be allocated to those Members, if any,
that have positive balances in their Capital Accounts, an amount of such loss
equal to the aggregate amount of such positive balances, which amount shall be
allocated in the same proportion as such positive balances.
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(c) The balance of such loss shall be allocated to the
Members in proportion to their Percentage Interests.
10.4 Notwithstanding the preceding provisions of this Article 10:
(a) Except as provided in sub-section (e) below, no allocation
of loss or deduction shall be made to a Member if such allocation would cause at
the end of any taxable year a deficit in such Member's Adjusted Capital Account
to exceed his allocable share of Minimum Gain; and any such loss or deduction
not allocated to a Member by reason of this Section 9.4 shall be allocated
pro-rata to each other Member if and to the extent that such allocation shall
not create a deficit in such other Member's Adjusted Capital Account in excess
of his allocable share of Minimum Gain; provided, however, that if such
allocation would create such deficit in all Members' Adjusted Capital Accounts
in excess of their share of Minimum Gain, then such allocation shall be made in
accordance with the principles of Treasury Regulation Section 1.704-1(b).
(b) If, during any taxable year, there is a net decrease in
Minimum Gain then, before any other allocations are made for such year, each
Member shall be allocated items of Company income and gain for such year (and,
if necessary, subsequent years) in an amount equal to each Member's share of the
net decrease in Company Minimum Gain (within the meaning of Treasury Regulation
Section 1.704-2(g)(2)) in a manner so as to satisfy the requirements of Treasury
Regulation Section 1.704-2(f).
(c) If, during any taxable year, there is a net decrease in
Company Minimum Gain Attributable to Member to Member Nonrecourse Debt, then,
before any other allocations are made for such year other than those pursuant to
Section 9.4(b) above, each Member with a share of the Company Minimum Gain
Attributable to Member Nonrecourse Debt at the beginning of the year shall be
allocated items of Company income and gain for such year (and, if necessary, for
subsequent years) in an amount equal to each Member's share of the net decrease
in Minimum Gain Attributable to Member Nonrecourse Debt as determined in
accordance with Treasury Regulation Section 1.704-2(i)(4) in a manner so as to
satisfy the requirements of said Treasury Regulation.
(d) If during any taxable year a Member unexpectedly receives
(i) a distribution of cash or property from the Company or (ii) an adjustment or
allocation described in either Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4) as in effect on the date hereof (concerning depletion
allowances with respect to oil and gas properties) or Treasury Regulation
Section 1.704-1 (b) (2) (ii) (d) (5) as in effect on the date hereof (concerning
allocations of loss and deduction in interests change during the year, if an
interest is acquired by gift or if a Member receives certain Company property in
redemption of part or all his interest), and if such adjustment, allocation or
<PAGE>
distribution would cause at the end of the taxable year a deficit balance in
such Member's adjusted capital account in excess of his allocable share of
Minimum Gain, then a pro-rata portion of each item of Company income, including
gross income, and gain for such taxable year (and, if necessary, subsequent
taxable years) shall be allocated to such Member in an amount and in a manner
sufficient to eliminate such excess balance as quickly as possible before any
other allocation is made for such year other than pursuant to Section 9.4(b)
above so as to satisfy the requirements of Treasury Regulation Section
1.704-1(b) (2) (ii) (d) (qualified income offset).
(e) To the extent required by Treasury Regulation Section
1.704-2(i) (1), Member Nonrecourse Debt Deductions for any taxable year shall be
allocated to the Member (or Members) who bear(s) the economic risk of loss of
such Member Nonrecourse Debt.
(f) In the event that any allocation is or has been made to a
Member pursuant to Sections 9.4(a), (b), (c), (d) or (e) above, subsequent items
of income, deduction, gain and loss shall be allocated before any other
allocations are made (subject to the provisions of said Sections) to the Members
in the manner which would result in each Member having a Capital Account balance
equal to what it would have been had the allocation pursuant to said Sections.
(g) Upon the occurrence of an event described in Section
6.4(c), all Company property shall be revalued on the Company's books at fair
market value, Capital Accounts will be adjusted in accordance with Section 6.4
(c), and subsequent allocations of taxable income, gain, loss and deductions
shall, solely for tax purposes, be made necessary so as to take account of the
variation between the adjusted tax basis and the fair market value of such
property in accordance with Section 704 of the Code and the Treasury Regulations
thereunder.
(h) For the purposes of this Article, each Member's "Adjusted
Capital Account" shall equal the Capital Account of each Member (1) reduced at
the end of each taxable year by the sum of (x) the excess of distributions
reasonable expected to be made to such Member over the offsetting increases to
such Member's Member's Capital Account reasonably expected to be made in the
same taxable year as the aforesaid distributions, (y) adjustments expected to be
made to such Member's Capital Account described in Treasury Regulation Section
1.704-1(b) (2) (ii) (d) (4) as in effect on the date hereof (concerning
depletion allowances with respect to oil and gas properties), and (z)
allocations expected to be made described in Treasury Regulation Section 1.704-1
(b) (2) (ii) (d) (5) as in effect on the date hereof (concerning allocations of
loss and deduction if Interests change during the year, if an Interest is
acquired by gift or if a Member receives certain Company property in redemption
of part or all of his Interest in the Company), and (2) increased by the sum of
(i) the amount, if any, which the Member is obligated to restore the Company
upon liquidation of his Interest if a deficit balance exists in his Capital
Account at such time, (ii) the outstanding principal balance of any promissory
<PAGE>
note made by such Member and contributed to the company if such note is not
readily tradable on an established securities market and if such note must be
satisfied within ninety (90) days after the date said Member's Interest is
liquidated and (iii) the sum of (a) the amount the Member would be personally
liable for either as a Member or in his individual capacity as a guarantor or
otherwise, and (b) the economic risk of loss the Member would bear attributable
to any Company liability (as determined in accordance with Treasury Regulation
Section 1.752-2).
(i) In accordance with Section 704(b) and (c) of the Code and
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company (including all or part of any
deemed capital contribution under Section 708 of the Code) shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company and its agreed value.
In the event that Capital Accounts are ever adjusted pursuant to Treasury
Regulation Section 1.704-1(b) (2) to reflect the fair market value of any
Company property, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset and its value as adjusted in the same manner as
required under Section 704(c) of the Code and the Regulations thereunder.
(j) The allocations provided in this Section 10.4 are intended
to comply with the provisions of Section 704(b) of the Code and the regulations
thereunder. However, if any such allocation causes a distortion in the Members'
Interest in contravention of the Members' economic arrangement as reflected in
Article 6, the Company has the authority to make curative allocations to bring
such allocations in accordance with such Member's Interest, as if such
allocations which caused the distortion had not occurred and to bring such
allocations in compliance with Section 794(b) of the Code and regulations
thereunder.
ARTICLE 10
RIGHTS, POWERS AND REPRESENTATIONS OF THE MEMBERS
10.1 All decisions, consents, authorizations and rights in connection
with the business and affairs the company shall be carried on and managed by a
majority in interest of the Members, which shall have full, exclusive and
complete discretion with respect thereto. Any Member or person acting pursuant
to any authority granted to him in writing by a majority in interest of the
Members shall have all necessary and appropriate powers to carry out the
authority so granted, and no other Member or person without such authority so
granted shall have the right to take any action or give any consent, by
affirmative act or acquiescence, to any matter or thing, affecting the Company,
Premises or Project. In furtherance of the foregoing, any Member or person so
authorized as provided above may:
<PAGE>
(a) negotiate, execute, deliver and perform on behalf of, and
in the name of, and in the name of, the Company any and all contracts, deeds,
assignments, deeds of trust, leases, subleases, promissory notes and other
evidences of indebtedness, mortgages, bills of sale, financing statements,
security agreements, easements, stock powers, and any and all other instruments
necessary or incidental to the business of the Company and the financing
thereof,
(b) borrow money, without limit as to amount, and to secure
the payment thereof by mortgage, pledge, or assignment of, or security interest
in, all or any part of the assets then owned or thereafter acquired by the
Company,
(c) effectuate the purpose of the Company as provided in
Article 5 hereof,
(d) establish, maintain and draw upon checking and other
accounts of the Company,
(e) execute any notifications, statements, reports, returns or
other filings that are necessary or desirable to be filed with any state or
Federal agency, commission or authority,
(f) enter into contracts in connection with the business
of the Company,
(g) arrange for facsimile signatures for the Members in
executing and all documents, papers, checks or other writings or legal
instruments which may be necessary or desirable in the Company business, and
(h) execute, ackowledge and deliver any and all contracts,
documents and instruments deemed appropriate to carry out any of the foregoing
purposes and intent of this Operating Agreement.
10.2 In the management of the Company, and with respect to any and all
decisions with respect to the Company and its business and the conduct of its
operations, the Members of the Company shall have a cumulative total of one
hundred (100) votes, and each Member shall have the number of votes equal to
his/her Interest. Wherever and whenever the word "majority" appears in this
Operating Agreement, either as a noun or as an adjective, it shall mean for all
purposes that number of Members whose votes when considered or added together
constitute more than fifty (50) of the total one hundred (100) votes of all the
Members. Any act or decision of any of the Members may be confirmed, overruled
or precluded by the majority of the Members.
<PAGE>
10.3 Each of the Members, on their own behalf and on behalf of anyone
who shall represent their Interests, hereby waives notice of the time, place or
purpose of any meeting at which any matter is to be voted on by the Members or
anyone acting by or for them, waives any requirement that there be such a
meeting and agrees that any action may be taken by consent without a meeting.
10.4 The fact that the Members are directly or indirectly interested in
or connected with any person, firm or corporation employed by the Company to
render or perform a service, or from which or whom the Company may buy
merchandise, material or other property shall not prohibit the Company from
employing such persons, firms or corporations, or from otherwise dealing with
him under such reasonable terms and conditions as the Company may determine.
ARTICLE 11
MANAGING MEMBER
11.1 Notwithstanding any provision contained in Article 10 to the
contrary, the daily affairs of the Company shall be conducted by the Managing
Member who shall the power and authority to make ordinary and usual decisions
concerning the business and affairs of the Company. The Managing Member shall
have the power and authority, on behalf of the Company, to do the following:
(a) open one or more depository accounts and make
deposits into and checks and withdrawals against such accounts;
(b) invest the capital resources of the Company, in amounts
not to exceed one hundred and twenty-five percent (125%) of the capital of the
Company without the prior consent of a majority in interest of the Members, in
stocks, bonds and other securities of publically traded companies (collectively
"Permitted Investments"), including the ability to buy, sell, exchange, swap or
transfer such securities;
(c) open one or more cash or margin brokerage accounts in
the name of the Company for purposes of making Permitted Investments;
(d) obtain insurance covering the business and affairs
of the Company;
(e) commence, prosecute or defend any proceeding in the
Company's name; and
(f) enter into any and all agreements and execute any
and all contracts, documents and instruments necessary or required to
effectuate the foregoing.
<PAGE>
11.2 Notwithstanding any provision contained in this Operating
Agreement to the contrary, it is specifically agreed between the Members that
the Company shall make no investment in Cali Realty Corporation without the
unanimous prior consent of all Members.
11.3 (a) The Managing Member shall perform and discharge his duties as
a manager in good faith, with the care an ordinary prudent person in a like
position would exercise under similar circumstances, and in a manner he
reasonably believes to be in the best interests of the Company. The Managing
Member shall not be liable for any monetary damages to the Company for any
breach of such duties except for: receipt of a financial benefit to which the
Manager is not entitled; voting for or assenting to a distribution to Members in
violation of this Operating Agreement or the Act; a knowing violation of the
Law; fraud; or a willful breach of fiduciary obligations owed to the Members.
(b) The Managing Member shall devote a significant amount of
his time and efforts to furthering the business and investments of the Company
and any other corporations and partnerships formed to invest in the stock in
private and public companies or real estate assets and mortgages. The Managing
Member shall also be permitted to perform consulting and legal services for
Environmental Waste Management Associates, Inc., its principal shareholders,
Richard Greenberg, and for Glenn Woo and other real estate related clients. In
compensation equal to $125,000, payable quarterly.
11.4 Unless otherwise provided by law or expressly assumed, a person
who is a Member or manager, or both, shall not be liable for the acts, debts or
liabilities of the Company.
11.5 The Company shall indemnify the Managing Member and each other
Member and may indemnify and employee or agent of the Company who was or is a
party or is threatened to be made a party to threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, and whether formal or informal, other than action by or in the
right of the Company, by reason of the fact that such person is or was a
manager, employee or agent of the Company against expenses, including attorneys
fees, judgements, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with the action, suit or
proceeding, if the person acted in good faith, with the care an ordinary prudent
person in a like position would exercise under similar circumstances, and in a
manner that such person reasonably believed to be in the best interests of the
Company and with respect to a criminal action or proceeding, if such person had
<PAGE>
no reasonable cause to believe such person's conduct was unlawful. To the extent
that a Member, employee or agent of the Company has been successful on the
merits or otherwise in defense of an action, suit or proceeding or in defense of
any claim, issue or other matter in the action, suit or proceeding, such person
shall be indemnified against actual and reasonable expenses, including attorneys
fees incurred by such person in connection with the action, suit or proceeding
and any action, suit or proceeding brought to enforce the mandatory
indemnification provided herein. Any indemnification permitted under this
Article, unless ordered by a court, shall be made by the Company only as
authorized in the specific case upon a determination that the indemnification is
proper under the circumstances because the person to be indemnified has met the
applicable standard of conduct and upon an evaluation of the reasonableness of
expenses and amount paid in settlement. This determination and evaluation shall
be made by a majority vote of the Members who are not parties or threatened to
be made parties to the action, suit or proceeding. Notwithstanding the foregoing
to the contrary, no indemnification shall be provided to the Managing Member or
any other Member, employee or agent of the Company for or in connection with the
receipt of a financial benefit to which such person is not entitled, voting for
or assenting to a distribution to Members in violation of this Operating
Agreement of the Act, or a knowing violation of law.
ARTICLE 12
BOOKS, RECORDS AND REPORTS
12.1 At all times during the continuance of the Company, the Company
shall keep or cause to be kept full and true books of account, in which shall be
entered fully and accurately each transaction of the Company. The books of
account, together with an executed copy of the Certificate of Formation of the
Company and any amendments thereto, shall at all times be maintained at the
principal office of the Company and shall be open to inspection and examination
by the members or their representatives at reasonable hours and upon reasonable
notice. For purpose hereof, the Company shall keep its books and records on the
same method of accounting employed for tax purposes.
12.2 The fiscal year of the Company shall be the calendar year. Within
a reasonable time after the end of each fiscal year and in any event on or
before thirty (30) days prior to the filing date for individual tax returns
(including extensions), the accountants for the Company shall deliver to each
Member (a) upon request of a Member, an annual statement of the Company's
accountants, and (b) a report or a tax return setting forth such Member's share
of the Company's profit or loss for such year and such Member's allocable share
of all items of income, gain, loss, deduction and credit for Federal income tax
purposes.
<PAGE>
12.3 The Company shall also cause to be prepared and filed all Federal,
state and local tax returns required of the Company. All books, records, balance
sheets, statements, reports and tax returns required pursuant to Section 12.1
and 12.2 hereof shall be prepared at the expense of the Company.
ARTICLE 13
BANK ACCOUNTS
13.1 All funds and income of the Company (a) shall be deposited in the
name of the Company in such bank account or accounts as shall be designated by
the Managing Member, (b) shall be invested in such Permitted Investments as
Managing Member shall determine and (c) shall be kept separate and apart from
the funds of any other individual or entity.
13.2 Withdrawals from any such bank account or accounts shall be made
upon the signature of any person so designated by the Company in writing.
ARTICLE 14
RIGHTS AND DUTIES OF MEMBERS
14.1 Subject to duties and obligations of the Managing Member, it is
expressly understood that each Member may engage in any other business or
investment, whether or not in direct competition with the business of the
Company, and neither the Company nor any other Member shall have any rights in
and to said businesses or investments, or the income or profits derived
therefrom.
14.2 The Managing Member may employ, on behalf of the Company, such
persons, firms or corporations, including those firms or corporations in which
any Member has an interest, and on such terms as the Managing Member shall deem
advisable in the operation and management of the business of the Company,
including, without limitation, such accountants, attorneys, architects,
engineers, contractors, appraisers and experts.
14.3 No Member shall be personally liable to the Company or any of the
other Members for any act or omission performed or omitted by him, except if
such act or omission was attributable to willful misconduct or gross negligence.
14.4 Each Member (and each former Member) shall be indemnified and
saved harmless by the Company from any loss, damage or expense incurred by him
by reason of any act or omission performed or omitted by him, except if such act
or omission was attributable to willful misconduct or gross negligence.
<PAGE>
ARTICLE 15
TAX MATTERS
15.1 (a) Notwithstanding any provisions hereof to the contrary, each of
the Members hereby recognizes that the Company will be a partnership for United
States federal income tax purposes and that the Company will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, that the filing of U.S. Partnership Returns of Income shall not be
construed to extend the purposes of the company or expand the obligations or
liabilities of the Members. At the request of any Member, the Company shall file
an election under Section 754 of the Code.
(b) The Company shall engage an accountant (the "Accountant")
to prepare at the expense of the company all tax returns and statements, if any,
which must be filed on behalf of the Company regarding the Premises and the
operation, dissolution and liquidation of the Company with any taxing authority.
(c) Lawrence Seidman is designated Tax Matters Member (herein
"TMM") for purposes of Chapter 63 of the Code and the Members will take such
actions as may be necessary, appropriate, or convenient to effect the
designation of Lawrence Seidman as TMM. The TMM shall attempt to comply with the
responsibilities outlined in this Section 15.1 and in Sections 6222 through 6231
of the Code (including any Treasury Regulations promulgated thereunder).
ARTICLE 16
BANKRUPTCY OF A MEMBER
16.1 Unless a majority in interest of the Members shall elect
otherwise, a Member shall cease to be a Member of the Company:
(a) if he/she/it:
(i) Makes an assignment for the benefit of
creditors;
(ii) Files a voluntary petition in bankruptcy;
(iii) Is adjudged bankrupt or insolvent, or has
entered against him an order for relief, in any bankruptcy or insolvency
proceeding;
(iv) Files a petition or answer
seeking for himself/herself/itself any
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation;
<PAGE>
(v) Files an answer or other pleading
admitting or failing to contest the
material allegations of a petition filed against him/
her/it in any proceeding of this nature; or
(vi) Seeks, consents to or acquiesces in
the appointment of a trustee,
receiver or liquidator of the Member or of all or
any substantial part of his/her/its
properties; or
(b) One hundred twenty (120) days after the commencement of
any proceeding against the Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, if the proceeding has not been dismissed, or within
ninety (90) days after the appointment without his consent or acquiescence of a
trustee, receiver or liquidator of the Member or of all or any substantial part
of his/her properties, the appointment is not vacated or stayed, or within
ninety (90) days after the expiration of any such stay, the appointment is not
vacated.
ARTICLE 17
ASSIGNABILITY, TRANSFER OR PLEDGE OF
INTERESTS; RESIGNATION OF MEMBER
17.1 (a) No Member shall have the right to assign, convey, sell or
otherwise transfer or dispose of, or pledge, mortgage, hypothecate or otherwise
encumber his/her/its Interest, whether record or beneficial interest thereof,
without the prior written consent of the Company. Notwithstanding the preceding
sentence, but subject to the restrictions on transferability required by law, or
set forth in any instrument or agreement by which the Company may be bound, or
which may be contained in this Operating Agreement, an individual Member, if
any, may, without any consent, assign, convey, sell or otherwise transfer or
dispose of all or any portion of his interest in the Company to any one or more
of the members of his/her immediate family or families (defined for the purposes
of this Operating Agreement as a mother, father, sister, brother, son, daughter,
stepson, stepdaughter or spouse (in each instance whether by marriage or
otherwise)) and/or a trust or other entity for the benefit thereof or
themselves, by a written instrument of assignment and assumption, provided that
the instrument of transfer provides for the assumption of the assignor's
liabilities and obligations hereunder and has been duly executed by the assignor
of such interest and by the transferee. The Member shall notify the Company of
any assignment, transfer or disposition of a beneficial interest in any interest
of the Member which occurs without a transfer of record ownership, although such
notification, or the absence of a response thereto, shall not be deemed a
consent thereof.
(b) An assignee or transferee of any portion of the interest
of the Member shall be entitled to receive allocations and distributions
<PAGE>
attributable to the interest acquired by reason of such assignment from and
after the effective date of the assignment of such interest to such assignee;
however. anything herein to the contrary notwithstanding, the Company shall be
entitled to treat the assignor of such interest of the Member as the absolute
owner thereof in all respects, and shall incur no liability for allocations of
net income, net losses, or gain or loss on sale of Company property, or
transmittal of reports and notices required to be given to Members hereunder
which are made in good faith to such assignor until such time as the written
assignment has been received by the Company, approved and recorded on its books
and the effective date of the assignment has passed. Provided that the Company
has actual notice of any assignment of the interest of the Member, the effective
date of such assignment on which the assignee shall be deemed an assignee of
record shall be the date set forth on the written instrument of assignment.
(c) Any assignment, sale, exchange, transfer or other
disposition in contravention of any of the provisions of this Article 17 and
Article 18 hereof shall be void and ineffective and shall not bind or be
recognized by the Company.
(d) In the event that there shall be more than one assignee,
transferee, representative or other successor in interest as permitted herein
(collectively, the "Transferees") and the Member as of the date of this
Operating Agreement shall remain a Member, then the Member shall be authorized
to act, and shall so act, on behalf of the Member and all of the Transferees
acting as such by, through or under the Member. In the event that there shall be
more than one Transferee, and the Member as of the date of this Operating
Agreement shall no longer be a Member, then the Company must be advised by the
Member whose interest is the subject of such event or failing which by a
two-thirds (2/3) majority in interest of those holding any portion of the
interests of the Member, of one person to act on behalf of all the Transferees.
The Member, if the first sentence of this paragraph shall be applicable, or the
person so noted to the Company, if the second sentence of this paragraph shall
be applicable, shall be authorized to act, and shall so act, for all of the
Transferees, all of whom shall be bound by any decision or action taken by such
person, and the Company, the Company and all of the other Members, shall be
entitled to rely on the decisions or actions taken by such person. Until the
Company shall be advised as to the identity of such person, (i) the Transferees
shall be entitled only to distributions and tax allocations as provided in
Article 8 and 9 hereof, but shall have no right, power or authority with respect
to any decision making reserved herein to the Members or any of them and (ii)
wherever in this Operating Agreement provision shall be made for the Members to
make decisions with respect to Company matters, the interests of the Member, as
transferred to the Transferees, shall not be included in determining whether the
requisite interest of members have consented to or approved of such decision.
<PAGE>
17.2 Without the prior written consent of all Members and other than as
provided in Section 6.1(b) above, a Member may not resign from the Company prior
to the dissolution and winding up of the Company.
ARTICLE 18
ADMISSION OF SUBSTITUTED MEMBERS;
DEATH OR INCAPACITY; FURTHER CONDITIONS
18.1 No assignment or transfer of all or any part of the interest of a
Member permitted to be made under this Operating Agreement shall be binding upon
the Company unless and until a duplicate original of such assignment or
instrument of transfer, duly executed and acknowledged by the assignor and the
transferee, has been delivered to the Company.
18.2 As a condition to the admission of any substituted Member, as
provided in Article 17 hereof, the person so to be admitted shall execute and
acknowledge such instruments, in form and substance reasonably satisfactory to
the Company, as a majority in interest of the Members may deem necessary or
desirable to effectuate such admission and to confirm the agreement of the
person to be admitted as a Member to be bound by all of the covenants, terms and
conditions of this Operating Agreement, as the same may have been amended.
18.3 Any person to be admitted as a member pursuant to the provisions
of this Operating Agreement shall, as a condition to such admission as a Member,
pay all reasonable expenses in connection with such admission as a Member,
including, but not limited to, the cost of the preparation, filing and
publication of any amendment to this Operating Agreement and/or Certificate of
Formation.
18.4 In the event of the death or adjudication of incompetency of a
Member, or upon the happening of any event described in Article 16, the
executor, administrator, committee or other legal representative of such Member,
or the successor in interest of such Member, shall succeed only to be right of
such Member to receive allocations and distributions hereunder, and may be
admitted to the Company as a Member in the place and stead of the deceases,
incompetent, or bankrupt Member in accordance with this Article 18, but shall
not be deemed to be a substituted Member unless so admitted. Such event,
however, shall cause a termination or dissolution of the Company within one
hundred twenty (120) days of such event unless a majority in interest of the
Members shall elect to continue the Company within said one hundred twenty (120)
day period.
18.5 Notwithstanding anything to the contrary contained in this
Operating Agreement, no sale or exchange of an interest in the Company may be
made if the interest sought to be sold or exchanged, when added to the total of
all other interests sold or exchanged within the period of twelve (12)
<PAGE>
consecutive months prior thereto, results in the termination of the Company
under Section 708 of the Code without the prior written consent of a majority in
interest of the Members.
18.6 In the event of a permitted transfer of all or part of the
interest of a Member, the Company shall, if requested, file an election in
accordance with Section 754 of the Code or a similar provision enacted in lieu
thereof, to adjust the basis of the Property of the Company. The Member
requesting said election shall pay all costs and expenses incurred by the
Company in connection therewith.
ARTICLE 19
LIQUIDATION
19.1 Upon the dissolution of the Company, the Company shall be
liquidated and its assets distributed as required by Section 42:2B-51 of the
Act.
19.2 The assets of the Company shall be liquidated as promptly as
possible, but in an orderly and businesslike manner so as not to involve undue
sacrifice.
19.3 In the event that any proceeds are to be distributed to the
Members same shall be distributed, if practicable, no later than the later of
(i) the end of the taxable year of the Company in which such liquidation occurs;
or (ii) within ninety (90) days after the date of such liquidation event.
19.4 In any liquidation, the Company's assets shall be used first to
pay the costs and expenses of the dissolution and liquidation. The liquidation
trustee (which may be a Member) shall be entitled to establish reserves to
provide for any contingent or unforeseen liabilities or obligations of the
Company.
19.5 With respect to distributions to Members, said distributions
shall be made:
(a) first, to the repayment of any accrued and unpaid interest
on, and the then outstanding principal balance of, any Default Loan, in
proportion to the aggregate amount of interest, and then principal, owed, and if
more than one Member shall have made a Default Loan, then in proportion to the
amounts so loaned. If there shall be more than one instance in which a Default
loan has been made, the Default loans shall be repaid in the order in which they
shall have been outstanding the longest;
(b) second, to the payment of an obligation owed
pursuant to Section 11.3 (c).
(c) third, to all Members in proportion to and to the extent
of any remaining positive balances in such Member's Capital Account
after giving effect to all locations to such Member under Article 10 of
this Operating Agreement so that liquidation proceeds shall be
<PAGE>
distributed in accordance with each Member's positive Capital Account
balance (within the meaning of Treasury Regulation Section 1.704-1(b)
(2) (ii) (b) as in effect on the date hereof); and
(d) last, to all Members pro rata in accordance with
their Company Interests.
ARTICLE 20
GENDER
20.1 All terms and words used in this Operating Agreement, regardless
of the sense or gender in which they are used, shall be deemed to include each
other sense and gender unless the context requires otherwise.
ARTICLE 21
FURTHER ASSURANCES
21.1 The Members agree immediately and from time to time to execute,
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and to do all such other
acts and things as may be required by law, or as may, in the opinion of a
majority in interest of the Members, be necessary or advisable to carry out the
intent and purposes of this Operating Agreement.
ARTICLE 22
COVENANT AGAINST PARTITION
22.1 The Members, on behalf of themselves, their legal representatives,
heirs, successors and assigns, hereby specifically renounce, waive and fofeit
all rights whether arising under contract, statute, or by operation of law, to
seek, bring, or maintain any action for partition in any court of law or equity
pertaining to any real property which the Company may now or in the future own,
regardless of the manner in which title to any such property may be held.
ARTICLE 23
NOTICES
23.1 Unless otherwise specified in this Operating Agreement, all
notices, demands, requests or other communications which any of the parties to
this Operating Agreement may desire or be required to give hereunder
(hereinafter referred to collectively as "Notices") shall be in writing and
shall be given by mailing the same by postage prepaid certified or registered
mail, return receipt requested, or by nationally recognized overnight courier to
the appropriate Member at the address set forth in this Operating Agreement.
Notices given in compliance with the provisions of this Article shall be deemed
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given one (1) business day after delivery to a nationally recognized overnight
courier or four (4) business days after mailing in a repository of the United
States Postal Service.
ARTICLE 24
APPLICABLE LAW
24.1 The parties agree that the parties shall be governed by, and this
Operating Agreement construed in accordance with, the laws of the State of New
Jersey applicable to agreements made and to be performed in such state and that
all claims and suits shall be heard in the courts located in the State of New
Jersey.
ARTICLE 25
CAPTIONS
25.1 All section titles or captions contained in this Operating
Agreement are for convenience only and shall not be deemed a part of this
Operating Agreement.
ARTICLE 26
COUNTERPARTS
26.1 This Operating Agreement may be executed in counterparts and each
counterpart so executed by each Member shall constitute and original, all of
which when taken together shall constitute one agreement, notwithstanding that
all the parties are not signatories to the same counterpart.
ARTICLE 27
BINDING EFFECT
27.1 This Operating Agreement may not be changed, modified, waived or
discharged, in whole or in part, unless in writing and signed by all of the
Members. This Operating Agreement shall be binding upon the Members and their
respective executors, administrators, legal representatives, heirs, successor
and assigns. The singular of any defined term or term used herein shall be
deemed to include the plural.
ARTICLE 28
PARTIAL INVALIDITY
28.1 If any term or provision of this Operating Agreement or the
application thereof to any person or circumstance shall to any extent be invalid
<PAGE>
or unenforceable, the reminder of this Operating Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby and each term
and provision of this Operating Agreement shall be valid and enforced to the
fullest extent permitted by law.
ARTICLE 29
INTEGRATION
29.1 This Operating Agreement is the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
relative to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Operating
Agreement as of the day and year first above written.
/S/ Lawrence Seidman
/S/ Sonia Seidman
/S/ SEIDCAL ASSOCIATES
By:
/S/ Angelo R. Cali, Partner
/S/ Paul Schmidt
/S/ Richard Greenberg
<PAGE>
SCHEDULE A
Required Contributions
Lawrence Seidman
$50,000
Sonia Seidman
$200,000
SEIDCAL Associates
$1,500,000
Paul Schmidt
$100,000
Richard Greenberg
$250,000
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SCHEDULE B
PERCENTAGE INTEREST
Lawrence Seidman:
%
Sonia Seidman:
%
SEIDCAL Associates:
%
Paul Schmidt:
%
Richard Greenberg:
%
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SCHEDULE B
EXAMPLE OF THE OPERATION OF SECTION 7.3
Assume the following facts:
(a) The interests are as follows:
A 10%
B 30%
C 60%
(b) The aggregate capital contributions made by the Members in
proportion to their respective interests is $2,000,000.
(c) The Company requires additional funds of $1,000,000.
(d) A and B each contribute their Additional Contributions to the
Company ($100,000 and $300,000, respectively) and C fails to contribute his
Additional Contribution ($600,000).
(e) B contributes C's Additional Contribution to Company.
The amount that C's Interest is decreased and the amount that B's
Interest is increased is computed as follows:
(i) Multiply the amount of the contribution not made by C
($600,000) by 200% resulting in a product of $1,200,000;
(ii) Divide the result of (i) above ($1,200,000) by the aggregate
amount of all capital
contributions made by the Members ($3,000,000), resulting in a product of .40;
(iii) Convert the product arrived at in computation (ii) above (.40) to
a percentage (by multiplying the same by 100) resulting in 40%. Subtract such
percentage from the Company Interest of C (40%) resulting in a new Interest for
C of 20%; and
(iv) Increase the Interest of B (30%) by adding thereto the same
Percentage that was subtracted from Member C (40%) resulting in a new Interest
for B of 70%.
<PAGE>
FIRST AMENDMENT TO OPERATING AGREEMENT
FOR SEIDMAN & ASSOCIATES, L.L.C.
THIS AMENDMENT is made on July , 1998, by and between LAWRENCE SEIDMAN,
having an address at 19 Veteri Place, Wayne, New Jersey 07470, SONIA SEIDMAN,
having an address at 19 Veteri Place, Wayne, New Jersey 07470; SEIDCAL
ASSOCIATES, L.L.C., a New Jersey limited liability company, having an address
c/o Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016;
PAUL SCHMIDT, having an address at 159 Clinton Place, Hackensack, New Jersey
07601; and RICHARD GREENBERG, having an address at 1235A Route 23 South, Wayne,
New Jersey 07474 (hereinafter referred to collectively as the "Members").
W I T N E S S E T H:
WHEREAS, the Members previously formed a limited liability company known as
Seidman & Associates, L.L.C. (the "Company") pursuant to the New Jersey Limited
Liability Company Act; and
WHEREAS, the Members entered into an Operating Agreement for the Company,
dated November 1994; and
WHEREAS, the Members desire to amend the Operating Agreement, pursuant to
Article 27 thereof, in accordance with the terms and provisions set forth below.
NOW, THEREFORE, the Members do hereby agree as follows:
1. INCORPORATION BY REFERENCE
Subject to the provisions of this Amendment, the definitions, terms and
conditions of the Operating Agreement are incorporated in this Amendment by
reference in the same manner and to the same extent as if such definitions,
terms and conditions were fully set forth in this Amendment.
2. AMENDMENT OF OPERATING AGREEMENT
2.1 Subparagraph 4.1(a) of the Operating Agreement be and the same is
hereby amended to read as follows:
4.1 The Company shall commence upon the filing of the Certificate of
Formation, and shall continue in full force and effect until May 1, 2024,
provided, however, that the Company shall be dissolved prior to such date upon
the happening of any of the following events:
(a) The mutual written consent of the Members to dissolve the Company;
provided, however, that the Company may not be dissolved by mutual consent prior
to December 31, 2000.
2.2 Subparagraph 11.3(c) of the Operating Agreement be and the same is
hereby amended to read as follows:
The Managing Member may be removed or replaced
any any time after December 31, 2000 by a majority in
interest of the Members, but if the Managing Member
is removed, he shall be entitled to receive $315,000.00
reduced by the payments already received pursuant
to Section 11.3(b), together with any other fees earned
prior to his removal.
2.3 Except as modified by Subparagraphs 2.1 and 2.2 of this Agreement, all
of the terms and conditions of the Operating Agreement shall remain in full
force and effect.
3. COVENANT OF FURTHER ASSURANCES
The Members agree that they shall execute and deliver any and all
additional writings, instruments, and other documents and take such further
action as shall reasonably be required in order to effectuate the provisions of
this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Operating Agreement as of the day and year first above written.
-----------------------
LAWRENCE SEIDMAN
-----------------------
SONIA SEIDMAN
[SIGNATURES CONTINUED ON NEXT PAGE]
SEIDCAL ASSOCIATES, L.L.C.
By:----------------------
-----------------------
Brant B. Cali, Member
-----------------------
PAUL SCHMIDT
-----------------------
RICHARD GREENBERG
LAWRENCE B. SEIDMAN, ESQ.
Lanidex Executive Center
100 Misty Lane
P. O. BOX 5430
Parsippany, New Jersey 07054
(973) 560-1400
March 30, 1999
Mr. Brant Cali, Executive Vice President
Mack-Cali Real Estate Corporation
11 Commerce Drive
Cranford, NJ 07016
Dear Brant:
This will confirm the agreement reached last week with Angelo
and John whereby my annual management fee from Seidman & Associates, LLC,
provided for in 11.3(b) of the Operating Agreement, shall be increased from
$125,000 to $250,000.
Very truly yours,
LAWRENCE B. SEIDMAN
LS:rr
