<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
I.C.H. Corporation
(Name of Issuer)
Common Stock $0.01 par value
(Title of Class of Securities)
44926L300
(CUSIP Number)
Lloyd I. Miller, III, 4550 Gordon Drive, Naples, Florida 33940 941-262-8577
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 14, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP NO. 44926L300
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lloyd I. Miller, III ###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00**
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 102,282***
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING 60,798***
PERSON
WITH 9 SOLE DISPOSITIVE POWER
102,282***
10 SHARED DISPOSITIVE POWER
60,798***
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,080
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8%
14 TYPE OF REPORTING PERSON
IN-IA**
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** See response to Item 3, herein.
*** See response to Item 5(b), herein.
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1
ORIGINAL REPORT ON SCHEDULE 13D
Item 1. Security and Issuer
This statement relates to the Common Stock $0.01 par value (the "Shares")
of I.C.H. Corporation, a Delaware corporation (the "Company"), which has its
principal executive offices at 9404 Genesee Avenue, LaJolla, California 92037.
Item 2. Identity and Background
This statement is filed by Lloyd I. Miller, III ("Miller"). Miller's
principal business address is 4550 Gordon Drive, Naples, Florida 33940. Miller
is a registered Investment Adviser under the Investment Advisers Act of 1940, as
amended. Miller's principal occupation is providing Investment Advisory
services. During the past five years, Miller has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) and
has not been a party to civil proceedings of a judicial or administrative body
of competent jurisdiction as a result of which Miller was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Miller is a United States citizen.
Item 3. Source and Amount of Funds or Other Considerations.
Miller is the Investment Adviser to Trust A-1, Trust A-3 and Trust A-4
(the "Trusts"). The Trusts were created pursuant to a Declaratory Judgement,
signed by the Honorable Wayne F. Wilke for the Court of Common Pleas, Probate
Division, Hamilton County, Ohio, on October 27, 1992, pursuant to which Trust A
was split into four separate trusts (Trust A-2 is not relevant for the purpose
of this filing). Trust A was created pursuant to an Amended and Restated Trust
Agreement, dated September 20, 1983 (the "Trust Agreement"), Miller was named as
advisor to PNC Bank, Ohio, N.A. (formerly The Central Trust Company, N.A.,
Cincinnati, Ohio), the Trustee named in the Trust Agreement. Such appointment
became effective on April 22, 1990, the date of death of Lloyd I. Miller, the
Grantor of Trust A. All of the Shares purchased by Miller as Investment Adviser
to the Trusts (the "Trust") were purchased by funds generated and held by the
Trusts. The purchase price for the Shares was $6,525.00 for Trust A-1,
$62,455.96 for Trust A-3 and $138,524.38 for Trust A-4.
Pursuant to the Operating Agreement of Milfam LLC (the "Operating
Agreement"), dated December 10, 1996, Miller is the manager of Milfam LLC, an
Ohio limited liability company, established on December 10, 1996. Pursuant to
the Milfam I, L.P. Partnership Agreement (the "Partnership Agreement"), dated
December 11, 1993, Milfam LLC is the managing general partner of Milfam I, L.P.,
a Georgia limited partnership, established on December 11, 1996. All of the
Shares purchased by Miller on behalf of Milfam I, L.P. were purchased with money
contributed to Milfam
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2
I, L.P. by its partners (as identified on the signature page of Exhibit 99.3,
attached hereto), or money generated and held by Milfam I, L.P. The purchase
price for the Shares was $381,802.43
The Company emerged from Chapter 11 bankruptcy on February 19, 1997 (the
"Effective Date"), pursuant to a plan of reorganization confirmed on February 7,
1997 (the "Plan"). Fifteen thousand shares of the "old" Preferred Stock were
purchased by Trust A-1 prior to February 17, 1997 and, pursuant to the Plan,
were subsequently exchanged for three thousand Shares currently held by Trust
A-1. Ten thousand, two hundred and ninety shares of the "old" Preferred Stock
were purchased by Trust A-3 prior to February 17, 1997 and, pursuant to the
Plan, were subsequently exchanged for two thousand and fifty-eight Shares
currently held by Trust A-3. Three Hundred and Fifty Thousand shares of the
"old" Common Stock were purchased by Trust A-3 prior to February 17, 1997 and,
pursuant to the Plan, were subsequently exchanged for nine thousand, four
hundred and fifteen Shares currently held by Trust A-3.
Item 4. Purpose of the Transaction.
Miller considers his beneficial ownership reported herein of the 163,080
Shares as an investment in the ordinary course of business. From time to time,
Miller may acquire additional Shares or dispose of all of some of the Shares
which he beneficially owns. Miller has no specific plan or proposal which
relates to, or could result in, any of the matters referred to in Paragraphs (a)
through (j), inclusive of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) Miller beneficially owns 163,080 Shares (5.8% of the outstanding
Shares) pursuant to the Trust Agreement, with the respect to the Shares held of
record by the Trusts and pursuant to the Partnership Agreement and the Operating
Agreement, with respect to the Shares held of record by Milfam I, L.P. As of the
date hereof, 3,000 Shares are owned of record by Trust A-1; 15,200 Shares are
owned of record by Trust A-3; 42,598 Shares are owned of record by Trust A-4;
and 102,282 are owned of record by Milfam I, L.P.
(b) Miller has shared voting power and shared dispositive power for all
such Shares held of record by the Trusts and sole voting power and sole
dispositive power for all such Shares held of record by Milfam I, L.P. (see Item
6).
(c) The following tables detail the purchases by Trust A-3, Trust A-4 and
Milfam I, L.P. effected during the sixty days prior to this filing, Trust A-1
did not purchase any Shares during such period. All of the transactions were
open market transactions.
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3
<TABLE>
<CAPTION>
TRUST A-3
---------
DATE OF NUMBER OF SHARES PRICE PER SHARE
------- ---------------- ---------------
TRANSACTION
-----------
<S> <C> <C>
8/11/97 4,500 4.901
8/12/97 4,700 4.086
8/14/97 6,000 4.140
</TABLE>
<TABLE>
<CAPTION>
TRUST A-4
---------
DATE OF NUMBER OF SHARES PRICE PER SHARE
------- ---------------- ---------------
TRANSACTION
-----------
<S> <C> <C>
6/4/97 10,000 3.415
6/3/97 2,000 3.280
6/3/97 16,500 3.535
6/10/97 2,058 3.437
6/11/97 1,023 3.548
</TABLE>
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4
<TABLE>
<CAPTION>
MILFAM I, LP
------------
DATE OF NUMBER OF SHARES PRICE PER SHARE
------- ---------------- ---------------
TRANSACTION
-----------
<S> <C> <C>
6/5/97 16,500 3.535
6/18/97 7,851 3.539
6/26/97 8,240 3.541
6/27/97 5,253 3.414
7/8/97 4,238 3.290
7/9/97 7,500 3.283
7/14/97 7,500 3.228
7/23/97 900 4.125
7/30/97 4,700 4.140
7/31/97 2,500 4.149
8/1/97 4,400 4.140
8/6/97 5,500 4.140
8/7/97 2,100 4.028
8/12/97 2,600 4.148
8/13/97 3,600 4.017
8/14/97 1,700 4.035
8/18/97 6,100 4.056
8/21/97 11,100 4.140
</TABLE>
(d) Milfam I, L.P. has the right to receive dividends from, and
proceeds of the sale of 102,282 Shares; Trust A-1 has the right to receive
dividends from, and proceeds of the sale of 3,000 Shares; Trust A-3 has the
right to receive dividends from, and proceeds of the sale of 15,200 Shares; and
Trust A-4 has the right to receive dividends from, and proceeds of the sale of
42,598 Shares. Neither Milfam I, L.P. nor the Trusts (i) have the right to
direct such dividends or proceeds or (ii) own 5% or more of the outstanding
Shares.
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5
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
The Trust Agreement provides:
The Trustee shall not make any investments, reinvestments or changes in
investments of the assets of Trust A, Trust B, Trust C or Trust D without
first consulting with and obtaining the advice of the advisor. The Trustee
need not act in accordance with the advice and counsel of the advisor, but
if it does so, the Trustee shall not be liable to any person for or as a
result of any action or failure to act if in accordance with such advice
and counsel ... The Trustee need not obtain the advice and counsel of the
advisor if the Trustee requests such advice and counsel in writing and if
the advisor fails to reply to the Trustee within five days from the date
of such request by telephone, telegram, mail or in person.
See response to Item 5 for the number of Shares held by each of Trusts.
Miller is the advisor to all such Trusts.
The Operating Agreement provides:
While Lloyd I. Miller, III serves as manager, he shall have complete
control over all of the affairs of [Milfam LLC] and need not seek the
consent or approval of any Member with respect to any action.
The Partnership Agreement provides:
The General Partner shall have the full and exclusive right to manage and
control the business and affairs of [Milfam I, L.P.] and to make all
decisions regarding the affairs of [Milfam I, L.P.]. In the course of
such management, the General Partner may acquire, encumber, hold title
to, pledge, sell, release or otherwise dispose of Partnership Property
and interests therein when and upon such terms as it determines to be in
the best interest of the [Milfam I, L.P.]. The General Partner shall have
all of the rights, powers and obligations of a partner of a partnership
without limited partners, except as otherwise provided under the Act.
See response to Item 5 for the number of Shares held by Milfam I, L.P.
Milfam LLC is the General Partner of Milfam I, L.P. and Miller is the manager of
Milfam LLC.
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6
Item 7. Materials to be Filed as Exhibits:
Exhibit Document
------- --------
99.1. Amended and Restated Trust Agreement, dated September 20,
between Lloyd I. Miller and PNC Bank, Ohio, N.A. (formerly The Central Trust
Company, N.A., Cincinnati, Ohio).
99.2. Operating Agreement of Milfam LLC, dated December 10, 1996.
99.3. Milfam I, L.P. Partnership Agreement, dated December 11,
1996.
After reasonable inquiry and to the best knowledge and belief of the
undersigned, it is hereby certified that the information set forth in this
statement is true, complete and correct.
Dated: August 28, 1997
By: /s/ Lloyd I. Miller, III
------------------------------------
Lloyd I. Miller, III
<PAGE> 9
7
EXHIBIT INDEX
Exhibit Document
------- --------
99.1. Amended and Restated Trust Agreement, dated September 20,
between Lloyd I. Miller and PNC Bank, Ohio, N.A. (formerly The Central Trust
Company, N.A., Cincinnati, Ohio).
99.2. Operating Agreement of Milfam LLC, dated December 10, 1996.
99.3. Milfam I, L.P. Partnership Agreement, dated December 11,
1996.
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AMENDED AND RESTATED TRUST AGREEMENT
This instrument contains all of the terms of an Amended and Restated
Trust Agreement made on September 20, 1983, by Lloyd I. Miller (the "Grantor"),
and The Central Trust Company, N.A., Cincinnati, Ohio (the "Trustee"). The
Grantor originally entered into a Trust Agreement with the Trustee on September
19, 1980. The Grantor reserved the right to amend the Agreement and now desires
to exercise such right by restating its provisions. Therefore, the Agreement is
hereby amended and restated in its entirety to read as follows:
SECTION 1
TRUST PROPERTY
1.1 The Trustee acknowledges that at the time of execution of this
Agreement, the Trustee is holding property which has previously been delivered
to the Trustee. The Trustee agrees to continue to hold such property in
accordance with the terms set forth in this Agreement.
1.2 The Trustee agrees that the Grantor, the Grantor's attorney-in-fact
or any other person, firm or corporation may from time to time add other
property to the trust estate. The Trustee agrees to accept and hold any such
additional property, provided that the Trustee may lawfully do so and provided
that it is of the character normally acceptable by trustees generally, whether
such property is conveyed or delivered to the Trustee or whether it is devised
or bequeathed to the Trustee by will.
SECTION 2
RIGHTS RETAINED BY GRANTOR
2.1 The Grantor may revoke this Agreement or, from time to time, amend
its terms. Any revocation or amendment shall be effective upon receipt by the
Trustee of a writing executed by the Grantor.
2.2 The Grantor may withdraw from time to time, upon prior written
notice to the Trustee, any or all of the property which constitutes the trust
estate.
2.3 The Grantor may sell, assign or hypothecate any policies of
insurance which may from time to time be part of the trust estate, exercise any
option or privilege granted by any of such policies, borrow any sum in
accordance with the provisions of any of such policies and receive all payments,
dividends, surrender values, benefits or privileges of any kind which may be
available under any of such policies.
2.4 The Grantor reserves the right, so long as the Grantor is not
incompetent or incapacitated, to approve any investments, reinvestments or
changes in investments which the Trustee may from time to time recommend. If,
however, the Trustee notifies the Grantor in writing of the
<PAGE> 2
Trustee's recommendation for investments, reinvestments or changes in
investments and the Grantor fails to reply to the Trustee within five days from
the date of such notice, either by telephone, telegram, mail or in person, the
Trustee may proceed to make any investments, reinvestments or changes in
investments about which the Trustee has notified the Grantor.
SECTION 3
DISTRIBUTIONS DURING LIFE OF GRANTOR
3.1 If, at any time during the life of the Grantor, the trust estate
includes any income producing assets, the Trustee shall pay the net income to
the Grantor at least quarter-annually, or in such other manner as directed by
the Grantor in writing.
3.2 During any time when the Grantor is incapacitated or incompetent,
the Trustee shall have full power, in the Trustee's sole discretion, to use the
net income and principal of the trust for the support, maintenance and medical
care of the Grantor and the Grantor's wife, Catherine C. Miller. Any net income
not currently used for such purposes shall be accumulated and added to
principal.
SECTION 4
DISTRIBUTIONS UPON DEATH OF GRANTOR
4.1 Upon the death of the Grantor, the trust estate, including all
amounts of undistributed income (even though accrued or accumulated by the
Trustee prior to the Grantor's death), any part of the Grantor's estate as may
be distributed to the Trustee and all other property which is or becomes part of
the trust estate, shall be held and distributed as herein provided.
4.2 Upon demand in writing by the Executor or Administrator of the
Grantor's estate, the Trustee shall pay to such Executor or Administrator an
amount equal to all, or such part as is demanded, of the following: the
Grantor's debts; expenses of the Grantor's last illness; funeral and burial
expenses; expenses of administering the Grantor's estate; and bequests under the
Grantors' will. If no Executor or Administrator is acting, the Trustee may pay
directly any of the above-described amounts. Such amounts shall not be paid from
assets which are excluded from the Grantor's gross estate for Federal estate tax
purposes.
4.3 If the Grantor's wife, Catherine C. Miller, survives him, the
Trustee shall divide the trust assets which remain after deducting amounts
otherwise paid or set apart to be paid as provided in Section 4.2 ("the residue
of the trust estate") into four parts designated Trust A, Trust B, Trust C and
Trust D as follows:
4.3.1 Trust A shall be a separate trust held under Section 5.
It shall consist of assets selected by the Trustee having a value equal to the
largest amount, if any, that can pass free of Federal estate tax, taking into
account the unified credit and the state death tax credit but no other
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credit, reduced by the value (as finally determined for Federal estate tax
purposes) of all property included in the Grantor's gross estate passing other
than under this Section 4.3 (whether by Grantor's Will, other provisions of this
Agreement or otherwise) which does not qualify for the Federal estate tax
marital deduction or charitable deduction, and reduced further by any charges to
principal that are not deducted in computing the Grantor's Federal estate tax
(other than any estate, inheritance or similar taxes due by reason of the
Grantor's death which are imposed by any governmental authority). In addition,
if the residue of the trust estate includes any property which is excluded from
the Grantor's gross estate for Federal estate tax purposes, such property (less
the expenses' including taxes, if any, incurred in connection with the receipt
of such property) shall be added to Trust A as principal.
4.3.2 Trust B shall be a separate trust held under Section 6
and shall consist of one-third of the assets which remain available for
distribution under this Section 4.3 after deducting any amounts required to be
set aside under Section 4.3.1.
4.3.3 Trust C shall be a separate trust held under Section 7
and shall consist of one-third of the assets which remain available for
distribution under this Section 4.3 after deducting any amounts required to be
set aside under Section 4.3.1.
4.3.4 Trust D shall be a separate trust held under Section 8
and shall consist of one-third of the assets which remain available for
distribution under this Section 4.3 after deducting any amounts required to be
set aside under Section 4.3.1.
4.3.5 Notwithstanding Sections 4.3.2, 4.3.3 and 4.3.4, if the
Grantor's wife, Catherine C. Miller, (or, in the event of her death, her
Executor) shall disclaim all or any portion of Trusts B, C or D, such disclaimed
property shall be added to Trust A held under Section 5. In that event, with
respect to the disclaimed property, Catherine C. Miller shall have all rights
provided in Trust A except the special power of appointment under Section 5.3.
4.4 If the Grantor's wife, Catherine C. Miller, does not survive him,
the residue of the trust estate shall be distributed as provided in Section 9.
4.5 Upon demand in writing by the Executor or Administrator of the
Grantor's estate, the Trustee shall pay to such Executor or Administrator an
amount equal to all, or such part as is demanded, of the estate, inheritance or
similar taxes due by reason of the Grantor's death which are imposed by any
governmental authority. If no Executor or Administrator is acting, the Trustee
may pay directly any of such taxes. Such taxes shall not be paid from assets
which are excluded from the Grantor's gross estate for Federal estate tax
purposes. If the Grantor's wife does not survive him, such taxes shall be paid
from the residue of the trust estate, prior to division and distribution as
provided under Section 9. If the Grantor's wife survives him, such taxes shall
be paid from Trust A, except that (a) If the Grantor's Executor or Administrator
fails to make the election so that any portion of Trust B fails to qualify for
the Federal estate tax marital deduction, then the Federal estate tax due by
reason of the Grantor's death shall be paid from the assets of that portion of
Trust B for
3
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which the marital deduction was not elected to the extent that those assets are
sufficient and otherwise from Trust A; or (b) If the taxes required hereunder to
be paid from Trust A should exhaust Trust A, the amount thereof which cannot be
paid from Trust A shall first be charged to Trust B, and if the assets allocated
to Trust B are insufficient to pay any portion thereof, the balance shall be
divided equally between Trust C and Trust D.
4.6 For the purposes of this Agreement, the Grantor's wife, Catherine
C. Miller, shall be deemed to have survived the Grantor, any presumption of law
notwithstanding, if she survives him for any period, or if there is no evidence
as to the order of their deaths.
SECTION 5
TRUST A
5.1 The Trustee shall, in its sole discretion, pay to Catherine C.
Miller, at such times as the Trustee determines, all or such part of the net
income of Trust A as the Trustee determines to be necessary to support and
maintain her in the manner to which she has become accustomed. In making any
such decisions, the Trustee shall consider her other income and means of support
known to the Trustee, and resolve any doubts in favor of generous and liberal
support for her. If all of the net income is not paid to Catherine C. Miller,
the Trustee may, in its sole discretion, distribute all or any part of such
undistributed income to any one or more of the Grantor's issue in such shares as
the Trustee determines, or the Trustee may accumulate and add to principal all
or any part of such undistributed income.
5.2 If, in the sole opinion of the Trustee, the net income of Trust A
is insufficient to support and maintain Catherine C. Miller in the manner to
which she has become accustomed, considering her other income and means of
support known to the Trustee, the Trustee may, in its sole discretion,
distribute to her as much of the principal of Trust A as the Trustee determines
is necessary for such purposes, provided that the Trustee shall not distribute
principal of Trust A to her at any time when principal is available for
distribution to her from Trust B under Section 6.2 or Trust C under Sections 7.2
or 7.3 or Trust D under Section 8.1.
5.3 Catherine C. Miller shall have full power to appoint, effective at
the date of her death, the entire principal and any undistributed income of
Trust A, or any portion thereof, to any person or persons or to any corporation
or corporations, in such proportions or shares as she may designate, provided,
however, that no such appointment shall be made to herself, her estate, her
creditors or the creditors of her estate.
5.4 Trust A shall terminate upon the death of Catherine C. Miller. Upon
termination the Trustee shall distribute the principal and any undistributed
income of Trust A in such manner as Catherine C. Miller may have appointed in
exercise of the power given her under Section 5.3. Any part remaining
unappointed shall be distributed as provided in Section 9.
4
<PAGE> 5
SECTION 6
TRUST B
6.1 The Trustee shall pay the net income of Trust B to Catherine C.
Miller at least quarter-annually during her life.
6.2 If, in the sole opinion of the Trustee, the net income of Trust B
is insufficient to support and maintain Catherine C. Miller in the manner to
which she has become accustomed, considering her other income and means of
support known to the Trustee, the Trustee may, in its sole discretion,
distribute to her as much of the principal of Trust B as the Trustee determines
is necessary for such purposes. In such event, if any portion of Trust B falls
to qualify for the Federal estate tax marital deduction, the Trustee shall
distribute for such purposes principal of Trust B with respect to which the
election was made, or if none, other principal of Trust B, provided, however,
that in no event shall other principal of Trust B be distributed when there is
available for distribution principal of Trust C or Trust D.
6.3 Trust B shall terminate upon the death of Catherine C. Miller. Upon
termination any undistributed income accrued or accumulated by the Trustee prior
to termination of Trust B shall be distributed to the estate of Catherine C.
Miller, and the remaining assets of Trust B shall be distributed as provided in
Section 9.
SECTION 7
TRUST C
7.1 The Trustee shall pay the net income of Trust C to Catherine C.
Miller at least quarter-annually during her life.
7.2 Catherine C. Miller shall have the power to withdraw, at any one
time or from time to time, any part or all of the principal of Trust C upon
first giving written notice to the Trustee of her intention to withdraw.
7.3 If, in the sole opinion of the Trustee, the net income of Trust C
is insufficient to support and maintain Catherine C. Miller in the manner to
which she has become accustomed, considering her other income and means of
support known to the Trustee, the Trustee may, in its sole discretion,
distribute to her as much of the principal of Trust C as the Trustee determines
is necessary for such purposes.
7.4 Catherine C. Miller shall have full power to appoint, effective at
the date of her death, the entire principal and any undistributed income of
Trust C, or any portion thereof, to her estate, or to any person or persons or
any corporation or corporations.
5
<PAGE> 6
7.5 Trust C shall terminate upon the death of Catherine C. Miller. Upon
termination the principal and any undistributed income (even though accrued or
accumulated by the Trustee prior to her death) of Trust C shall be distributed
in such manner as Catherine C. Miller may have appointed in exercise of the
power given her under Section 7.4. Any part remaining unappointed shall be paid
as follows: The Trustee shall pay to the Executor or Administrator of her estate
such sum as may be required for the payment of any estate, inheritance or
similar taxes imposed by any governmental authority by reason of her death and
by reason of her possession of the general power of appointment with respect to
the assets of Trust C, over and above the amount of such taxes which would have
been payable upon her death from her estate had the assets of Trust C not been
included in the determination of such taxes. The balance of the unappointed
principal and undistributed income of Trust C shall be distributed as provided
in Section 9.
SECTION 8
TRUST D
8.1 The Trustee shall, in its sole discretion, pay to Catherine C.
Miller or apply for her use or benefit all or any part of the net income and
principal of Trust D as the Trustee deems appropriate at such times as the
Trustee deems appropriate. Any net income not paid to Catherine C. Miller shall
be accumulated and added to principal.
8.2 Trust D shall terminate upon the death of Catherine C. Miller. Upon
termination the Trustee shall distribute the principal and any undistributed
income of Trust D to the estate of Catherine C. Miller.
SECTION 9
DISTRIBUTION UPON DEATH OF GRANTOR AND GRANTOR'S
WIFE
9.1 Upon the death of the last to die of the Grantor and the Grantor's
wife, Catherine C. Miller, any trust assets which are required to be distributed
as provided in this Section 9 shall be divided into as many equal shares as
there are children of the Grantor then living and deceased children of the
Grantor with issue then living. One such equal share shall be held under Section
9.2 as a separate trust for the benefit of each then living child of the
Grantor. One such equal share shall be distributed, per stirpes, to the then
living issue of each deceased child of the Grantor, subject to Section 9.3.
9.2 If any of the Grantor's children who becomes entitled to all or any
share of the residue of the trust estate at the time of the Grantor's death or
all or any share of the principal and undistributed income of any trust or held
hereunder upon its termination is under age 35 at the time set for distribution
to him, his share shall not be distributed to him directly, but shall be held by
the Trustee as a separate trust for his benefit as follows:
6
<PAGE> 7
9.2.1 The Trustee shall pay the net income of the trust to the
child for whom the trust is held at least as often as quarter-annually during
his life.
9.2.2 If, in the sole opinion of the Trustee, the net income
of the trust is insufficient to provide for the support, comfort, maintenance,
education and medical care of the child for whom the trust is held, considering
his other income and means of support known to the Trustee, the Trustee may, in
its sole discretion, distribute principal of the trust for such purposes. The
word "education" when used in this Agreement may include private schooling,
college or university education and, in an appropriate case, post-graduate
education, and also, without limitation, all tuition, board, lodging, fees,
travel expenses and other expenses incidental thereto.
9.2.3 The trust shall terminate as to one-fourth of the
principal thereof on the date when the child for whom the trust is held attains
age 25; as to one-half of the balance of the principal thereof on the date when
such child attains age 30; and as to the remaining principal and any
undistributed income thereof on the date when such child attains age 35; and
distribution shall be made to such person of the shares indicated on such dates.
If, in the sole opinion of the Trustee, the trust estate has at any time been so
reduced as to make it uneconomical or otherwise impractical to continue to hold
it in trust, the trust shall terminate and the Trustee shall distribute the
principal, and any undistributed income thereof to the child for whom the trust
is held, outright and free of trust. If at the time the trust is established the
child for whom the trust is held has attained age 25 but has not yet attained
age 35, the Trustee shall distribute directly to such child the share of the
trust estate as to which the trust would have terminated if it had been
established when such child was under age 25 and continued to the date it is in
fact established, and the Trustee shall hold the balance of the trust estate for
such child under the terms and conditions hereof. If the child for whom the
trust is held dies before receiving distribution of all of the principal and any
undistributed income of the trust, the trust shall terminate on the date of his
death, and the Trustee shall distribute the principal and any undistributed
income thereof to his then living issue, per stirpes, subject to Section 9.3, or
if none, to the Grantor's then living issue, per stirpes, provided that any
share of the trust estate required to be distributed to a child of the Grantor
shall be subject to this Section 9.2, and any share of the trust estate required
to be distributed to a more remote issue of the Grantor shall be subject to
Section 9.3.
9.3 If any issue of the Grantor more remote than a child who becomes
entitled to all or any share of the residue of the trust estate at the time of
the Grantor's death or all or any share of the principal and undistributed
income of any trust held hereunder upon its termination is under age 21 at the
time set for distribution to him or her, his or her share shall not be
distributed to him or her directly, but shall continue to be held by the Trustee
as a separate trust for his or her benefit as follows: The Trustee shall pay as
much of the net income and, if necessary, principal of the trust as it deems
appropriate at such times as it deems appropriate to provide for the support,
comfort, maintenance, education and medical care of the person for whom the
trust is held. Any net income not currently required for such purposes shall be
accumulated and added to the principal of the trust. The trust shall terminate
on the first to occur of the following: the date when the person for whom the
trust is held attains age 21; the date of death of such person; and the date
when, in the sole opinion of the Trustee, the trust estate has been so reduced
as to make it uneconomical or otherwise
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<PAGE> 8
impractical to hold it in trust. Upon termination of the trust, the Trustee
shall distribute the principal and any undistributed income thereof to the
person for whom the trust is held, if living, or if not, to his or her estate.
9.4 Solely for purposes of investment convenience, the Trustee may hold
and invest the assets of the separate trusts held under this Section 9 as a
unit, without physically dividing them, until actual division becomes necessary
in order to make distribution, and in such case the Trustee shall allocate to
each separate trust its proportionate part of receipts and expenditures. If at
any time there shall be held under Section 9.2 or Section 9.3 more than one
trust for the same person, the trusts for such person under such section shall
be combined and treated as on trust estate.
SECTION 10
GENERAL PROVISIONS
10.1 The Trustee shall have the following powers, in addition to
authority the Trustee may have under the laws of any state, which the Trustee
may exercise without order of court:
10.1.1 To collect, pay and compromise debts and claims.
10.1.2 To borrow money, including authority for a corporate
Trustee to borrow from itself in its nonfiduciary capacity.
10.1.3 To sell real and personal property, publicly and
privately; to give options to buy real and personal property for any length of
time; to lease real and personal property for any term; to mortgage real
property; to pledge personal property; and to execute and deliver instruments to
effectuate such powers.
10.1.4 To retain property received by the Trustee (including
securities issued by a corporate Trustee or its affiliate), regardless of
whether such property is authorized by law for investment by fiduciaries; and to
invest and reinvest the proceeds of the sale of such property, and cash, in
whatever property the Trustee deems reasonable (including participation in any
common trust fund established and maintained by a corporate Trustee for
collective investment of fiduciary funds), whether or not the investment is
authorized by law for investment by fiduciaries. A corporate Trustee may invest
in securities issued by it or its affiliate only at the written direction of the
Grantor during his lifetime or, after his death, at the written direction of the
primary income beneficiary of the trust for which such securities are purchased,
the parent, guardian or custodian to act for any beneficiary who is not
competent to act. The provisions of this Section 10.1.4 shall be subject to
Section 2.4.
10.1.5 To exercise and not exercise, as the Trustee deems
reasonable, rights of ownership incident to securities that the Trustee may
hold, including rights to vote, give proxies and execute consents, provided that
securities issued by a corporate Trustee or its affiliate shall be voted by the
Grantor during his lifetime or, after his death, by the primary income
beneficiary of the trust
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<PAGE> 9
to which such securities are allocated, the parent, guardian or custodian to act
for any beneficiary who is not competent to act.
10.1.6 To sell or issue call options against any security or
asset now or hereafter held in the trust estate, including without limitation
the sale or issuance of any option which is traded on the Chicago Board Options
Exchange, the American Exchange or any other Exchange; to take any and all
action as may be, in the Trustee's opinion, necessary or advisable in connection
with the sale or issuance of such options, including the execution and delivery
of escrow receipts; and to purchase any call option, including the re-purchase
of any call option which the Trustee may have sold, even if at a loss.
10.1.7 To hold property in the name of a nominee.
10.1.8 To sell property to and to borrow funds from one trust
in favor of another trust established by this Agreement as if dealing with
outside interests.
10.1.9 To permit any beneficiary of any trust to enjoy the use
of any residential real estate and tangible personal property from the date of
the Grantor's death which the Trustee may receive in kind. The Trustee shall not
be liable for any consumption, damage, injury to or loss of property so used,
nor shall the beneficiaries of any such trust be liable for any non-negligent
consumption, damage, injury to or loss of property so used.
10.1.10 To hold, retain and continue to operate any business
interest received, whether organized as a sole proprietorship, partnership
(general or limited) or corporation, for such time and in such manner as the
Trustee may deem advisable, without liability on the part of the Trustee for any
losses resulting therefrom; to dissolve, liquidate or sell at such time and upon
such terms as the Trustee may deem advisable; to use the assets of the trust
estate for the purposes of the business; to use the income from such business
for business purposes, including but not limited to the establishing of
additional reserve and depreciation accounts, establishing funds for future
expansion and growth and such other business purposes as the Trustee may deem
advisable; to borrow money for business purposes and to pledge or encumber the
assets of the business or other assets of the trust estate to secure a loan; to
employ such officers, managers, employees or agents as the Trustee may deem
advisable in the management of such business, including electing representatives
of the Trustee to take part in the management of such business as directors,
officers or employees, and any such representatives of the Trustee may receive
compensation for their services in addition to the fee to which the Trustee may
be entitled for the Trustee's services in the administration of the trusts held
hereunder; and to have such additional powers as may be necessary to enable the
Trustee to continue or to dispose of any such business interest.
10.2 No person leasing or purchasing property from or lending money to
or otherwise dealing with any trust and no transfer agent requested to transfer
corporate securities to or from any trust need inquire as to the purpose of the
lease, sale, loan, transfer or assignment or see to the
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<PAGE> 10
application of the proceeds, and the receipt of the Trustee shall be a complete
acquittance and discharge of such person for the amount paid.
10.3 The Trustee is authorized to distribute trust assets in cash or in
kind, or partly in each. When the Trustee is required to make a division of
trust assets and to distribute such assets either to separate trusts created
hereunder (such as Trust A, Trust B, Trust C and Trust D) to beneficiaries
outright, or to any combination of trusts and beneficiaries, the Trustee is
authorized to make any such division and distribution in such manner as the
Trustee shall determine. If the Trustee determines not to divide real property,
the Trustee may convey undivided interests therein. The Trustee need not divide
each trust asset proportionately among the trusts and beneficiaries entitled to
distribution. The Trustee may select specific assets for allocation to one trust
or beneficiary to the exclusion of the others so long as each trust and
beneficiary receives the share to which he, she or it is entitled of the fair
market value of the trust assets which are the subject of such division and
distribution. If it is necessary for the Trustee to value trust assets for the
purposes of division and distribution, each such asset shall be valued at what
the Trustee determines to be its fair market value on the date of distribution.
Notwithstanding the foregoing, if Trust A, Trust B, Trust C and Trust D are to
be established hereunder, assets which do not qualify for the marital deduction
shall be allocated to Trust A.
10.4 The Grantor recognizes that under the Federal tax law applicable
at the date of execution of this Agreement there are substantially different tax
consequences associated with the numerous tax elections which are required to be
made by the Executor or Administrator of the Grantor's estate and by the Trustee
which may affect the various beneficiaries in different ways. The Trustee shall
not be required to make any compensatory adjustments to any beneficiary by
reason of the manner in which any such election was exercised.
10.5 The administrative and discretionary powers granted the Trustee
herein shall be exercised in such a manner as not to diminish in any way the
full beneficial enjoyment of the Grantor's wife, Catherine C. Miller, in Trust C
nor to restrict her general power of appointment with respect to Trust C, and in
the exercise of such administrative and discretionary powers the Trustee shall
use the same degree of judgment and care a prudent man would use if he were the
owner of the trust assets. If at any time any of the assets allocated to Trust B
consist of unproductive property, the Trustee shall convert such unproductive
property to income producing property upon written notice from the Grantor's
wife.
10.6 If the Trustee has a reasonable doubt about the manner of
allocating any credit or charge to principal or income under applicable law, the
Trustee shall have the power, exercisable as a fiduciary in good faith: to
determine whether assets received shall be treated as principal or income,
provided that distributions of capital gains by regulated investment companies,
capital gains on the sale of assets and stock dividends in stock of the
declaring corporation shall be allocated to principal; to charge or apportion
expenses or losses to principal or income; to establish and maintain reasonable
reserves for depreciation, depletion, amortization and obsolescence, and if any
portion of the trust
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<PAGE> 11
estate consists of a wasting asset, to establish and maintain reasonable
reserves for such asset; and to amortize or not to amortize both premiums and
discounts on investments.
10.7 The Trustee is authorized to employ legal counsel, investment
counsel and other agents in any matter in connection with the administration of
any of the trusts, such as agents for the collection of rentals or the
management or sale of any of the trust estate. The Trustee may pay such
compensation and expenses in connection therewith as the Trustee deems
reasonable under the circumstances.
10.8 The Trustee assumes no responsibility with respect to the validity
or enforceability of any policy of insurance delivered or made payable to the
Trustee hereunder, nor with respect to the payment of any premiums or other
amounts that may be due or may become due on any such policy, nor does the
Trustee assume responsibility for doing anything else that may be required in
order to keep any such policy in force. Any insurance company which has issued a
policy of insurance payable to the Trustee hereunder need not inquire into or
take notice of this Agreement, nor see to the application of the proceeds of any
such policy or any other amounts paid to the Trustee, and the receipt of the
Trustee shall be a complete release and discharge of the insurance company for
the amount so paid and shall be binding upon every beneficiary of any trust
created hereunder. If a dispute arises with respect to the collection by the
Trustee of the proceeds of any such policy, the Trustee shall have authority to
compromise such dispute in any manner the Trustee deems to be in the best
interests of the trust, and the Trustee may enter into any agreement with
respect to such compromise which the Trustee deems appropriate and may release
any insurance company from any liability under any such policy. The Trustee need
not engage in litigation to collect the proceeds due under any such policy
unless and until the Trustee is fully indemnified to the Trustee's satisfaction
by beneficiaries of the trust from any liability which may result from such
litigation, including obligations incurred by the Trustee for attorney fees,
court costs and other expenses incident to such litigation.
10.9 If the Trustee receives a benefit by reason of the Grantor's death
under any plan for employees or for self-employed persons or under an individual
retirement account, and if the Trustee may elect to take such benefit either as
a lump sum payment or installments over a period of years, the Trustee shall
have the sole right to make such election in the manner the Trustee deems best.
However, to assist the Trustee in making such election, the following shall
serve as general guidelines:
(a) The Grantor recognizes that under the Federal tax law
applicable at the date of execution of this Agreement there are substantially
different estate and income tax consequences from the receipt of such benefit,
depending upon whether the benefit is paid in a lump sum or in installments.
Also, the Grantor recognizes that the decision may involve significant
investment considerations and that distribution in a lump sum or in installments
may affect various beneficiaries in different ways, totally apart from tax or
investment considerations. It is the Grantor's intention that the Trustee
exercise such right of election so as to produce what in the Trustee's judgment
is the
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<PAGE> 12
best overall tax and investment result, and not be influenced by the particular
wishes or desires of any trust beneficiary.
(b) The Trustee may utilize any means available to it for
calculating the estimated tax consequences of the Trustee's election to receive
the benefit in a lump sum or in installments. The Trustee may pay any fees or
expenses which may be required to obtain such information. The Trustee shall,
however, consider any such information as advisory in nature, it being the
Grantor's intention that the Trustee exercise its own judgment based on all
facts and circumstances and all information available to the Trustee.
(c) The Grantor recognizes that it may be difficult for the
Trustee to exercise the discretion granted to it, and that the decision is
dependent upon subjective as well as objective factors. Therefore, the Grantor
expressly exonerates the Trustee from any liability as a result of such decision
to any person whomsoever, provided only that the Trustee acts in good faith.
10.10 If a beneficiary ("Donee") exercises a power of appointment given
her under any section of this Agreement, the Donee may appoint the property
outright or in trust. If the Donee appoints in trust, she may select a trustee
or trustees, establish such administrative powers as she deems appropriate,
create different types of interests, including the creation of new powers of
appointment, and impose any lawful conditions upon any appointment. A Donee may
exercise her power of appointment only by an instrument or instruments in
writing (other than a Will) signed in the presence of two witnesses and
delivered to the Trustee prior to such Donee's death. If a Donee executes more
than one instrument purporting to appoint the same trust property, the
instrument last executed in conformity with the foregoing provisions shall be
effective with respect to such property.
10.11 Income or principal of any trust created under this Agreement
which becomes payable or is, in the discretion of the Trustee, distributable to
any beneficiary who is incapacitated or incompetent may be paid to such
beneficiary, despite his or her incapacity or incompetency, to his or her parent
or parents, to the guardian or guardians of his or her person or estate, to a
custodian for such beneficiary designated by the Trustee, or to any person,
corporation or institution for the benefit of such beneficiary, as the Trustee
deems reasonable. The receipt of any such payee shall be a complete discharge
and release of the Trustee.
10.12 For all purposes of this Agreement, a person, including the
Grantor, shall be considered incapacitated or incompetent if under age 18, or if
so declared by a court having jurisdiction, or if such person's personal
physician or any two physicians selected by the Trustee shall advise the Trustee
of such incapacity or incompetency in writing. Any such incapacity or
incompetency established in the first instance by declaration of court may be
removed only by such court, or if established in the first instance by such
person's personal physician or any two physicians selected as above provided,
may be removed by either the personal physician then serving such person or any
two physicians selected by the Trustee (who need not be the same two physicians
who may have advised the Trustee of such person's incapacity or incompetency).
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<PAGE> 13
10.13 The words "child" or "children," when used in this Agreement,
shall mean lineal descendants of the first degree only, including an adopted
person or persons. The word "issue" shall mean lineal descendants of any degree,
including an adopted person or persons.
10.14 Notwithstanding any other provisions of this Agreement, unless
terminated at an earlier date under other provisions hereof, all trusts herein
created shall terminate 21 years after the death of the last to die of the
Grantor, the Grantor's wife and the Grantor's issue who are living on the date
of the termination of the Grantor's power to revoke the trusts established by
this Agreement, whether such power terminates by death of the Grantor or
otherwise, and thereupon the Trustee shall distribute to the persons then
entitled to receive income from any trust the share of the trust from which any
such person is then entitled to receive income.
10.15 Notwithstanding any other provisions of this Agreement, if the
Grantor survives his wife and if the Trustee should receive any property under
her Last Will and Testament, or any proceeds of insurance policies owned by her
on her life, or any other property owned by her and passing to the Trustee by
reason of her death, to be added to any trust under this Agreement, the Grantor
shall have none of the powers reserved to him under Section 2 with respect to
such property, nor shall any such property be used for the purposes set forth in
Sections 4.2 and 4.5.
10.16 Throughout this Agreement words used in the singular or plural
shall be read in the plural or singular, and pronouns shall be read in the
feminine, masculine or neuter gender, as the facts or context may require to
accomplish the purpose intended.
10.17 This trust has been accepted by the Trustee in the State of Ohio,
and all questions pertaining to the trust and its validity and the
administration thereof, and to the construction of this Agreement, shall be
determined in accordance with the laws of the State of Ohio.
SECTION 11
THE TRUSTEE
11.1 References in this Agreement to the "Trustee" shall include not
only The Central Trust Company, N.A., but also any corporation, which may
succeed to its trust business.
11.2 Upon the written request of the Grantor during his life, The
Central Trust Company, N.A., or any Trustee then acting hereunder, shall resign
as Trustee as of the date fixed in the request, which shall not be earlier than
30 days after the date of the request, and any Trustee acting hereunder shall
have the right to resign upon 30 days' notice to the Grantor, if living, and if
not, to all of the beneficiaries then entitled to receive income who are legally
competent and to the guardians or custodians of those who are not legally
competent. Upon the resignation of any Trustee, voluntarily or involuntarily,
the Trustee shall turn over the assets and administration of the trusts then
held hereunder to such bank or trust company authorized to do business under the
laws of any state or under the National Bank Act of the United States as may be
selected by the Grantor, if living and
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<PAGE> 14
competent, or if not, by such beneficiaries or their guardians or custodians.
After the death of the Grantor, if his wife, Catherine C. Miller, survives him,
she shall have the same right which the Grantor had during his lifetime to
require a Trustee to resign and to designate another bank or trust company as
Trustee.
11.3 For its services in connection with the administration of each
trust held hereunder, the Trustee shall be entitled to receive such compensation
as is provided for in its current schedule of fees effective from time to time.
Unless the Grantor otherwise directs, such compensation shall be charged against
income except for compensation on principal distributions which shall be charged
entirely against principal.
11.4 If there shall be included among the assets of any trust held
hereunder assets which are located in another state, and if under the laws of
such other state the Trustee acting hereunder cannot or will not serve as
Trustee of such assets, then the Trustee is authorized, in its sole discretion,
to select some individual or corporation authorized to do business in such other
state to serve as its agent for purposes of holding title to and/or managing
such assets, with all the powers, authorities and duties granted the Trustee
under this Agreement. The individual or corporation who serves as agent for such
purposes shall be entitled to such compensation as the Trustee and such agent
may agree. Such agent shall exercise all powers and authorities with regard to
such out-of-state assets after consultation with and at the direction of the
Trustee, it being the Grantor's intention to vest in the Trustee the power to
supervise and control such agent in the conduct of such office. Such agent shall
not participate in decisions relative to other assets of the trust and shall not
be required to give bond. If the out-of-state assets are sold, the sale proceeds
shall be paid to the Trustee.
11.5 Any successor Trustee shall have each and every right, privilege,
power, discretion, authority and duty of the original Trustee and shall be
subject to the same responsibilities. Any successor Trustee shall qualify by
executing a written instrument of acceptance of the trusteeship which shall be
attached to any counterpart or copy of this Agreement. No bond shall be required
of any Trustee for serving as such.
SECTION 12
DESIGNATION OF ADVISOR
12.1 Notwithstanding Sections 10.1.3, 10.1.4 and 10.1.6, after the
Grantor's death, the Grantor's son, Lloyd I. Miller, III, if living and
competent, shall serve as advisor to the Trustee during any time Trust A, Trust
B, Trust C or Trust D is being held hereunder under the following conditions:
The Trustee shall not make any investments, reinvestments or changes in
investments of the assets of Trust A, Trust B, Trust C or Trust D without first
consulting with and obtaining the advice of the advisor. The Trustee need not
act in accordance with the advice and counsel of the advisor, but if it does so,
the Trustee shall not be liable to any person for or as a result of any action
or failure to act if in accordance with such advice and counsel. No person, firm
or corporation dealing with the Trustee shall be bound to see that the
provisions of this Section 12 are complied with, and all such
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<PAGE> 15
persons, firms and corporations may proceed as if this Section 12 did not appear
in this Agreement. The Trustee need not obtain the advice and counsel of the
advisor if the Trustee requests such advice and counsel in writing and if the
advisor fails to reply to the Trustee within five days from the date of such
request by telephone, telegram, mail or in person.
IN WITNESS WHEREOF, the Grantor and the Trustee have signed duplicates
hereof, each of which shall be deemed an original, on the date first above
written.
/s/
----------------------------------------
/s/ Lloyd I. Miller
- -----------------------
/s/
- -----------------------
As to Lloyd I. Miller
THE CENTRAL TRUST COMPANY, N.A.
By: /s/
------------------------------------
Joseph D. Landen, Executive Vice
/s/ President
- ---------------------------------------
/s/
- ---------------------------------------
As to The Central Trust Company, N.A.
STATE OF OHIO, COUNTY OF HAMILTON: SS:
Before me, the undersigned, a Notary Public in and for said county and
state, personally appeared Lloyd I. Miller, who executed the foregoing Agreement
as the Grantor and acknowledged the signing thereof to be his voluntary act for
the uses and purposes therein contained.
IN TESTIMONY WHEREOF, I have signed and affixed my seal to this
Agreement on September 20, 1983.
/s/
------------------------------
Notary Public
15
<PAGE> 1
OPERATING AGREEMENT
OF
MILFAM LLC,
AN OHIO LIMITED LIABILITY COMPANY
This operating agreement is entered into as of December 10, 1996 by
Lloyd I. Miller, III, the Irrevocable Trust U/A Catherine C. Miller dated March
26, 1991, and the Irrevocable Trust U/A Lloyd I. Miller, III dated December 31,
1991.
RECITALS
The Company was established as an Ohio limited liability company
pursuant to articles of organization filed by Martin E. Mooney and Barbara F.
Applegarth as the initial members. Mr. Mooney and Ms. Applegarth have resigned
as members and the parties hereto have been admitted as members.
The parties have agreed to organize and operate a limited liability
company under the laws of the State of Ohio in accordance with the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties,
intending legally to be bound, agree as follows:
SECTION I
DEFINED TERMS
The following capitalized terms shall have the meanings specified in
this Section I. Other terms are defined in this Agreement, and, throughout this
Agreement, those terms shall have the meanings respectively ascribed to them.
"Act" means the Ohio Limited Liability Company Act, Chapter 1705 Ohio
Revised Code as amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Interest
Holder, the deficit balance, if any, in the Interest Holder's Capital Account as
of the end of the relevant taxable year, after giving effect to the following
adjustments:
(i) the deficit shall be decreased by the amounts which
the Interest Holder is obligated to restore pursuant
to Section 4.4(b), or is deemed obligated to restore
pursuant to Regulation Section 1.704-1(b)(2)(ii)(c);
and
(ii) the deficit shall be increased by the items described
in Regulation Section 1.704-1(b)(2)(ii)-(d)(4), (5),
and (6).
<PAGE> 2
"Agreement" means this Agreement, as amended from time to time.
"Capital Account" means the account to be maintained by the Company for
each Interest Holder in accordance with the following provisions:
(i) an Interest Holder's Capital Account shall be
credited with the Interest Holder's Capital
Contributions, the amount of any Company liabilities
assumed by the Interest Holder (or which are secured
by Company property distributed to the Interest
Holder), the Interest Holder's distributive share of
Profit, and any item in the nature of income or gain
specially allocated to the Interest Holder pursuant
to the provisions of Section IV (other than Section
4.3(c)); and
(ii) an Interest Holder's Capital Account shall be debited
with the amount of money and the fair market value of
any Company property distributed to the Interest
Holder, the amount of any liabilities of the Interest
Holder assumed by the Company (or which are secured
by property contributed by the Interest Holder to the
Company), the Interest Holder's distributive share of
Loss, and any item in the nature of expenses or
losses specially allocated to the Interest Holder
pursuant to the provisions of Section IV (other than
Section 4.3(c)).
If any Membership Interest is transferred pursuant to the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent the Capital Account is attributable to the transferred Membership
Interest. If the book value of Company property is adjusted pursuant to Section
4.3(c), the Capital Account of each Membership Interest Holder shall be adjusted
to reflect the aggregate adjustment in the same manner as if the Company had
recognized gain or loss equal to the amount of such aggregate adjustment. It is
intended that the Capital Accounts of all Interest Holders shall be maintained
in compliance with the provisions of Regulation Section 1.704-1(b), and all
provisions of this Agreement relating to the maintenance of Capital Accounts
shall be interpreted and applied in a manner consistent with that Regulation.
"Capital Contribution" means the total amount of cash and the fair
market value of any other assets contributed (or deemed contributed under
Regulation Section 1.704-1(b)(2)(iv)(d)) to the Company by a Member, net of
liabilities assumed or to which the assets are subject.
"Cash Flow" means all cash funds derived from operations of the Company
(including interest received on reserves), without reduction for any non-cash
charges, but less cash funds used to pay current operating expenses and to pay
or establish reasonable reserves for future expenses, debt repayments, capital
improvements, and replacements as determined by the Manager. Cash Flow shall be
increased by the reduction of any reserve previously established.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding law.
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<PAGE> 3
"Company" means the limited liability company formed in accordance with
this Agreement.
"Family Member" means Catherine Ward and any of her descendants and any
trusts for their benefit.
"Interest Holder" means any Person who holds a Membership Interest,
whether as a Member or an unadmitted assignee of a Member.
"Involuntary Transfer" means, with respect to any Interest Holder, the
transfer of any interest in the Company upon death, divorce, insolvency,
bankruptcy or other proceeding with respect to creditors.
"Involuntary Withdrawal" means, with respect to any Member, the
occurrence of any of the following events:
(i) the Member makes an assignment for the benefit of
creditors;
(ii) the Member files a voluntary petition of bankruptcy;
(iii) the Member is adjudged bankrupt or insolvent;
(iv) the Member files a petition or answer seeking for the
Member any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation;
(v) the Member files an answer or other pleading
admitting or failing to contest the material
allegations of a petition filed against the Member in
any proceeding described in Subsection (iv);
(vi) any proceeding against the Member seeking
reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation,
continues for one hundred twenty (120) days after the
commencement thereof, or the appointment of a
trustee, receiver, or liquidator for the Member or
all or any substantial part of the Member's
properties without the Member's agreement or
acquiescence, which appointment is not vacated or
stayed for ninety (90) days or, if the appointment is
stayed, for ninety (90) days after the expiration of
the stay during which period the appointment is not
vacated;
(vii) if the Member is an individual, the Member's death or
adjudication by a court of competent jurisdiction as
incompetent to manage the Member's person or
property;
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(viii) if the Member is acting as a Member by virtue of
being a trustee of a trust, the termination of the
trust;
(ix) if the Member is a partnership or another limited
liability company, the dissolution and commencement
of winding up of the partnership or limited liability
company;
(x) if the Member is a corporation, the dissolution of
the corporation or the revocation of its charter; or
(xi) if the Member is an estate, the distribution by the
fiduciary of the estate's entire interest in the
limited liability company.
"Manager" is the Person designated as such in Section 5.1 and any
successors thereto. If there is more than one Manager, the term "Manager" shall
include all such persons as the context requires.
"Member" means each Person signing this Agreement and any Person who
subsequently is admitted as a Member of the Company.
"Member Loan Nonrecourse Deductions" means any Company deductions that
would be Nonrecourse Deductions if they were not attributable to a loan made or
guaranteed by a Member within the meaning of Regulation Section 1.704-2(i).
"Membership Interest" means an Interest Holder's share of the Profits
and Losses of, and the right to receive distributions from, the Company.
"Membership Rights" means all of the rights of a Member in the Company,
including a Member's: (i) Membership Interest; and (ii) the rights granted to
Members under this Agreement or under the Act.
"Minimum Gain" has the meaning set forth in Regulation Section
1.704-2(d). Minimum Gain shall be computed separately for each Interest Holder
in a manner consistent with the Regulations under Code Section 704(b).
"Negative Capital Account" means a Capital Account with a balance of
less than zero.
"Nonrecourse Deductions" has the meaning set forth in Regulation
Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a taxable year
of the Company equals the net increase, if any, in the amount of Minimum Gain
during that taxable year, determined according to the provisions of Regulation
Section 1.704-2(c).
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"Nonrecourse Liability" means any liability of the Company with respect
to which no Member has personal liability determined in accordance with Code
Section 752 and the Regulations promulgated thereunder.
"Percentage" means, (i) as to a Member, the percentage set forth after
the Member's name on Exhibit A, as amended from time to time, and (ii) as to an
Interest Holder who is not a Member, the Percentage of the Member whose
Membership Interest has been acquired by such Interest Holder, to the extent the
Interest Holder has succeeded to that Member's Membership Interest.
"Person" means and includes any individual, corporation, partnership,
association, limited liability company, trust, estate, or other entity.
"Positive Capital Account" means a Capital Account with a balance
greater than zero.
"Profit" and "Loss" means, for each taxable year of the Company (or
other period for which Profit or Loss must be computed) the Company's taxable
income or loss determined in accordance with Code Section 703(a), with the
following adjustments:
(i) all items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in computing
taxable income or loss; and
(ii) any tax-exempt income of the Company, not otherwise
taken into account in computing Profit or Loss, shall
be included in computing taxable income or loss; and
(iii) any expenditures of the Company described in Code
Section 705(a)(2)(B) (or treated as such pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Profit or
Loss, shall be subtracted from taxable income or
loss; and
(iv) gain or loss resulting from any taxable disposition
of Company property shall be computed by reference to
the adjusted book value of the property disposed of,
notwithstanding the fact that the adjusted book value
differs from the adjusted basis of the property for
federal income tax purposes; and
(v) in lieu of the depreciation, amortization, or cost
recovery deductions allowable in computing taxable
income or loss, there shall be taken into account the
depreciation computed based upon the adjusted book
value of the asset; and
(vi) notwithstanding any other provision of this
definition, any items which are specially allocated
pursuant to Section 4.3 hereof shall not be taken
into account in computing Profit or Loss.
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"Regulations" means the income tax regulations, including any temporary
regulations, from time to time promulgated under the Code.
"Secretary" means the Secretary of State of Ohio.
"Voluntary Transfer" means any voluntary sale, hypothecation, pledge,
assignment, attachment, or other voluntary transfer.
"Voluntary Withdrawal" means a Member's dissociation with the Company
by means other than a transfer or an Involuntary Withdrawal.
"Units" has the meaning set forth in Section 3.7.
SECTION II
FORMATION AND NAME: OFFICE; PURPOSE; TERM
2.1 Organization. The parties shall operate a limited liability company
pursuant to the Act and the provisions of this Agreement and, for that purpose,
have caused Articles of Organization to be executed and filed with the
Secretary.
2.2 Name of the Company. The name of the Company shall be "Milfam LLC."
The Company may do business under that name and under any other name or names
upon which the Manager selects. If the Company does business under a name other
than that set forth in its Articles of Organization, then the Company shall file
a fictitious name certificate as required by law.
2.3 Purpose. The Company is organized solely to serve as general
partner of a limited partnership that will purchase, acquire, buy, sell, own,
trade in, hold,and otherwise deal in securities, and to do any and all things
necessary, convenient, or incidental to such purpose.
2.4 Term. The term of the Company shall begin upon the filing of the
Articles of Organization with the Secretary and shall continue in existence
until December 31, 2050, unless its existence is sooner terminated pursuant to
Section VII of this Agreement.
2.5 Principal Office. The principal office of the Company in Ohio shall
be located at 2500 PNC Center, 201 East Fifth Street, Cincinnati, Ohio 45202 or
at any other place that the Manager selects.
2.6 Statutory Agent. The name and address of the Company's statutory
agent in the State of Ohio shall be Martin E. Mooney, 2500 PNC Center, 201 East
Fifth Street, Cincinnati, Ohio 45202.
2.7 Members. The name and present mailing address of each Member, as
well as the number of Units owned by each Member, are set forth on Exhibit A.
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SECTION III
MEMBERS; CAPITAL; CAPITAL ACCOUNTS
3.1 Initial Capital Contributions. Within a reasonable time following
the execution of this Agreement, the Members shall contribute to the Company
cash or other property having a value in the amounts set forth opposite their
respective names on Exhibit A.
3.2 Additional Capital Contributions. No Member shall be required to
contribute any additional capital to the Company, and no Member shall have any
personal liability for any obligation of the Company.
3.3 No Interest on Capital Contributions. Interest Holders shall not be
paid interest on their Capital Contributions.
3.4 Return of Capital Contributions. Except as otherwise provided in
this Agreement, no Interest Holder shall have the right to receive the return of
any Capital Contribution.
3.5 Form of Return of Capital. If an Interest Holder is entitled to
receive a return of a Capital Contribution, the Interest Holder shall not have
the right to receive anything but cash in return of the Interest Holder's
Capital Contribution.
3.6 Capital Accounts. A separate Capital Account shall be maintained
for each Interest Holder.
3.7 Units. Ownership rights in the Company will be reflected in Units.
Subject to limitations on voting rights imposed by this Agreement, each Unit has
equal governance rights with every other Unit and, in matters subject to a vote
of the Members, each Unit carries with it the right to one vote. Except as
otherwise provided herein, each Unit has equal rights with every other Unit with
respect to sharing of Profits and Losses and with respect to distributions. The
Manager will determine when and for what consideration the Company will issue
Units, and, subject to any limitations imposed by this Agreement, the Manager
will determine how many Units may be issued. For each Member, the records of the
Company will state the value and nature of the contribution received by the
Company and the number of Units received in return by the Member. The Company
initially will have 100,000 Units.
3.8 Loans. Any Member may, at any time, make a loan to the Company in
any amount and on those terms upon which the Company and the Member agree.
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SECTION IV
PROFIT, LOSS AND DISTRIBUTIONS
4.1 Allocations of Profit or Loss.
(a) Allocation to Manager. While Lloyd I. Miller, III serves
as Manager of the Company, he shall be allocated an amount equal to the sum of
any guaranteed payment paid to the Company pursuant to Section 3.8 of the
respective Partnership Agreements of Milfam I L.P. and Milfam II L.P and any
profit allocated to the Company pursuant to Sections 4.1(a)(2)(i) and (ii) of
such agreements.
(b) Remaining Profit or Loss. After giving effect to the
special allocations set forth in Sections 4.1(a) and 4.3, for any taxable year
of the Company, Profit or Loss shall be allocated to the Interest Holders in
proportion to their Units.
4.2 Distributions
(a) Cash Flow. Cash Flow for each taxable year of the Company
shall be distributed first to Lloyd I. Miller, III while he serves as Manager of
the Company in an amount sufficient to cause cumulative Cash Flow distributed to
him pursuant to this sentence to equal the cumulative Profits allocated to him
pursuant to Section 4.1(a). The balance of any Cash Flow shall be distributed to
the Interest Holders in proportion to their Units at such time and in such
amounts as are determined by the Manager, in his sole discretion.
(b) Distribution on Termination. On termination of the
Company, assets shall be distributed and applied by the Company in the following
order and priority:
(i) to the payment of all expenses of the
Company incident to winding up; then
(ii) to the payment of debts and liabilities of
the Company then due and outstanding
(including all debts due to any Interest
Holder); then
(iii) to the establishment of any reserves which
the Manager deems necessary for liabilities
or obligations of the Company; then
(iv) the balance shall be distributed to the
Interest Holders in accordance with their
respective Capital Account balances.
4.3 Regulatory Allocations.
(a) Qualified Income Offset. No Interest Holder shall be
allocated Losses or deductions if the allocation causes an Interest Holder to
have an Adjusted Capital Account Deficit. If an Interest Holder receives (1) an
allocation of Loss or deduction (or item thereof) or (2) any
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distribution, which causes the Interest Holder to have an Adjusted Capital
Account Deficit at the end of any taxable year, then all items of income and
gain of the Company (consisting of a pro rata portion of each item of Company
income, including gross income and gain) for that taxable year shall be
allocated to that Interest Holder, before any other allocation is made of
Company items for that taxable year, in the amount and in proportions required
to eliminate the excess as quickly as possible. This Section 4.3(a) is intended
to comply with, and shall be interpreted consistently with, the "qualified
income offset" provisions of the Regulations promulgated under Code Section
704(b).
(b) Minimum Gain Chargeback. Except as set forth in Regulation
Section 1.704-2(f)(2), (3), and (4), if, during any taxable year, there is a net
decrease in Minimum Gain, each Interest Holder, prior to any other allocation
pursuant to this Section IV, shall be specially allocated items of gross income
and gain for such taxable year (and, if necessary, subsequent taxable years) in
an amount equal to that Interest Holder's share of the net decrease of Minimum
Gain, computed in accordance with Regulation Section 1.704-2(g). Allocations of
gross income and gain pursuant to this Section 4.3(b) shall be made first from
gain recognized from the disposition of Company assets subject to non-recourse
liabilities (within the meaning of the Regulations promulgated under Code
Section 752), to the extent of the Minimum Gain attributable to those assets,
and thereafter, from a pro rata portion of the Company's other items of income
and gain for the taxable year. It is the intent of the parties hereto that any
allocation pursuant to this Section 4.3(b) shall constitute a "minimum gain
chargeback" under Regulation Section 1.704-2(f).
(c) Contributed Property and Book-ups. In accordance with Code
Section 704(c) and the Regulations thereunder, as well as Regulation Section
1.704-l(b)(2)(iv)(d)(3), income, gain, loss, and deduction with respect to any
property contributed (or deemed contributed) to the Company shall, solely for
tax purposes, be allocated among the Interest Holders so as to take account of
any variation between the adjusted basis of the property to the Company for
federal income tax purposes and its fair market value at the date of
contribution (or deemed contribution). If the adjusted book value of any Company
asset is adjusted as provided herein, subsequent allocations of income, gain,
loss, and deduction with respect to the asset shall take account of any
variation between the adjusted basis of the asset for federal income tax
purposes and its adjusted book value in the manner required under Code Section
704(c) and the Regulations thereunder.
(d) Code Section 754 Adjustment. To the extent an adjustment
to the tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulation Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of the
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases basis), and the gain or loss shall be specially allocated to the
Interest Holders in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to that Section of the
Regulations.
(e) Nonrecourse Deductions. Nonrecourse Deductions for a
taxable year or other period shall be specially allocated among the Interest
Holders in proportion to their Units.
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(f) Member Loan Nonrecourse Deductions. Any Member Loan
Nonrecourse Deduction for any taxable year or other period shall be specially
allocated to the Interest Holder who bears the risk of loss with respect to the
loan to which the Member Loan Nonrecourse Deduction is attributable in
accordance with Regulation Section 1.704-2(b).
(g) Withholding. All amounts required to be withheld pursuant
to Code Section 1446 or any other provision of federal, state, or local tax law
shall be treated as amounts actually distributed to the affected Interest
Holders for all purposes under this Agreement.
4.4 Liquidation and Dissolution.
(a) If the Company is liquidated, the assets of the Company
shall be distributed to the Interest Holders in accordance with the balances in
their respective Capital Accounts, after taking into account the allocations of
Profit or Loss pursuant to Section 4.1, if any, and distributions, if any, of
cash or property, if any, pursuant to Sections 4.2.
(b) No Interest Holder shall be obligated to restore a
Negative Capital Account.
4.5 General.
(a) Timing of Distributions. Except as otherwise provided in
this Agreement, the timing and amount of all distributions shall be determined
by the Manager.
(b) Distributions in Kind. If any assets of the Company are
distributed in kind to the Interest Holders, those assets shall be valued on the
basis of their fair market value, and any Interest Holder entitled to any
interest in those assets shall receive that interest as a tenant-in-common with
all other Interest Holders so entitled. Unless the Manager otherwise agrees, the
fair market value of the assets shall be determined by an independent appraiser
who shall be selected by the Manager. The Profit or Loss for each unsold asset
shall be determined as if the asset had been sold at its fair market value, and
the Profit or Loss shall be allocated as provided in Section 4.1 and shall be
properly credited or charged to the Capital Accounts of the Interest Holders
prior to the distribution of the assets in liquidation pursuant to Section 4.4.
(c) Timing of Allocations. All Profit and Loss shall be
allocated, and all distributions shall be made, to the Persons shown on the
records of the Company to have been Interest Holders as of the last day of the
taxable year for which the allocation or distribution is to be made.
Notwithstanding the foregoing, unless the Company's taxable year is separated
into segments, if there is a Transfer or an Involuntary Withdrawal during the
taxable year, the Profit and Loss shall be allocated between the original
Interest Holder and the successor on the basis of the number of days each was an
Interest Holder during the taxable year; provided, however, the Company's
taxable year shall be segregated into two or more segments in order to account
for Profit, Loss, or proceeds attributable to any extraordinary non-recurring
items of the Company.
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(d) Amendments. The Manager is authorized, upon the advice of
the Company's tax counsel, to amend this Article IV to comply with the Code and
the Regulations promulgated under Code Section 704(b); provided, however, that
no amendment shall materially affect distributions to an Interest Holder without
the Interest Holder's prior written consent.
SECTION V
MANAGEMENT: RIGHTS, POWERS, AND DUTIES
5.1 Management.
(a) Manager. The Company shall be managed by one or more
Managers. The number of Managers shall be determined periodically by the Members
owning 75 percent or more of the Units. The Company initially will have one
Manager. Lloyd I. Miller, III is hereby designated to serve as the initial
Manager. At such time as he is unable or unwilling to serve as Manager,
Catherine Ward will designate one or more banks or trust companies authorized to
do business under the laws of any state or under the National Bank Act of the
United States to serve as Manager.
(b) General Powers. The Manager shall have full, exclusive,
and complete discretion, power, and authority, subject in all cases to the other
provisions of this Agreement and the requirements of applicable law, to manage,
control, administer, and operate the business and affairs of the Company for the
purposes herein stated, and to make all decisions affecting such business and
affairs, including without limitation, for Company purposes, the power to:
(i) acquire by purchase, exchange, lease, or
otherwise, any real or personal property,
tangible or intangible;
(ii) construct, operate, maintain, finance, and
improve, and to own, sell, convey, assign,
mortgage, or lease any real estate and any
personal property;
(iii) sell, dispose, trade, or exchange assets;
(iv) enter into agreements and contracts and to
give receipts, releases, and discharges;
(v) purchase liability and other insurance to
protect properties and business;
(vi) borrow money for and on behalf of the
Company, on a secured or unsecured basis,
and, in connection therewith, execute and
deliver instruments authorizing the
confession of judgment against the Company.
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(vii) execute or modify leases and options;
(viii) prepay, in whole or in part, refinance,
amend, modify, or extend any mortgages or
deeds of trust which may affect any asset
and in connection therewith to execute for
and on behalf of the Company any extensions,
renewals, or modifications of such mortgages
or deeds of trust;
(ix) execute any and all other instruments and
documents which may be necessary or in the
opinion of the Manager desirable to carry
out the intent and purpose of this
Agreement, including, but not limited to,
documents whose operation and effect extend
beyond the term of the Company;
(x) make any and all expenditures which the
Manager deems necessary or appropriate in
connection with the management of the
affairs of the Company and the carrying out
of its obligations and responsibilities
under this Agreement, including, without
limitation, all legal, accounting, and other
related expenses incurred in connection with
the organization and financing and operation
of the Company;
(xi) enter into any kind of activity necessary
to, in connection with, or incidental to,
the accomplishment of the purposes of the
Company;
(xii) invest and reinvest Company reserves in
short-term instruments or money market
funds;
(xiii) purchase, invest and reinvest, retain,
operate and sell any business interest,
whether organized as a sole proprietorship,
partnership, trust, limited liability
company or other type of entity, for such
time and in such manner as the Manager may
deem advisable;
(xiv) employ legal counsel, investment counsel and
other agents in any manner in connection
with the administration of the assets of the
Company and to pay such compensation and
expenses in connection therewith as the
Manager deems reasonable under the
circumstances; and
(xv) employ officers, managers, employees or
agents as the Manager may deem advisable in
its management of the Company's business;
(c) Limitation on Authority of Manager. If there is more than
one Manager, decisions of the Managers will require the approval of a majority
of the Managers. While Lloyd I. Miller, III serves as manager, he shall have
complete control over all of the affairs of the Company
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and need not seek the consent or approval of any Member with respect to any
action. Any Manager who serves after him shall not undertake any of the
following without the approval of the Members:
(i) the sale of substantially all of the assets
of the Company;
(ii) admitting additional Members to the Company;
(iii) issuing additional Units;
(iv) hiring of a professional manager to run the
Company or a significant part of the
Company;
(v) determining the compensation to be paid to
the Manager; or
(vi) engaging in business in any jurisdiction
which does not provide for the registration
of limited liability companies.
(d) Limitation on Authority of Members.
(i) No Member is an agent of the Company solely
by virtue of being a Member, and no Member
has authority to act for the Company solely
by virtue of being a Member.
(ii) This Section 5.1 supersedes any authority
granted to the Members pursuant to Section
1705.25(A) of the Act. Any Member who takes
any action or binds the Company in violation
of this Section 5.1 shall be solely
responsible for any loss and expense
incurred by the Company as a result of the
unauthorized action and shall indemnify and
hold the Company harmless with respect to
the loss or expense.
(e) Removal of Manager. Lloyd I. Miller, III may not be
removed as Manager except for cause. The Members may remove any other Manager
for cause. For cause means the occurrence of any of the following conditions:
(i) the Manager commits a felonious criminal
act;
(ii) the Manager's continuous and uninterrupted
inability for a period of two months or more
to perform the duties required under this
Agreement by reason of accident, illness or
disease;
(iii) taking an action with reckless disregard for
the best interest of the Company; or
(vi) an intentional breach of this Agreement.
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In addition to removing a Manager for reasons set forth above, any Manager,
other than Lloyd I. Miller, III, may be removed for continued unsatisfactory
performance. To remove a Manager on such basis, Members owning 75% or more of
the Units held by Members (exclusive of the Units owned by the Manager) must
state in writing the basis for the Manager's unsatisfactory performance. The
Manager will be given a 90-day period within which to have his performance
deemed satisfactory. If, at the close of such 90-day period, Members owning 75%
or more of the Units held by Members (exclusive of Units owned by the Manager)
still deem the Manager's performance unsatisfactory, the Manager may be removed.
A new Manager will be appointed by Catherine Ward or her legal representative
while she is still alive, and, after her death, by Members owning a majority of
the Units held by Members.
5.2 Meetings of and Voting by Members.
(a) Voting. Any Member holding Units will be entitled to vote
such Units.
(b) Meetings. A meeting of the Members may be called at any
time by the Manager or by those Members entitled to vote holding at least
fifty-one percent (51%) of the Units held by Members. Meetings of Members shall
be held at the Company's principal place of business or at any other place
designated by the Person calling the meeting. Not less than ten (3) nor more
than ninety (90) days before each meeting, the Person calling the meeting shall
give written notice of the meeting to each Member entitled to vote at the
meeting. The notice shall state the time, place, and purpose of the meeting.
Notwithstanding the foregoing provisions, each Member who is entitled to notice
waives notice if before or after the meeting the Member signs a waiver of the
notice which is filed with the records of Members' meetings, or is present at
the meeting in person or by proxy. Unless this Agreement provides otherwise, at
a meeting of Members, the presence in person or by proxy of Members holding not
less than a majority of the Units then held by Members entitled to vote
constitutes a quorum. Subject to any limitations set forth in this Agreement, a
Member entitled to vote may vote either in person or by written proxy signed by
the Member or by his duly authorized attorney in fact.
(c) Required Vote. Except as otherwise provided in this
Agreement, wherever this Agreement requires the approval of Members, the
affirmative vote of Members holding or entitled to vote a majority or more of
the Units for which votes may be cast shall be required to approve the matter.
(d) Written Consent. In lieu of holding a meeting, the Members
entitled to vote may take action by a written instrument indicating the consent
of Members holding or entitled to vote a majority or more of the Units for which
votes may be cast.
5.3 Personal Services.
(a) Required Services. No Member shall be required to perform
services for the Company solely by virtue of being a Member. Unless approved by
the Manager, no Member shall
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perform services for the Company or be entitled to compensation for services
performed for the Company.
(b) Compensation. The Manager shall be entitled to reasonable
compensation for services performed for the Company as set forth above. In
addition, the Manager shall be entitled to reimbursement for expenses reasonably
incurred in connection with the activities of the Company.
5.4 Duties of Parties.
(a) Time Commitment. The Manager shall devote such time to the
business and affairs of the Company as is necessary to carry out the Manager's
duties set forth in this Agreement.
(b) Outside Ventures. Except as otherwise expressly provided
in Section 5.4(c), nothing in this Agreement shall be deemed to restrict in any
way the rights of any Member to conduct any other business or activity
whatsoever, and the Member shall not be accountable to the Company or to any
Member with respect to that business or activity even if the business or
activity competes with the Company's business. The organization of the Company
shall be without prejudice to the respective rights of the Members to maintain,
expand, or diversify such other interests and activities and to receive and
enjoy profits or compensation therefrom. Each Member waives any rights the
Member might otherwise have to share or participate in such other interests or
activities of any other Member.
(c) Arm's Length Dealings. Each Member understands and
acknowledges that the conduct of the Company's business may involve business
dealings and undertakings with Members. In any of those cases, those dealings
and undertakings shall be at arm's length and on commercially reasonable terms.
5.5 Liability and Indemnification.
(a) Standard Imposed. The Manager shall not be liable,
responsible, or accountable, in damages or otherwise, to any Member or to the
Company for any act performed by the Manager within the scope of the authority
conferred on the Manager by this Agreement, except as provided in Section
1705.29(D) of the Act.
(b) Right to Indemnity. The Company shall indemnify the
Manager for any act performed by the Manager within the scope of the authority
conferred on the Manager by this Agreement unless the act is proved by clear and
convincing evidence to have been undertaken with deliberate intent to cause
injury to the Company, with reckless disregard for the best interest of the
Company, or to be an intentional breach of this Agreement.
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5.6 Power of Attorney.
(a) Grant of Power. Each Member constitutes and appoints the
Manager as the Member's true and lawful attorney-in-fact ("Attorney-in-Fact"),
and in the Member's name, place and stead, to make, execute, sign, acknowledge,
and file:
(i) Articles of Organization or any amendment
thereto, which has been approved as provided
in this Agreement;
(ii) all documents (including amendments to
articles of organization) which the
Attorney-in-Fact deems appropriate to
reflect any amendment, change, or
modification of this Agreement;
(iii) any and all other certificates or other
instruments required to be filed by the
Company under the laws of the State of Ohio
or of any other state or jurisdiction,
including, without limitation, any
certificate or other instruments necessary
in order for the Company to continue to
qualify as a limited liability company under
the laws of the State of Ohio;
(iv) one or more fictitious or trade name
certificates; and
(v) all documents which may be required to
dissolve and terminate the Company and to
cancel its Articles of Organization.
(b) Irrevocability. The foregoing power of attorney is
irrevocable and is coupled with an interest, and, to the extent permitted by
applicable law, shall survive the death or disability of a Member. It also shall
survive the Involuntary or Voluntary Transfer of an Interest, except that if the
transferee is approved for admission as a Member, this power of attorney shall
survive the delivery of the assignment for the sole purpose of enabling the
Attorney-in-Fact to execute, acknowledge, and file any documents needed to
effectuate the substitution. Each Member shall be bound by any representations
made by the Attorney-in-Fact acting in good faith pursuant to this power of
attorney, and each Member hereby waives any and all defenses which may be
available to contest, negate, or disaffirm the action of the Attorney-in-Fact
taken in good faith under this power of attorney.
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SECTION VI
TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS
6.1 Transfers.
(a) General Restriction. No Person may make any transfer,
either a Voluntary Transfer, Involuntary Transfer, or otherwise, of all or any
portion of or any interest or rights in the Person's Membership Rights or
Membership Interest unless the following conditions ("Conditions of Transfer")
are satisfied:
(i) The transfer will not require registration
of Membership Interests or Membership Rights
under any federal or state securities laws;
(ii) The transferee agrees to be bound by the
terms of Section VI of this Agreement.
(iii) the transfer will not result in the
termination of the Company pursuant to Code
Section 708; and
(iv) the transferor complies with the right of
first refusal provisions set forth in
Section 6.1(d).
(b) Permitted Transfer. If the Conditions of Transfer are
satisfied, then a Member or Interest Holder may transfer all or any portion of
that Person's Membership Interest. Without receiving the consent of Members
owning at least 75% of the Units, exclusive of Units held by the Transferors,
the transfer of a Membership Interest pursuant to this Section 6.1 shall not
result in the transfer of any of the transferor's other Membership Rights, if
any, and the transferee of the Membership Interest shall have no right to: (i)
become a Member; (ii) exercise any Membership Rights other than those
specifically pertaining to the ownership of a Membership Interest; or (iii) act
as an agent of the Company.
(c) Consent to Restriction. Each Member hereby acknowledges
the reasonableness of the prohibition contained in this Section 6.1 in view of
the purposes of the Company and the relationship of the Members. The transfer of
any Membership Rights or Membership Interests in violation of the prohibition
contained in this Section 6.1 shall be deemed invalid, null and void, and of no
force or effect. Any Person to whom Membership Rights are attempted to be
transferred in violation of this Section shall not be entitled to vote on
matters coming before the Members, participate in the management of the Company,
act as an agent of the Company, receive distributions from the Company, or have
any other rights in or with respect to the Membership Rights.
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(d) Right of First Refusal.
(i) If:
(A) an Interest Holder (a "Transferor")
intends to transfer all or any
portion of, or any interest or
rights in a Membership Interest
either to a bona fide third party
purchaser or pursuant to an
Involuntary Transfer, or,
(B) an Interest Holder is a spouse of a
Family Member, and the Interest
Holder and such Family Member are
divorced,
the Transferor shall so notify the Company
(the "Transfer Notice"). The Transfer Notice
shall describe the terms upon which the
Membership Interest is to be transferred or
that the Interest Holder and the Family
Member are getting a divorce. The Company
shall have the option (the "Company Option")
to purchase all of the Membership Interest
to be transferred on the terms proposed by a
bona fide third party purchaser. With
respect to an Involuntary Transfer or
divorce, the Company also shall have the
option to purchase all of the Membership
Interest that is subject to the Involuntary
Transfer or that is owned by the Member who
is getting divorced, for a price equal to
the fair market value of the Membership
Interest as determined by an independent
appraiser, taking into account adjustments
for lack of marketability, lack of control
and any other adjustments that may apply
(the "Purchase Price").
(ii) The Company Option shall be and remain
irrevocable for a period (the "Company
Option Period") ending at 11:59 P.M. local
time at the Company's principal office on
the thirtieth (30th) Day following the date
the Transfer Notice is given to the Company.
(iii) At any time during the Company Option
Period, the Company may elect to exercise
the Company Option by giving written notice
of its election to the Transferor. The
Transferor shall not be deemed a Member for
the purpose of voting on whether the Company
shall elect to exercise the Company Option.
(iv) If the Company chooses to exercise the
Company Option, the Company's notice of its
election shall fix a closing date for the
purchase, which shall not be earlier than
five (5) days after the date of the notice
of election or more than thirty (30) days
after the expiration of the Company Option
Period.
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(v) If the Company chooses to exercise the
Company Option, the Purchase Price shall be
paid, at the Company's election, in cash at
closing or in up to 48 equal monthly
installments with interest at the applicable
federal rate in effect as of the date of
closing. In the latter case, payment will be
secured by the Membership Interest
purchased.
(vi) If the Company fails to exercise the Company
Option, the other Members will have the
option to acquire the Membership Interest in
the same proportions as the Units that the
acquiring Member owns bears to the total
number of Units owned by the Members who
desire to acquire Membership Interest that
is the subject of the transfer, or in such
other proportions as the Members may agree
(the "Member Option"). The terms of the
Member Option will be the same as the terms
of the Company Option.
(vii) The Member Option shall be and remain
irrevocable for a period (the "Member Option
Period") ending at 11:59 P.M. local time at
the Company's principal office on the
thirtieth (30th) Day following the date the
Company Option Period expires.
(viii) If a Member chooses to exercise the Member
Option, the Purchase Price shall be paid, at
the election of the Member, in cash at
closing or in up to 48 equal monthly
installments with interest at the applicable
federal rate in effect as of the date of
closing. In the latter case, payment will be
secured by the Membership Interest
purchased.
(ix) If the Members fails to exercise the Member
Option, the Transferor shall be permitted to
offer and sell for a period of ninety (90)
days (the "Free Transfer Period") after the
expiration of the Member Option Period on
the terms set forth in the notice or at a
price not less than the Purchase Price. If
the Transferor does not Transfer the
Membership Interest within the Free Transfer
Period, the Transferor's right to Transfer
the Membership Interest pursuant to this
Section shall terminate.
(x) Any Transfer of the Transferor Interest made
after the last day of the Free Transfer
Period or without strict compliance with the
terms, provisions, and conditions of this
Section and other terms, provisions, and
conditions of this Agreement, shall be null,
void and of no force or effect.
6.2 Voluntary Withdrawal. No Member shall have the right or power to
Voluntarily Withdraw from the Company.
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<PAGE> 20
6.3 Involuntary Withdrawal. Immediately upon the occurrence of an
Involuntary Withdrawal, the successor of the withdrawn Member shall thereupon
become an Interest Holder but shall not become a Member. The interest held will
be subject to the option rights set forth in Section 6.1.
SECTION VII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
7.1 Events of Dissolution. The Company shall be dissolved upon the
happening of any of the following events:
(a) when the period fixed for its duration in Section 2.4
has expired;
(b) upon the written agreement of Members owning 75% or
more of the Units; or
(c) upon the death, insanity, bankruptcy, retirement,
resignation,or expulsion of any Member, unless remaining Members owning a
majority of the Units owned by remaining Members elect to continue the business
of the Company pursuant to the terms of this Agreement within 120 days after the
occurrence of such event.
7.2 Procedure for Winding Up and Dissolution. If the Company is
dissolved, the Manager shall wind up its affairs. On winding up of the Company,
the assets of the Company shall be distributed, first, to creditors of the
Company, including Interest Holders who are creditors, in satisfaction of the
liabilities of the Company, and then to the Interest Holders in accordance with
Section 4.4 of this Agreement
7.3 Filing of Certificate of Dissolution. If the Company is dissolved,
the Manager shall promptly file a Certificate of Dissolution with the Secretary.
If there is no Manager, then the Certificate of Dissolution shall be filed by
the remaining Members; if there are no remaining Members, the Certificate shall
be filed by the last Person to be a Member; if there is neither a Manager,
remaining Members, or a Person who last was a Member, the Certificate shall be
filed by the legal or personal representatives of the Person who last was a
Member.
SECTION VIII
BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS
8.1 Bank Accounts. All funds of the Company shall be deposited in a
bank account or accounts maintained in the Company's name. The Manager shall
determine the institution or institutions at which the accounts will be opened
and maintained, the types of accounts, and the Persons who will have authority
with respect to the accounts and the funds therein.
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<PAGE> 21
8.2 Books and Records.
(a) Records Kept. The Manager shall keep or cause to be kept
complete and accurate books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the Company's
business. The records shall include, but not be limited to, financial statements
of the Company for the three most recent fiscal years, a copy of the Articles of
Organization and operating agreement, together with any relevant powers of
attorney, information regarding the amount of cash or agreed value of property
or services contributed, or agreed to be contributed in the future, by each
Member, the respective rights of the Company and each Member regarding the
return of contributions, and the Company's federal, state, or local tax returns.
(b) Accounting Method. The books and records shall be
maintained in accordance with sound accounting practices and shall be available
at the Company's principal office for examination by any Member or by Member's
duly authorized representative at any and all reasonable times during normal
business hours.
(c) Reimbursement. Each Member shall reimburse the Company for
all costs and expenses incurred by the Company in connection with the Member's
inspection and copying of the Company's books and records.
8.3 Annual Accounting Period. The annual accounting period of the
Company shall be its taxable year. The Company's taxable year shall be selected
by the Manager, subject to the requirements and limitations of the Code.
8.4 Reports. As soon as practicable after the end of each taxable year
of the Company, the Manager shall cause to be sent to each Person who was a
Member at any time during the accounting year then ended that tax information
concerning the Company which is necessary for preparing the Interest Holder's
income tax returns for that year. At the request of any Member, and at the
Member's expense, the Manager shall cause an audit of the Company's books and
records to be prepared by independent accountants for the period requested by
the Member.
8.5 Tax Matters Partner. Lloyd I. Miller, III shall be the Company's
tax matters partner ("Tax Matters Partner"). The Tax Matters Partner shall have
all powers and responsibilities provided in Code Section 6221, et seq. The Tax
Matters Partner shall keep all Members informed of all notices from government
taxing authorities that may come to the attention of the Tax Matters Partner.
The Company shall pay and be responsible for all reasonable third-party costs
and expenses incurred by the Tax Matters Partner in performing those duties. A
Member shall be responsible for any costs incurred by the Member with respect to
any tax audit or tax-related administrative or judicial proceeding against any
Member, even though it relates to the Company. The Tax Matters Partner may not
compromise any dispute with the Internal Revenue Service without the approval of
the Members.
8.6 Tax Elections. The Manager shall have the authority to make all
Company elections permitted under the Code, including, without limitation,
elections of methods of depreciation and
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<PAGE> 22
elections under Code Section 754. The decision to make or not make an election
shall be at the sole and absolute discretion of the Manager.
SECTION IX
GENERAL PROVISIONS
9.1 Assurances. Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing, and other acts as
the Manager deems appropriate to comply with the requirements of law for the
formation and operation of the Company and to comply with any laws, rules, and
regulations relating to the acquisition, operation, or holding of the property
of the Company.
9.2 Notifications. Any notice, demand, consent, election, offer,
approval, request, or other communication (collectively a "notice") required or
permitted under this Agreement must be in writing and either delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
return receipt requested. A notice must be addressed to an Interest Holder at
the Interest Holder's last known address on the records of the Company. A notice
to the Company must be addressed to the Company's principal office. A notice
that is sent by mail will be deemed given three (3) business days after it is
mailed. Any party may designate, by notice to all of the others, substitute
addresses or addressees for notices; and, thereafter, notices are to be directed
to those substitute addresses or addressees.
9.3 Specific Performance. The parties recognize that irreparable injury
will result from a breach of any provision of this Agreement and that money
damages will be inadequate to fully remedy the injury. Accordingly, in the event
of a breach or threatened breach of one or more of the provisions of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more preliminary or
permanent orders (i) restraining and enjoining any act which would constitute a
breach or (ii) compelling the performance of any obligation which, if not
performed, would constitute a breach.
9.4 Complete Agreement. This Agreement constitutes the complete and
exclusive statement of the agreement among the Members. It supersedes all prior
written and oral statements, including any prior representation, statement,
condition, or warranty. Except as expressly provided otherwise herein, this
Agreement may not be amended without the written consent of all of the Members.
9.5 Applicable Law. All questions concerning the construction, validity
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement shall be governed by the internal law, not the law of
conflicts, of the State of Ohio.
9.6 Section Titles. The headings herein are inserted as a matter of
convenience only and do not define, limit or describe the scope of this
Agreement or the intent of the provisions hereof.
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<PAGE> 23
9.7 Binding Provisions. This Agreement is binding upon, and inures to
the benefit of, the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
9.8 Jurisdiction and Venue. Any suit involving any dispute or matter
arising under this Agreement may only be brought in the courts of the State of
Ohio. All Members hereby consent to the exercise of personal jurisdiction by any
such court with respect to any such proceeding.
9.9 Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the Person
may in the context require.
9.10 Severability of Provisions. Each provision of this Agreement shall
be considered severable; and if, for any reason, any provision or provisions
herein are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or affect those portions of
this Agreement which are valid.
9.11 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of
which, when taken together, constitute one and the same document. The signature
of any party to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart.
IN WITNESS WHEREOF, the parties have executed, or caused this Agreement
to be executed, under seal, as of the date set forth hereinabove.
/s/ Lloyd I. Miller, III
------------------------
Lloyd I. Miller, III
Irrevocable Trust U/A Catherine C. Miller dated
March 26, 1991
By: /s/ Lloyd I. Miller, III
------------------------
Irrevocable Trust U/A Lloyd I. Miller, III dated
December 31, 1991
By: /s/ Lloyd I. Miller, III
------------------------
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<PAGE> 24
RESIGNATION
The undersigned hereby resign as Members of Milfam LLC effective as of
the time of the admission as Members of the parties to the foregoing Agreement.
Date: December 12, 1996 /s/ Barbara F. Applegarth
----------------- -------------------------
Barbara F. Applegarth
/s/ Martin E. Mooney
---------------------------
Martin E. Mooney
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<PAGE> 1
PARTNERSHIP AGREEMENT
OF
MILFAM I L.P.
THIS PARTNERSHIP AGREEMENT is made and entered into as of the 11th day
of December, 1996 between Milfam LLC, an Ohio limited liability company (herein
referred to as the "General Partner"), Trust B under Section 6 of the Amended
and Restated Trust U/A Lloyd I. Miller, dated September 20, 1983, Trust D under
Section 8 of the Amended and Restated Trust U/A Lloyd I. Miller, dated September
20, 1983, Lloyd I. Miller, III and Martin G. Miller (herein collectively
referred to as the "Limited Partners").
DEFINED TERMS
Capitalized words and phrases used in this Agreement have the following
meanings:
(a) "Act" means the Georgia Revised Uniform Limited Partnership Act
law, as set forth in Sections 14-9-100 to -1204 of the Georgia Code Annotated,
as amended from time to time (or any corresponding provisions of succeeding
law).
(b) "Agreement" or "Partnership Agreement" means this partnership
agreement, as amended from time to time. Words such as "herein," "hereinafter,"
"hereof," "hereto" and "hereunder," refer to this Agreement as a whole, unless
the context otherwise requires.
(c) "Bankruptcy" of a Partner shall be deemed to have occurred 60 days
after the happening of any of the following: (1) the filing of an application by
a Partner for, or a consent to, the appointment of a trustee of the Partner's
assets, (2) the filing by a Partner of a voluntary petition in bankruptcy or the
filing of a pleading in any court of record admitting in writing the Partner's
inability to pay the Partner's debts as they come due, (3) the making by a
Partner of a general assignment for the benefit of creditors, (4) the filing by
a Partner of an answer admitting the material allegations of, or consenting to,
or defaulting in answering a bankruptcy petition filed against the Partner in
any bankruptcy proceeding, or (5) the entry of an order, judgment, or decree by
any court of competent jurisdiction adjudicating a Partner bankrupt or
appointing a trustee of the Partner's assets, and that order, judgment, or
decree continuing unstayed and in effect for a period of 60 days.
(d) "Basis Point" means one hundredth of one percent (.01 percent), 100
Basis Points are equal to one percent.
(e) "Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such
Partner's distributive share of Profits and any items
in the nature of income or gain which are specially
allocated to such Partner.
<PAGE> 2
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value
of any Partnership Property distributed to such
Partner pursuant to any provision of this Agreement
net of liabilities assumed by the Partner or to which
such property is subject, and such Partner's
distributive share of Losses and any items in the
nature of expenses or losses which are specially
allocated to such Partner.
(iii) In the event any interest in the Partnership is
transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it
relates to the transferred interest.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. The General Partner shall make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Sections 1.704-1(b) and 1.704-2 of the Regulations.
(f) "Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner.
(g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).
(h) "Family" and "Family Member" mean Catherine Ward and her
descendants and trusts created for their benefit.
(i) "General Partner" means any Person who (i) is listed as such in
Exhibit A, attached, or has become a General Partner pursuant to the terms of
this Agreement, and (ii) has not ceased to be a General Partner pursuant to the
terms of this Agreement.
(j) "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be
the gross fair market value of such asset, as
determined by the contributing Partner and the
Partnership;
(ii) The Gross Asset Value of all Partnership assets shall
be adjusted to equal their respective gross fair
market values, as determined by the General Partner,
as of the following times: (a) the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (b) the distribution by
the Partnership to a Partner of more than a de
minimis amount of Partnership Property as
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<PAGE> 3
consideration for an interest in the Partnership if
the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership; and (c) the liquidation of the
Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair
market value of such asset on the date of
distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to
Section 1.704-1(b)(2)(iv)(m) of the Regulations;
provided, however, that Gross Asset Values shall
not be adjusted to the extent the General Partner
determines that an adjustment is not necessary or
appropriate in connection with a transaction that
would otherwise result in an adjustment.
If the Gross Asset Value of an asset has been determined or adjusted, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits and Losses.
(k) "Lehman Brothers Rate of Return" means the rate of return of the
Lehman Brothers Intermediate Bond Index for the period in question expressed in
Basis Points, as determined by a third party selected by the General Partner who
is qualified to make such a determination.
(l) "Limited Partner" means any Person whose name is set forth on
Exhibit A of this Agreement as Limited Partner or who has been admitted as an
additional or Substituted Limited Partner pursuant to the terms of this
Agreement. "Limited Partners" means all such Persons.
(m) "Net Cash Flow" means the gross cash proceeds from Partnership
operations and from the sale or other disposition of assets of the Partnership
less the portion thereof used to pay or establish reserves for all Partnership
expenses, debt payments, capital improvements, replacements and contingencies,
all as determined by the General Partner. "Net Cash Flow" shall not be reduced
by depreciation, amortization, cost recovery deductions or similar allowances.
(n) "Partners" means all General Partners and all Limited Partners,
where no distinction is required by the context in which the term is used
herein. "Partner" means any one of the Partners.
(o) "Partnership" means the partnership formed pursuant to this
Agreement and the partnership continuing the business of this Partnership in the
event of dissolution as herein provided.
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<PAGE> 4
(p) "Partnership Property" means all real and personal property
acquired by the Partnership and any improvements thereto, and shall include both
tangible and intangible property.
(q) "Person" means any individual, partnership, corporation, trust or
other entity.
(r) "Profits" and "Losses" means, for each fiscal year or other period,
an amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(l) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into
account in computing Profits or Losses shall be added
to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Profits or Losses shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted, the amount of such adjustment
shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing
Profits or Losses.
(iv) Gain or loss resulting from any disposition of
Partnership Property with respect to which gain or
loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs
from its Gross Asset Value;
(v) Notwithstanding any other provision herein, any items
which are specially allocated shall not be taken into
account in computing Profits or Losses.
(s) "Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
(t) "Standard & Poor's Rate of Return" means the rate of return of the
Standard & Poor's Index for the period in question expressed in Basis Points, as
determined by a third party selected by the General Partner who is qualified to
make such a determination.
(u) "Substituted Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Article 6 hereof.
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<PAGE> 5
(v) "Unit(s)" means any one (or part thereof) or more of the 1 million
units that are authorized to be issued to Partners representing an interest in
the Partnership as described in this Agreement.
ARTICLE 1
NAME AND PURPOSES
SECTION 1.1 FORMATION. The Partners do hereby form the Partnership as a
limited partnership pursuant to the Act, for the purposes hereinafter described.
SECTION 1.2 NAME AND OFFICE. The Partnership shall be conducted under
the name of Milfam I L.P. (the "Partnership"). The principal office and place of
business of the Partnership in Georgia shall be located at 1201 Peachtree
Street, N.E., Atlanta Georgia 30361, or such other place as the General Partner
may from time to time determine on prior notice to the Limited Partners.
SECTION 1.3 PURPOSES AND POWERS.
(a) The purposes of the Partnership and the business to be carried on
and the objectives to be effected by it are:
(i) To acquire, hold, and, in all respects, deal with
stocks, bonds, and other investment securities and,
in the sole discretion of the General Partner, to
acquire one or more memberships on recognized
national exchanges and to engage in any other
business permitted by the Act in order to make a
profit, increase Family wealth, and provide a means
for members of the Family to become knowledgeable of
and preserve Family assets;
(ii) To provide a means for resolving any disputes that
may arise among Family members with respect to the
management of Family assets so as to preserve harmony
among Family members and avoid costs associated with
litigation;
(iii) To maintain control of Family assets;
(iv) To provide a means to consolidate certain Family
assets;
(v) To provide more centralized management for Family
assets;
(vi) To serve as liaison with outside advisors, such as
legal counsel, accountants, banks and portfolio
managers;
(vii) To benefit from economies of scale that can be
realized by consolidating Family assets;
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<PAGE> 6
(viii) To provide a means of facilitating gifts to Family
members without fractionalizing assets;
(ix) To provide protection to Family assets from claims of
creditors brought against Family members;
(x) To prevent the transfer of a Family member's interest
in Family assets in the event of a failed marriage;
(xi) To provide flexibility in taking advantage of
business and investment opportunities, to increase
Family wealth and profits that are not available
through trusts, corporations or other entities, and
to make investments in accordance with the modern
portfolio theory;
(xii) To facilitate the administration and reduce the cost
associated with the disability or probate of the
estate of Family members and to reduce or eliminate
probate and guardianship proceedings in foreign
jurisdictions;
(xiii) To promote knowledge of and communication about
Family assets while allowing restrictions to be
placed on disclosure of information thereby
permitting confidentiality to be preserved as needed;
(xiv) To enter into, continue, perform and carry out
contracts of any kind necessary to, in connection
with, or incidental to, the accomplishment of the
purposes of the Partnership;
(xv) To acquire any property, or any rights therein or
appurtenant thereto, necessary for the accomplishment
of such purposes;
(xvi) To borrow money, and to issue evidence of
indebtedness and to secure the same by mortgage, deed
of trust, pledge or other lien, in furtherance of any
or all of the purposes of the Partnership, and to
continue in effect and assume any liabilities or
indebtedness that may have been incurred by any
predecessor partnership; and
(xvii) To carry on any other activities necessary to, in
connection with or incidental to the foregoing.
SECTION 1.4 TERM. The Partnership shall continue in full effect until
December 31, 2050, and thereafter from year to year with the agreement of all
Partners, unless sooner dissolved and terminated as herein provided.
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<PAGE> 7
SECTION 1.5 AGENT AND TAX MATTERS PARTNER. Lloyd I. Miller, III shall
be the Tax Matters Partner for the Partnership for purposes of Section
6231(a)(7) of the Code. CT Corporation System shall be the agent for the
Partnership for service of process in the State of Georgia.
ARTICLE 2
CAPITAL CONTRIBUTIONS
SECTION 2.1 CAPITAL CONTRIBUTIONS. Each Partner has made or will make a
Capital Contribution to the Partnership in the amount set forth on Exhibit A.
Contributions may be made in cash or property. In addition, a contribution may
be made by delivery of a promissory note or other obligation to contribute cash
or property. Each Partner's Capital Contribution is based upon the number of
Units the Partner acquires. The Partnership is authorized to issue up to 100,000
Units at an initial cost of $1,000 per Unit. Fractional Units may be issued.
SECTION 2.2 DIVERSIFICATION. The initial Capital Contribution made by
each Partner will be in the form of stocks, bonds and other securities. No such
Capital Contribution will be accepted by the Partnership if the acceptance
thereof would cause the Partnership to be an "investment company" within the
meaning of section 351 of the Code and the regulations thereunder. To provide
further assurance that the Partnership will not be an investment company as a
result of accepting a Capital Contribution made by any Partner, each Partner
will be required to contribute, as such Partner's initial Capital Contribution,
a "diversified portfolio of stocks and securities" within the meaning of Section
1.351-1(c)(6) of the Regulations.
SECTION 2.3 FUTURE CAPITAL CONTRIBUTIONS. If the Partnership requires
additional funding to provide working capital or for any other purpose, no
Partner shall have any obligation to advance such funds personally to the
Partnership except as otherwise provided herein.
SECTION 2.4 LOANS TO THE PARTNERSHIP. Any Partner will be permitted to
make loans to the Partnership from time to time in such amounts and on such
terms as such Partner and the Partnership may agree. In no event, however, will
a Partner be permitted to loan funds to the Partnership on terms less favorable
to the Partnership than those that could be obtained from an unrelated creditor.
SECTION 2.5 GENERAL PROVISIONS. A Limited Partner shall not be liable
for any of the debts of the Partnership or be required to contribute any capital
or lend any funds to the Partnership other than as expressly provided in this
Agreement. The General Partner shall not have any personal liability for the
repayment of the Capital Contributions of any Limited Partner, except as
provided to the contrary in this Agreement. Unless otherwise provided herein, no
interest will be paid on or imputed to any capital contributed to the
Partnership.
SECTION 2.6 ADDITIONAL UNITS. The Partnership may increase the number
of authorized Units with the consent of Partners holding a majority of the
Units. The cost of additional Units will
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be determined by the General Partner by dividing the total value of Units
outstanding by the number of Units outstanding. The determination will be made
as nearly as practicable to the date on which additional Units are to be issued.
ARTICLE 3
RIGHTS, POWERS AND DUTIES OF THE PARTNERS
SECTION 3.1 MANAGEMENT AND CONTROL OF THE PARTNERSHIP.
(a) The General Partner shall have the full and exclusive right to
manage and control the business and affairs of the Partnership and to make all
decisions regarding the affairs of the Partnership. In the course of such
management, the General Partner may acquire, encumber, hold title to, pledge,
sell, release or otherwise dispose of Partnership Property and interests therein
when and upon such terms as it determines to be in the best interests of the
Partnership. The General Partner shall have all of the rights, powers and
obligations of a partner of a partnership without limited partners, except as
otherwise provided under the Act.
(b) No Limited Partner who is not also a General Partner shall
participate in the management of or have any control over the Partnership's
business nor have the power to represent, act for, sign for or bind the General
Partner or the Partnership.
(c) In fulfilling its obligations set forth in paragraph (a) above, and
to the extent not inconsistent with that paragraph, the General Partner shall
have the authority to borrow money in the name of the Partnership, and in
connection with any such borrowing, to mortgage, pledge, encumber and
hypothecate the assets of the Partnership.
SECTION 3.2 AUTHORITY OF THE GENERAL PARTNER. In addition to the rights
and powers the General Partner has under this Agreement and law, the General
Partner shall, except to the extent otherwise provided herein, have all rights
and powers required or appropriate to manage the Partnership business, including
without limitation, the right to hire other professional advisors and other
personnel to provide services to the Partnership. To accomplish the purposes of
the Partnership the authority of the General Partner includes, but is not
limited to the following:
(a) to purchase, sell, invest in and deal in stocks, bonds, notes,
evidence of indebtedness and any other securities of any person whether foreign
or domestic;
(b) to guarantee the financial transactions of others that are for the
benefit of the Partnership;
(c) to borrow money;
(d) to sell, pledge, or dispose of assets of the Partnership;
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(e) to carry such insurance as the General Partner deems necessary; and
(f) to perform all acts deemed appropriate by the General Partner to
carry out the purposes of the Partnership.
SECTION 3.3 AUTHORITY OF PARTNERS TO DEAL WITH THE PARTNERSHIP. The
Partnership may acquire property or services from any Partner, or lease or sell
any property to the any Partner provided the terms of such transactions are
arm's-length and in furtherance of the purposes of the Partnership.
SECTION 3.4 RESTRICTIONS ON THE AUTHORITY OF THE GENERAL PARTNER.
(a) Without the unanimous consent of the Limited Partners, the General
Partner shall not have the authority to:
(i) Do any act in contravention of this Agreement;
(ii) Do any act which would make it impossible to carry on
the business of the Partnership;
(iii) Confess a judgment against the Partnership;
(iv) Admit a Person as a General Partner; or
(v) Elect to dissolve the Partnership.
SECTION 3.5 DUTIES AND OBLIGATIONS OF THE GENERAL PARTNER.
(a) The General Partner shall use his best efforts to take all actions
that may be necessary or appropriate for the continuation of the Partnership's
valid existence as a limited partnership and for the acquisition, holding and
operation of Partnership Property, in accordance with the provisions of this
Agreement and applicable laws and regulations.
(b) The General Partner shall at all times act with integrity and good
faith and exercise diligence in all activities relating to the conduct of the
Partnership business and in resolving conflicts of interest.
(c) The General Partner shall prepare or cause to be prepared and shall
file on or before the due date (or any extension thereof) all Federal, state and
local tax returns required to be filed by the Partnership. The General Partner
shall, to the extent that Partnership funds are available, cause the Partnership
to pay any taxes payable by the Partnership.
(d) The General Partner shall use its best efforts to cause the
Partnership to be formed, reformed, qualified to do business or registered under
any applicable assumed or fictitious name
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statute or similar law if required by such law in any state in which the
Partnership then owns property or transacts business.
(e) The General Partner shall have the sole and exclusive right to
manage and operate the business of the Partnership with full and exclusive
authority to act for and on behalf of and as agent of the Partnership and to
take any and all reasonable actions deemed by the General Partner to be
necessary or advisable in connection therewith. The General Partner shall
operate the business of the Partnership in a commercially reasonable manner and
shall do so at such time and in such manner as the General Partner, in its sole
discretion, shall reasonably deem fit and further, shall endeavor and take all
reasonable actions to operate the Partnership so as to provide income and
capital growth for the Partners.
SECTION 3.6 OTHER RIGHTS OF LIMITED PARTNERS. The Limited Partners
shall not participate in the management or control of the business of, or
transact any business for, the Partnership. The Limited Partners shall have no
power to sign for or bind the Partnership in their capacity as Limited Partners.
Limited Partners owning 90% or more of the outstanding Units held by Limited
Partners will have the right to remove the General Partner at any time.
SECTION 3.7 OTHER INTERESTS OF PARTNERS. The Partners may engage in or
possess an interest in other business ventures of every nature and description,
independently or with others, including, but not limited to, the investment
business in all its aspects. Neither the Partnership nor the other Partners
shall have any rights in and to such independent ventures or the income or
profits derived therefrom.
SECTION 3.8 COMPENSATION TO GENERAL PARTNER.
In addition to any Profits that may be allocated to the General
Partner, as compensation for various administrative, reporting, advisory and
other services that are to be performed by the General Partner, the General
Partner will receive a guaranteed payment equal to .30 percent (30 Basis Points)
of the Gross Asset Value of all Partnership assets as of December 31 of each
year. The fee will be payable in four equal quarterly installments during the
succeeding and will be treated as earned during the succeeding year. The fee
will be adjusted if the Partnership has a short taxable year.
SECTION 3.9 CONFIDENTIALITY OF INFORMATION. The Partners acknowledge
that they may receive information regarding the Partnership in the nature of
trade secrets or that otherwise is confidential, the release of which may be
damaging to the Partnership or Persons with which it does business. Each Partner
shall hold in strict confidence any information it receives regarding the
Partnership that is identified as being confidential (and if that information is
provided in writing, that is so marked) and may not disclose it to any Person
other than another Partner, except for disclosures (1) compelled by law, (2) to
advisers or representatives of the Partner or Assignees of the Partner, but only
if they have agreed to be bound by the provisions of this Section 3.9, or (3) of
information that Partner also has received from a source independent of the
Partnership that the Partner reasonably believes obtained that information
without breach of any obligation of confidentiality. The Partners acknowledge
that breach of the provisions of this Section 3.9 may cause irreparable injury
to the Partnership for which monetary damages are inadequate, difficult to
compute, or both.
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Accordingly, the Partners agree that the provisions of this Section 3.9 may be
enforced by specific performance and other appropriate injunctive or equitable
relief.
ARTICLE 4
ALLOCATIONS
SECTION 4.1 ALLOCATION OF PROFITS AND LOSSES.
(a) PROFITS. Profits for any fiscal period shall be allocated
among the Partners as follows:
(1) First, Profits shall be allocated to Partners who
have been allocated Losses pursuant to Section
4.1(b)(2) in proportion to the Losses so allocated to
them until the cumulative amount of Profits allocated
to Partners pursuant to this Section 4.1(a)(1) is
equal to the cumulative amount of Losses allocated to
Partners pursuant to Section 4.1(b)(2).
(2) Second, Profits will be allocated to the General
Partner based upon the investment performance of the
Partnership during the calendar year (or other period
agreed upon by the Partners). The Profits allocated
to the General Partner will be determined as follows:
(i) If the rate of return for equity
investments earned by the Partnership for
the year (or such other period as may be
determined by the Partners) exceeds the
Standard & Poor's Rate of Return by 100
Basis Points or more, the General Partner
will be allocated Profits equal to .50
percent (50 Basis Points) of the average
Gross Asset Value of equity investments held
by the Partnership during such year (or
other period determined by the Partners). If
the rate of return for equity investments
earned by the Partnership for the year (or
such other period as may be determined by
the Partners) does not exceed the Standard &
Poor's Rate of Return by 100 Basis Points or
more, the General Partner will be allocated
Profits equal to .05 percent (5 Basis
Points) of the average Gross Asset Value of
equity investments held by the Partnership
during such year (or other period determined
by the Partners). If the period over which
the rate of return is measured is greater
than or less than one year, appropriate
adjustments will be made to the amount by
which the rate of the return earned by the
Partnership on equity investments must
exceed the Standard & Poor's Rate of Return
in order for the General Partner to earn .50
percent rather than .05 percent of the Gross
Asset Value of equity investments held by
the Partnership. The rate of return on
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Partnership equity investments will be
determined in the same manner that the
Standard & Poor's Rate of Return is
determined.
(ii) If the rate of return for fixed income
investments earned by the Partnership for
the year (or such other period as may be
determined by the Partners) exceeds the
Lehman Brothers Rate of Return by 100 Basis
Points or more, the General Partner will be
allocated Profits equal to .50 percent (50
Basis Points) of the average Gross Asset
Value of fixed income investments held by
the Partnership during such year (or other
period determined by the Partners). If the
rate of return for fixed income investments
earned by the Partnership for the year (or
such other period as may be determined by
the Partners) does not exceed the Lehman
Brothers Rate of Return by 100 Basis Points
or more, the General Partner will be
allocated Profits equal to .05 percent (5
Basis Points) of the average Gross Asset
Value of fixed income investments held by
the Partnership during such year (or other
period determined by the Partners). If the
period over which the rate of return is
measured is greater than or less than one
year, appropriate adjustments will be made
to the amount by which the rate of the
return earned by the Partnership on equity
investments must exceed the Lehman Brothers
Rate of Return in order for the General
Partner to earn .50 percent rather than .05
percent of the Gross Asset Value of fixed
income investments held by the Partnership.
The rate of return on Partnership fixed
income investments will be determined in the
same manner that the Lehman Brothers Rate of
Return is determined.
(3) Third, any remaining Profits shall be allocated among
Partners based upon the number of Units held by each
Partner in proportion to the number of Units
outstanding.
(b) LOSSES. Losses for any fiscal period shall be allocated among the
Partners as follows:
(1) First, Losses shall be allocated among Partners based
upon the number of Units held by each Partner in
proportion to the number of Units outstanding, except
that Losses shall not be allocated pursuant to this
Section 4.1(b)(1) to the extent such allocation would
cause any Limited Partner to have a deficit in such
Limited Partner's Capital Account at the end of such
fiscal year.
(2) Second, any Loss that cannot be allocated to a
Limited Partner because it would create a deficit in
such Limited Partner's Capital shall be allocated
first to other Limited Partners for whom the
allocation would not create a deficit in such Limited
Partners' respective Capital Accounts in proportion
to the
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positive balances in such Limited Partner's Capital
Account and then to the General Partner.
SECTION 4.2 TAX ALLOCATIONS: CODE SECTION 704(C). In accordance with
Code Section 704(c) and the Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value.
Any elections or other decisions relating to such allocations shall be
made by the General Partner in any manner that reasonably reflects the purpose
and intention of this Agreement. Allocations pursuant to this Section 4.2 are
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Partner's Capital Account or
share of Profits, Losses, other items or distributions pursuant to any provision
of this Agreement.
SECTION 4.3 OTHER ALLOCATIONS RULES.
(a) In the event additional Partners are admitted to the Partnership on
different dates during any fiscal year, or their interests in the Partnership
otherwise vary during the year, the Profits (or Losses) may be allocated to the
Partners in accordance with Section 706, of the Code, or rules comparable to
those allowed by Section 706 of the Code, using any convention permitted by law
and selected by the General Partner.
(b) For purposes of determining the Profits, Losses or any other items
allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partner using any permissible method under Section 706 of the Code and the
Regulations thereunder.
(c) Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction and any other allocations not
otherwise provided for shall be divided among the Partners in the same
proportions as they share Profits or Losses, as the case may be, for the year.
SECTION 4.4 NONRECOURSE LIABILITIES. The allocation provisions set
forth in this Agreement are based on the premise that the Partnership has not
incurred and will not incur any nonrecourse liabilities as that term is defined
in Section 1.752-1(a)(2) of the Treasury regulations. If the Partnership should
incur such liabilities, the Agreement will be amended to assure compliance with
Section 704(b) of the Code and the Treasury regulations thereunder.
ARTICLE 5
DISTRIBUTIONS
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SECTION 5.1 DISTRIBUTIONS TO GENERAL PARTNER. Distributions of Net Cash
Flow for any period, if made, will be distributed first to the General Partner
until the cumulative Net Cash Flow distributed to the General Partner under this
Section 5.1 for the current and all past periods is equal to the cumulative
Profits allocated to the General Partner for the current and all prior periods
pursuant to Section 4.1(a)(2).
SECTION 5.2 REMAINING NET CASH FLOW. After the distributions described
in Section 5.1 have been made, if any additional distributions are made, the
balance of the Net Cash Flow will be distributed among the Partners based upon
the number of Units held by each Partner in proportion to the number of Units
outstanding. The timing and the amount of distributions of Net Cash Flow will be
in the sole discretion of the General Partner.
ARTICLE 6
ASSIGNMENT OF LIMITED PARTNER'S INTEREST
SECTION 6.1 GENERAL PROVISION. The Partnership interest of a Limited
Partner, which includes the Units representing such interest, may be assigned in
whole or in part as permitted by the provisions of this Article 6.
SECTION 6.2 ASSIGNEES. The assignment, sale, transfer or pledge of a
Partnership interest, in whole or in part, by a Limited Partner is permitted in
accordance with the terms of this Agreement. Once an interest has been assigned,
transferred, pledged or otherwise encumbered, the assignee, transferee, pledgee
or otherwise (hereinafter, the "assignee") may not exercise any rights of a
Limited Partner with respect to such interest except those granted to the
assignee by the Act unless the assignee becomes a substitute Limited Partner in
accordance with Section 6.3. An assignment entitles the assignee to receive, to
the extent assigned, the assignor's Partnership interest, including, without
limitation, any distributions associated with such interest.
SECTION 6.3 PLEDGES. If any Partner or assignee at any time desires to
pledge or hypothecate any or all of the interest in the Partnership then owned
by him, he may do so provided (i) that such transaction is a bona fide pledge or
hypothecation to a financial institution and (ii) that such financial
institution at the time of such pledge agrees in writing to afford the other
Partners a right of first refusal to repurchase the interest in the Partnership
in the manner described in Section 6.5 in the event of the sale of such interest
upon foreclosure.
SECTION 6.4 TRANSFER TO FAMILY MEMBER. Any Partner may voluntarily
assign, with or without consideration, all or any part of such Partner's
interest in the Partnership to a Family Member provided such Family Member takes
the interest subject to the restrictions set forth in this Agreement.
SECTION 6.5 RIGHT OF FIRST REFUSAL. Except for transfers described in
Section 6.4, if any Person desires to transfer any or all of the interest in the
Partnership owned by him, or if any such
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interest becomes subject to an involuntary transfer such Person (the
"Transferor") will so notify the Partnership and the other Partners in writing
(the "Other Partners"). The notice will set forth the name and address of the
proposed transferee, who, in the case of a sale, must be a bona fide prospective
purchaser, the date of the proposed transfer, the proposed transfer price (in
terms of a dollar amount) and the other terms and conditions of the proposed
transfer. For a period of 60 days after receipt of such notice, the Partnership
may purchase some or all of the offered interest by giving written notice to the
Transferor. If the Partnership does not elect to purchase the entire interest,
it shall notify the Other Partners of the portion of the interest it did not
elect to purchase, and the Other Partners shall have 45 days after expiration of
such 60-day period to purchase all, but not less than all, of the interest that
the Partnership did not elect to purchase. Such purchase by the Other Partners
will be in proportion to the ownership interest in the Partnership owned by such
Other Partners (omitting, for purposes of such calculation, the ownership
interest owned by the Transferor) unless they agree otherwise. If any of the
Other Partners declines to purchase his proportion of such interest, the
remaining Other Partners may purchase such interest in proportion to their
interests in the Partnership (counting for this purpose only the interests in
the Partnership of the Other Partners who wish to purchase some or all of the
interest to be transferred). If all of the remaining interest proposed to be
transferred is not agreed to be purchased by the Other Partners, the Transferor
may transfer the remaining interest to the assignee. Any transfer must completed
in accordance with the terms of the notice given to the Partnership. In
addition, Persons to whom any interest is transferred must, as a condition to
such transfer, enter into an agreement with the parties hereto (or all parties
except the transferor) setting forth restrictions on transfer and other
provisions for repurchase identical to the limitations imposed by this
Agreement.
SECTION 6.6 SUBSTITUTE LIMITED PARTNER. The assignee of the whole or a
portion of a Partnership interest shall be admitted as a substitute Limited
Partner upon compliance with the following conditions:
(a) The assignee must deliver to the Partnership an executed
counterpart of the instrument of assignment, satisfactory in substance and form
to the General Partner that contains a statement of the assignor's desire that
the assignee be admitted as a substitute Limited Partner and the assignee's
agreement to be bound by this Agreement. This condition shall be deemed to be
met in the case of a Successor in Interest, defined hereinafter.
(b) The General Partner, in its sole discretion, must consent in
writing to the admission of the assignee as a substitute Limited Partner.
(c) The assignor and the assignee must execute and acknowledge such
instruments as the General Partner may deem necessary or desirable to effect
such admission, and the assignee agrees to pay all expenses in connection with
such admission.
SECTION 6.7 DEATH OF LIMITED PARTNER. The Partnership shall not be
dissolved, wound up and terminated upon the death, insanity, incompetency or
bankruptcy of a Limited Partner. If a Limited Partner shall die or be declared
insane, incompetent or bankrupt, he shall cease to be a Limited Partner and, if
designated by the Limited Partner, his Successor in Interest, as hereinafter
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defined, shall succeed to the interest of the former Limited Partner in the
Profits, Losses, credits and distributions of the Partnership. A Limited
Partner's Successor in Interest shall be such person as the Limited Partner,
from time to time, has designated in writing. In the event that a Limited
Partner fails to designate a Successor in Interest, or if the person designated
is not then living, or for any reason renounces or disclaims the Partnership
interest or is unable to succeed to such Partnership interest, the Successor in
Interest shall be the spouse of the former Limited Partner. If the spouse is not
then living or for any other reason is unable to succeed to the Partnership
interest, or if the spouse renounces or disclaims such Partnership interest, or
if there is no spouse, the Successor in Interest shall be the executor or
administrator of the deceased Limited Partner's estate, the guardian of an
insane or incompetent Limited Partner's estate, or the trustee in bankruptcy of
a bankrupt Limited Partner's estate, who shall hold or distribute such
Partnership interest in accordance with applicable fiduciary law.
SECTION 6.8 RESTRICTIONS ON SUCCESSOR IN INTEREST. The Successor in
Interest shall be subject to all of the restrictions specified in this Article 6
applicable to the assignee of an interest and shall not become a substitute
Limited Partner except upon compliance with the conditions hereinabove
specified. The Successor in Interest shall be entitled to receive all sums
payable with respect to the interest of the Partner to which the Successor in
Interest succeeds. If agreed to by the General Partner, the Successor in
Interest of a deceased former Limited Partner shall be deemed to be the
recipient, for federal income tax purposes, of the portion of the deceased
former Limited Partner's distributive share of the Profit or Loss (or items
thereof) of the Partnership for the taxable year during which the deceased
former Limited Partner died in proportion to the part of the year that the
Successor in Interest is entitled to such Profit or Loss.
SECTION 6.9 WITHDRAWAL OF LIMITED PARTNER. No Limited Partner may
withdraw from the Partnership prior to termination of the Partnership.
ARTICLE 7
SALE OF A GENERAL PARTNER'S INTEREST
SECTION 7.1 GENERAL RESTRICTION. A General Partner shall not transfer
all or any part of his interest in the Partnership without obtaining the consent
of Limited Partners owning a majority of the Units held by Limited Partners.
ARTICLE 8
EVENTS OF WITHDRAWAL
SECTION 8.1 PROCEDURE FOLLOWING EVENT OF WITHDRAWAL. Upon the
occurrence of an Event of Withdrawal, the General Partner concerned shall cease
to be a member of the Partnership and the Partnership shall have the option to
liquidate the Partnership interest of such General Partner.
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The Partnership and all its Partners shall be notified of such event by the
withdrawing General Partner or his legal representative or by any remaining
General Partner.
SECTION 8.2 EXERCISE OF OPTION. The Partnership shall exercise its
option by serving written notice upon the General Partner concerned or the legal
representative of such General Partner within ninety (90) days from the date it
receives notification of the Event of Withdrawal. The purchase price to be paid
by the Partnership for the interest shall equal the fair market value of such
interest, as determined by agreement of the parties or by appraisal if they
cannot agree as of the date of such notice, and shall be paid in full by
cashier's check or certified check at the closing or on such other terms as the
parties agree.
SECTION 8.3 CONTINUATION OF PARTNERSHIP. If the Partnership exercises
its option, the Partnership shall not dissolve, wind up and terminate but its
business shall be continued if there is a remaining General Partner or, if there
is not a remaining General Partner, if the Limited Partners consent in writing
to the continuation of the business of the Partnership and to the appointment of
a new General Partner effective as of the date of withdrawal of the former
General Partner. The interests of the Partners shall be adjusted appropriately
to reflect the liquidation of the General Partner's interest and, if applicable,
the admission of a new General Partner.
SECTION 8.4 TERMINATION. Upon the occurrence of an Event of Withdrawal
at such time as the Partnership has a sole General Partner, the Partnership
shall be dissolved, wound up and terminated unless all of the Limited Partners
consent in writing to the continuance of the Partnership as contemplated in
Sections 8.3.
SECTION 8.5 EVENT OF WITHDRAWAL DEFINED. For purposes of this
Agreement, an Event of Withdrawal shall include the occurrence of any event set
forth in Section 14-9-602 of the Act upon compliance with any notification
requirements imposed by the Act. A voluntary withdrawal by a General Partner
will not be in violation of this Agreement provided the General Partner provides
written notice to Limited Partners holding 2/3 or more of the Partnership Units
held by Limited Partners at least 10 days in advance of such withdrawal.
ARTICLE 9
PROVISIONS APPLICABLE TO ALL
ASSIGNMENTS AND TRANSFERS
SECTION 9.1 GENERAL RESTRICTIONS. Notwithstanding anything to the
contrary in this Agreement, any assignment or purchase under Articles 6, 7 or 8
may be prohibited by the General Partner if such assignment or purchase would,
in the opinion of counsel for the Partnership, result in the termination of the
Partnership under Section 708(b)(l)(B) of the Code.
SECTION 9.2 SECTION 6050K. Upon the transfer or assignment of any
Partnership interest, the transferor or assignor must provide to the Partnership
the information set forth in Section 6050
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K of the Code, and the Partnership shall furnish the required information to the
Internal Revenue Service, the transferor and the transferee as required by such
section.
ARTICLE 10
TERMINATION OF THE PARTNERSHIP
SECTION 10.1 EVENTS CAUSING TERMINATION. The Partnership shall
dissolve, wind up and terminate upon the first to occur of the following:
(a) The expiration of the term of the Partnership;
(b) The occurrence of an Event of Withdrawal unless the business of the
Partnership is continued as provided in Article 8;
(c) Upon the written consent of all Partners.
SECTION 10.2 PROCEDURE ON TERMINATION. Upon the occurrence of an event
described in Section 10.1, the General Partner (or, if none, a Limited Partner
appointed by the Limited Partners) shall proceed to liquidate and wind up the
business of the Partnership. Upon fifteen (15) days' prior written notice to all
of the Partners identifying the assets to be sold, the liquidating Partner(s)
may, in lieu of selling the Partnership assets, convey undivided interests in
the assets to the Partners or distribute the assets in kind to the Partners. The
Partnership assets and the proceeds of any liquidation sale shall be applied and
distributed at the closing of any sale in the following order of priority:
(a) To the payment of all debts and liabilities of the Partnership and
all expenses of liquidation.
(b) To the setting up of such reserves as the liquidating Partners may
deem necessary for any contingent liabilities of the Partnership. Any reserves
shall be deposited with an escrowee to be applied to the discharge of any
contingent liabilities, and, at the expiration of whatever period the
liquidating Partner may deem advisable, the balance shall be distributed as
provided in clause (c) below.
(c) The balance, if any, shall be distributed to the Partners in
accordance with their Capital Accounts, adjusted to reflect the Gross Asset
Value of each asset, notwithstanding any statutory priorities the Limited
Partners may have under the provisions of the laws of the Act.
SECTION 10.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. In the
event the Partnership is "liquidated" within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations, (i) distributions shall be made
pursuant to Article 10 to the Partners who have positive Capital Accounts in
compliance with Section 1.704-1(b)(2)(ii)(b)(2) of the Regulations, and (ii) if
any Partner's Capital
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Account has a deficit balance (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during
which such liquidation occurs), such Partner shall contribute to the capital of
the Partnership the amount necessary to restore such deficit balance to zero in
compliance with Section 1.704-1 (b)(2)(ii)(b)(3) of the Regulations. In the
discretion of the General Partner, a pro rata portion of the distributions that
would otherwise be made to the Partners pursuant to the preceding sentence may
be:
(a) Distributed to a trust established for the benefit of the Partners
for the purposes of liquidating Partnership assets, collecting amounts owed to
the Partnership, and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the Partners arising out of or in
connection with the Partnership. The assets of any such trust shall be
distributed to the Partners from time to time, in the reasonable discretion of
the General Partner, in the same proportions as the amount distributed to such
trust by the Partnership would otherwise have been distributed to the Partners
pursuant to this Agreement; or
(b) Withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withheld
amounts shall be distributed to the Partners as soon as practicable.
SECTION 10.4 RIGHTS OF PARTNERS. Except as otherwise provided in this
Agreement, each Partner shall look solely to the assets of the Partnership for
the return of his Capital Contribution and shall have no right or power to
demand or receive property other than cash from the Partnership. No Partner
shall have priority over any other Partner as to the return of his Capital
Contributions, distributions or allocations.
ARTICLE 11
FISCAL MATTERS
SECTION 11.1 BOOKS AND RECORDS. The General Partner shall maintain full
and accurate books of the Partnership at the Partnership's principal place of
business, showing all receipts and expenditures, assets and liabilities, Profits
and Losses, and all other records necessary for recording the Partnership's
business and affairs, including those sufficient to record the allocations and
distributions provided for in Article 4 and Article 5. The books of the
Partnership shall be kept on either a cash or an accrual basis as determined by
the General Partner. Each Partner and his duly authorized representatives shall
at all times during regular business hours have access to and may inspect and
copy any of such books and records.
SECTION 11.2 PARTNERSHIP YEAR. The annual accounting period of the
Partnership shall be the calendar year.
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SECTION 11.3 PARTNERSHIP BANK ACCOUNTS. The General Partner shall
receive all moneys of the Partnership and shall deposit the same in one or more
banking accounts. All expenditures by the General Partner shall be made by
checks drawn against the Partnership accounts. Withdrawals from Partnership
accounts shall be made upon such signature or signatures as the General Partner
shall authorize.
SECTION 11.4 ACCOUNTING DECISIONS. All decisions as to accounting
matters, except as specifically provided to the contrary herein, shall be made
by the General Partner.
SECTION 11.5 FEDERAL INCOME TAX ELECTIONS. The decision to make or not
make any other election that is described in the Code including, without
limitation, a Section 754 election, shall be made in the discretion of the
General Partner.
ARTICLE 12
ALTERNATIVE DISPUTE RESOLUTION ("ADR"); BINDING ARBITRATION
12.1 AGREEMENT TO USE PROCEDURE. The Partners have entered into this
Agreement in good faith in the belief that it is mutually advantageous to them.
It is with that same spirit of cooperation that they pledge to attempt to
resolve any dispute amicably without the necessity of litigation. Accordingly,
they agree if any dispute arises between them relating to this Agreement (the
"Dispute"), they will first utilize the procedures specified in this Article 12
(the "Procedure") prior to any Additional Proceedings.
12.2 INITIATION OF PROCEDURE. The Partner seeking to initiate the
Procedure (the "Initiating Partner") shall give written notice to the other
Partners, describing in general terms the nature of the Dispute, the Initiating
Partner's claim for relief an identifying one or more individuals with authority
to negotiate the Dispute on such Partner's behalf. The Partner(s) receiving such
notice (the "Responding Partner," whether one or more) shall have five (5)
business days within which to designate by written notice to the Initiating
Partner, one or more individuals with authority to negotiate the Dispute on such
Partner's behalf. The individuals so designated shall be known as the
"Authorized Individuals." The Initiating Partner and the Responding Partner
shall collectively be referred to as the "Disputing Partners" or individually
"Disputing Partner."
12.3 DIRECT NEGOTIATIONS. The Authorized Individuals shall be entitled
to make such investigation of the Dispute as they deem appropriate, but agree to
promptly, and in no event later than thirty (30) days from the date of the
Initiating Partner's written notice, meet to discuss resolution of the Dispute.
The Authorized Individuals shall meet at such times and places and with such
frequency as they may agree. If the Dispute has not been resolved within thirty
(30) days from the date of their initial meeting, the Disputing Partners shall
cease direct negotiations and shall submit the Dispute to mediation in
accordance with the following procedure.
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12.4 SELECTION OF MEDIATOR. The Authorized Individuals shall have five
(5) business days from the date they cease direct negotiations to submit to each
other a written list of acceptable qualified attorney-mediators not affiliated
with any of the Partners. Within five (5) days from the date of receipt of such
list, the Authorized Individuals shall rank the mediators in numerical order of
preference and exchange such rankings. If one or more names are on both lists,
the highest ranking person shall be designated as the mediator. If no mediator
has been selected under this procedure, the Disputing Partners agree jointly to
request a State or Federal District Judge of their choosing (or if they cannot
agree, the Chief Judge of the United States District Court for the county in
which the principal office of the Partnership is located, and if that Judge
refuses to act, the Presiding Judge of the State Administrative Judicial Region
for said county) to supply within ten (10) business days a list of potential
qualified attorney-mediators. Within five (5) business days of receipt of the
list, the Authorized Individuals shall again rank the proposed mediators in
numerical order of preference and shall simultaneously exchange such list and
shall select as the mediator the individual receiving the highest combined
ranking. If such mediator is not available to serve, they shall proceed to
contact the mediator who was next highest in ranking until they are able to
select a mediator.
12.5 TIME AND PLACE OF MEDIATION. In consultation with the mediator
selected, the Authorized Individuals shall promptly designate a mutually
convenient time and place for the mediation, and unless circumstances require
otherwise, such time to be not later than forty-five (45) days after selection
of the mediator.
12.6 EXCHANGE OF INFORMATION. In the event any Disputing Partner to
this Agreement has substantial need for information in the possession of another
Disputing Partner to this Agreement in order to prepare for the mediation, all
Disputing Partners shall attempt in good faith to agree to procedures for the
expeditious exchange of such information, with the help of the mediator if
required.
12.7 SUMMARY OF VIEWS. At least seven (7) days prior to the first
scheduled session of the mediation, each Disputing Partner shall deliver to the
mediator and to the other Disputing Partners a concise written summary of its
views on the matter in Dispute, and such other matters required by the mediator.
The mediator may also request that a confidential issue paper be submitted by
each Disputing Partner to him.
12.8 PARTIES TO BE REPRESENTED. In the mediation, each Disputing
Partner shall be represented by an Authorized Individual and may be represented
by counsel. In addition, each Disputing Partner may, with permission of the
mediator, bring such additional Persons as needed to respond to questions,
contribute information, and participate in the negotiations.
12.9 CONDUCT OF MEDIATION. The mediator shall determine the format for
the meetings, designed to assure that both the mediator and the Authorized
Individuals have an opportunity to hear an oral presentation of each Disputing
Partner's views on the matter in dispute, and that the authorized parties
attempt to negotiate a resolution of the matter in dispute, with or without the
assistance of counsel or others, but with the assistance of the mediator; to
this end, the mediator is authorized to conduct both joint meetings and separate
private caucuses with the Disputing Partners.
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The mediation session shall be private. To the extent permitted under applicable
law, the mediator will keep confidential all information learned in private
caucus with any Disputing Partner unless specifically authorized by such
Disputing Partner to make disclosure of the information to the other Disputing
Partner. The Disputing Partners commit to participate in the proceedings in good
faith with the intention of resolving the Dispute if at all possible.
12.10 TERMINATION OF PROCEDURE. The Disputing Partners agree to
participate in the mediation procedure to its conclusion. The mediation shall be
terminated (1) by the execution of a settlement agreement by the Disputing
Partners, (2) by a declaration of the mediator that the mediation is terminated,
or (3) by a written declaration of a Disputing Partner to the effect that the
mediation process is terminated at the conclusion of one full day's mediation
session. Even if the mediation is terminated without a resolution of the
Dispute, the Disputing Partners agree not to terminate negotiations and not to
commence any litigation or other legal proceedings to resolve the Dispute
("Additional Proceedings") prior to the expiration of five (5) days following
the mediation. Notwithstanding the foregoing, any Disputing Partner may commence
Additional Proceedings within such five (5) day period if the Dispute could be
barred by an applicable statute of limitations.
12.11 FEES OF MEDIATION; DISQUALIFICATION. The fees and expenses of the
mediator shall be shared equally by the Disputing Partners. The mediator shall
be disqualified as a witness, consultant, expert or counsel for any Disputing
Partner with respect to the Dispute and any related matters.
12.12 CONFIDENTIALITY. To the extent permitted under applicable law,
the mediation process shall be confidential, and no stenographic, visual or
audio record shall be made. All conduct, statements, promises, offers, views and
opinions, whether oral or written, made in the course of the mediation by any
Disputing Partner, their agents, employees, representatives or other invitees
and by the mediator shall be confidential and shall, in addition and where
appropriate, be deemed privileged. To the extent permitted under applicable law,
such conduct, statements, promises, offers, views and opinions shall not be
discoverable or admissible for any purpose, including impeachment, in any
litigation or other proceeding involving the parties, and shall not be disclosed
to anyone not an agent, employee, expert, witness, or representative of any of
the Partners; provided, however, that evidence otherwise discoverable or
admissible is not excluded from discovery or admission as a result of its use in
the mediation.
12.13 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination, or invalidity thereof
which the Partners are unable to resolve using other procedures in this Article
12, shall be settled by arbitration in accordance with the rules of American
Arbitration Association by one or more arbitrators appointed under such rules,
in the place determined by the parties to the dispute, or if they cannot agree
on the location, in Cincinnati, Ohio. The decision of the arbitrator shall be
final and binding upon all parties hereto. Judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
expenses of arbitration shall be borne equally by the Partners who are parties
to the dispute.
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ARTICLE 13
GENERAL PROVISIONS
SECTION 13.1 NOTICES. Except as otherwise provided in this Agreement,
any and all notices, consents, waivers, requests, votes or other instruments or
communications provided for under this Agreement shall be in writing, signed by
the party giving the same and shall be deemed properly given only if sent by
registered or certified United States mail, postage prepaid, addressed: (a) in
the case of the Partnership or the General Partner, to the Partnership or the
General Partner, as the case may be, at the principal place of business of the
Partnership, (b) in the case of any Partner to such Partner at his address set
forth in the records of the Partnership. Each Partner may, by notice to the
Partnership, specify any other address for the receipt of such instruments of
communications. Any such communication sent by telegram shall be properly given
when received by the person to whom it is sent.
SECTION 13.2 INDEMNIFICATION OF GENERAL PARTNER. A General Partner
shall not be liable to the Partnership or the Limited Partners for any act or
omission performed or omitted by the General Partner in good faith pursuant to
the authority granted to the General Partner by the Partnership Agreement, but
not for fraud, bad faith or gross negligence. The Partnership shall indemnify
the General Partner for any loss or damage incurred by the General Partner on
behalf of the Partnership in or in furtherance of the Partnership interests,
except for liability arising out of fraud, bad faith or gross negligence. If a
claim for indemnification against liabilities under the Securities Act of 1933
(other than for expenses incurred in successful defense) is asserted against the
Partnership by the General Partner under the Agreement or otherwise, the
Partnership will, unless in the opinion of its counsel, the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction,
the question of whether such indemnification by it is against public policy, and
will be governed by the final adjudication of such issue. In the event the
General Partner pays any debt of the Partnership, the General Partner shall be
reimbursed therefor from Partnership assets.
SECTION 13.3 INTEGRATION. This Agreement embodies the entire agreement
and understanding among the Partners relating to the subject matter hereof, and
supersedes all prior agreements and understandings relating to such subject
matter.
SECTION 13.4 APPLICABLE LAW. This Agreement and the rights of the
Partners shall be governed by and construed and enforced in accordance with the
laws of the State of Georgia.
SECTION 13.5 COUNTERPARTS. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement binding on all
the parties hereto, notwithstanding that all the parties are not signatory to
the original counterpart.
SECTION 13.6 SEPARABILITY. In case any one or more of the provisions
contained in this Agreement or any application thereof shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and any other application thereof
shall not in any way be affected or impaired thereby.
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SECTION 13.7 BINDING EFFECT. Except as herein otherwise provided to the
contrary, this Agreement shall be binding upon, and inure to the benefit of, the
Partners and their respective heirs, executors, administrators, successors and
permitted assigns.
SECTION 13.8 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner is
not required to deliver or mail a copy of the Partnership's certificate of
limited partnership or any other certificate to any of the Limited Partners.
SECTION 13.9 AUTHORITY TO AMEND. Amendments to this Agreement shall
require the approval of the General Partner and the Limited Partners owning a
majority of the outstanding Units held by Limited Partners. Notwithstanding the
foregoing, no Partner's interest in Profits, Losses or cash distributions will
be reduced without the consent of that Partner. A copy of any amendment shall be
mailed in advance to all of the Limited Partners.
SECTION 13.10 GENDER. Wherever the context shall so require, all words
herein in a particular gender shall be deemed to include other genders where
applicable. In addition, singular words shall include the plural and plural
words shall include the singular.
SECTION 12.11 MEETINGS. Meetings of the Partners shall be held not less
than fifteen (15) days nor more than thirty (30) days after receipt of written
notice from the General Partner. The General Partner will give notice of a
meeting at any time upon their own choosing or within five (5) days after they
shall receive demand for a meeting from Limited Partners who own at least thirty
percent of the outstanding Units.
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IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
[GENERAL PARTNER] MILFAM LLC,
an Ohio limited liability company
By: /s/ Lloyd I. Miller, III
-----------------------------------------------
LIMITED PARTNERS:
Trust B under Section 6 of the Amended and Restated
Trust U/A Lloyd I. Miller, dated September 20, 1983
By: /s/ Blair Thompson
-----------------------------------------------
Trust D under Section 8 of the Amended and Restated
Trust U/A Lloyd I. Miller, dated September 20, 1983
By: /s/ Steven Hendrickson
-----------------------------------------------
/s/ Lloyd I. Miller, III
---------------------------------------------------
Lloyd I. Miller, III
/s/ Martin G. Miller
---------------------------------------------------
Martin G. Miller
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<PAGE> 26
MILFAM I L.P.,
A GEORGIA LIMITED PARTNERSHIP
PARTNERSHIP AGREEMENT
THE INTEREST REPRESENTED HEREBY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
APPLICABLE STATE LAW. THE INTEREST HAS BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (i)
AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (ii) AN OPINION OF COUNSEL
SATISFACTORY TO THE MILFAM I L.P. (THE
"PARTNERSHIP") TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT AND SUCH LAWS.
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