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SECURlTIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. 9 )*
IBS FINANCIAL CORP.
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Common Stock
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44922Q105
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(CUSIP Number)
Lawrence B. Seidman, 100 Misty Lane, Parsippany, NJ 07054 (201) 560-1400
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 3, 1996
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(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-l(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: (I) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item l; and (2) has hled no amendment subsequent thereto
reporting beneficial ownership of hve 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-l(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
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 subjcct to all other provisions of thc Act (however, see the
Notes).
<PAGE>
The statement on Schedule 13D which was filed on September 8, 1995,
Amendment #1 which was filed on November 6, 1995, Amendment #2 which was filed
on November 16, 1995, Amendment #3 which was filed on December 7, 1995,
Amendment #4 which was filed on February 5, 1996, Amendment #5 which was filed
on March 18, 1996, Amendment #6 which was filed on June 13, 1996, Amendment #7
which was filed on October 11, 1996 and Amendment #8 which was filed on November
19, 1996 on behalf of Seidman and Associates, L.L.C. ("SAL"), Seidman and
Associates II, L.L.C. ("SAL II"), Federal Holdings, L.L.C., ("Federal"), Seidman
Investment Partnership ("SIP"), L.P., Lawrence B. Seidman, Individually
("Seidman"), The Benchmark Company, Inc. ("TBCI"), Benchmark Partners LP
("Partners"), Richard Whitman, Individually ("Whitman"), Lorraine DiPaolo
("DiPaolo"), Individually, Ernest Beier, Jr., Individually ("Beier") and Dennis
Pollack ("Pollack") (collectively, the "Reporting Persons") with respect to the
Reporting Persons' beneficial ownership of shares of Common Stock, $.01 par
value (the "Shares"), of IBS Financial Corp., a New Jersey Corporation (the
"Issuer"), is hereby amended as set forth below. Such Statement on Schedule 13D
is hereinafter referred to as the "Schedule 13D". Terms used herein which are
defined in the Schedule 13D shall have their respective meanings set forth in
the Schedule 13D.
2. Identity and Background
Item 2 is amended as follows: (See Item 6(e) below.)
(a) Richard Baer
(b) 164-A Delancy Street, Newark, NJ 07105
(c) Casper Partition Systems, Inc. (Office Equipment)
(d) See below.*
(e) See below.**
(f) U.S.A.
(a) Brent G. Wolmer, Esq.
(b) 500 South Australian Avenue,
West Palm Beach, FL 33401
(c) Lewis Vegosen Rosenbach & Silver, P.A. (Attorney)
(d) See below.*
(e) See below.**
(f) U.S.A.
<PAGE>
(a) Sonia Seidman
(b) 19 Veteri Place, Wayne, NJ 07470
(c) Jans World of Travel, (Travel Agent)
Preakness Shopping Center
Wayne, NJ 07470
(d) See below.*
(e) See below.**
(f) U.S.A.
*None of the above persons during the last five years, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors.)
**None of the above persons, during the last five years was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding 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.
6. Contracts. Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The Issuer filed a Complaint in the United States District Court for
the District of New Jersey against the Reporting Persons. The Issuer's Complaint
alleges that the Reporting Persons have failed to disclose all the information
required by the federal securities laws in the nominating materials submitted by
the Committee To Maximize Shareholder Value (the "Committee") and in their
previously filed Schedule 13D. In addition, the Complaint alleges that the
Schedule 14A, which will be filed by the Committee, will also be deficient.
Among other things, the Complaint alleges that the Committee has failed to
disclose the identity of the various persons or entities who (1) assisted in
organizing the limited liability companies and partnerships, (2) financed the
Reporting Persons' purchases of the Issuer's Common Stock, or (3) are otherwise
deemed by the federal securities laws to be "participants" in the Committee's
threatened proxy contest. The Issuer's Complaint also alleges that the
previously filed Schedule 13D is incomplete and inaccurate because, among other
things, it does not annex copies of the various limited partnership agreements
and operating agreements, as exhibits, or provide a description of such
agreements. The Issuer is seeking a declaratory judgment that the Reporting
Persons are required, under the federal securities laws, to disclose the
identity of all investors, limited partners, members and others and to describe
the contracts, understandings and arrangements with such persons and entities.
The Issuer also seeks a declaratory judgment that, because of the alleged
deficiencies in the Reporting Persons' materials, the Issuer may reject the
nomination of Beier as a director and the request for a stockholder list.
[Subsequent to the filing of the Complaint, counsel for the Issuer has stated
that its Board of Director has rejected the nomination of Beier.]
The Reporting Persons have filed an Answer in the above-described
litigation, which denies the material allegations of the Complaint. In addition,
a Counterclaim has been filed which seeks to: (i) compel production of the
Issuer's shareholders' lists and (ii) to invalidate the reduction of the size of
the Board of Directors to six (6) members, which leaves one (1) Board seat
available to be filled at the election to be conducted at the next Annual
Shareholders' Meeting. Based in part upon the quotes attributed to the Issuer's
Chairman in an article appearing in the American Banker on November 19, 1996,
the Counterclaim alleges the reduction in the size of the Board of Directors
constitutes an improper action taken to avoid having the Reporting Persons gain
a position of influence or control. [The Issuer has not filed an Answer to the
Counterclaim, but its counsel has stated it plans to seek a dismissal of same.]
In addition, the Issuer seeks to enjoin further alleged violations of
the federal securities laws, additional purchase of shares, and the soliciting
of proxies until there is compliance with such laws.
The Reporting Persons, based on advice of counsel, do not believe that
disclosure of: the names of the limited partners of SIP, the Members of SAL, SAL
II and Federal; or the respective organization documents; or Mr. Seidman's
"clients" is required under the securities laws and regulations. The Reporting
Persons, therefore, make the disclosures that follow without admitting that same
are necessary or required. These disclosures are solely made to avoid the
expense of litigation and moot the Issuer's objections. [No claim has been
seriously lodged that disclosures are required to identify the shareholders of
the TBCI, a licensed broker-dealer; or to identify the limited partners of
Partners, which has been in existence since 1989. Hence, no disclosures are made
with regard to these entities.]
Seidman and Whitman are the only organizers of the Committee and the
Reporting Persons are its members. At the present time it is not contemplated
that any employee of any Committee Member will perform any functions other than
secretarial work in connection with the solicitation of proxies.
All of the below named limited partners, members and persons are
passive investors, who did not participate in the proxy contest between the
Committee and the Issuer that was conducted last year, and they will not
participate, in any manner, in the proxy contest to be conducted between the
Issuer and the Committee.
<PAGE>
A. The limited partners of SIP are: James J. Gallagher, Ph.D.; Kaplus
Hanover Associates (Robert Kaplus, General Partner); The
Ketron Family Trust DTD 10/20/89 (Russ Ketron, TTEE); Louis M. Rogow, M.D.
& Enid Z. Rogow and SAL. The General Partner of SIP is:
Veteri Place Corp; a New Jersey Corporation (Seidman is the sole officer, and
shareholder).
B. The members of SAL are: Seidman; Sonia Seidman; Seidcal Associates
LLC (Brant Cali, Managing Member); Paul Schmidt; and
Richard Greenberg.
C. The members of SAL II are: Sonia Seidman and Seidcal Associates, L.L.C.
(Brant Cali, Managing Member).
D. The members of Federal are: Charisma Partners, L.P. (General Partner:
8th Floor Realty Corp., Kevin Moore, Vice President),
Anne L. Peretz, Jesse W. Peretz, Eugenia Peretz, David L. Farnsworth,
Anne Farnsworth, Edmund S. Twining III, Taylor Twining, Edmund
S. Twining IV and Jonathan A. Bernstein.
E. Persons who have previously been referred to as "Seidman's clients" are:
Jeffrey Greenberg (owns 2,700 Shares) and Steven Greenberg (owns 2,700 Shares).
[Seidman has letter agreements with Jeffrey and Steven Greenberg (these
agreements are annexed)] and Richard Baer (owns 635 Shares of which 165 are
owned in his wife's retirement account over which Mr. Baer exercises discretion)
and Brent Wolmer (owns 600 Shares). [Seidman has oral agreements with Richard
Baer and Brent Wolmer. Under these oral agreements, which are at-will
agreements, these owners have agreed to sell and vote their shares as directed
by Seidman.]
F. Sonia Seidman (owns 1,171 shares) is the wife of Seidman. She has
orally agreed to vote and sell the shares as directed by
Seidman.
G. None of the partners of SIP, or members of SAL, or members of SALII,
or members of Federal own any shares of Issuer.
<PAGE>
7. Material to be filed as Exhibits
Exhibit A Offering Prospectus and Amended and
Restated Agreement of Limited Partnership
Investment Partnership, L.P.,
Questionnaire and Amendment #1 to Limited
Partnership Certificate of Seidman Investment
Partnership, L.P.
Exhibit B Operating Agreement for Seidman and
Associates, L.L.C.
Exhibit C Operating Agreement for Seidman and Associates II,
L.L.C.
Exhibit D Operating Agreement for Federal Holding LLC
and First Amendment to Operating Agreement
Exhibit E Seidman's Letter Agreements with Clients
Jeffrey Greenberg
Steven Greenberg
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
December 3, 1996 /s/ Lawrence B. Seidman, Manager
Date Seidman and Associates, L.L.C.
December 3, 1996 /s/Lawrence B. Seidman, Manager
Date Federal Holdings, L.L.C.
/s/Lawrence B. Seidman, General Partner
Date Seidman Investment Partnership, L.P.
December 3, 1996
Date /s/Lawrence B. Seidman, Individually
December 3, 1996
/s/Richard Whitman, President
The Benchmark Company, Inc.
December 3, 1996
/s/Richard Whitman, General Partner
Benchmark Partners, LP
December 3, 1996
/s/Richard Whitman, Individually
December 3, 1996
/s/Lorraine DiPaolo, Individually
December 3, 1996
/s/Ernest Beier, Jr., Individually
December 3, 1996 /s/Dennis Pollack, Individually
December 3, 1996
/s/ Lawrence B. Seidman, Manager
Seidman & Associates II,L.L.C.
Exhibit A
CONFIDENTIAL - NOT TO BE REPRODUCED OR CIRCULATED
SEIDMAN INVESTMENT PARTNERSHIP, L.P.
A NEW JERSEY LIMITED PARTNERSHIP
PRIVATE PLACEMENT MEMORANDUM
LIMITED PARTNERSHIP INTEREST
JANUARY 5, 1995
THIS PRIVATE PLACEMENT MEMORANDUM HAS BEEN SUBMITTED TO YOU CONFIDENTIALLY IN
CONNECTION WITH THE PRIVATE PLACEMENT OF LIMITED PARTNERSHIP INTERESTS AND DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE
INTERESTS IN ANY STATE OR JURISDICTION IN WHICH THE OFFER OR SALE OF THE
INTERESTS WOULD BE PROHIBITED OR TO ANY ENTITY OR INDIVIDUAL NOT POSSESSING THE
QUALIFICATIONS DESCRIBED IN THIS MEMORANDUM.
For the information of:
Number
PRIVATE OFFERING TO QUALIFIED INVESTORS
AND A LIMITED NUMBER OF NON-QUALIFIED INVESTORS
<PAGE>
THE LIMITED PARTNERSHIP INTERESTS REFERRED TO IN THIS PRIVATE PLACEMENT
MEMORANDUM HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT AND THOSE LAWS. THE INTERESTS ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE 1933 ACT AND THE SECURITIES LAWS OF CERTAIN STATES PURSUANT
TO REGISTRATION OR EXEMPTION FROM REGISTRATION. THE INTERESTS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAS ANY OF THOSE
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IN NO EVENT SHOULD THIS PRIVATE PLACEMENT MEMORANDUM BE DUPLICATED OR
TRANSMITTED TO ANYONE OTHER THAN THE PROSPECTIVE INVESTOR TO WHOM IT WAS
DIRECTED BY WRITTEN COMMUNICATION OF THE OFFEROR.
CALIFORNIA
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE CALIFORNIA CORPORATION CODE BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE CALIFORNIA CORPORATIONS CODE, IF SUCH REGISTRATION IS REQUIRED.
CONNECTICUT
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BANKING
COMMISSIONER OF THE STATE OF CONNECTICUT NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
FLORIDA
PURSUANT TO SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR
PROTECTION ACT, AN OFFEREE WHO IS A RESIDENT OF FLORIDA MAY, AT THE OFFEREE'S
OPTION, VOID ANY PURCHASE HEREUNDER WITHIN A PERIOD OF THREE (3) DAYS AFTER HE
(A) FIRST TENDERS OR PAYS THE CONSIDERATION TO THE PARTNERSHIP REQUIRED
HEREUNDER OR (B) DELIVERS HIS EXECUTED SUBSCRIPTION AGREEMENT WHICHEVER OCCURS
LATER. TO ACCOMPLISH THIS, IT IS SUFFICIENT FOR A FLORIDA OFFEREE TO SEND A
LETTER OR TELEGRAM TO THE PARTNERSHIP WITHIN THE THREE (3) DAY PERIOD, STATING
THAT HE IS VOIDING AND RESCINDING THE PURCHASE. IF AN OFFEREE SENDS A LETTER, IT
IS PRUDENT TO DO SO BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO INSURE THAT
IT IS RECEIVED AND TO EVIDENCE THE TIME OF MAILING.
ILLINOIS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY OF STATE
OF ILLINOIS OR THE STATE OF ILLINOIS, NOR HAS THE SECRETARY OF STATE OF ILLINOIS
<PAGE>
OR THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IOWA
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
NORTH CAROLINA
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
PENNSYLVANIA
EACH SUBSCRIBER WHO IS A PENNSYLVANIA RESIDENT HAS THE RIGHT TO WITHDRAW HIS
ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE PARTNERSHIP OR ANY OTHER
PERSON WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE PARTNERSHIP OF
HIS DULY EXECUTED SUBSCRIPTION AGREEMENT OR THE INITIAL PAYMENT FOR THE PURCHASE
OF HIS LIMITED PARTNERSHIP INTEREST, WHICHEVER IS LATER. ANY NOTICE OF
WITHDRAWAL SHOULD BE MADE BY TELEGRAM OR CERTIFIED OR REGISTERED MAIL AND WILL
BE EFFECTIVE UPON DELIVERY TO WESTERN UNION OR DEPOSIT IN THE UNITED STATES
MAILS, TRANSMITTAL OR POSTAGE FEES PAID. UPON SUCH WITHDRAWAL, THE SUBSCRIBER
WILL HAVE NO OBLIGATION OR DUTY UNDER THE SUBSCRIBER AGREEMENT TO THE
PARTNERSHIP, THE GENERAL PARTNERS, OR ANY OTHER PERSON, AND WILL BE ENTITLED TO
THE FULL RETURN OF ANY AMOUNT PAID BY HIM, WITHOUT INTEREST.
NEITHER THE PENNSYLVANIA SECURITIES COMMISSION NOR ANY OTHER AGENCY HAS PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING AND ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
PENNSYLVANIA SUBSCRIBERS MAY NOT SELL THEIR PARTNERSHIP INTERESTS FORM THE
DATE OF PURCHASE IF SUCH A SALE WOULD VIOLATE SECTION 203(d) OF
THE PENNSYLVANIA SECURITIES ACT.
<PAGE>
TEXAS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER APPLICABLE LAWS OF TEXAS AND
THEREFORE CANNOT BE RESOLD OR TRANSFERRED UNLESS SUBSEQUENTLY REGISTERED OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
<PAGE>
TABLE OF CONTENTS
Introduction...............................................................1
..
Summary Description of the Partnership.............................1
and the Offering
Management.........................................................1
Investment
Objective..........................................................2
Investment.Approach and Policies ..................................2
Special
Techniques.........................................................2
Scheduled Term of Partnership......................................2
Minimum Initial Investment by
Limited Partners
..........................................................2
Expenses...........................................................2
Administrative
Fee................................................................2
Allocation of Profit or
Loss...............................................................2
Additional
Contributions......................................................3
Admission of Limited Partners......................................3
Withdrawals by Limited Partners....................................3
Eligibility Standards for
Investors..........................................................3
Compensation to Third Parties......................................3
Evaluating the
Partnership........................................................4
Investment
Techniques.........................................................4
Special
Techniques.........................................................5
Short-Term
Trading............................................................5
Leverage...........................................................5
<PAGE>
Options
Strategies.........................................................5
Derivatives........................................................5
Publicly Distributed
Securities.........................................................5
Use of Cash and Cash Equivalents...................................6
Management.........................................................6
The General
Partner............................................................6
Certain
Risks..............................................................7
Dependence on the General Partners.................................7
Risks of Special
Techniquess........................................................7
Short Term
Trading............................................................7
Leverage...........................................................7
Short
Sales..............................................................7
Options............................................................7
Illiquidity........................................................7
Changes in Applicable
Law................................................................8
Conflicts of
Interest...........................................................8
Services of the General
Partners...........................................................8
Allocation of Investment Opportunities.............................8
Co-Investment by the General Partners.....................8
General Partners' Share of
Profits...................................................8
Resolution of
Conflicts.................................................9
Tax
Consequences.......................................................9
Federal Income Tax Considerations in General.............9
Federal Income Tax Rules Applicable to
Options and Hedging Transactions.........................10
<PAGE>
Options in
General............................................................10
Section 1256
Contracts..........................................................11
Straddles..........................................................11
Allocation of Taxable
Income.............................................................11
State and Local Tax
Consequences.......................................................11
Tax Information....................................................12
The Partnership Agreement
...................................................................13
Control............................................................13
Liability of the General Partners
...................................................................13
Liability of Limited
Partners...........................................................13
Additional Contributions; New Limited Partners.....................13
Form of Contributions
...................................................................13
Allocations........................................................13
Expenses...........................................................15
Withdrawals by Limited
Partners...........................................................15
Withdrawals by the General Partners and Limited
Partners that are Affiliates of General Partners ..................16
Term of
Partnership........................................................16
Dissolution........................................................16
Reports............................................................16
Amendments.........................................................16
Indemnifiction.....................................................17
Rights of
Transfer...........................................................17
Investing in the
Partnership........................................................17
Minimum
Subscription.......................................................17
Investor Suitability
Standards...........................................................17
Access to Information.
....................................................................19
<PAGE>
Method of Subscription
....................................................................19
Miscellaneous Securities Matters
....................................................................19
Registration Under the Investment
Advisers
Act.................................................................19
Exemption from the Investment Company Act...........................20
Additional Information
....................................................................20
Professional
Assistance..........................................................20
EXHIBITS
Exhibit A -Agreement of Limited Partnership
Exhibit B - Offeree Questionnaire
Exhibit C - Subscription Agreement
<PAGE>
INTRODUCTION
Seidman Investment Partnership, L.P. (the "Partnership") is a New Jersey limited
partnership seeking to maximize capital appreciation in the securities markets
through analysis of individual securities, not markets. Securities are selected
on the basis of perceived pricing inefficiencies in stocks based on their
comparison to other stocks in the same industry segment, growth rate in either
earnings of assets and cash flow. The General Partner believes the majority of
these opportunities occur in companies not well followed by Wall Street
research. Market risk may be hedged through the use of short sales and various
option strategies.
SUMMARY DESCRIPTION OF THE
PARTNERSHIP AND THE OFFERING
The Partnership offers limited partnership interests (the "Interests")
privately to no more than 35 "non accredited" investors and to "accredited"
investors who, upon admission to the Partnership, become its Limited Partners
(the "Limited Partners"). The following is a summary description of the
Partnership and certain of the major terms of the offering and is qualified in
its entirety by information appearing elsewhere in this Private Placement
Memorandum and in the Partnership's Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement").
MANAGEMENT General Partner. Veteri Place Corporation ("Veteri"),
a New Jersey Corporation shall serve as the General
Partner and have complete and exclusive control of
the management of the Partnership. Veteri is wholly
owned by Lawrence B. Seidman ("Seidman") and he is
the only operating officer of the Corporation. Veteri
was formed solely to serve as the General Partner of
the Partnership and its only asset is a note
receivable from Seidman. Seidman has over 10 years
experience in the investment business. The General
Partner shall be permitted to share any fees and
other financial benefits with third parties.
<PAGE>
INVESTMENT
OBJECTIVE The Partnership's investment
objective is to maximize capital
appreciation by long and short
term investments in and the short
sale of securities. See "EVALUATING
THE PARTNERSHIP."
INVESTMENT APPROACH
AND POLICIES The Partnership seeks to
meet its objective through
investment in what are deemed to be
inefficiently priced stocks based on
estimates of their future growth
rate in earnings or assets and cash
flow. The Partnership may effect
short sales of securities which the
General Partner considers to be
overpriced or subject to adverse
business conditions not currently
reflected in their price.
SPECIAL TECHNIQUES The Partnership may attempt to
enhance its performance by engaging
in short-term trading
and by using leverage and certain
hedging techniques. "EVALUATING
THE PARTNERSHIP --
Special Techniques."
SCHEDULED TERM OF
PARTNERSHIP 20 years. See 'THE PARTNERSHIP
AGREEMENT -- Term of Partnership."
MINIMUM INITIAL
INVESTMENT BY
LIMITED PARTNERS $100,000 subject to waiver by the
General Partner under appropriate
circumstances. See
'INVESTING IN THE PARTNERSHIP
--General Information."
EXPENSES Administrative, legal, audit and
investment expenses are paid by the
Partnership. See
"THE PARTNERSHIP AGREEMENT --
Expenses."
ADMINISTRATIVE FEE The Partnership pays the General
Partner as of the end of each fiscal
quarter of the Partnership an
administrative fee at an annual rate
equal to 1% of the value of the
Partnership's assets. In addition,
the General Partner shall receive an
Incentive Allocation fee equal to
20% of the Partnership's annual
profits.
ALLOCATION OF PROFIT
OR LOSS Net Profit for each year (as defined
below) is allocated to the Partners,
on the basis of the proportion that
such Partners'Capital accounts bear
to the capital accounts of all the
Partner. At the end of the fiscal
year, 20% of Net Profit allocated
to the accounts of the
Limited Partners will be
re-allocated to the General Partner
(the "Incentive Allocation"). The
General Partners may reallocate to
Special Limited Partners and other
third parties all or a portion of
the Incentive Allocation. Net
loss for each fiscal year (as
defined below) generally is
allocated to each Partner in
proportion to and in accordance with
the Capital account of the Partner.
<PAGE>
To the extent losses have been
allocated to the account of a
Partner 100% of a subsequent Net
Profits attributable to such Partner
are allocated to the account of that
Partner until all such losses have
been recouped. Only after such
losses have been recouped the
General Partner is entitled to the
20% Incentive Allocation on
subsequent profits.
ADDITIONAL
CONTRIBUTIONS Additional contributions to the
Partnership may be made by a Partner
quarterly or more frequently at the
discretion of the General Partner.
See "THE PARTNERSHIP
AGREEMENT -- Additional
Contributions;New Limited Partners."
ADMISSION OF LIMITED
PARTNERS New Limited Partners may be admitted
to the Partnership as of the first
day of any fiscal quarter of the
Partnership, or more frequently at
the discretion of the General
Partner. See 'THE PARTNERSHIP
AGREEMENT -- Additional
Contributions; New Limited
Partners."
WITHDRAWALS BY
LIMITED PARTNERS Withdrawals by Limited Partners are
permitted annually as of the last
day of the Fiscal Year on 180 days'
written notice to the General
Partner provided such Limited
Partner has been a Partner of the
Partnership for eight full Fiscal
quarters, unless otherwise permitted
at the discretion of the General
Partner. The withdrawing Limited
Partner shall pay for any costs
incurred by the Partnership to
effectuate the withdrawal. At the
discretion of the General Partner,
distributions uponwithdrawal may be
in cash or in kind or both. See
"THE PARTNERSHIP AGREEMENT --
Withdrawals by Limited Partners."
ELIGIBILITY STANDARDS
FOR INVESTORS Interests described in this Private
Placement Memorandum are not
registered under the Securities Act
of 1933, as amended (the "1933
Act"), in reliance upon the
exemption contained in Section 4(2)
of the 1933 Act and Regulation D
thereunder for transactions
not involving a public offering. An
offer and sale of Interests is made
only to a prospective investor who
satisfies, in the judgment of the
General Partner, certain suitability
standards. See "INVESTING IN THE
PARTNERSHIP--Investor Suitability
Standards."
COMPENSATION TO
THIRD PARTIES Interests in the Partnership may be
offered with the assistance of
registered broker dealers and others
who are not affiliated with the
Partnership. Subject to applicable
state securities laws such persons
may receive compensation for their
services based on the percentage o
the amount invested as a result of
their services. The identity and
amount of compensation to be paid
are disclosed to the prospective
Limited Partner prior to the
acceptance of his Subscription
Agreement by the Partnership.
<PAGE>
EVALUATING THE PARTNERSHIP
Seidman Investment Partnership, L.P. ("Partnership"), is a limited
partnership seeking to maximize capital appreciation in the securities markets
through the purchase and short sale of securities, while hedging its risks
through the use of various techniques such as short selling, and purchase and
sale of stock and index options, convertible securities and fixed income
securities. While the primary goal of the Partnership is long term capital gain,
it does not overlook opportunities to identify short term aberrations in the
pricing of certain securities and to take advantage of the resulting price
movement. Such opportunities may arise when, for example, stock of a
historically successful company suffers a large percentage loss as a result of a
non-recurring event such as a sudden catastrophic loss or an unanticipated
dividend cut. The Partnership may also take advantage of opportunities in time
arbitrage when it believes the risk reward ratio is strongly in its favor. Time
arbitrage is the purchase of securities of companies involved in takeovers,
restructuring, stock buybacks, etc. The Partnership buys the stock of such
companies if it believes the "spread" between the market price and eventual
price on the completion of the transaction is great enough on a percentage basis
to merit investment.
Investment Techniques
The Partnership attempts to maximize capital gains through analysis of
individual securities, not markets. The General Partner believes that over
extended periods of time stock selection, not market timing, is the key
ingredient of investment success. Therefore, the Partnership concentrates its
efforts in a "bottoms-up" stock selection process as opposed to a "top-down"
macro-economic approach. Securities are selected primarily on the basis of what
the General Partner deems to be inefficiencies in the pricing of the stock at
any given time. These inefficiencies can occur when the market is overlooking
the potential of a company's assets, cash flow, brand names or market niche, and
securities with these characteristics are often referred to as "value" stocks.
Undervaluation can also occur when a company's current or future growth in
earnings is not attracting a price/earning ratio in line with that growth.
Generally, the Partnership avoids investing in companies which are
widely followed by Wall Street analysts as the opportunities for pricing
inefficiencies in those companies are rare. The Partnership may take
concentrated positions in those companies where it believes extraordinary
capital gain potential exists. When the Partnership owns more that 5% of a
company's stock it will be required to file a Form 13D disclosing its position
and other data. The Partnership may attempt to acquire control of such companies
which may require the Partnership's involvement in a proxy contest or other
take-over litigation.
To hedge its position and with a view to enhancing its performance, the
Partnership may sell securities short. If the Partnership believes a company has
poor business prospects or its stock price has been inflated by overly
optimistic Wall Street assessments, it may sell short expecting the stock price
to decline substantially. The Partnership may be a short seller of securities.
Selling securities short involves selling securities that the Partnership does
not own. To make delivery to the purchaser of the securities, the Partnership
borrows securities from a third party lender. The Partnership typically fulfills
its obligation to the lender by purchasing securities in the market. The
Partnership generally is required to pledge cash with the lender equal to the
market price of the borrowed securities. This deposit may be increased or
decreased in accordance with changes in the market price of the borrowed
securities. During the period in which the securities are borrowed, the lender
typically retains its right to receive interest and dividends accruing to the
securities, but pays the Partnership a fee for the use of the Partnership's
cash. This fee is based on prevailing interest rates, the availability of the
particular security for borrowing, and other market factors.
<PAGE>
Special Techniques
The Partnership attempts to enhance its performance by
engaging in short-term trading and by using leverage and attempts to hedge its
portfolio by the use of options, warrants, convertible securities, and similar
strategies. These special investment techniques are described below.
Short-Term Trading. The Partnership typically seeks to invest and hold
for the long term a "core" of equity securities. The extent of this core of
equity positions depends on market conditions, but typically represents more
than 50% of the Partnership's assets at any one time. From time to time, the
Partnership may make frequent changes in that part of its portfolio that does
not fall within the Partnership's core positions to take advantage of
opportunities in the market.
Leverage. The Partnership expects to borrow funds for the purpose of
purchasing securities. Loans to the Partnership are arranged through
broker-dealers with which the Partnership maintains customer accounts. The
amount of borrowings that the Partnership may have outstanding at any time may
be large in comparison to its capital.
Options Strategies. The Partnership may purchase and sell put and call
options on both securities and stock indexes for the purpose of hedging its
portfolio positions. A stock index measures the movement of a certain group of
stocks by assigning relative values to the common stocks included in the index.
Examples of well-known stock indexes on which the Partnership may purchase put
and call options are the Standard & Poor's composite Index of 500 Stocks; the
Standard & Poor's 100 Index, the American Stock Exchange Major Market Index and
the New York Stock Exchange Composite Index.
Derivatives. The Partnership may use derivative securities to augment
returns or reduce risk. Derivatives are securities products developed by banks
and brokerage firms which are not traded on securities exchanges or in over -the
- -counter markets, but which mirror individual securities or "baskets" of
securities.
The Partnership does not presently intend to have derivatives represent
a significant amount of its equity but, rather, will use them in the same manner
as conventional option strategies.
Publicly Distributed Securities
From time to time the Partnership may purchase securities which are
part of a public distribution. If such securities trade at a premium in the
secondary market immediately after the distribution process has commenced, the
National Association of Securities Dealers, Inc. ("NASD") has taken the position
in its Rules of Fair Practice that such securities are part of a "hot issue"
and, accordingly members of the NASD may not sell such securities to an account
in which a member, or a person having specified relationships with a member, of
the NASD has an interest. In addition, in the case of senior bank officers and
certain other persons, participation is permitted in hot issues only in certain
circumstances.
In view of this restriction, the Partnership Agreement provides a
mechanism for the purchase of securities in a public distribution without
presenting any problems to a limited partner who would or might be deemed to
come within the NASD prohibition or to the Partnership.
In essence, the mechanism provided for in the Partnership Agreement for
hot issues is for the Partnership to have, in addition to his regular accounts,
a special account (the "Hot Issues Account"), the sole purpose of which is to
purchase securities which are part of a public distribution and are considered a
"hot issue". Only those limited partners who do not fall within the prohibition
of the NASD have a beneficial interest in the Hot Issues account (as compared to
the Partnership's regular accounts in which all Partners have an interest).
<PAGE>
The General Partner and Seidman as the controlling shareholder of the
General Partner may not have a beneficial interest in the Hot Issues account
because he is presently affiliated with a member of the NASD, and accordingly
does not receive any of the net profits attributable to such investments.
Use of Cash and Cash Equivalents
Pending investment of the proceeds of this offering in accordance with
the Partnership's investment objective and policies, when the General Partner
believes the Partners should follow a temporary defensive posture, or when the
General Partner determines that opportunities for capital growth are
unattractive, the Partnership may, without limitation, hold cash or invest in
cash equivalents. Among the cash equivalents in which the Partnership may invest
are: obligations of the United States Government, its agencies or
instrumentalities ("U.S. government securities"); commercial paper; and
certificates of deposit and bankers' acceptances issued by domestic branches of
United States banks that are members of the Federal Deposit Insurance
Corporation. The Partnership may also engage in repurchase agreements, may
purchase shares of money market mutual funds and may receive interest paid on
its credit balances.
MANAGEMENT
The General Partner
Veteri is the General Partner of the Partnership. (See Exhibit D
attached hereto for the Financial Statement of the General Partner.) Seidman is
the controlling shareholder of Veteri. Seidman is an attorney admitted to
practice law in the States of New Jersey and New York and the District of
Columbia. For the past ten years he has been involved as a general partner
and/or counsel, in the organization of real estate and stock investment limited
partnerships. He has been a Director of the Savings Bank of Rockland County and
a Director and Chairman of the Board of Crestmont Financial Corp., the holding
company for Crestmont Federal Savings & Loan Association, Inc. He has also been
an officer and director of Seidman & Rappaport, P.A., a law firm he organized
and prior thereto was an associate at two separate law firms. Seidman is
presently involved in an administratilve proceeding with the Office of Thrift
Supervision (OTS) which could conclude with the issuance of a Cease and Desist
Order and possibly a small civil money penalty being issued against Seidman.
Seidman has refuted the allegations brought against him by the OTS. The matter
has been remanded by the Third Circuit Court of Appeals back to the OTS. At this
time the OTS has not expressed any opinion with respect to the resolution of
this matter
<PAGE>
CERTAIN RISKS
Purchasing interest involves certain risks to an investor. Careful
attention should be given to the significant risks discussed in the following
summary.
Dependence on the General Partner
All decisions with respect to the management of the Partnership are
made exclusively by or under the supervision of Mr. Seidman as the controlling
shareholder and President and sole operating officer of the General Partner.
Limited Partners have no right or power to take part in the management of the
Partnership. As a result, the success of the Partnership for the foreseeable
future depends largely upon his ability.
Risks of Special Techniques and Short Sales
Each of the special investment techniques that the Partnership may use
is subject to certain risks that are summarized below.
Short-Term Trading. The Partnership's engaging in short -term trading
may result in the Partnership's experiencing significant turnover and
transactions costs.
Leverage. Borrowing money to purchase securities provides the
Partnership with the opportunity for greater capital appreciation but, at the
same time, may increase the Partnership's exposure to capital risk and higher
current expenses. Moreover, if the Partnership's revenues were not sufficient to
pay the principal of and interest on the Partnership's debt when due, Partners
could sustain a total loss of their investment.
Short Sales. The possible losses to the Partnership from a short sale
of a security differ from losses that could be incurred from a cash investment
in the security; the former may be unlimited, whereas the latter can only equal
to the total amount of the cash investment. Short-selling activities are subject
to restrictions imposed by the federal securities laws and the various
securities exchanges.
Options. Purchasing and selling of call and put options entail risks.
Although an option buyer's risk is limited to the amount of the purchase price
of the option, an investment in an option may be subject to greater fluctuation
than an investment in the underlying securities. In theory, an uncovered call
writer's loss is potentially unlimited, but in practice the loss is limited by
the duration of the call. The risk for a writer of a put option is that the
price of the underlying security may fall below the exercise price.
The effectiveness of purchasing or selling stock index options as a
hedging technique depends upon the extent to which price movements in the
portion of the Partnership's hedged portfolio correlate with price movements of
the stock index selected. Because the value of an index option depends upon
movements in the level of the index rather that the price of a particular stock,
whether the Partnership realizes a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of stock prices in the
stock market generally, rather than movements in the price of a particular
stock. Successful use by the Partnership of options on stock indexes depends
upon the ability of the General Partner to predict correctly movements in the
direction of the stock market generally. This ability requires skills and
techniques different form those used in predicting changes in the price of
individual stocks.
Illiquidity
The Interest are being offered without registration under the 1933 Act
in reliance upon an exemption contained in Section 4(2) of the 1933 Act and
Regulation D thereunder. Certain restrictions on transferability preclude
disposition and transfer of Interests other than pursuant to an effective
<PAGE>
registration statement (which is not expected to exist) or in accordance with an
exemption from registration contained in the 1933 Act. In addition, the
Partnership Agreement requires that the consent of the General Partner be
obtained prior to the transfer of an Interest. In light of the restrictions
imposed on a transfer of an Interest, and in light of the limitations imposed on
a Partner's ability to withdraw all or part of his or its capital contribution
from the Partnership, an investment in the Partnership should be viewed as
illiquid and subject to high risk.
Changes in Applicable Law
The Partnership must comply with various legal requirements, including
requirements imposed by the federal securities laws and tax laws. Should any of
those laws change over the scheduled term of the Partnership, the legal
requirements to which the Partnership and the Partners may be subject could
differ materially from current requirements.
CONFLICTS OF INTERESTS
The Partnership is subject to various conflicts of interest arising out
of its relationship to the General Partner and the General Partners'
relationship with Seidman. Conflicts of interest involving the Partnership
include, but are not limited to, the following:
Services of the General Partner
The Partnership depends on the General Partner for the day-to-day
operation of the Partnership. Mr. Seidman devotes as much of his time to the
business of the General Partner and Partnership as in his judgment is reasonably
required, but is involved in other business activities, including organizing and
operating a partnership to invest in real estate and mortgages and other real
estate investments. As a result of his other activities, the General Partner may
have a conflict of interest in allocating management time, services and
functions among the Partnership and other business ventures.
Allocation of Investment Opportunities
The General Partner through Seidman is responsible for the investment
decisions made on behalf of the Partnership, and Seidman is also responsible
directly or indirectly for investment decisions made on behalf of other
potential clients and partnerships. If a determination is made that the
Partnership and any other client should purchase or sell the same securities at
the same time, the securities are allocated in a manner believed to be equitable
to each. Circumstances may occur, however, in which an allocation could have
adverse effects on the Partnership or the other client with respect to the price
or size of securities positions obtainable or saleable.
Co-Investment by the General Partner
From time to time, the General Partner or Seidman in their individual
capacity may invest in securities in which the Partnership invests. The General
Partner or Seidman do not, however, purchase or sell any securities on terms
more favorable than those received by the Partnership.
General Partner's Share of Profits
The General Partner shall receive a performance fee equal to 20 % of
the Annual Net Profit of the Partnership.
<PAGE>
Resolution of Conflicts
Under the terms of the Partnership Agreement, the General Partner, in
resolving a conflict of interest between the General Partner and his affiliates
and the Partnership or Limited Partners will consider the relative interests of
the parties involved in the conflict, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
principles.
TAX CONSEQUENCES
A description of all of the aspects of Federal, state and local laws
that may affect the tax consequences of investing in the Partnership is beyond
the scope of this Private Placement Memorandum. The discussion that follows is
intended to be only a summary of certain tax considerations generally affecting
the Partnership and the Limited Partners. Prospective Limited Partners should
satisfy themselves as to the tax consequences of investing in the Partnership by
obtaining advice from their own tax advisors.
Federal Income Tax Considerations in General
The Partnership has been advised that the Partnership should be treated
as a partnership, and not as a corporation, for federal income tax purposes
under current regulations, rulings and decisions.
Each Limited Partner generally will be required to report on his
federal income tax return his distributive share of the Partnership's income,
gains, losses, deductions and credits, if any, for the tax year of the
Partnership ending within or with the Limited Partner's tax year. Because the
Partnership's income is taxed when realized by the Partnership, it is not
usually taxed again when distributed to Partners. If the Partnership were taxed
as a corporation (1) the Partnership's income would be subject to corporate tax
rates; (2) Partnership items of income, gains, losses, deductions or credits
would not flow through to the Limited Partners; and (3) distributions to Limited
Partners, if any, would be taxed as dividends to the extent of current earnings
and profits.
It is uncertain as to whether the Partnership will be considered to be
engaged in an investment activity for Federal income tax purposes or in a trade
or business. If the Partnership is considered to be engaged in an investment
activity, an individual Limited Partner will be able to deduct his share of the
Partnership's expenses, including administrative fees, only to the extent that
those expenses (together with his other miscellaneous itemized deductions)
exceed 2% of his adjusted gross income. If the Partnership were not considered
to be engaged in an investment activity but were considered to be engaged in
trade or business, then its partners would not be subject to the 2% rule.
However, such trade or business would not be considered a passive activity, and
therefore losses and income of the Partnership from that trade or business would
be characterized as "non-passive" income or loss and could not be used by a
Limited Partner to offset other passive income or loss.
Whether the Partnership will be held to be engaged in a trade or
business or in an investment activity will depend on the extent and nature of
the Partnership's trading activity in any taxable year. This issue is largely
resolved on an analysis of facts, many of which will be known only in the
future. Moreover, it is unclear what legal standards would be applied to those
facts. Therefore, no clear guidance can be given whether the Partnership will be
considered to be engaged in a trade or business or an investment activity for
federal income tax purposes.
Under the Internal Revenue Code of 1986 (the "Code"), the deduction of
interest on funds borrowed to acquire or carry investment assets is limited.
This limit would apply to the interest expense of those investors, if any, who
borrow to purchase their Interests. In general, a deduction would be disallowed
to a noncorporate taxpayer to the extent his investment interest expense exceeds
his net investment income (i.e., the excess of non-trade or business income from
interests, dividends, rents and royalties, over expenses incurred in earning the
income).
<PAGE>
Taxpayers may elect to include any amount of their net capital gain in
their investment income when computing their allowable investment interest
deduction. However, if the election is exercised, taxpayers must reduce the
amount of their capital gains that are otherwise eligible for the maximum 28
percent tax rate by the amount included as investment income.
The deduction of investment interest that is disallowed under these
rules is not lost permanently, but may be claimed as an investment interest
deduction in succeeding taxable years subject to the limitation described above.
A taxpayer may not, under the code, deduct interest paid on
indebtedness incurred or continued for the purpose of purchasing or carrying
obligations, the income on which is exempt from tax. The service will infer a
purpose to carry tax -exempt obligations whenever a taxpayer owns tax -exempt
obligations and has outstanding indebtedness that is neither directly connected
with his personal expenditures nor incurred in connection with his active
conduct of a trade or business. Ownership of an Interest should not constitute
either a personal expenditure or the active conduct by the taxpayer of a trade
or business within the meaning of the Code. Therefore, in the case of a Limited
Partner owning tax-exempt obligations, the Service might take the position that
the Limited Partner's allocable portion of any interest expense of the
Partnership should be viewed in whole or in part as incurred to enable the
Limited Partner to continue carrying the tax -exempt obligations and that the
deduction of any interest by the Limited Partner should be denied in whole or in
part.
Federal Income Tax Rules Applicable
to Options and Hedging Transactions
The Federal income tax consequences of the Partnership's options and
hedging transaction depend upon the nature of any underlying security, whether
the option is written or purchased and whether the "1256 Contract" or "straddle"
rules, discussed separately below, apply to the transaction.
Options in General. When the Partnership writes a call or a put option
it receives a premium. If the option expires unexercised or is closed out, the
Partnership realizes a gain (or loss if the cost of closing out exceeds the
amount of the premium) without regard to any unrealized gain or loss on any
underlying security. Generally, any such gain or loss is a short-term capital
gain or loss. If a call option written by the Partnership is exercised, the
Partnership recognizes a capital gain or loss from the sale of the underlying
security, and treats the premium as additional sales proceeds. Whether the gain
or loss is long-term or short-term depends on the holding period of the
underlying security. If a put option written by the Partnership is exercised,
the amount of the premium reduces the tax basis of the security that the
Partnership then purchases.
If a purchased put or call option expires unexercised, the Partnership
realizes a capital loss equal to the cost of the option. If the Partnership
enters into a closing transaction with respect to the option, it realizes a
capital gain or loss (depending on whether the proceeds from the closing
transaction are greater or less than the cost of the option). The gain or loss
is short-term or long-term, depending on the Partnership's holding period in the
option. If the Partnership exercises a put option, it realizes a capital gain or
loss (short or long-term depending on its holding period for the underlying
security at the time it purchases the put) from the sale of the underlying
security measured by the sales proceeds decreased by the premium paid. If the
Partnership exercised a call option, the premium paid for the option is added to
the tax basis of the security purchased. Certain options purchased by the
Partnership that remain unexpired and unexercised at the end of the
Partnership's taxable year are treated as sold at their year-end fair market
value under the section 1256 Contract rules described below and the
corresponding gain or loss is recognized for Federal income tax purposes.
<PAGE>
Section 1256 Contracts. The Partnership intends to make investments
that would be characterized as "Section 1256 Contracts." Gain or loss on Section
1256 Contracts are taken into account for Federal income tax purposes when
actually realized. In addition, Section 1256 Contracts remaining unexercised at
the end of the Partnership's taxable year are treated as sold and then
repurchased at their year-end fair Market value (i.e., "marked-to-market"), with
the corresponding gain or loss recognized for Federal income tax purposes.
Generally, both the realized and unrealized year-end gains or losses from these
investment positions are treated as 60% long-term and 40% short-term capital
gain or loss, regardless of the Partnership's actual holding period for the
investments.
Straddies. The Partnership is generally authorized to enter into put,
call, covered call and other investments that may constitute one position in a
"straddle" when considered in conjunction with the other investments of the
Partnership. If two (or more) positions constitute a straddle, recognition of a
realized loss from one position (including a marked-to-market loss) must be
deferred to the extent of unrecognized gain in an off-settling position. In
addition, long-term capital gain may be recharacterized as short-term capital
gain, or short-term capital loss as long term capital loss. Interest and other
carrying charges allocable to personal property that is part of a straddle must
also be capitalized.
The Partnership may identify particular offsetting positions as being
components of a straddle, and a realized loss is recognized no earlier than upon
the liquidation of all of the components of the identified straddle. If the
Partnership makes certain elections, the Section 1256 Contract components of a
straddle are not subject to the 60%/40% marked-to-market rules described above.
Instead, the amount, the nature (as long-term or short-term) and the timing of
the recognition of the Partnership's gains or losses from the affected straddle
positions are determined under rules that vary according to the type of election
made.
A prospective investor in the Partnership should review the application
of these rules to his own particular tax situation with special regard to the
potential interaction between Partnership's operations and transactions entered
into by the investor in his own capacity.
Allocation of Taxable Income
As a consequence of new Limited Partners joining the Partnership and
existing Partners adding capital to or withdrawing capital from the Partnership
during a fiscal period of the Partnership, the allocation of taxable income for
tax purposes by the Partnership may differ from the way in which the benefits of
the income have been allocated among the Partners for financial purposes in any
one period.
State and Local Tax Consequences.
Prospective investors in the Partnership should consider not only
federal income tax consequences, but also the potential state and local tax
implications of an investment in the Partnership. State and local taxation of
Limited Partners differ, depending largely upon place of residence.
The Partnership should not be subject to the New York City
unincorporated business tax, which is not imposed on a partnership that invests
in securities for its "own account." By reason of a similar "own account"
exemption, an individual Limited Partner that is a non-resident of New York
state should not be subject to New York state personal income tax with respect
to his investment in the Partnership. In addition, a Limited Partner that is on
non-residents with respect to his investment in the Partnership. A Limited
Partner which is a corporation is not deemed to be doing business in the state
of New York because of the location of the Partnership's office.
<PAGE>
Tax Information
The General Partners provide the Limited Partners with such
statements and reports with respect to the Partnership's activities as are
required to enable the Limited Partners to file their annual tax returns.
<PAGE>
THE PARTNERSHIP AGREEMENT
The following is a brief discussion of certain provisions of the
Partnership Agreement, some of which are also described elsewhere in this
Private Placement Memorandum. To obtain more detailed information, reference
should be made to the Partnership Agreement, which is attached as Exhibit A.
Control
The General Partner has the exclusive right to manage and control the
affairs of the Partnership. No Limited Partner is permitted to participate in
the control of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for the Partnership or
bind the Partnership in any other way.
Liability of the General Partners
The doing of any act or the failure to do any act by the General
Partner, the effect of which may cause or result in loss, liability, damage or
expense to the Partnership or any Partner, does not subject the General Partner
to any liability to the Partnership or to any Partner, except that the General
Partner may be so liable if he acted fraudulently or in bad faith, was grossly
negligent or guilty of willful misfeasance.
Liability of the Limited Partners
A Limited Partner is not liable for any debts or bound by any
obligations of the Partnership, except to the extent of his or its capital
contribution. A Limited Partner receiving a return of any part of the capital he
(she) or it contributes to the Partnership, is not liable to the Partnership for
the amount of the return unless he knew, at the time of the distribution, that,
after giving effect to the distribution, all liabilities of the Partnership,
other than liabilities to Partners on account of their interests in the
Partnership, exceeded the fair value of the Partnership's assets.
Additional Contributions; New Limited Partners
Any Partner may elect, with the consent of the General Partner, to make
additional contributions to the Partnership's capital as of the first day of any
fiscal quarter of the Partnership. The General Partner may, in its discretion,
permit additional contributions to be made more frequently than quarterly.
New Limited Partners may be admitted to the Partnership as of the first
day of any fiscal quarter of the Partnership. The General Partner may, in its
discretion, however, admit new Limited Partners more frequently than quarterly.
Form of Contributions
Contributions to the Partnership's capital must be in cash.
Allocations
Except as otherwise provided in the Partnership Agreement regarding the
treatment of the "Hot Issues Account", allocation of Net Profits (as defined
below) is a two -step process. First, all Net Profits are provisionally
allocated to all Partners in proportion to their respective Capital Accounts.
Then, 20% of the Net Profits provisionally allocated to Limited Partners (except
certain Limited Partners affiliated with the General Partner) is reallocated to
the General Partner. This 20% reallocation is the "Incentive Allocation".
Notwithstanding the preceding, if a Net Loss has been allocated to any Partner,
no part of the Net Profits provisionally allocated to such Partner's account are
reallocated to the General Partner as Incentive Allocation until the amount of
such loss has been recouped. This is referred to in the Partnership Agreement as
<PAGE>
the "Recoupment Allocation". If a Limited Partner who is entitled to a
Recoupment Allocation withdraws any portion of his Capital Account, the amount
of Recoupment Allocation to which he is entitled is reduced in proportion to the
amount of capital withdrawn. Net Losses (as defined below) are allocated to all
Partners in proposition to their respective Capital Accounts. The General
Partner has unlimited liability for the obligations of the Partnership. This
means that if the Partnership ware unable to pay its obligations, creditors of
the Partnership would have claims against the General Partner. Accordingly, if
the Partnership were to have a negative net worth, which could be reflected as
negative balances in the General Partners' Capital Accounts, profits would be
allocated to the General Partner until the negative balances were eliminated.
Thereafter, allocation of profits would return to the normal basis described
above.
For purposes of the allocation procedures described above, Net Profit
of the Partnership means, with respect to a particular fiscal period of the
Partnership, the excess of the aggregate revenue, income and gains (realized and
unrealized) earned on an accrual basis by the Partnership during the fiscal
period from all sources over the expenses and losses (realized and unrealized)
incurred on an accrual basis during the fiscal period. Net loss, for purposes of
the allocation procedures described above, means, with respect to a fiscal
period of the Partnership, the excess of all expenses and losses (realized and
unrealized) incurred on an accrual basis during the fiscal period over the
aggregate revenue, income and gains (realized and unrealized) earned on an
accrual basis by the Partnership during the fiscal period from all sources.
Gains, losses and expenses are allocated by the Partnership for income
tax purposes in a manner so as to reflect as nearly as possible the amounts
credited or charged to each Partner's Capital Account under the financial
allocation procedures described above. All matters concerning the valuation of
securities, the allocation of profits, gains and losses among the Partners,
including the taxes on them, and accounting procedures, not specifically and
expressly provided for by the terms of the Partnership Agreement, are determined
in good faith by the General Partner, whose determinations are final, binding
and conclusive upon all of the Partners.
At such times as the General Partner wishes to effect a transaction in
the "Hot Issues Account" (as described in Section 10 of the Partnership
Agreement), the requisite funds would be transferred to the Hot Issues Account
from one or more of the regular accounts. Securities involved in the
distribution are purchased in the Hot Issues Account. If sold, the proceeds of
sale are transferred from the Hot Issues Account to the regular account. If
securities are to be held, such securities are purchased by the regular account
from the Hot Issues Account at fair market value.
At the end of the particular Fiscal Period, if the Hot Issues Account
has been in existence in that Fiscal Period:
(a) interest is charged to the Limited Partners having a beneficial
interest in the Hot Issues Account on the monies paid to purchase the
securities in the Hot Issues Account. Such interest is charged to the
Limited Partners in accordance with their interests in the Hot Issues
Account (being based on the relationship between their Capital accounts
as of the beginning of the fiscal Period) at the rate from time to time
being paid, or which would have been paid, by the Partnership for
borrowed funds during the various periods that funds from regular
accounts have been held in or made available to the Hot Issues Account,
and such interest is credited to all of the Limited Partners in the
Partnership in accordance with their Capital accounts as of the
beginning of the Fiscal Period and
(b) the gains or losses resulting from the various transactions in the
Hot Issues Account is credited or debited to the Limited Partners
having an interest in the Hot Issues Account in accordance with their
interest therein.
<PAGE>
Expenses
The Partnership Agreement provides that the organizational expenses be
borne by the Partnership. The Partnership pays its own administrative, legal and
audit expenses and investment expenses such as commissions, research fees,
interest on margin accounts and other indebtedness, borrowing charges on
securities sold short, custodial fees, bank service fees and any other
reasonable expenses related to the purchase, sale or transmittal of Partnership
assets as shall be determined by the General Partner in his sole discretion.
Withdrawals by Limited Partners
After a Limited Partner has been a Partner of the Partnership for eight
full Fiscal quarters, such Limited Partner may, as of the end of any fiscal year
of the Partnership, or at other times at the discretion of the General Partner,
withdraw all or any part of his or its Capital account with the Partnership, so
long as the General Partner receives written notice of the intended withdrawal
not less than 180 days prior to the withdrawal date, stating the amount to be
withdrawn. A partner liquidating his Partnership interest at any time other than
year end will be subject to a charge, as the General Partner may determine, to
cover the costs of selling securities and other costs incurred in order to
effect payment of such withdrawal. If the amount of a withdrawal by a Limited
Partner represents less than 75% of the Limited Partner's Capital Account, the
Limited Partner receives the proceeds of the withdrawal within 30 days after the
withdrawal date. If the amount of a Limited Partner's withdrawal represents 75%
or more of the Limited Partner's Capital account, the Limited Partner receives
75% of his Capital Account within 30 days after the withdrawal date and the
remainder of the amount withdrawn within 10 business days after the availability
of the Partnership's audited financial statement for the period including the
withdrawal date. If a Limited Partner requests withdrawal of capital which would
reduce the amount of his Capital Account below the amount of his initial Capital
Contribution, the General Partner may treat such request as a request for
withdrawal of all such Limited Partner's capital.
Any Limited Partner's Interest may be terminated by the Partnership as
of the end of any fiscal year of the Partnership upon 180 days prior written
notice, so long as the General Partner determines the termination to be in the
best interest of the Partnership. In the event that a Limited Partner's Interest
is terminated by the Partnership, the Limited Partner receives 90% of his
Capital Account within 190 days after notice of termination and the remaining
10% within 10 business days after the availability of the Partnership's
financial statements for the fiscal year in which his or its Interest is
terminated.
The distribution of any amount withdrawn under any circumstances by a
Limited Partner or paid to him upon termination of his interest may take the
form of cash and or securities as determined by the General Partner in his sole
discretion.
<PAGE>
Withdrawals by the General Partner and Limited
Partners that are Affiliates of General Partner
Each General Partner and each Limited Partner that is an affiliate of a
General Partner, has the right to withdraw an amount from his Capital Account as
of the end of any fiscal year of the Partnership, without prior notification to
the Limited Partners, if, giving effect to such withdrawal, the total amount of
the Capital Accounts of the General Partner and such affiliates is at least
$50,000. Although the General Partner does not intend to effect or permit any
withdrawals of capital which would reduce the aggregate of the Capital accounts
of the General Partner and his affiliates that are Limited Partners, to less
than $50,000, he may do so on 180 days prior notice to the Limited Partners. In
that event, if a Limited Partner gives notice to the General Partner not later
than 15 days after the date of such notice by the General Partner, the Limited
Partner may withdraw his capital as of the same date as the withdrawal by the
General Partner or affiliate.
` The General Partner may voluntarily resign or withdraw from the Partnership as
of the end of any fiscal year of the Partnership upon 60 days' written notice
sent to all Partners. As noted below under "Term of Partnership," the
Partnership's business may be continued by the remaining General Partner or
General Partners in the event of the withdrawal of a General Partner.
Term of Partnership
The scheduled term of the Partnership is until December 31, 2014. The
Partnership will terminate prior to the end of its scheduled term upon the
written consent of all Partners, upon the entry of a decree of judicial
dissolution, or upon an event of withdrawal of any or all of the General
Partners', unless the business of the Partnership is continued by the remaining
General Partner or General Partners. Under the Partnership Agreement, upon the
occurrence of an event of withdrawal of a General Partner, the remaining General
Partner or General Partners may carry on the business of the Partnership upon
written notice provided to all Partners with the right of a Partner to withdraw
60 days thereafter.
Dissolution
On dissolution of the Partnership, the General Partner (or if there are
no General Partners remaining, one or more person selected by Limited Partners
holding a majority in interest of the Capital Accounts of Limited Partners) will
wind up the Partnership's affairs and will distribute the Partnership's assets
in the following manner and order: (1) in satisfaction of the claims of all
creditors of the Partnership, other than the General Partner; (2) in
satisfaction of the claims of the General Partner as creditor of the
Partnership; and (3) any balance to the Partners in the relative proportions
that their respective Capital Accounts bear to each other, those Capital
Accounts to be determined as if the fiscal year of the Partnership ended on the
date of the dissolution.
Reports
Limited Partners receive interim information reports quarterly and
annual financial statements.
Amendments
The Partnership Agreement may be amended in whole or in part by the
written consent of the General Partner, and of Partners whose Capital Accounts
constitute a majority in interest of the total Partnership Capital accounts at
that time. In addition, any provisions of the Partnership Agreement, other than
Section 9, which establishes the amount of profit and loss allocated to
Partners, may be amended by the General Partner in any manner that does not, in
the discretion of the General Partner, adversely affect any Limited Partner.
<PAGE>
Indemnification
In Partnership indemnifies each General Partner and any of his
associates, employees or agents to the fullest extent permitted by Law and holds
each harmless from and with respect to all (1) fees, costs and expenses incurred
in connection with, or resulting from, any claim, action or demand against the
General Partner, or any of its associates, employees or agents that arises out
of or in any way relates to the Partnership, its properties, business or
affairs; and (2) any losses or damages resulting from any such claim, action or
demand, including amounts paid in settlement or compromise of the claim, action
or demand. This indemnification applies, however, only so long as the action or
failure to act by the General Partner or by his associates, employees or agents
does not constitute bad faith or willful misfeasance. Advances to cover the cost
of defense against such claims may be made to General Partner prior to the
adjudication or other resolution thereof. If it shall subsequently be determined
by a court of competent jurisdiction that the General Partner is not entitled to
indemnification against liability arising from a particular claim, action or
demand, such General Partner is required to reimburse the Partnership for any
advances made to cover the cost of the defense against such claim, action or
demand.
Rights of Transfer
No Limited Partner may assign or otherwise transfer his or its
Interest, in whole or in part, without the consent of the General Partner and
without a written opinion of counsel that the transfer is consistent with the
1933 Act and applicable provisions of any state "blue sky" law, and would not
result in the Partnership's having to register as an investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"). In addition, no
Limited Partner has the right to have his or its assignee admitted as a
substitute Limited Partner, except upon the written consent of the General
Partner, which consent may be withheld in the discretion of the General Partner.
INVESTING IN THE PARTNERSHIP
Minimum Subscription
Each potential Limited Partner must subscribe for a minimum of
$100,000. This minimum subscription may be waived by the General Partner in its
discretion.
Investor Suitability Standards
The Interests offered pursuant to this Private Placement Memorandum are
not registered under the 1933 Act and must be acquired for investment and not
with a view to distributing them within the meaning of the 1933 Act. As a
result, offers and sales of the Interests are made by the Partnership only to
affiliates of the General Partner and to other prospective investors who, in the
judgment of the General Partner, satisfy the following suitability standards:
(1) The investor, if an individual, qualifies as an "accredited
investor" because he or she (a) has a net worth, or joint net worth with his or
her spouse, of at least $1,000,000, or (b) had an individual income in excess of
$200,000 in each of the two most recent years, or joint income together with his
or her spouse in excess of $300,000 in each of those two years, and reasonably
expects to reach the same income level in the current year.
(2) The investor, if an entity, qualifies as an "accredited investor"
because it is:
(a) a bank as defined in Section 3(a)(2) of the 1933 Act, or a savings
and loan association or other institution as defined in Section
3(a)(5)(A) of the 1933 Act, whether acting in its individual capacity
or in a fiduciary capacity;
(b) a registered broker-dealer;
<PAGE>
(c) an insurance company as defined in Section 2(13) of the 1933 Act;
(d) an investment company registered under the 1940 Act or a business
development company as defined in Section 2(a)(48) of the 1940 Act;1
(e) a Small Business Investment Company licenses by the Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment act of 1958;
(f) any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of $5 million;
(g) a private business development company as defined Section
202(a)(22) of the Investment Advisers Act of 1940 (the "Advisers Act");
(h) an organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation, a Massachusetts or similar business Trust,
or a partnership, not formed for the specific purpose of investing in
the Partnership, with total assets in excess of $5 million; or
(i) a trust with total assets in excess of $5 million, not formed for
the specific purpose of investing in the Partnership, whose purchase is
directed by a person who the General Partner has reason to believe has
such knowledge and experience in financial and business matters that he
is capable of evaluating the merits and risks of investment in the
Partnership;
(j) any other entity all of the equity owners of which are "accredited
investors".
(3) The investor must have the ability to bear the economic risks of
his or its investment in the Partnership.
(4) The investor must have sufficient knowledge and experience in
financial, business or investment matters to evaluate the merits and risk of his
or its investment.
(5) The investor must confirm and represent that his or its Interest in
the Partnership is being acquired for investment and not with a view to
distribution.
(6) The investor must not be a non-resident alien or foreign
corporation, foreign trust or foreign estate.
(7) The investor must be an individual or a "company" which either has
assets of at least $1 million or has invested at least $100,000 in the
Partnership. However, the General Partners may sell Limited Partnership interest
to 35 investors who do not meet the above criteria.
Each investor is required to make certain other representations to the
Partnership, including (but not limited to) representations as to his or its
access to information concerning the Partnership.
(1)For purposes of this provision, a "company" means a corporation, a
partnership, an association, a joint-stock company, a trust, or any other
organized group of persons, whether incorporated or not, but does not include
(i) an investment company registered or required to be registered under the
1940 Act; (ii) a company that would be defined as an investment company under
the 1940 Act but for the exception provided by Section 3(c)(1) of that Act; or
(iii) a "business development compnay" as defined in Section 202(a)(22) of the
Advisers Act, unless each of the equity owners thereof is an individual with
assets of at least $1 million, or has at least $500,000 invested in the
Partnership.
<PAGE>
Access to Information
The General Partner will make available to prospective investors any
nonproprietary materials available to the General Partner relating to the
Partnership, and will answer all inquiries from prospective investors concerning
the Partnership, the General Partner, the business of the Partnership, and any
other matters relating to the formation of the Partnership and the offer and
sale of the Interests. The General Partner will also afford prospective
investors the opportunity to obtain any additional nonproprietary information
(to the extent the General Partner possesses that information or can acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
representations or information contained in this Private Placement Memorandum.
Prospective investors are invited to communicate directly with Mr.
Seidman, as the representative of the General Partner. Communications to the
General Partner should be directed to the Partnership's office located at 1235A
Route 23 South, Wayne, New Jersey 07470. Mr. Seidman's phone number is (201)
633-7900.
Method of Subscription
An investor may subscribe to purchase an Interest by (1) completing,
dating and signing two copies of the Subscription Agreement accompanying this
Private Placement Memorandum, (2) signing and having notarized the Limited Power
of Attorney delivered with this Private Placement Memorandum and (3) delivering
the signed copies of the foregoing documents to a General Partner together with
a check in an amount equal to the Dollar amount of the Interest to be purchased.
The General Partner reserves the right to accept or reject any subscription in
their discretion for any reason whatsoever. Amounts paid by any subscriber whose
subscription is rejected will be promptly returned.
MISCELLANEOUS SECURITIES MATTERS
Registration Under the Investment Act
The General Partner does not intend to register as an investment
adviser under the Investment Advisers Act of 1940, as amended. If the General
Partner was registered as investment adviser, it would be subject to various
requirements, including restrictions relating to the manner in which its
compensation for investment advisory services could be computed. Prospective
investors should understand that the compensation arrangements of the
Partnership Agreement may create an incentive for the General Partner to cause
the Partnership to make investments that are riskier or more speculative than if
their compensation did not depend on the Net Profit of the Partnership. See
"CONFLICTS OF INTEREST-General Partners' Share of Profits."
<PAGE>
Exemption from the Investment Company Act.
To ensure that the Partnership is exempt from registration under the
Investment Company Act, the General Partner may limit the number of Limited
Partners and the percentage interest in the Partnership that may be held by
certain investors.
ADDITIONAL INFORMATION
This Private Placement Memorandum is intended only to be a summary of
the more significant features of investing in the Partnership and is qualified
by the provisions of the Partnership Agreement.
PROFESSIONAL ASSISTANCE
Lawrence B. Seidman prepared the Offering Memorandum and Partnership
Agreement and no independent counsel passed upon the legal matters on behalf of
the Partnership. The Partnership shall retain Schonbraun Safris Cohen Sternlieb
& Co., as the independent accountant firm for the Partnership.
- --------
1 For purposes of this provision, a "company" means a corporation, a
partnership, an association, a joint-stock company, a trust, or any other
organized group of persons, whether incorporated or not, but does not include
(i) an investment company registered or required to be registered under the 1940
Act; (ii) a company that would be defined as an investment company under the
1940 Act but for the exception provided by Section 3(c)(1) of that Act; or (iii)
a "business development company" as defined in Section 202(a)(22) of the
Advisers Act, unless each of the equity owners thereof is an individual with
assets of at least $1 million, or has at least $500,000 invested in the
Partnership.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SEIDMAN INVESTMENT PARTNERSHIP, L.P.
JANUARY 5, 1995
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
<PAGE>
Table of Contents
1.
Definitions............................................................
(a) "Act".................................................
(b) "Affiliate"...........................................
(c) "Agreement"...........................................
(d) "Capital Account"....................................
(e) "Certificate".........................................
(f) "Code"................................................
(g) "Fiscal
Period"...............................................
(h) "Fiscal Quarter"......................................
(i) "Fiscal Year".........................................
(j) "General Partner Percentage".........................
(k) "Net Profit".........................................
(l) "Net Loss".........................................
(m) "Partnership Percentage".............................
2. Organization....................................................
3. Name of
Partnership...................................................
4. Principal Office, Resident Agent,
Registered Office.............................................
5. Term of the Partnerships......................................
6. Purposes......................................................
7. Contributions of the
Partners; New Partners.....................................
8. Capital
Accounts......................................................
9. Adjustments to Capital Accounts...............................
10. Hot Issues...................................................
11. Valuation.....................................................
12. Determination by General Partners of
Certain Matters...............................................
13. Liability of Partners.........................................
14. Rights and Duties of General Partner..........................
15. Expensess.....................................................
16. Administrative Fee............................................
17. Limitation on Power of Limited Partners.......................
18. Other Business
Ventures......................................................
19. Limitation on Assignability of Interests
of Limited
Partners......................................................
20. Withdrawals by the Limited Partners...........................
21. Withdrawal by the General Partner and
Affiliates....................................................
22. Dissolution and Winding Up of the
Partnership...................................................
23. Accounting and
Reports.......................................................
24. Books and
Records.......................................................
25. Indemnification...............................................
26. Amendment of Partnership Agreement............................
27. Notices.......................................................
28. Agreement Binding on Successors
and Assigns...................................................
29. Governing Law.................................................
30. Consents......................................................
31. Miscellaneous.................................................
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
SEIDMAN INVESTMENT PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Seidman
Investment Partnership, L.P. (the "Partnership"), dated as of January 5, 1995,
by and between Veteri Place Corporation, as the General Partner (the "General
Partner") and the persons and entities, referred to in schedule A on file at the
offices of the Partnership, who have executed, either directly or indirectly by
an attorney-in-fact, as limited partners (the "Limited Partners").
PREMISES:
A. The Partnership was organized in accordance with the New Jersey
revised Uniform Limited Partnership act by the filing by the General Partner of
a certificate of Limited Partnership with the office of the Secretary of State
of the State of New Jersey on----------------, 1995.
B. The General Partner, pursuant to the authority granted to him under
section 26 of the Agreement, desires to amend the Agreement and to restate the
same.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, effective as of February 15, 1995, it is hereby
agreed as follows:
The following terms shall have the following meaning when used in this
Agreement:
(a) "Act" shall mean the New Jersey Revised Uniform Limited
Partnership Act, amended from time to time.
(b) "Affiliate" shall mean any person performing services on
behalf of the Partnership who (i) directly or indirectly controls, is controlled
by, or is under common control with a General Partner; (ii) is any company of
which a General Partner or its controlling shareholder is an officer, director,
partner or trustee; (iii) a member of the family of the controlling shareholder
of the General Partner; or (iv) an Individual Retirement account or similar
trust for the benefit of one or more General Partner or its affiliates.
(c) "Agreement" shall mean this agreement of Limited
Partnership, as originally executed and as amended, modified, supplemented or
restated from time to time.
(d) "Capital account" shall mean the account described in
Section 8 of this Agreement.
(e) "Certificate" shall mean the Partnership's certificate of
Limited Partnership as defined in section 2 of this Agreement.
(f) "Code" shall mean the Internal Revenue code of 1986, or
successor provision of law, and the regulations issued thereunder.
<PAGE>
(g) "Fiscal Period" shall mean the period beginning on the day
immediately succeeding the last day of the immediately preceding fiscal Period
and ending on the earliest occurring of the following:
(i) The last day of the Fiscal Year;
(ii) The day immediately preceding the day on which
a new Partner is admitted to the
Partnership;
(iii) the day immediately preceding the date on
which a Partner makes an additional capital
contribution to the Partner's capital account;
(iv) The day on which a Partner withdraws, in whole
or in part, the amount of his or its
Capital account;
(v) The date of dissolution of the Partnership in
accordance with Section 5 of this Agreement.
(h) "Fiscal "Quarter" shall mean a fiscal quarter of the
Partnership.
(i) "Fiscal Year" shall mean the fiscal year of the
Partnership, which shall be the calendar year.
(j) "General Partner Percentage" shall mean a percentage
established by the General Partner for each General Partner on the Partnership's
books as of the first day of each Fiscal Period. The sum of the General Partners
Percentages for each Fiscal Period shall equal one hundred percent (100%).
(k) "Net Profit" of the Partnership shall mean, with respect
to any Fiscal Period, the excess of the aggregate revenue, income and gains
(realized and unrealized) earned on an accrual basis during the fiscal Period by
the Partnership from all sources over the expenses and losses (realized and
unrealized) incurred on an accrual basis during the fiscal Period by the
Partnership.
(l) "Net Loss" of the Partnership shall mean, with respect to
any fiscal Period, the excess of all expenses and losses (realized and
unrealized) incurred on an accrual basis during the fiscal Period by the
Partnership over the aggregate revenue, income and gains (realized and
unrealized) earned on the accrual basis during the fiscal period by the
Partnership from all sources.
(m) "Partnership Percentage" shall mean a percentage
established for each partner on the Partnership' books as of the first day of
each Fiscal Period. The Partnership Percentage of a Partner for a Fiscal Period
shall be determined by dividing the amount of the Partner's capital account as
of the beginning of the Fiscal Period by the sum of the capital accounts of all
of the Partners as of the beginning of the fiscal Period. The sum of the
Partnership Percentage for each fiscal Period shall equal one hundred percent
(100%).
2. Organization.
The General Partner has executed a Certificate of Limited Partnership
pursuant to the provisions of the Act (the "Certificate") and has cause the
certificate to be filed as required by the Act. The General Partner shall also
execute and record all amendments to the Certificate or additional certificates
as may be required by this Agreement or by law.
<PAGE>
3. Name of Partnership.
The name of the Partnership shall be Seidman Investment Partnership,
L.P. or such other name as the General Partner may from time to time designate.
4. Principal Office, Resident Agent, Registered Office.
The principal office of the Partnership is 1235A Route 23 South, Wayne,
New Jersey
or any other place determined by the General Partner. The Partnership's phone
number is (201) 633-7900. The name and address of the registered agent for
service of process in the State of New Jersey is Lawrence B. Seidman, 1235A
Route 23 South, Wayne, NJ 07470. The address of the registered office of the
Partnership in the State of New Jersey is c/o Lawrence B. Seidman, 1235A Route
23 South, Wayne, New Jersey 07470.
5. Term of the Partnership.
(a) The term of the Partnership, having commenced on the date the
Certificate was filed shall continue until the first of the following events
occurs:
(i) December 31, 2014;
(ii) a written consent to dissolution of the Partnership by
all Partners;
(iii) upon all of the General Partners ceasing to be general
partners as a result of doing or being subject to one or more of the following:
(A) withdrawing from the Partnership in accordance
with Section 21 of this Agreement;
(B) assigning all of its interest in the
Partnership;
(C) making an assignment for the benefit of its
creditors;
(D) filing a voluntary petition in bankruptcy;
(E) being adjudged bankrupt or insolvent or having
entered against it an order of relief in any bankruptcy or insolvency
proceeding;
(F) filing a petition or answer seeking for itself
any reorganization, arrangement,composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation;
(G) filling an answer or other pleading admitting
or failing to contest the material allegations of a petition filed
against it in any proceeding seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under
any statute, law or regulation;
(H) seeking consenting to, or acquiescing in the
appointment of a trustee or receiver, or liquidator of all or any substantial
part of its properties;
(I) being the subject of any proceeding seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law or regulation, which
proceeding shall have continued for one hundred and twenty (120) days
<PAGE>
after the commencement thereof; or the appointment of a trustee, receiver,
or liquidator for such General Partner or all or any substantial part of it
properties without its consent or acquiescence, which appointment is not
vacated or stayed for ninety (90) days after the expiration of the stay during
which period the appointment is not vacated;
(J) the death of a General Partner; or
(K) the entry by a court of competent jurisdiction
adjudicating such General Partner incompetent to manage his person or his
property; or
(iv) upon issuance of a non-appealable decree of dissolution
of the Partnership by a New Jersey Court of competent jurisdiction.
(b) In the event a General Partner does or becomes subject to any of
the provisions of subsection (a)(iii) of this Section 5, the remaining General
Partner shall be permitted to carry on the business of the Partnership upon
written notice provided to all Partners of the decision to continue the
Partnership's business. Each Limited Partner shall have the right for a period
of thirty (30) days from the date of the written notice (the "Election Period")
to elect to withdraw from the Partnership as of ten (10) days after the last day
of the Election Period. The Limited Partner will receive the proceeds of a
withdrawal made pursuant to this subsection (b) within ninety (90) days of the
date of withdrawal. The amount of such proceeds will be calculated after the
adjustments to his capital account provided for in Section 9 hereof, made as if
the withdrawal date were the end of a Fiscal Year.
(c) If any one or more of the termination events listed in this Section
5 occurs, and if the remaining General Partner chooses not to carry on the
business of the Partnership in accordance with the provisions of subsection (b)
of this Section 5, the Partnership shall be dissolved and its affairs wound up
as provided in Section 22 of this Agreement.
6. Purposes
The Partnership is organized for the following purposes:
(a) to invest and trade, on margin or otherwise, in "Securities," as
that term is defined in Section 2(1) of the Securities Act of 1933, as amended
(the "1933 Act");
(b) to sell Securities short and cover short sales;
(c) to lend funds or properties of the Partnership, either with or
without security; and
(d) to execute, deliver and perform all contracts and other
undertakings, and engage in all activities and transactions, that the General
Partner believes is necessary or advisable in carrying out the purposes
specified all subsections (a), (b), and (c) of this Section 6, including without
limitation:
(i) to purchase, transfer or acquire in any manner and
exercise all rights, powers, privileges and other incidents of ownership or
possession with respect to the investments described in subsection (a) of this
Section 6; and
(ii) to register or qualify the Partnership under any
applicable Federal or state laws, or to obtain exemptions under those laws, if
registration qualification or exemption is deemed necessary by the General
Partner.
<PAGE>
7. Contributions of the Partners; New Partners.
(a) Each Partner shall make a contribution to the Partnership's capital
("Capital Contribution") in the amount set out opposite the Limited Partner's
name in Schedule A attached to this Agreement.
(b) Any Partner may elect, with the consent of the General Partner to
make an additional Capital Contribution, as of the first day of any fiscal
Quarter. The General Partner may, in its sole discretion, permit additional
Capital Contributions to be made more frequently than quarterly.
(c) No Partner shall be required to make any additional Capital
Contributions.
(d) Capital Contributions made by Limited Partners must be in cash.
(e) The General Partner shall have the right, but not the obligation,
to admit new Partners to the Partnership as of the first day of any Fiscal
quarter. The General Partner may, however, in its sole discretion, admit new
Partners more frequently than quarterly.
8. Capital Accounts.
A Capital account shall be established for each Partner. For the Fiscal
Period during which a Partner is admitted to the Partnership, his or its capital
account shall equal the amount of his or its initial Capital Contribution. For
each subsequent Fiscal Period, the Partner's Capital account will equal the sum
of the amount of his or its Capital account as finally adjusted for the
immediately preceding fiscal Period and the amount of any additional Capital
Contribution made by the Partner as of the first day of the current Fiscal
Period.
9. Adjustments to Capital Accounts.
At the end of each Fiscal Period, the Capital Accounts of the Partners
shall be adjusted in the following manner:
(a) Subject to the provisions of subsections (c) and (d) and (f) of
this Section 9, Net Profit of the Partnership for the Fiscal Year shall be
credited as follows:
(i) Twenty percent (20%) of the Net Profit shall be
reallocated to the General Partner for each Fiscal
Year as a "Incentive Allocation".
(ii) The remaining Net Profit shall be allocated to the
Partners in proportion to their Capital Accounts.
(b) Net Loss of the Partnership for the Fiscal Year shall be debited
against the Capital Account of each Partner in proportion to and in accordance
with the balance in the Capital Account of the Partner until the value of any
Partners' Capital account becomes zero. Thereafter, any remaining Net Loss for
the Fiscal Year shall be debited to Partners having positive balances in their
Capital accounts in proportion to those balances, until the value of each
Partner's Capital Account becomes zero. Thereafter, any remaining Net Loss for
the Fiscal Year shall be debited to the General Partner in accordance with each
General Partner's General Partner Percentage for the Fiscal Period.
<PAGE>
(c) In the event that the Capital Account of one or more General
Partner has a negative balance, one hundred percent (100%) of the Net Profit of
the Partnership for the Fiscal Period shall be credited to those General
Partners whose Capital Accounts have negative balances in accordance with their
respective General Partner Percentages until no General Partner shall have a
negative Capital Account balance.
(d) Anything in this Section 9 to the contrary notwithstanding, if any
Net Losses are allocated to the account of any Limited Partner, each such
Limited Partner shall be entitled to a "Recoupment Allocation" of subsequent Net
Profits of the Partnership, in an amount in proportion to his Partnership
Percentage, until such Net Loss shall have been eliminated. The amount of Net
Profits allocated as a Recoupment Allocation shall not exceed, but shall reduce,
the amount of Net Profits otherwise allocable to the General Partners as the
Incentive Allocation pursuant to Section 9(a) (ii) hereof. If a Limited Partner
who is entitled to a Recoupment Allocation shall withdraw any portion of his
Capital Account, the amount of Recoupment Allocation to which he is entitled
shall be reduced in proportion to the amount of capital withdrawn.
(e) The amount of any withdrawal made by the Partner pursuant to
Section 21 or Section 22 of this Agreement shall be debited against the Capital
Account of that Partner.
(f) Allocations of Net Profit or Net Loss for a Fiscal Period, if
necessary, shall be made in accordance with each Partner's Partnership
percentage, adjusted as provided in paragraph (a) of this Section 9 at the end
of the Fiscal Year, provided that the "Incentive Allocation" may not exceed
twenty percent (20%) of the Net Profit for the Fiscal Year.
10. Hot Issues.
In the event the General Partner decides to invest in securities which
are the subject of a public distribution and which the General Partner, in his
sole discretion, believes may become a "hot issue" as that term is defined in
Article III, Section 1 of the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. (the "Association"), such investment shall be made
in accordance with the following provisions:
(a) any such investment made in a particular Fiscal Period shall be
made in a special account (the "Hot Issues account");
(b) only those Partners who do not fall within the proscription of
Article III, section 1 of said Rules of Fair Practice ("Unrestricted Partners")
shall have any beneficial interest in the Hot Issues Account;
(c) each Unrestricted Partner shall have a beneficial interest in the
Hot Issues Account for any Fiscal Period in the proportion which (i)a such
Unrestricted Partner's Capital account as of the beginning of the Fiscal Period
bore to (ii) the sum of the Capital Accounts of all Unrestricted Partners as of
the beginning of such fiscal Period.
(d) Funds required to make a particular investment shall be transferred
to the Hot Issues account from the regular account of the Partnership;
securities involved in the public distribution shall be purchased in the Hot
Issues Account, held in the Hot Issues Account and eventually sold from the Hot
Issues Account or transferred to the regular account at fair market value as of
the day of transfer as determined by the General Partner with such transfer
being treated as a sale; if such securities are sold from the Hot Issues
account, the proceeds of the sale shall be transferred from the Hot Issues
account to the regular account of the Partnership.
<PAGE>
(e) as of the last day of each Fiscal Period in which a particular
investment or investments are held in the Hot Issues Account: (A) interest shall
be debited to the Capital Accounts of the Unrestricted Partners in accordance
with their beneficial interest in the Hot Issues Account at the interest rate
being paid by the Partnership from time to time for borrowed funds during the
period in that Fiscal Period that funds from the regular account have been held
in or made available to the particular Hot Issues Account or, if no such funds
are being borrowed during such period, the interest rate that the General
Partner determines would have been paid if funds had been borrowed by the
Partnership during such period; and such interest shall be credited to the
Capital Accounts of all the Partners, both General and Limited, in the
proportions which (i) each Partner's Capital Account as of the beginning of such
Fiscal Period bore to (iii) the sum of the Capital accounts of all Partners as
of the beginning of such Fiscal Period and (B) any Net Profits or Net Losses
during such Fiscal Period with respect to the Hot Issues Account shall be
allocated to the Capital accounts of the Unrestricted Partners in accordance
with their beneficial interest in the Hot Issues Account during such Fiscal
Period; provided, however, that the amount of such interest shall not exceed the
amount of profit accrued in the Hot Issues Account; and
(f) the determination of the General Partners as to whether a
particular Partner falls within the proscription of Article III, Section I of
said Rules of Fair Practice shall be final.
11. Valuation.
The Partnership's assets shall be valued in accordance with the
following principles:
(a) Any Security that is listed on a national securities exchange will
be valued at its last sale price on the date of determination as recorded by the
composite tape system, or if no sales occurred on that day, at the mean between
the closing "bid" and "asked" prices on that day as recorded by the system or
the exchange, as the case may be;
(b) Any Security that is a National Market Security will be valued at
its last sale price on the date of determination as reported by the National
Association of Securities dealers automated quotations system ("NASDAQ") or if
no sale occurred on that day, at the mean between the closing "bid" and "asked"
prices on that day as reported by NASDAQ:
(c) Any Security not listed on a national securities exchange and not a
National Market Security will be valued at the mean between the closing "bid"
and "asked" prices on the date of determination as reported by NASDAQ or, if not
so reported, as reported in the over-the-counter market in the United States;
(d) An option shall be valued at the last sales price or, in the
absence of a last sales price, the last offer price; and
(e) All other Securities shall be assigned the value that the General
Partner in good faith determine.
12. Determination by General Partner of Certain Matters.
(a) All matters concerning the valuation of Securities, the allocation
of profits, gains and losses among the Partners, including the taxes on them and
accounting procedures, not specifically and expressly provided for by the terms
of this Agreement, shall be determined in good faith by the General Partner,
whose determination shall be final, binding and conclusive upon all of the
Partners.
<PAGE>
(b) gains, losses, and expenses of the Partnership for each Fiscal
Period shall be allocated among the Partners for income tax purposes in a manner
so as to reflect, as nearly as possible, the amounts credited or charged to each
Partner's Capital Account pursuant to Section 9 of this Agreement.
(c) The General Partner shall have the power to make all tax elections
and determinations for the Partnership, and to take any and all action necessary
under the Code or other applicable law to effect those elections and
determinations. All such elections and determinations by the General Partner
shall be final, binding and conclusive upon all Partners.
13. Liability of Partners.
(a) The General Partner shall not be obligated to contribute cash or
other assets to the Partnership to make up deficits in their Capital accounts or
in the Capital Accounts of the Limited Partners either during the term of the
Partnership or upon liquidation. The General Partner shall be liable for all
debts and obligations of the partnership to the extent that the Partnership is
unable to pay such debts and obligations up to the extent of Veteri's capital.
(b) The doing of any act or the failure to do any act by a General
Partner, the effect of which may cause or result in loss, liability, damage or
expense to the Partnership or any Partner shall not subject a General Partner to
any liability to the Partnership or to any Partner, except that a General
Partner may be so liable if it has not acted in good faith, or has committed
gross misconduct or was grossly negligent.
(c) A Limited Partner will not be liable for any debts or bound by any
obligations of the Partnership except to the extent set forth in subsections
(d), (e) and (f) of this Section 13.
(d) A Limited Partner who has received the return of any part of his or
its Capital contribution without violation of this Agreement or the Act shall
not therefore be labile to the Partnership or its creditors.
(e) A Limited Partner receiving a return of any portion of his or its
Capital Contribution in violation the Act or this Agreement will be Liable to
the Partnership for a period of six (6) years thereafter for the amount of the
contribution wrongfully returned.
(f) A Limited Partner may be liable to the Partnership or creditors of
the Partnership for any amounts distributed if, and to the extent that, at the
time of the distribution, he actually knew that, after giving effect to the
distribution, all liabilities of the Partnership, other than liabilities to
Partners on account of their interest in the Partnership, exceeded the fair
value of the Partnership's assets.
14. Rights and Duties of the General Partner
(a) The General Partner shall have the exclusive right to manage and
control the affairs of the Partnership, and shall have the power and authority
to do all things necessary or proper to carry out the purposes of the
Partnership. The General Partner shall devote an amount of time and attention
that the General Partner in its sole discretion deems necessary or appropriate.
(b) Without limiting the generality of the foregoing, the General
Partner shall have full power and authority:
(i) to engage independent agents, investment advisors,
attorneys, accountants and custodians as the General Partner deems necessary or
advisable for the affairs of the Partnership;
<PAGE>
(ii) to receive, buy sell, exchange, trade, and otherwise
deal in and with Securities and other property of the Partnership;
(iii) to open, conduct and close accounts with brokers on
behalf of the Partnership and to pay the customary fees and charges applicable
to transactions in those accounts;
(iv) to open, maintain and close accounts, including margin
accounts, with brokers and banks, and to draw checks and other orders for the
payment of money by the Partnership;
(v) to file, on behalf of the Partnership, all required
local, state and Federal tax and other returns relating to the Partnership;
(vi) to cause the Partnership to purchase or bear the cost of
any insurance covering the potential liabilities of the General Partner and any
associate, employee or agent of the General Partner arising out of the General
Partner's actions as General Partner under this Agreement;
(vii) to cause the Partnership to purchase or bear the cost of
any insurance covering the potential liabilities of any person serving as a
director, officer or employee of an entity in which the Partnership has an
investment or of which the Partnership is a creditor;
(viii) to commence or defend litigation or submit to
arbitration any claim or cause of action that pertains to the Partnership or any
Partnership assets;
(ix) to enter into, make and perform contracts, agreements and
other undertakings, and to do any other acts, as the General Partner deems
necessary or advisable for, or as may be incidental to, the conduct of the
business of the Partnership, including, without limiting the generality of the
foregoing, contracts, agreements, undertakings and transactions with any Partner
or with any other person, firm or corporation having any business, financial or
other relationship with any Partner or Partners:
(x) to make or revoke elections pursuant to Section 754 of the
Code to adjust the basis of the Partnership's property as permitted by Sections
734(b) and 743(b) of the Code; and
(xi) to designate a Tax Matters Partner for all purposes
under the Code.
15. Expenses.
The Partnership shall bear all expenses relating to its organization.
The Partnership will bear the expenses of its administration, accountant, its
legal counsel, and expenses of investments.
16. Administrative Fee.
The Partnership shall pay the General Partner as of the end of each
Fiscal Quarter of the Partnerhship an administrative fee at an annual rate equal
to 1% of the value of the Partnership's assets.
17. Limitation on Powers of Limited Partners.
No Limited Partner shall participate in the control of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for the Partnership or to bind the Partnership in
any other way.
<PAGE>
18. Other Business ventures.
Each Partner agrees that each General Partner and its affiliates and
associates may engage in other business activities or possess interest in other
business activities of every kind and description, independently or with others.
These activities may include, without limitation, establishing a broker-dealer
and investing in real estate and real estate related partnerships, or in
investing, in financing, acquiring and disposing of interest in securities in
which the Partnership may from time to time invest, or in which the Partnership
is able to invest or otherwise have any interest. The Limited Partners agree
that the General Partner and its affiliates may act as general partner of other
partnerships, including investment partnerships.
19. Limitation on Assignability of Interest of Limited Partners.
(a) No Limited Partner may assign or otherwise transfer or encumber his
or its interest in the Partnership, in whole or in part, without the consent of
the General Partner and without a written opinion of counsel to or approved by
the General Partner that the proposed transfer (i) is consistent with all
applicable provisions of the 1933 Act, and the rules and regulations thereunder,
as from time to time in effect, as well as any applicable provisions of any
state "blue sky" law; and (ii) would not result in the Partnership's having to
register as an investment company under the Investment Company Act of 1940, as
amended.
(b) Notwithstanding any other provision of this Agreement, any
successor to any Limited Partner shall be bound by the provisions of this
Agreement. Prior to recognizing any assignment of an interest in the Partnership
that has been transferred in accordance with this Section 19, the General
Partner may require the transferring Limited Partner to execute and acknowledge
an instrument of assignment in form and substance satisfactory to the General
Partner, and may require the assignee to agree in writing to be bound by all the
terms and provisions of this Agreement, to assume all of the obligations of the
assigning Limited Partner and to execute whatever other instruments or documents
the General Partner deems necessary or desirable in connection with the
assignment.
(c) No Limited Partner shall have the right to have his or its assignee
admitted as a substitute Limited Partner, except upon the written consent of the
General Partner, which consent may be withheld in the sole discretion of the
General Partner.
(d) Each Limited Partner hereby approves of the admission to the
Partnership as a Limited Partner of any assignee who succeed to the interest in
the Partnership of a Limited Partner in accordance with the provisions of this
Section 19.
20. Withdrawals by a Limited Partner.
(a) (i) A Limited Partner who shall have been a Limited Partner for at
least eight full Fiscal Quarters shall have the right, as of the end of any
Fiscal Year, or at other times at the discretion of the General Partner, to
withdraw all or a portion of the amount of his or its Capital Account, so long
as the General Partner receives written notice of the intended withdrawal not
less than one hundred eighty (180) days prior to the withdrawal, stating the
amount to be withdrawn. In no event, however, shall a Limited Partner be
permitted to withdraw any amounts from his or its Capital Account in excess of
the positive balance of his or its Capital Account. If the amount of a Limited
Partner's withdrawal represents less than seventy-five (75%) of the Limited
Partner's Capital Account, the Limited Partner will receive the proceeds of the
withdrawal within thirty (30) days after the date of withdrawal. If the amount
of a Limited Partner's withdrawal represents seventy-five (75%) or more of the
Limited Partner's Capital Account, the Limited Partner will receive seventy-five
percent (75%) of his Capital account within thirty (30) days after the date of
withdrawal and the remainder of the amount withdrawn within ten (10) days after
the Partnership has received financial statements from its independent certified
public accountants pursuant to Section 23(c) of this
<PAGE>
Agreement. If a Limited Partner requests withdrawal of capital which would
reduce his Capital Account below the amount of his initial Capital Contribution,
the General Partner may treat such request as a request for withdrawal of all of
such Partner's Capital Account. The distribution of any amount withdrawn by a
Limited Partner may take the form of cash and/or marketable securities as
determined by the General Partner in his sole discretion.
(ii) In the event of a proposed withdrawal of capital by one
or more General Partner or Affiliates pursuant to Section 21(a)(ii) of this
Agreement, as a result of which the aggregate of the Capital Accounts of the
General Partner and Affiliates will be less than $50,000 (fifty thousand
dollars), a Limited Partner shall have the right to withdraw all or a portion of
the amount of his or its Capital Account, so long as the General Partner
receives written notice of the intended withdrawal not more than fifteen (15)
days after the date of the notice of withdrawal by such General Partner or
General Partner or Affiliate or Affiliates pursuant to said Section 21(a)(ii),
stating the amount to be withdrawn. In such event the withdrawal by such Limited
Partner shall be effective as of the effective date of the withdrawal by the
General Partner or General Partners pursuant to said Section 21(a)(ii). The
amount available for withdrawal shall be calculated in the same manner as
provided for in the last sentence of paragraph (b) of Section 5 hereof.
(b) Any Limited Partner's interest in the Partnership may be terminated
by the Partnership as of the end of any Fiscal Year upon prior written notice,
so long as the General Partner determines the termination to be in the best
interest of the Partnership. In the event that a Limited Partner's interest in
the Partnership is terminated pursuant to this Section 20, the Limited Partner
shall receive ninety percent (90%) of the value of his Capital Account within
one hundred eighty (180) days after written notice of termination is given by
the Partnership and the remaining ten percent (10%) within ten (10) business
days after receipt by the Partnership of financial statements with respect to
the Fiscal Year in which his or its interest in the Partnership is terminated.
21. Withdrawals by the General Partners and Affiliates.
(a) (i) Each General Partner shall have the right to withdraw any
amount of cash from his Capital Account as of the end of any Fiscal Year,
without prior notification to the Limited Partners, provided that, after giving
effect to such withdrawal, the aggregate Capital accounts of the General
Partners and their Affiliates are not less than $50,000 (fifty thousand
dollars).
(ii) Upon forty-five (45) days ' prior notice to the Limited
Partners, a General Partner or an Affiliate may withdraw any amount from his
Capital Account contributed to the Partnership as a result of which withdrawal
the aggregate Capital Accounts of the General Partner and their Affiliates would
be reduced below $50,000. (fifty thousand dollars).
(b) Any or all of the General Partners may voluntarily resign or
withdraw from the Partnership as of the end of any Fiscal Year upon sixty (60)
days' written notice sent to all Partners.
22. Dissolution and Winding Up of the Partnership.
On dissolution of the Partnership, the General Partners or if there is
no General Partner, one or more persons approved by Limited Partners holding a
majority in interest of the Capital Accounts of the Limited Partners) shall wind
up the Partnership's affairs and shall distribute the Partnership's assets in
the following manner and order:
(a) in satisfaction of the claims of all creditors of the Partnership,
other than the General Partners;
<PAGE>
(b) in satisfaction of the claims of the General Partners as creditors
of the Partnership; and
(c) any balance to the Partners in the relative proportions that their
respective Capital Accounts bear to each other, those Capital Accounts to be
determined as if the Fiscal Year ended on the date of the dissolution.
23. Accounting and Reports.
(a) The records and books of account of the Partnership shall be
reviewed as of the end of each fiscal Year by independent certified public
accountants selected by the General Partner in his sole discretion.
(b) As soon as practicable after the end of each Fiscal Year, the
General Partner shall cause to be delivered to each person who was a Partner at
any time during that Fiscal Year all information deemed necessary by the General
Partner in his sole discretion for the preparation of the Partner's income tax
returns, including a Form 1065/Schedule K-1 statement showing the Partner's
share of Net Profit or Net Loss, deductions and credits for the year Federal
income tax purposes, and the amount of any distributions made to or for the
account of the Partner pursuant to this Agreement.
(c) The independent certified public accounts selected by the General
Partner in accordance with subsection (a) of this Section 23 shall prepare and
mail to each Partner, within ninety (90) days after the end of each fiscal Year,
an income statement for the Fiscal Year and a balance sheet as of the end of the
Fiscal Year.
(d) The Partnership shall cause to be prepared and mailed to each
Partner a report setting out as of the end of each fiscal quarter information
determined by the General Partner to be appropriate.
(e) The General Partner shall cause tax returns for the Partnership to
be prepared and timely filed with the appropriate authorities.
24. Books and Records.
The General Partner shall keep at the Partnership's principal office:
(a) books and records pertaining to the Partnership's business showing
all of its assets and liabilities, receipts and disbursements, realized profits
and losses, Partners' Capital Accounts and all transactions enter into by the
Partnership;
(b) a current list of the full name and last known home, business or
mailing address of each Partner set out in alphabetical order;
(c) a copy of the Certificate and all amendments to it, together with
executed copies of any powers of attorney pursuant to which the Certificate and
any amendments to it have been executed;
(d) copies of the Partnership's Federal, state and local income tax
returns and reports, if any, for the three (3) most recent years; and
(e) copies of this Agreement as may be amended from time to time.
All books and records of the Partnership required to be kept under this
Section 24 shall be available for inspection by a Partner of the Partnership at
the offices of the Partnership during ordinary business hours for any purpose
reasonably related to the Partner's interest as a Partner in the Partnership.
<PAGE>
25. Indemnification.
(a) The Partnership shall indemnify each General Partner and any of his
Affiliates (each an "Indemnitee") to the fullest extent permitted by law and
will hold each harmless from and with respect to (i) all fees, costs and
expenses incurred in connection with, or resulting from, any claim, action or
demand against any indemnitee that arises out of or in any way relates to the
Partnership, its properties, business or affairs, and (ii) any losses or damages
resulting from any such claim, action or demand, including amounts paid in
settlement or compromise of the claim, action or demand.
(b) No Indemnitee shall be indemnified by the Partnership with respect
to any action or failure to act that does not constitute good faith, or that
constitutes willful misfeasance.
(c) The Partnership may pay the expenses incurred by an Indemnitee in
defending a civil or criminal action, suit or proceeding brought by a party
against the Indemnitee that arises out of or is in any way related to the
Partnership, its properties, business or affairs, upon receipt of an undertaking
by the Indemnitee to repay the amount advanced by the Partnership if an
adjudication or determination is subsequently made by a court of competent
jurisdiction that the Indemnitee is not entitled to indemnification as provided
in this Agreement.
(d) The right of indemnification provided in this Section 25 shall be
in addition to any rights to which an Indemnitee may otherwise be entitled and
shall inure to the benefit of the executors, administrators, personal
representatives, successors or assigns of each Indemnitee.
(e) The rights to indemnification and reimbursement provided for in
this Section 25 may be satisfied only out of the assets of the Partnership. No
Partner shall be personally liable for any claim for indemnification or
reimbursement under this Section 25.
26. Amendment of Partnership Agreement.
This Agreement may be amended, in whole or in part, by the written
consent of (a) the General Partner, and (b) Partners the value of whose Capital
Account constitute not less than fifty percent (50%) of the total value of all
Capital Accounts of the Partnership, provided that no such amendment shall
affect the allocation of Net Profit or Net Loss to any Partner who has not
consented to such amendment. In addition, any provision of this Agreement, other
than Section 9, may be amended by the General Partner in any manner that does
not, in the sole discretion of the General Partner, adversely affect any Limited
Partner.
27. Notices.
Notices that may or are required to be given under this Agreement by
any part to another shall be in writing and deposited in the United States mail,
certified or registered, postage prepaid, addressed to the respective parties at
their addresses set out in Schedule A to this Agreement or to any other
addressee designated by any Partner by notice addressed to the Partnership in
the case of any Limited Partner and to the General Partner in the case of the
General Partners. Notices shall be deemed to have been given when deposited in
the United States mail within the continental United States.
<PAGE>
28. Agreement Binding Upon Successors and Assigns.
This Agreement shall inure to the benefit of and shall be binding upon
the heirs, executors, administrators or other representatives, successors and
assigns of the Partners.
29. Governing Law.
This Agreement, and the rights of the Partners under it, shall be
governed by and construed in accordance with the law of the State of New Jersey.
30. Consents.
Any and all consents, agreements or approvals provided for or permitted
by this Agreement shall be in writing and signed copies of them shall be filed
and kept with the books of the Partnership.
31. Miscellaneous.
(a) This Agreement, including Schedule A appended to it, constitutes
the entire understanding and Agreement of the Partners as to the operation of
the Partnership.
(b) This agreement may be executed in counterparts, each of which
shall be deemed to be an original.
(c) Each provision of this Agreement is intended to be severable. A
determination that a particular provision of this Agreement is illegal or
invalid shall not affect the validity of the remainder of the Agreement.
(d) Nothing contained in this Agreement shall be construed to
constitute any Partner the agent of another Partner, except as specifically
provided in this Agreement, or in any manner to limit the partners in the
carrying on of their own respective business or activities.
(e) If there is a conflict between the terms and conditions of the
Partnership Agreement and Offering Memorandum, the Partnership Agreement shall
be controlling.
<PAGE>
IN WITNESS WHEREOF, the Partners have executed this Agreement as of the
date first above written.
GENERAL PARTNER
VETERI PLACE CORPORATION
By:/s/Lawrence B. Seidman, President
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as Limited Partners of the
Partnership, pursuant to Powers of Attorney now and hereafter executed in favor
of, and delivered to the General Partner.
LAWRENCE B. SEIDMAN
Attorney-in-Fact
/s/Lawrence B. Seidman
<PAGE>
Exhibit B
SEIDMAN INVESTMENT PARTNERSHIP, L.P.
OFFEREE QUESTIONNAIRE
INSTRUCTIONS: All prospective Limited Partners of Seidman Investment
Partnership L.P. (the "Partnership") must
complete this Questionnaire. If you have any questions about this form
please telephone Lawrence B. Seidman, the
representative of the General Partner, at (201) 633-7900.
This questionnaire is required to insure that the offering of the
Partnership's Limited Partnership Interests complies with SEC rules on
private placements. All information will be kept confidential.
PART I TO BE COMPLETED BY ALL SUBSCRIBERS
1. Name
2. Home Address
Home Telephone Number ( )
3. Business Address
Business Telephone Number ( )
4. Social Security Number
or Employer I.D. Number
5. If subscriber is a corporation, partnership, trust or other
entity, attach a copy of the Articles of Incorporation, By-Laws,
Partnership Agreement, Trust Instrument, or other documents showing
that the entity is authorized to invest in the Interests and that the
individual(s) signing the Subscription Agreement are authorized to take
such action on behalf of the entity.
<PAGE>
PART II
1. Please indicate the basis on which you qualify as an
"accredited investor" for purposes of SEC Regulation
D. See Annex B-1 for the types of "accredited investors
" .eligible to invest in the Partnership
2. Educational Background - List all schools, beginning with the last
high school attended and indicate years attended, whether graduated,
and degrees received:
3. Business Background - List your principal business occupations
during the past 10 years, indicating name of company, nature
of business, and your title and responsibilities:
<PAGE>
4. Investment Background - Indicate whether you have ever invested in
any of the following (give details where possible); include investments
for your own account, as trustee or other fiduciary, or in any business
or professional capacity:
a. Investment partnerships
b. Other limited partnerships
c. Venture capital companies
d. Restricted securities
e. Any other business involving investments
f. Any other activity which you believe contributes to
your ability to understand and evaluate the merits
and risks of an investment in the Partnership
<PAGE>
PART III THE FOLLOWING QUESTIONS ARE BEING ASKED TO ASSIST
THE PARTNERSHIP TO DETERMINE AND DOCUMENT ITS
ELIGIBILITY TO PURCHASE SECURITIES THAT ARE PART OF A
PUBLIC OFFERING AND THAT MAY TRADE AT A PREMIUM IN
THE SECONDARY MARKET AFTER THE OFFERING.
A. TO BE COMPLETED BY "INSTITUTIONAL INVESTORS"
THE FOLLOWING QUESTIONS SHOULD BE ANSWERED TO THE BEST
KNOWLEDGE AND BELIEF OF THE PERSON AUTHORIZED TO ACT FOR
THE SUBSCRIBER.
Except as specified below, the Subscriber is not, and, upon
information and belief, all persons having a beneficial interest in the
Subscriber are not:
1. a broker/dealer or an officer, director, general
partner, employee, agent,or associated person of
any broker/dealer.
2. a senior officer of, or a person in the securities
department of, or an employee or other person who may
influence or whose activities directly or indirectly
involve or are related to the function of buying or
selling of securities for:
a. a bank,
b. a savings and loan institution,
c. an insurance company,
d. a registered investment company,
e. a registered investment advisory firm, or
f. any other institutional-type account.
3. a person who acts in a fiduciary capacity (including
attorney, accountant or financial consultant) to any
firm which is a managing underwriter of public
offerings.
4. an immediate family member of any person listed
above.
<PAGE>
B. TO BE COMPLETED BY INDIVIDUAL INVESTORS
Except as specified below, to the best of my knowledge and belief:
1. I am not an officer, director, general partner, employee,
agent, or associated person of any broker/dealer.
2. I am not a senior officer of, or a person in the securities
department of, or an employee or other person who may
influence or whose activities directly or indirectly involve
or are related to the function of buying or selling of
securities for:
a. a bank,
b. a savings and loan institution,
c. an insurance company,
d. a registered investment company,
e. a registered investment advisory firm, or
f. any other institutional-type account.
3. I do not act as a finder in connection with public offerings
of securities.
4. I do not act in a fiduciary capacity (including attorney,
accountant or financial consultant) to any firm which is a
managing underwriter of public offerings.
5. I am not an immediate family member of any person listed
above.
C. TO BE COMPLETED BY BOTH "INSTITUTIONAL"
AND INDIVIDUAL INVESTORS
<PAGE>
PLEASE GIVE AN EXPLANATION OF EACH EXCEPTION TO THE STATEMENTS LISTED
ABOVE. IF YOU ARE, OR ANY BENEFICIAL OWNER OF THE SUBSCRIBER IS KNOWN
TO BE, AN IMMEDIATE FAMILY MEMBER OF A PERSON LISTED IN CATEGORY 1
ABOVE, PLEASE STATE WHETHER SUCH PERSON CONTRIBUTES DIRECTLY OR
INDIRECTLY TO YOUR OR SUCH BENEFICIAL OWNER'S SUPPORT.
Signature of Subscriber
Date: , 1995
<PAGE>
Exhibit C
SUBSCRIPTION AGREEMENT
Seidman Investment Partnership, L.P.
1235A Route 23, South
Wayne, New Jersey 07470
Gentlemen:
1. Subscription. The undersigned ("Subscriber") hereby irrevocably
subscribes for and agrees to acquire a Limited Partnership Interest ("Interest")
in Seidman Investment Partnership, L.P. (the "Partnership") and agrees to make a
contribution to the capital of the Partnership in the amount of
$______________________ in cash, all in accordance with the terms and conditions
of the Amended and Restated Agreement of Limited Partnership dated January 5,
1995 (the "Partnership Agreement") attached as Exhibit A to the Confidential
Private Placement Memorandum dated January 5, 1995 relating to the Partnership
(the "Memorandum"). This subscription may be rejected by the Partnership in
whole or in part.
2. Adoption of Partnership Agreement. The Subscriber hereby adopts,
accepts and agrees to be bound by all terms and provisions of the Partnership
Agreement and to perform all obligations therein imposed upon a Limited Partner.
Upon acceptance of this Subscription by a General Partner on behalf of the
Partnership and payment in full of the subscription price, the Subscriber shall
become a Limited Partner for all purposes of the Partnership Agreement.
3. Representations and Warranties. The Subscriber hereby
represents and warrants to the Partnership that:
(a) if the Subscriber is an individual he or she, is not less
than twenty-one (21) years of age; if the Subscriber is an entity this
Subscription Agreement is signed on behalf of the Subscriber by an authorized
person who is not less than twenty-one (21) years of age;
(b) the Interest subscribed for hereby is being acquired by
the Subscriber for investment purposes only, for the account of the subscriber
and not with the view to any resale or distribution thereof, and the Subscriber
is not participating, directly or indirectly, in an underwriting of such
Interest and will not take, or cause to be taken, any action that would cause
the Subscriber to be deemed an "underwriter" of such Interest as defined in
Section 2(11) of the Securities Act of 1933, as amended;
(c) the Subscriber has received and has carefully read a copy
of the Memorandum, including the Partnership Agreement and other Exhibits
thereto, and, in connection therewith, has had access to all other materials,
books, records, documents and information relating to the Partnership, and has
been able to verify the accuracy of and supplement the information contained
therein;
(d) the Subscriber acknowledges that he or it has been offered
an opportunity to ask questions of, and receive answers from Lawrence B.
Seidman, the representative of the General Partner, concerning the Partnership
and its proposed business, and that any request for such information has been
fully complied with by them;
(e) the Subscriber (if an individual) or the person signing
this Subscription Agreement on behalf of the Subscriber (if it is an entity) has
such knowledge and experience in financial and business matters that the
Subscriber is capable of evaluating the merits and risks of an investment in the
Partnership, and the Subscriber is able to bear the economic risks of an
investment in the Partnership;
<PAGE>
(f) the Subscriber has adequate means of providing for the
current needs of the Subscriber and possible personal contingencies, and the
Subscriber has no need for liquidity with respect to the investment of the
Subscriber in the Partnership;
(g) the Subscriber has been advised that an investment
in the Partnership is highly speculative, and the Subscriber is able to bear
the economic risk of an investment in the Partnership;
(h) the Offeree Questionnaire furnished by the Subscriber
to the Partnership is true and accurate as of the date hereof; and
(i) if the Subscriber is an entity, it is authorized and
otherwise duly qualified to acquire an Interest in the Partnership.
4. Restrictions on Transferability of Interests. The Subscriber
realizes that the Interests are not, and will not be, registered under the
Securities Act of 1933, as amended (the "Act"), and that the Partnership does
not file and does not intend to file periodic reports with the Securities and
Exchange Commission pursuant to the requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended. The Subscriber also understands
that the Partnership has not agreed to register the Interests for distribution
in accordance with the provisions of the Act or any applicable state securities
laws, and that the Partnership has not agreed to comply with any exemption under
the Act or any such laws for the resale of the Interests. Hence, the Subscriber
understands that by virtue of the provisions of certain rules relating to
"restricted securities" promulgated under the act, the Interest which the
Subscriber has subscribed for hereby must be held indefinitely, unless and until
subsequently registered under the Act and/or applicable state securities laws or
unless an exemption from registration is available, in which case the Subscriber
may still be limited with respect to the extent to which such Interest may be
transferred.
5. Power of Attorney. The Subscriber hereby makes, constitutes and
appoints Lawrence B. Seidman, and each of them, with power of substitution, as
the true and lawful Attorney-in-Fact of the Subscriber, in whose name, place and
stead to make, execute, sign, acknowledge and file with respect to the
Partnership:
(a) the Partnership Agreement;
(b) a Certificate or amended Certificate of Limited
Partnership under the laws of the State of New Jersey, including therein all
information therein all information required by the laws of such state;
(c) all instruments which said Attorney-in-Fact deems
appropriate to reflect any amendment, change or modification of the Partnershi
in accordance with the terms of the Partnership Agreement;
(d) all such other instruments, documents and certificates
which may from time to time be required by the laws of the State of New Jersey,
the United States of America, or any other jurisdiction in which the Partnership
shall determine to do business, or any political subdivision or agency thereof,
to effectuate, implement, continue and defend the valid and subsisting existence
of the Partnership as a Limited Partnership.
(e) all applications, certificates, certifications, reports or
similar instruments or documents required to be submitted by or on behalf of the
Partnership to any governmental or administrative agency or body or to any
securities or commodities, exchange, board of trade, clearing corporation or
association or similar institution or to any other self-regulatory organization
or trade association; and
<PAGE>
(f) all papers which may be deemed necessary or desirable by
said Attorney-in-Fact to effect the dissolution and liquidation of the
Partnership; provided, however, that such Attorney-in-Fact shall not have any
right, power or authority to amend or modify the Partnership Agreement when
acting in such capacity. The admission or termination of the interest of any
Partner in accordance with the terms of the Partnership Agreement shall not
constitute an amendment thereof. The foregoing Power of Attorney is hereby
declared to be irrevocable and to constitute a power coupled with an interest,
and it shall survive the death or adjudicated incompetency of the Subscriber and
extend to the Subscriber's heirs, legal representatives, successors and
assignees. The Subscriber hereby agrees to be bound by any representation made
by such Attorney-in-Fact acting in good faith pursuant to such Power of
Attorney, and the Subscriber hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of such Attorney-in-Fact
taken in good faith pursuant to such Power of Attorney.
6. Payment of Subscription. Enclosed herewith is a certified or
official bank check payable to the order of the Partnership for the full amount
of this subscription. The Subscriber recognizes that if this subscription is
rejected, in whole or in part, the funds and instruments delivered herewith, to
the extent this subscription has been rejected, will be returned to the
Subscriber without interest as soon as practicable.
7. Non-Revocability. The Subscriber agrees that this Subscription
Agreement may not be canceled, terminated or revoked, and that this Subscription
Agreement and the Power of Attorney granted hereby are coupled with an interest
and shall survive the death or disability of the Subscriber and shall be binding
upon the heirs, executors, administrators, successors, and assignees of the
Subscriber.
8. Notice. Any notices or other communications in connection herewith
shall be sufficiently given if sent by registered or certified mail, postage
prepaid, and (i) if to the Partnership, at the address at the head of this
Subscription Agreement, and (ii) if to the Subscriber, at the address set forth
below, or (iii) at such other address as either the Subscriber or the
Partnership shall designate to the other by notice in writing.
9. Successors and Assignees. This Subscription Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and to the
successors and assignees of the Partnership and to the personal and legal
representatives, heirs, guardians, successors and permitted assignees of the
Subscriber.
10. Applicable Law. This Subscription Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey and,
to the extent it involves any United States statute, in accordance with the
laws of the United States.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and sealed
this Subscription Agreement, this __ day of _______, 1995
Name of Subscriber
Signature of Subscriber
Residence Address
City, State and Zip Code
Social Security or Tax
Identification Number
Accepted:
Seidman Investment Partnership, L.P.
VETERI PLACE CORPORATION
By:
Lawrence B. Seidman, President
<PAGE>
[Individual Acknowledgment]
State of )
)SS:
County of )
On the day of , 1995, before me personally
came , to me known and known to me to be the individual described in and who
executed the foregoing instrument, and (s)he duly acknowledged to me that (s)he
executed the same.
Notary Public
[Corporate Acknowledgment]
State of )
)SS:
County of )
On the day of , 1995, before me personally
came , to me known , who, being by me
sworn, did depose and say that (s)he resides in
, that (s)he is the
of , the corporation described in and which executed the above instrument; and
that (s)he signed such instrument by order of the board of directors of said
corporation.
Notary Public
<PAGE>
[Partnership Acknowledgment]
State of )
)SS:
County of )
On the day of , 1995, before me personally
came , who, being by me sworn, did depose
and say that (s)he resides in
, that (s)he is a general partner of
, the
partnership described in and who
executed the above instrument, and (s)he is duly authorized to do so in the name
of, and on behalf of, said partnership.
Notary Public
[Trust Acknowledgment]
State of )
)SS:
County of )
On the day of , 1995, before me personally
came , trustee under
,
to me personally known and known to me to be the individual described in and who
executed the foregoing instrument, and (s)he duly acknowledged to me that (s)he
executed the same.
Notary Public
<PAGE>
NEAL S. Axelrod, P.A. Certified Public Accountant
Post Office Box 307 Colonia, NJ 07067 908 499-0660 FAX 908 499-0620
To: Veteri Place Corporation
Wayne, New Jersey
I have compiled the accompanying balance sheet of Veteri Place Corporation as at
January 6, 1995 in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the represetation of the owner. I have not audited or
reviewed the accompanying financial statement and, accordingly, do not express
an opinion or any other form of assurance on it.
Management has elected to omit substantially all of the disclosures drequired by
generally accaepted accounting principles. If the omitted disclosures were
included in the financial statement, they might influence the user's conclusions
about he company's financial position. Accordingly, this financial statement is
not designed for those who are not informed about such matters.
<PAGE>
/s/ Neal Axelrod
Exhibit D
Veteri Place Corporation
Contents
Page
Accountant's Compilation Report 1
Balance Sheet - January 6, 1995 2
January 6, 1995
<PAGE>
Veteri Place Corporation
Balance Sheet
Januaray 6, 1995
Assets
Cash $ 100
Notes receivable 100,000
Organizational costs 110
-------
Total assets $ 100,210
=======
Stockholders' Equity
Common stock $ 100,212
=======
See Accountant's Compilation Report.
<PAGE>
AMENDMENT #1
TO LIMITED PARTNERSHIP
CERTIFICATE OF
SEIDMAN INVESTMENT PARTNERSHIP, L.P.
Section 1 The Name of the Partnership is Seidman Investment
Partnership, L.P., which was filed with the Secretary of State on
January 17, 1995.
Section 6 Section 6 is hereby amended to add the following people and entities
as limited partners:
NAME CAPITAL CONTRIBUTION
James J. Gallagher, Ph.D,
TTEE Gallagher Living
Trust DTD 11/30/92
3636 Paradise dr.
Tiburon, CA 94920 $200,000.00
Robert Kaplus, G.P.
Kaplus Hanover Associates
4 Pewter Lane
New Providence, NJ 07974 $125,000.00
Russ Ketron, TTEE
The Ketron Family Trust DTD 10/20/89
33 San Miguel Way
Novato, CA 94945 $50,000.00
Louis M. Rogow, M.D. &
Enid Z. Rogow
P. O. Box 57
211 Post Rd.
Bernardsville, NJ 07924 $100,000.00
Seidman and Associates, L.L.C. $100,000.00
100 Misty Lane
Parsippany, NJ 07054
VETERI PLACE CORPORATION
Dated: November 21, 1996 By:
/s/Lawrence B. Seidman, President
<PAGE>
STATE OF NEW JERSEY )
)ss:
COUNTY OF MORRIS )
On the 21 day of November, 1996, before me personally came Lawrence B.
Seidman, to me known, who, being by me sworn, did depose and say that he resides
at 19 Veteri Place, Wayne, New Jersey 07470, that he is the President of Veteri
Place Corporation described in and which executed the above instrument; and that
he signed such instrument by order of the Board of Directors of said
Corporation.
/s/ Ruth W. Rivkind
A Notary Public of the
State of New Jersey
My Commission Expires
February 14, 2001
OPERATING AGREEMENT
FOR
SEIDMAN AND ASSOCIATES, LLC.
Dated: November 9, 1994
<PAGE>
INDEX
Page No.
Article 1 - Definitions 1
Article 2 - Formation 5
Article 3 - Principal Office 5
Article 4 - Term and Duration 6
Article 5 - Purpose 7
Article 6 - Capital Contributions by the Member7
Article 7 - Additional Capital Contributions 9
Article 8 - Cash Contributions 10
Article 9 - Tax Allocations 11
Article 10 - Rights, Powers and Representation of
the Members 15
Article 11 - Managing Member 17
Article 12 - Books, Records and Reports 19
Article13 - Bank Accounts 20
Article 14 - Rights and Duties of Members 20
Article 15 - Tax Matters 21
Article 16 - Bankruptcy 21
Article 17 - Assignability or Transfer of Int 22
Article 18 - Admission of Substituted Members; Death
or Incapacity; Further Conditions 24
Article 19 - Liquidation 25
Article 20 - Gender 26
Article 21 - Further Assurances 26
Article 22 - Covenant Against Partition 26
Article 23 - Notices 26
Article 24 - Applicable Law 27
Article 25 - Captions 27
Article 26 - Counterparts 27
Article 27 - Binding Effect 27
Article 28 - Partial Invalidity 27
Article 29 - Integration 28
Exhibit A - Property Description
Exhibit B - Contract of Sale
Schedule A - Members' Percentage Interests
Schedule B - Example of the Operation of Section 8.3
<PAGE>
OPERATING AGREEMENT
FOR
SEIDMAN AND ASSOCIATES, LLC.
AGREEMENT made November 9, 1994 by and between LAWRENCE SEIDMAN
("Lawrence Seidman"), having an address at 19 Veteri Place, Wayne, New Jersey
07470; SONIA SEIDMAN ("Sonia Seidman"), having an address at 19 Veteri Place,
Wayne, New Jersey 07470; SEIDCAL Associates ("Seidcal"), a New Jersey general
partnership having an address c/o Cali Realty Corporation, 11 Commerce Drive,
Cranford, New Jersey 07016; PAUL SCHIMDT ("Schimdt"), having an address at 159
Clinton Place, Hackensack, New Jersey 07601; and RICHARD GREENBERG
("Greenberg"), having an address at 1235A Route 23 South, Wayne, New Jersey
07474 (hereinafter Lawrence Seidman, Sonia Seidman, Seidcal, Schimdt and
Greenberg may sometimes be referred to individually as a "Member" and
collectively as the "Members").
WITNESSETH:
WHEREAS, the Members desire to form a limited liability company (the
"Company") pursuant to the New Jersey Limited Liability Company Act (the"Act")
and adopt this Operating Agreement in connection therewith; and
WHEREAS, the purpose of the Company shall be to purchase stock in
private and public companies and manage and invest the funds of others for these
purposes and for any and all other purposes permitted pursuant to the Act; and
WHEREAS, the Members wish to set forth the terms and conditions as to
the manner in which the Company shall be operated and to set forth the rights,
obligations and duties of the Members to each other and to the Company; and
WHEREAS, by executing this Operating Agreement, each Member represents
that he has sufficient right and authority to execute this Operating Agreement
and not acting on behalf of any undisclosed or partially disclosed principal.
NOW, THEREFORE, in consideration of ten ($10) dollars and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows effective as of the date first
written above.
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, the following terms shall have
the definitions set forth below:
<PAGE>
"Additional Contribution": Each Member's pro-rata portion of a
Required Amount, determined by multiplying the Required Amount by each Member's
Interest.
"Additional Member": Any person or entity who acquires an additional
interest in the Company.
"Adjusted Capital Account": As defined in Section 9.4(h).
"Capital Account" or "Capital Accounts": As defined in Section 6.4.
"Capital Contributions": The respective capital contributions,
including any Additional Contribution,of each of Member to the Company.
"Capital Transaction" or "Capital Transactions": Sale, transfer,
assignment or exchange of stock purchases or other investment made by the
Company or other similar transactions which, in accordance with generally
accepted principles, are treated as a capital transaction.
"Certificate of Formation": The Certificate of Formation of the Company
filed with the Secretary of State of the State of New Jersey, pursuant to the
Act to form the Company, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"Code": The Internal Revenue Code of 1986, as amended, and any
reference to a particular section of the Code shall be deemed to include any
successor section to such section.
"Company": Seidman and Associates, LLC.
"Contributing Member": A Member which has made its Additional
Contribution.
"Default Loan": A loan to the Company of an amount equal to the
Additional Contribution not made by a Defaulting Member.
"Defaulting Member": A Member which fails to make his Additional
Contribution as required herein.
"Default Rate": A floating rate equal to the lesser of (a) ten (10%)
percent per annum in excess of the rate of interest announced from time to time
in The Wall Street Journal as the "prime rate" or "base rate" charged by
institutional commercial lenders, from time to time or (b) the maximum rate of
interest then permitted according to the laws of the State of New Jersey or
according to Federal law, to the extent applicable.
<PAGE>
"Gain from a Capital Transaction": The gain recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes. In the event
there is a revaluation of Company property and the Capital Accounts are adjusted
pursuant to Section 6.4(c), Gain from a Capital Transaction shall be computed by
reference to the "book items" and not the corresponding "tax items".
"Income": Net Proceeds and all other income or amounts, however
characterized, received by the Company.
"Interest": The respective percentage interest of each Member as set
forth on Schedule A.
"Loss from a Capital Transaction": The loss recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes. In the event
there is a revaluation of the Company property and the Capital Accounts are
adjusted pursuant to Section 6.4(c), Loss from a Capital Transaction shall be
computed by reference to the "book items" and not the corresponding "tax items".
"Managing Member": Lawrence Seidman, or such successor appointed by a
majority in interest of the remaining Members.
"Member": Each of the parties who has executed this Operating
Agreement and any party who may hereafter become an Additional Member or a
Substitute Member pursuant to this Operating Agreement.
"Member Nonrecourse Debt": Any nonrecourse debt of the Company for
which a Member bears the economic risk of loss, determined in accordance with
Treasury Regulation Section 1.704-2(b) (4).
"Member Nonrecourse Debt Deductions": With regard to any Member
Nonrecourse Debt, the amount of the net increase during any taxable year to the
Company in the amount of Minimum Gain Attributable to Member Nonrecourse Debt,
over the aggregate amount of any distributions during such year to the Member
who bears the economic risk of loss for such debt of proceeds of such debt that
are allocable to an increase in the Minimum Gain Attributable to such Member
Nonrecourse Debt. Such amounts shall be determined in accordance with Treasury
Regulation Section 1.704-2(i) (2).
"Minimum Gain": The amount of gain which would be recognized to the
Company for federal income tax purposes if all Company property secured by
Nonrecourse Liability were transferred to the creditor of such debt in
satisfaction thereof (and for no other consideration) in a taxable transaction.
<PAGE>
The amount of such gain shall be determined and calculated in accordance with
Treasury Regulation Section 1.704--2(g) (i).
"Minimum Gain Attributable to Member Nonrecourse Debt": The amount of
gain which would be recognized by the Company for federal income tax purposes if
all Company property secured by Member Nonrecourse Debt were transferred to the
creditor of such debt in satisfaction thereof (and for no other consideration)
in a taxable transaction. The amount of such gain shall be determined and
calculated in accordance with Treasury Regulation Section 1.704-2(f) (i) (4).
"Net Proceeds": The net proceeds available to the Company from a
Capital Transaction after deducting (i) all costs and expenses incurred in
connection therewith, (ii) any liens or other indebtedness which is satisfied or
refinanced as a result of such Capital Transaction, and (iii) reasonable
reserves established by the Company from time to time for working capital and
other purposes.
"Net Profit" and "Net Loss": The net income (including income exempt
from tax) and net loss (including expenditures that can neither be capitalized
nor deducted), respectively, of the Company, determined in accordance with the
method of accounting used by the Company for federal income tax purposes, but
computed without regard for Gain from Capital Transactions, Loss from Capital
Transactions and items of income or loss, if any, that are specifically
allocated to Members. In the event there is a revaluation of Company property
and the Capital Accounts are adjusted pursuant to Section 6.4(c), Net Profits
and Net Losses shall be computed by reference to the "book items" and not
corresponding "tax items".
"Nonrecourse Liability": Any Company debt for which no Member has any
economic risk of loss, determined in accordance with Treasury Regulation
Section 1.704-2(b) (3).
"Operating Agreement": This Operating Agreement as originally
executed and as amended, modified,supplemented or restated from time to time.
"Required Amount": The amount of cash required by the Company as
determined by a majority in interestof the Members.
"Substitute Member": Any transferee of a Member's Interests who is
admitted as a Member in the Company pursuant to Article 17 or 18.
"Unrecovered Additional Contributions": The aggregate amount of
Additional Contribution made by a Member pursuant to Section 7.1 hereof less
prior distributions to such Member of Income which is distributed to repay
outstanding Additional Contributions and any interest on any Default Loan
specially allocated to such Member.
<PAGE>
ARTICLE 2
FORMATION
2.1 The parties hereto do hereby form the Company under the name
of SEIDMAN AND ASSOCIATES, LLC.pursuant to the Act. Pursuant to the provisions
of the Act, the formation of the Company shall be effective upon the filing of
the Certificate of Formation.
In order to maintain the Company as a limited liability company under
the laws of the State of New Jersey, the Company shall from time to time take
appropriate action, including the preparation and filing of such amendments to
the Certificate of Formation and such other assumed name certificates,
documents, instruments and publications as may be required by law, including,
without limitation, action to reflect:
(i) a change in the Company name;
(ii) a correction of a defectively or erroneously executed
Certificate of Formation;
(iii) a correction of false or erroneous statements in the
Certificate of Formation or the desire of the Members
to make a change in any statement therein in order
that it shall accurately represent the agreement
among the Members; or
(iv) a change in the time for dissolution of the Company
as stated in the Certificate of
Formation and in this Agreement.
Section 2.2 Other Instruments. Each Member hereby agrees to execute and
deliver to the Company within five (5) days after receipt of a written request
therefor, such other and further documents and instruments, statements of
interest and holdings, designations, powers of attorney and other instruments
and to take such other action as the Company deems necessary, useful or
appropriate to comply with any laws, rules or regulations as may be necessary to
enable the Company to fulfill its responsibilities under this Operating
Agreement, to preserve the Company as a limited liability company under the Act
and to enable the Company to be taxed as a partnership for federal and state
income tax purposes.
ARTICLE 3
PRINCIPAL OFFICE
3.1 The Company's registered office in New Jersey shall be at 19 Veteri
Place, Wayne, New Jersey 07470. The Company's registered agent who is a resident
of New Jersey is Lawrence Seidman, whose business address 19 Veteri Place,
Wayne, New Jersey 07470. At any time, the Company may designate another
registered agent and/or office.
<PAGE>
3.2 The principal place of business of the Company shall be at 19
Veteri Place, Wayne, New Jersey 07470. At any time, the Company may change the
location of its principal place of business and may establish additional
offices.
ARTICLE 4
TERM AND DURATION
4.1 The Company shall commence upon the filing of the Certificate of
Formation, and shall continue in full force and effect until May 1, 2024,
provided, however, that the Company shall be dissolved prior to such date upon
the happening of any of the following events:
(a) The mutual written consent of the Members to dissolve the
Company.
(b) The sale or other divestiture of all or substantially all of the
assets of the Company and the distribution of the proceeds thereof to the
Members, including real estate or interests held or owned by the Company (other
than a transfer to a nominee of the Company for any Company purpose, which event
shall not be construed as an event of termination); provided, however, that (i)
if the Company receives a purchase money mortgage or other collateral security
in connection with such sale, the Company shall continue (A) until such mortgage
or security interest is paid in full or otherwise disposed of, or (B) in the
event of foreclosure of such mortgage, or security interest provided the Company
retains title therein; and (ii) the Company shall continue if the assets of the
Company are exchanged under Section 1031 of the Code.
(c) Upon the death, retirement, expulsion, bankruptcy or dissolution of
a Member or occurrence of any other event that terminates the continued
membership of a Member in the Company (a "Dissolution Event") unless the
business of the Company is continued by the unanimous consent of the remaining
Members within ninety (90) days following the Dissolution Event.
(d) The entry of a decree of judicial dissolution under Section
49 of the Act.
(e) The happening of any other prior event which pursuant to the terms
and provisions of this Operating Agreement shall cause a dissolution or
termination of the Company.
<PAGE>
4.2 Upon any dissolution of the Company, the distribution of the Company's
assets and the winding up of its affairs shall be concluded in accordance with
Article 19 of this Operating Agreement.
ARTICLE 5
PURPOSE
5.1 The business of the Company shall be for the purpose of:
(a) Purchasing stock in private and public companies and managing
and investing funds of others for
these purposes.
(b) Such other activities incident or appropriate to the foregoing,
including acting directly or in conjunction with others through joint ventures,
partnerships or otherwise.
5.2 The business of the Company shall also be for any lawful
purpose.
ARTICLE 6
CAPITAL CONTRIBUTIONS BY THE MEMBERS
6.1 (a) Upon execution hereof, or at such other times as determined by
the Managing Member, each Member shall contribute in cash to the capital of the
Company an amount in the aggregate equal to that set forth opposite his/her/its
name on Schedule A attached hereto.
(b) A Member's interest in the Company shall be represented by the
percentage interest held by such Member. Each Member's respective initial
interest in the Company is set forth opposite his/her name on Exhibit B attached
hereto.
6.2 No Member shall have the right to withdraw any part of his Capital
Contribution or receive any distribution, except in accordance with the
provisions of this Operating Agreement. No interest shall be paid on any Capital
Contribution.
6.3 No Member shall have any priority over any other Member with
respect to the return of Capital Contributions.
6.4 The Company shall maintain a capital account (a "Capital Account")
for each Member within the provisions of Treasury Regulation Section 1.704-1 (b)
(2) (iv) as such regulation may be amended from time to time. Without limiting
the foregoing, the Member's Capital Accounts shall be adjusted as follows:
(a) Subject to the last sentence of Section 6.4 (c), the Capital
Account of each Member shall be credited with (i) an amount equal to such
<PAGE>
Member's initial cash contribution and any additional cash contributions to the
Company and the fair market value of property or securities contributed to the
Company (net of liabilities secured by such property) if a contribution of
property or securities shall be permitted by the Company and (ii) such Member's
share of the Company's Net Profits and Gain from Capital Transactions (including
income and gain exempt from tax).
(b) Subject to the last sentence of Section 6.4 (c), the Capital
Account of each Member shall be debited by (i) the amount of cash distributions
to such Member and the fair market value of property and/or securities
distributed to the Member (net of liabilities secured by such property and/or
securities) and (ii) such Member's share of the Company's Net Loss and Net Loss
from Capital Transactions (including expenditures which are not permitted to be
capitalized or deducted for tax purposes).
(c) Upon the transfer of an interest in the Company, the Capital
Account of the transfer Member (as adjusted, if at all, as required by this
Section 6.4) that is attributable to the transferred interest will be carried
over to the transferee Member. The Capital Account will not be adjusted to
reflect any adjustment under Section 743 of the Code except as specifically
provided in Treasury Regulation Section 1.704-1 (b) (2) (iv) (m). Upon (i) the
"liquidation of the Company" (as hereinafter defined), (ii) the "liquidation of
a Member's interest in the Company" (as hereinafter defined), (iii) the
distribution of money, property or securities to a Member as consideration for
an interest in the Company, or (iv) the contribution of money or (if permitted
pursuant to (a) above) property and/or securities to the Company by a new or
existing Member as consideration for an interest in the Company, or upon any
transfer causing a termination of the Company for tax purposes within the
meaning of Section 708(b) (1) (B) of the Code, then adjustments shall be made to
the Members' Capital Accounts in the following manner: all property and
securities of the Company which are not sold in connection with such event shall
be valued at their then fair market value; such fair market value shall be used
to determine both the amount of gain or loss which would have been recognized by
the Company if the property and securities had been sold for its fair market
value (subject to any debt secured by the property and securities) at such time,
and the amount of Income, which would have been distributable by the Company
pursuant to Article 9 if the property and securities had been sold at such time
for said fair market value, less the amount of any debt secured by the property;
the Capital Accounts of the Members shall be adjusted to reflect the deemed
allocation of such hypothetical gain or loss in accordance with Article 10; and
the Capital Accounts of the Members (or of a transferee of a Member) shall
thereafter be adjusted to reflect "book items" and not "tax items" in accordance
with Treasury Regulation Sections 1.704-1 (b) (2) (iv) (g) and 1.704-1 (b) (4)
(i).
(d) For purposes of this Article 6, (i) the term "liquidation of the
Company" shall mean (A) a termination of the Company effected in accordance with
this Operating Agreement, which shall be deemed to occur, for purposes of
<PAGE>
Article 6, on the date upon which the Company ceases to be a going concern and
is continued in existence solely to wind-up its affairs, or (B) a termination of
the Company pursuant to Section 708(b)(1) of the Code; and (ii) the term
"liquidation of a Member's interest in the Company" shall mean the termination
of the Member's entire interest in the Company effected by a distribution, or a
series of distributions, by the Company to the Member.
ARTICLE 7
ADDITIONAL CAPITAL CONTRIBUTIONS
7.1 No Member shall be obligated to make additional capital
contributions to the Company. If the Managing Member, with the concurrence of
Members holding a majority in interest of the Company, shall determine there
shall be a Required Amount for any Company purpose, including, without
limitation, those purposes set forth in Article 5, then within fifteen (15) days
of notice of such requirement, each Member may, but shall not be obligated to,
contribute to the Company his Additional Contribution.
7.2 If a Member fails to make his Additional Contribution, in whole or
in part, as required in Section 7.1 above (the "Noncontributing Member"), then,
so long as any other Member shall make his Additional Contribution as provided
herein (each such Member making his Additional Contribution being hereinafter
referred to as "Contributing Member"), any Contributing Member shall have the
option (a) with the consent of a majority in interest of the Contributing
Members (i) to make a capital contribution equal to the Additional Contribution
not made by the Noncontributing Member or (ii) to make a Default Loan equal to
the Additional Contribution not made by the Noncontributing Member or (b) with
the unanimous written consent of each Contributing Member, to declare the
Company terminated as a result of the Noncontributing Member's default. In the
event that more than one Contributing Member desires to make an Additional
Contribution, or is permitted to make a Default Loan, on account of the
Noncontributing Member, each such Contributing Member shall be permitted to
participate in proportion to their respective Interests. All loans made pursuant
to this Section 7.2 shall bear interest at the Default Rate.
7.3 Upon the making of a capital contribution to the Company pursuant
to Section 7.2, the Interest of the Noncontributing Member and the Contributing
Members shall be adjusted as follows: (a) the Noncontributing Member's Interest
shall be decreased (but not below zero) by subtracting therefrom an amount equal
to the percentage equivalent of the quotient of (i) the Additional Contribution
not made by the Noncontributing Member giving rise to application of this
Section 7.3 multiplied by (A) 200% upon the first failure of the Noncontributing
Member to make an Additional Contribution, (B) 300% upon the second such failure
and (C) 400% upon the third such failure, divided by (ii) the aggregate amount
of all Capital Contributions made by the Members (including the Additional
Contributions received by the Company), and (b) the Contributing Members'
<PAGE>
Interest shall be increased by adding thereto an amount equal to the percentage
by which the Noncontributing Member's Interest was decreased pursuant to clause
(a) above. Upon the fourth and each subsequent failure of the Noncontributing
Member to make an Additional Contribution giving rise to the application of this
Section 7.3, a majority-in-interest of the Contributing Members shall have the
option, exercisable in their sole discretion, to cause the remaining Interest of
the Noncontributing Member to be forfeited and allocated to the Contributing
Members or to continue re-allocating the Interests of the Noncontributing Member
and Contributing Members as provided in the preceding sentence except that the
percentage multiple set forth in clause (i) (C) shall be increased 100% for each
failure of the Noncontributing Member to make an Additional Contribution. An
example of the operation of this Section 7.3 with respect to a re-allocation of
Interests upon the first failure of a Noncontributing Member to make an
Additional Contribution, is set forth in Schedule B attached hereto.
7.4 The obligations of the Members contained in this Section 7 are
personal and run only to the benefit of the Company and the Members and may not
be enforced by any third parties. No creditor of the Company may rely on the
foregoing provisions of this Article 7 or any other provision of this Operating
Agreement to make any contributions or returns to the Company, notwithstanding
any agreement, representation, intention, indication or otherwise to the
contrary.
ARTICLE 8
CASH DISTRIBUTIONS
8.1 The Company shall distribute Income to the Members at such times as
the Company shall determine (but not less often than quarterly), in the
following order of priority:
(a) first, to any Member who made a Default Loan, to the
payment of accrued and unpaid interest, and the then outstanding principal
balance of, any Default Loan, such distribution to be proportion to the
aggregate amount of interest, and the principal, owed. If more than one Member
participates in the making of a Default Loan, then distributions to such Members
on account of this Section 8.1(a) shall be made in proportion to the amounts so
loaned. If there shall be more than one instance in which a Default Loan has
been made, then Default Loans shall be repaid in the order in which they shall
have been outstanding the longest;
(b) second, to the Members in an amount equal to and in
proportion to their Unrecovered Additional Contributions;
(c) next, to the Members in an amount sufficient to give them
a ten percent (10%) return compounded annually on the aggregate of their Capital
Contributions and Additional Contributions;
<PAGE>
(d) next, to Sonia Seidman and the Managing Member in an
amount sufficient to pay to them, in the aggregate, up to twenty percent (20%)
of the net annual profits of the Company for each year calendar that the Company
is in existence to be paid 5% to the Managing Member and 15% to Sonia Seidman;
and
(e) the balance, if any, shall be distributed to the
Members in proportion to their Interests.
8.2 Notwithstanding Section 8.1, Net Proceeds from a Capital
Transaction which constitutes a liquidation of the Company, together with other
funds remaining to be distributed, shall be distributed to the Members no later
than the later of (a) the end of the taxable year of the Company in which such
liquidation occurs; or (b) within ninety (90) days after the date of such
liquidation event, after payment of all Company liabilities and expenses (or
adequate provision therefor), in accordance with Section 9.1, except that in no
event shall (x) a distribution be made to any Member if, after giving effect to
such distribution, all liabilities of the Company, other than liabilities to
Members on account of their Interests and liabilities for which the recourse of
creditors of the Company is limited to specified property of the Company, exceed
the fair value of the assets of the Company, except that the fair value of
property that is subject to a liability for which the recourse of creditors is
limited shall be included in the assets of the Company only to the extent that
the fair value of the property exceeds that liability and (y) the distribution
to a Member exceed the positive balance in such Member's Capital Account after
giving effect to all allocations to such Member under Article 9 of Net Profits,
Net Losses, and Gain and Loss from Capital Transactions so that liquidation
proceeds shall be distributed in accordance with each Member's positive Capital
Account balance (within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(b) as in effect on the date hereof). If a members shall
receive a distribution that should not have been made based upon the provisions
of Section 8.2 (x), the provisions of Section 42:2B-42 (b) of the act shall
apply . Section 42:2B-42(c) of the Act shall apply to all distributions made to
the Members.
ARTICLE 9
TAX ALLOCATIONS
10.1 Net Profits, Net Losses and any investment tax credit for each
fiscal year or part thereof shall be allocated to the Members in proportion to
their Interests.
10.2 Gain from a Capital Transaction shall be allocated in the
following order:
(a) There shall first be allocated to those Members, if any,
who have deficit balances in their Capital Accounts immediately prior to such
Capital Transaction an amount of such gain equal to the aggregate amount of such
deficit balances, which amount shall be allocated in the same proportion as such
deficit balances.
<PAGE>
(b) There shall next be allocated to each of the Members gain
in proportion to (but not greater than) the amount by which (x) the amount of
Net Losses theretofore allocated to each Member and not theretofore taken into
account under this Section 9.2(b), exceeds (y) the gain allocated to such Member
under Section 9.2(a).
(c) There shall next be allocated to each of the Members gain
equal to the amount by which (x) the aggregate proceeds derived from a Capital
Transaction distributable to each Member in accordance with the provisions of
Section 8.1 or 8.2 other than with respect to Default Loans, as the case may be,
exceeds (y) the positive balance, if any, in such Member's Capital Account after
such Member's Capital Account has been adjusted to reflect the gain allocated to
such Member pursuant to Sections 9.2(a) and 9.2(b); provided, however, that if
there shall be an insufficient amount of gain determined by this Section 9.2(c),
then the gain shall be allocated to the Members in proportion to the respective
amounts determined pursuant to this Section 9.2(c).
(d) Any remaining gain shall be allocated among the
Members in proportion to their
Interests.
(e) If the Company shall realize, upon a Capital Transaction,
gain which is treated as ordinary income under Sections 1245 or 1250 of the
Code, such ordinary income shall be allocated to the Members who receive the
allocation of the depreciation or cost recovery deduction that generated the
ordinary income in the same proportions as such deductions.
(f) Notwithstanding the foregoing, distributions of Income
made to a Member for interest and in repayment of the principal on any Default
Loan shall not be treated as Income for the purpose of allocating gain pursuant
to this Section 9.2 or for any other purpose. Any interest on a Default Loan
shall be treated as a "guaranteed payment" for purposes of Section 707(c) of the
Code.
10.3 Losses from Capital Transactions shall be allocated in the
following order:
(a) There shall first be allocated to those Members, if any,
whose positive balances in their Capital Accounts exceed their Unrecovered
Additional Contributions, an amount of such loss equal to such excess amount,
which amount shall be allocated in the same proportion as such excess amounts.
(b) There shall next be allocated to those Members, if any,
that have positive balances in their Capital Accounts, an amount of such loss
equal to the aggregate amount of such positive balances, which amount shall be
allocated in the same proportion as such positive balances.
<PAGE>
(c) The balance of such loss shall be allocated to the
Members in proportion to their Percentage Interests.
10.4 Notwithstanding the preceding provisions of this Article 10:
(a) Except as provided in sub-section (e) below, no allocation
of loss or deduction shall be made to a Member if such allocation would cause at
the end of any taxable year a deficit in such Member's Adjusted Capital Account
to exceed his allocable share of Minimum Gain; and any such loss or deduction
not allocated to a Member by reason of this Section 9.4 shall be allocated
pro-rata to each other Member if and to the extent that such allocation shall
not create a deficit in such other Member's Adjusted Capital Account in excess
of his allocable share of Minimum Gain; provided, however, that if such
allocation would create such deficit in all Members' Adjusted Capital Accounts
in excess of their share of Minimum Gain, then such allocation shall be made in
accordance with the principles of Treasury Regulation Section 1.704-1(b).
(b) If, during any taxable year, there is a net decrease in
Minimum Gain then, before any other allocations are made for such year, each
Member shall be allocated items of Company income and gain for such year (and,
if necessary, subsequent years) in an amount equal to each Member's share of the
net decrease in Company Minimum Gain (within the meaning of Treasury Regulation
Section 1.704-2(g)(2)) in a manner so as to satisfy the requirements of Treasury
Regulation Section 1.704-2(f).
(c) If, during any taxable year, there is a net decrease in
Company Minimum Gain Attributable to Member to Member Nonrecourse Debt, then,
before any other allocations are made for such year other than those pursuant to
Section 9.4(b) above, each Member with a share of the Company Minimum Gain
Attributable to Member Nonrecourse Debt at the beginning of the year shall be
allocated items of Company income and gain for such year (and, if necessary, for
subsequent years) in an amount equal to each Member's share of the net decrease
in Minimum Gain Attributable to Member Nonrecourse Debt as determined in
accordance with Treasury Regulation Section 1.704-2(i)(4) in a manner so as to
satisfy the requirements of said Treasury Regulation.
(d) If during any taxable year a Member unexpectedly receives
(i) a distribution of cash or property from the Company or (ii) an adjustment or
allocation described in either Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4) as in effect on the date hereof (concerning depletion
allowances with respect to oil and gas properties) or Treasury Regulation
Section 1.704-1 (b) (2) (ii) (d) (5) as in effect on the date hereof (concerning
allocations of loss and deduction in interests change during the year, if an
interest is acquired by gift or if a Member receives certain Company property in
redemption of part or all his interest), and if such adjustment, allocation or
<PAGE>
distribution would cause at the end of the taxable year a deficit balance in
such Member's adjusted capital account in excess of his allocable share of
Minimum Gain, then a pro-rata portion of each item of Company income, including
gross income, and gain for such taxable year (and, if necessary, subsequent
taxable years) shall be allocated to such Member in an amount and in a manner
sufficient to eliminate such excess balance as quickly as possible before any
other allocation is made for such year other than pursuant to Section 9.4(b)
above so as to satisfy the requirements of Treasury Regulation Section
1.704-1(b) (2) (ii) (d) (qualified income offset).
(e) To the extent required by Treasury Regulation Section
1.704-2(i) (1), Member Nonrecourse Debt Deductions for any taxable year shall be
allocated to the Member (or Members) who bear(s) the economic risk of loss of
such Member Nonrecourse Debt.
(f) In the event that any allocation is or has been made to a
Member pursuant to Sections 9.4(a), (b), (c), (d) or (e) above, subsequent items
of income, deduction, gain and loss shall be allocated before any other
allocations are made (subject to the provisions of said Sections) to the Members
in the manner which would result in each Member having a Capital Account balance
equal to what it would have been had the allocation pursuant to said Sections.
(g) Upon the occurrence of an event described in Section
6.4(c), all Company property shall be revalued on the Company's books at fair
market value, Capital Accounts will be adjusted in accordance with Section 6.4
(c), and subsequent allocations of taxable income, gain, loss and deductions
shall, solely for tax purposes, be made necessary so as to take account of the
variation between the adjusted tax basis and the fair market value of such
property in accordance with Section 704 of the Code and the Treasury Regulations
thereunder.
(h) For the purposes of this Article, each Member's "Adjusted
Capital Account" shall equal the Capital Account of each Member (1) reduced at
the end of each taxable year by the sum of (x) the excess of distributions
reasonable expected to be made to such Member over the offsetting increases to
such Member's Member's Capital Account reasonably expected to be made in the
same taxable year as the aforesaid distributions, (y) adjustments expected to be
made to such Member's Capital Account described in Treasury Regulation Section
1.704-1(b) (2) (ii) (d) (4) as in effect on the date hereof (concerning
depletion allowances with respect to oil and gas properties), and (z)
allocations expected to be made described in Treasury Regulation Section 1.704-1
(b) (2) (ii) (d) (5) as in effect on the date hereof (concerning allocations of
loss and deduction if Interests change during the year, if an Interest is
acquired by gift or if a Member receives certain Company property in redemption
of part or all of his Interest in the Company), and (2) increased by the sum of
(i) the amount, if any, which the Member is obligated to restore the Company
upon liquidation of his Interest if a deficit balance exists in his Capital
Account at such time, (ii) the outstanding principal balance of any promissory
<PAGE>
note made by such Member and contributed to the company if such note is not
readily tradable on an established securities market and if such note must be
satisfied within ninety (90) days after the date said Member's Interest is
liquidated and (iii) the sum of (a) the amount the Member would be personally
liable for either as a Member or in his individual capacity as a guarantor or
otherwise, and (b) the economic risk of loss the Member would bear attributable
to any Company liability (as determined in accordance with Treasury Regulation
Section 1.752-2).
(i) In accordance with Section 704(b) and (c) of the Code and
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company (including all or part of any
deemed capital contribution under Section 708 of the Code) shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company and its agreed value.
In the event that Capital Accounts are ever adjusted pursuant to Treasury
Regulation Section 1.704-1(b) (2) to reflect the fair market value of any
Company property, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset and its value as adjusted in the same manner as
required under Section 704(c) of the Code and the Regulations thereunder.
(j) The allocations provided in this Section 10.4 are intended
to comply with the provisions of Section 704(b) of the Code and the regulations
thereunder. However, if any such allocation causes a distortion in the Members'
Interest in contravention of the Members' economic arrangement as reflected in
Article 6, the Company has the authority to make curative allocations to bring
such allocations in accordance with such Member's Interest, as if such
allocations which caused the distortion had not occurred and to bring such
allocations in compliance with Section 794(b) of the Code and regulations
thereunder.
ARTICLE 10
RIGHTS, POWERS AND REPRESENTATIONS OF THE MEMBERS
10.1 All decisions, consents, authorizations and rights in connection
with the business and affairs the company shall be carried on and managed by a
majority in interest of the Members, which shall have full, exclusive and
complete discretion with respect thereto. Any Member or person acting pursuant
to any authority granted to him in writing by a majority in interest of the
Members shall have all necessary and appropriate powers to carry out the
authority so granted, and no other Member or person without such authority so
granted shall have the right to take any action or give any consent, by
affirmative act or acquiescence, to any matter or thing, affecting the Company,
Premises or Project. In furtherance of the foregoing, any Member or person so
authorized as provided above may:
<PAGE>
(a) negotiate, execute, deliver and perform on behalf of, and
in the name of, and in the name of, the Company any and all contracts, deeds,
assignments, deeds of trust, leases, subleases, promissory notes and other
evidences of indebtedness, mortgages, bills of sale, financing statements,
security agreements, easements, stock powers, and any and all other instruments
necessary or incidental to the business of the Company and the financing
thereof,
(b) borrow money, without limit as to amount, and to secure
the payment thereof by mortgage, pledge, or assignment of, or security interest
in, all or any part of the assets then owned or thereafter acquired by the
Company,
(c) effectuate the purpose of the Company as provided in
Article 5 hereof,
(d) establish, maintain and draw upon checking and other
accounts of the Company,
(e) execute any notifications, statements, reports, returns or
other filings that are necessary or desirable to be filed with any state or
Federal agency, commission or authority,
(f) enter into contracts in connection with the business
of the Company,
(g) arrange for facsimile signatures for the Members in
executing and all documents, papers, checks or other writings or legal
instruments which may be necessary or desirable in the Company business, and
(h) execute, ackowledge and deliver any and all contracts,
documents and instruments deemed appropriate to carry out any of the foregoing
purposes and intent of this Operating Agreement.
10.2 In the management of the Company, and with respect to any and all
decisions with respect to the Company and its business and the conduct of its
operations, the Members of the Company shall have a cumulative total of one
hundred (100) votes, and each Member shall have the number of votes equal to
his/her Interest. Wherever and whenever the word "majority" appears in this
Operating Agreement, either as a noun or as an adjective, it shall mean for all
purposes that number of Members whose votes when considered or added together
constitute more than fifty (50) of the total one hundred (100) votes of all the
Members. Any act or decision of any of the Members may be confirmed, overruled
or precluded by the majority of the Members.
<PAGE>
10.3 Each of the Members, on their own behalf and on behalf of anyone
who shall represent their Interests, hereby waives notice of the time, place or
purpose of any meeting at which any matter is to be voted on by the Members or
anyone acting by or for them, waives any requirement that there be such a
meeting and agrees that any action may be taken by consent without a meeting.
10.4 The fact that the Members are directly or indirectly interested in
or connected with any person, firm or corporation employed by the Company to
render or perform a service, or from which or whom the Company may buy
merchandise, material or other property shall not prohibit the Company from
employing such persons, firms or corporations, or from otherwise dealing with
him under such reasonable terms and conditions as the Company may determine.
ARTICLE 11
MANAGING MEMBER
11.1 Notwithstanding any provision contained in Article 10 to the
contrary, the daily affairs of the Company shall be conducted by the Managing
Member who shall the power and authority to make ordinary and usual decisions
concerning the business and affairs of the Company. The Managing Member shall
have the power and authority, on behalf of the Company, to do the following:
(a) open one or more depository accounts and make
deposits into and checks and withdrawals against such accounts;
(b) invest the capital resources of the Company, in amounts
not to exceed one hundred and twenty-five percent (125%) of the capital of the
Company without the prior consent of a majority in interest of the Members, in
stocks, bonds and other securities of publically traded companies (collectively
"Permitted Investments"), including the ability to buy, sell, exchange, swap or
transfer such securities;
(c) open one or more cash or margin brokerage accounts in
the name of the Company for purposes of making Permitted Investments;
(d) obtain insurance covering the business and affairs
of the Company;
(e) commence, prosecute or defend any proceeding in the
Company's name; and
(f) enter into any and all agreements and execute any
and all contracts, documents and instruments necessary or required to
effectuate the foregoing.
<PAGE>
11.2 Notwithstanding any provision contained in this Operating
Agreement to the contrary, it is specifically agreed between the Members that
<PAGE>
the Company shall make no investment in Cali Realty Corporation without the
unanimous prior consent of all Members.
11.3 (a) The Managing Member shall perform and discharge his duties as
a manager in good faith, with the care an ordinary prudent person in a like
position would exercise under similar circumstances, and in a manner he
reasonably believes to be in the best interests of the Company. The Managing
Member shall not be liable for any monetary damages to the Company for any
breach of such duties except for: receipt of a financial benefit to which the
Manager is not entitled; voting for or assenting to a distribution to Members in
violation of this Operating Agreement or the Act; a knowing violation of the
Law; fraud; or a willful breach of fiduciary obligations owed to the Members.
(b) The Managing Member shall devote a significant amount of
his time and efforts to furthering the business and investments of the Company
and any other corporations and partnerships formed to invest in the stock in
private and public companies or real estate assets and mortgages. The Managing
Member shall also be permitted to perform consulting and legal services for
Environmental Waste Management Associates, Inc., its principal shareholders,
Richard Greenberg, and for Glenn Woo and other real estate related clients. In
compensation equal to $125,000, payable quarterly.
11.4 Unless otherwise provided by law or expressly assumed, a person
who is a Member or manager, or both, shall not be liable for the acts, debts or
liabilities of the Company.
11.5 The Company shall indemnify the Managing Member and each other
Member and may indemnify and employee or agent of the Company who was or is a
party or is threatened to be made a party to threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, and whether formal or informal, other than action by or in the
right of the Company, by reason of the fact that such person is or was a
manager, employee or agent of the Company against expenses, including attorneys
fees, judgements, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with the action, suit or
proceeding, if the person acted in good faith, with the care an ordinary prudent
person in a like position would exercise under similar circumstances, and in a
manner that such person reasonably believed to be in the best interests of the
Company and with respect to a criminal action or proceeding, if such person had
<PAGE>
no reasonable cause to believe such person's conduct was unlawful. To the extent
that a Member, employee or agent of the Company has been successful on the
merits or otherwise in defense of an action, suit or proceeding or in defense of
any claim, issue or other matter in the action, suit or proceeding, such person
shall be indemnified against actual and reasonable expenses, including attorneys
fees incurred by such person in connection with the action, suit or proceeding
and any action, suit or proceeding brought to enforce the mandatory
indemnification provided herein. Any indemnification permitted under this
Article, unless ordered by a court, shall be made by the Company only as
authorized in the specific case upon a determination that the indemnification is
proper under the circumstances because the person to be indemnified has met the
applicable standard of conduct and upon an evaluation of the reasonableness of
expenses and amount paid in settlement. This determination and evaluation shall
be made by a majority vote of the Members who are not parties or threatened to
be made parties to the action, suit or proceeding. Notwithstanding the foregoing
to the contrary, no indemnification shall be provided to the Managing Member or
any other Member, employee or agent of the Company for or in connection with the
receipt of a financial benefit to which such person is not entitled, voting for
or assenting to a distribution to Members in violation of this Operating
Agreement of the Act, or a knowing violation of law.
ARTICLE 12
BOOKS, RECORDS AND REPORTS
12.1 At all times during the continuance of the Company, the Company
shall keep or cause to be kept full and true books of account, in which shall be
entered fully and accurately each transaction of the Company. The books of
account, together with an executed copy of the Certificate of Formation of the
Company and any amendments thereto, shall at all times be maintained at the
principal office of the Company and shall be open to inspection and examination
by the members or their representatives at reasonable hours and upon reasonable
notice. For purpose hereof, the Company shall keep its books and records on the
same method of accounting employed for tax purposes.
12.2 The fiscal year of the Company shall be the calendar year. Within
a reasonable time after the end of each fiscal year and in any event on or
before thirty (30) days prior to the filing date for individual tax returns
(including extensions), the accountants for the Company shall deliver to each
Member (a) upon request of a Member, an annual statement of the Company's
accountants, and (b) a report or a tax return setting forth such Member's share
of the Company's profit or loss for such year and such Member's allocable share
of all items of income, gain, loss, deduction and credit for Federal income tax
purposes.
<PAGE>
12.3 The Company shall also cause to be prepared and filed all Federal,
state and local tax returns required of the Company. All books, records, balance
sheets, statements, reports and tax returns required pursuant to Section 12.1
and 12.2 hereof shall be prepared at the expense of the Company.
ARTICLE 13
BANK ACCOUNTS
13.1 All funds and income of the Company (a) shall be deposited in the
name of the Company in such bank account or accounts as shall be designated by
the Managing Member, (b) shall be invested in such Permitted Investments as
Managing Member shall determine and (c) shall be kept separate and apart from
the funds of any other individual or entity.
13.2 Withdrawals from any such bank account or accounts shall be made
upon the signature of any person so designated by the Company in writing.
ARTICLE 14
RIGHTS AND DUTIES OF MEMBERS
14.1 Subject to duties and obligations of the Managing Member, it is
expressly understood that each Member may engage in any other business or
investment, whether or not in direct competition with the business of the
Company, and neither the Company nor any other Member shall have any rights in
and to said businesses or investments, or the income or profits derived
therefrom.
14.2 The Managing Member may employ, on behalf of the Company, such
persons, firms or corporations, including those firms or corporations in which
any Member has an interest, and on such terms as the Managing Member shall deem
advisable in the operation and management of the business of the Company,
including, without limitation, such accountants, attorneys, architects,
engineers, contractors, appraisers and experts.
14.3 No Member shall be personally liable to the Company or any of the
other Members for any act or omission performed or omitted by him, except if
such act or omission was attributable to willful misconduct or gross negligence.
14.4 Each Member (and each former Member) shall be indemnified and
saved harmless by the Company from any loss, damage or expense incurred by him
by reason of any act or omission performed or omitted by him, except if such act
or omission was attributable to willful misconduct or gross negligence.
<PAGE>
ARTICLE 15
TAX MATTERS
15.1 (a) Notwithstanding any provisions hereof to the contrary, each of
the Members hereby recognizes that the Company will be a partnership for United
States federal income tax purposes and that the Company will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, that the filing of U.S. Partnership Returns of Income shall not be
construed to extend the purposes of the company or expand the obligations or
liabilities of the Members. At the request of any Member, the Company shall file
an election under Section 754 of the Code.
(b) The Company shall engage an accountant (the "Accountant")
to prepare at the expense of the company all tax returns and statements, if any,
which must be filed on behalf of the Company regarding the Premises and the
operation, dissolution and liquidation of the Company with any taxing authority.
(c) Lawrence Seidman is designated Tax Matters Member (herein
"TMM") for purposes of Chapter 63 of the Code and the Members will take such
actions as may be necessary, appropriate, or convenient to effect the
designation of Lawrence Seidman as TMM. The TMM shall attempt to comply with the
responsibilities outlined in this Section 15.1 and in Sections 6222 through 6231
of the Code (including any Treasury Regulations promulgated thereunder).
ARTICLE 16
BANKRUPTCY OF A MEMBER
16.1 Unless a majority in interest of the Members shall elect
otherwise, a Member shall cease to be a Member of the Company:
(a) if he/she/it:
(i) Makes an assignment for the benefit of
creditors;
(ii) Files a voluntary petition in bankruptcy;
(iii) Is adjudged bankrupt or insolvent, or has
entered against him an order for relief, in any bankruptcy or insolvency
proceeding;
(iv) Files a petition or answer
seeking for himself/herself/itself any
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation;
<PAGE>
(v) Files an answer or other pleading
admitting or failing to contest the
material allegations of a petition filed against him/
her/it in any proceeding of this nature; or
(vi) Seeks, consents to or acquiesces in
the appointment of a trustee,
receiver or liquidator of the Member or of all or
any substantial part of his/her/its
properties; or
(b) One hundred twenty (120) days after the commencement of
any proceeding against the Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, if the proceeding has not been dismissed, or within
ninety (90) days after the appointment without his consent or acquiescence of a
trustee, receiver or liquidator of the Member or of all or any substantial part
of his/her properties, the appointment is not vacated or stayed, or within
ninety (90) days after the expiration of any such stay, the appointment is not
vacated.
ARTICLE 17
ASSIGNABILITY, TRANSFER OR PLEDGE OF
INTERESTS; RESIGNATION OF MEMBER
17.1 (a) No Member shall have the right to assign, convey, sell or
otherwise transfer or dispose of, or pledge, mortgage, hypothecate or otherwise
encumber his/her/its Interest, whether record or beneficial interest thereof,
without the prior written consent of the Company. Notwithstanding the preceding
sentence, but subject to the restrictions on transferability required by law, or
set forth in any instrument or agreement by which the Company may be bound, or
which may be contained in this Operating Agreement, an individual Member, if
any, may, without any consent, assign, convey, sell or otherwise transfer or
dispose of all or any portion of his interest in the Company to any one or more
of the members of his/her immediate family or families (defined for the purposes
of this Operating Agreement as a mother, father, sister, brother, son, daughter,
stepson, stepdaughter or spouse (in each instance whether by marriage or
otherwise)) and/or a trust or other entity for the benefit thereof or
themselves, by a written instrument of assignment and assumption, provided that
the instrument of transfer provides for the assumption of the assignor's
liabilities and obligations hereunder and has been duly executed by the assignor
of such interest and by the transferee. The Member shall notify the Company of
any assignment, transfer or disposition of a beneficial interest in any interest
of the Member which occurs without a transfer of record ownership, although such
notification, or the absence of a response thereto, shall not be deemed a
consent thereof.
(b) An assignee or transferee of any portion of the interest
of the Member shall be entitled to receive allocations and distributions
<PAGE>
attributable to the interest acquired by reason of such assignment from and
after the effective date of the assignment of such interest to such assignee;
however. anything herein to the contrary notwithstanding, the Company shall be
entitled to treat the assignor of such interest of the Member as the absolute
owner thereof in all respects, and shall incur no liability for allocations of
net income, net losses, or gain or loss on sale of Company property, or
transmittal of reports and notices required to be given to Members hereunder
which are made in good faith to such assignor until such time as the written
assignment has been received by the Company, approved and recorded on its books
and the effective date of the assignment has passed. Provided that the Company
has actual notice of any assignment of the interest of the Member, the effective
date of such assignment on which the assignee shall be deemed an assignee of
record shall be the date set forth on the written instrument of assignment.
(c) Any assignment, sale, exchange, transfer or other
disposition in contravention of any of the provisions of this Article 17 and
Article 18 hereof shall be void and ineffective and shall not bind or be
recognized by the Company.
(d) In the event that there shall be more than one assignee,
transferee, representative or other successor in interest as permitted herein
(collectively, the "Transferees") and the Member as of the date of this
Operating Agreement shall remain a Member, then the Member shall be authorized
to act, and shall so act, on behalf of the Member and all of the Transferees
acting as such by, through or under the Member. In the event that there shall be
more than one Transferee, and the Member as of the date of this Operating
Agreement shall no longer be a Member, then the Company must be advised by the
Member whose interest is the subject of such event or failing which by a
two-thirds (2/3) majority in interest of those holding any portion of the
interests of the Member, of one person to act on behalf of all the Transferees.
The Member, if the first sentence of this paragraph shall be applicable, or the
person so noted to the Company, if the second sentence of this paragraph shall
be applicable, shall be authorized to act, and shall so act, for all of the
Transferees, all of whom shall be bound by any decision or action taken by such
person, and the Company, the Company and all of the other Members, shall be
entitled to rely on the decisions or actions taken by such person. Until the
Company shall be advised as to the identity of such person, (i) the Transferees
shall be entitled only to distributions and tax allocations as provided in
Article 8 and 9 hereof, but shall have no right, power or authority with respect
to any decision making reserved herein to the Members or any of them and (ii)
wherever in this Operating Agreement provision shall be made for the Members to
make decisions with respect to Company matters, the interests of the Member, as
transferred to the Transferees, shall not be included in determining whether the
requisite interest of members have consented to or approved of such decision.
<PAGE>
17.2 Without the prior written consent of all Members and other than as
provided in Section 6.1(b) above, a Member may not resign from the Company prior
to the dissolution and winding up of the Company.
ARTICLE 18
ADMISSION OF SUBSTITUTED MEMBERS;
DEATH OR INCAPACITY; FURTHER CONDITIONS
18.1 No assignment or transfer of all or any part of the interest of a
Member permitted to be made under this Operating Agreement shall be binding upon
the Company unless and until a duplicate original of such assignment or
instrument of transfer, duly executed and acknowledged by the assignor and the
transferee, has been delivered to the Company.
18.2 As a condition to the admission of any substituted Member, as
provided in Article 17 hereof, the person so to be admitted shall execute and
acknowledge such instruments, in form and substance reasonably satisfactory to
the Company, as a majority in interest of the Members may deem necessary or
desirable to effectuate such admission and to confirm the agreement of the
person to be admitted as a Member to be bound by all of the covenants, terms and
conditions of this Operating Agreement, as the same may have been amended.
18.3 Any person to be admitted as a member pursuant to the provisions
of this Operating Agreement shall, as a condition to such admission as a Member,
pay all reasonable expenses in connection with such admission as a Member,
including, but not limited to, the cost of the preparation, filing and
publication of any amendment to this Operating Agreement and/or Certificate of
Formation.
18.4 In the event of the death or adjudication of incompetency of a
Member, or upon the happening of any event described in Article 16, the
executor, administrator, committee or other legal representative of such Member,
or the successor in interest of such Member, shall succeed only to be right of
such Member to receive allocations and distributions hereunder, and may be
admitted to the Company as a Member in the place and stead of the deceases,
incompetent, or bankrupt Member in accordance with this Article 18, but shall
not be deemed to be a substituted Member unless so admitted. Such event,
however, shall cause a termination or dissolution of the Company within one
hundred twenty (120) days of such event unless a majority in interest of the
Members shall elect to continue the Company within said one hundred twenty (120)
day period.
18.5 Notwithstanding anything to the contrary contained in this
Operating Agreement, no sale or exchange of an interest in the Company may be
made if the interest sought to be sold or exchanged, when added to the total of
all other interests sold or exchanged within the period of twelve (12)
<PAGE>
consecutive months prior thereto, results in the termination of the Company
under Section 708 of the Code without the prior written consent of a majority in
interest of the Members.
18.6 In the event of a permitted transfer of all or part of the
interest of a Member, the Company shall, if requested, file an election in
accordance with Section 754 of the Code or a similar provision enacted in lieu
thereof, to adjust the basis of the Property of the Company. The Member
requesting said election shall pay all costs and expenses incurred by the
Company in connection therewith.
ARTICLE 19
LIQUIDATION
19.1 Upon the dissolution of the Company, the Company shall be
liquidated and its assets distributed as required by Section 42:2B-51 of the
Act.
19.2 The assets of the Company shall be liquidated as promptly as
possible, but in an orderly and businesslike manner so as not to involve undue
sacrifice.
19.3 In the event that any proceeds are to be distributed to the
Members same shall be distributed, if practicable, no later than the later of
(i) the end of the taxable year of the Company in which such liquidation occurs;
or (ii) within ninety (90) days after the date of such liquidation event.
19.4 In any liquidation, the Company's assets shall be used first to
pay the costs and expenses of the dissolution and liquidation. The liquidation
trustee (which may be a Member) shall be entitled to establish reserves to
provide for any contingent or unforeseen liabilities or obligations of the
Company.
19.5 With respect to distributions to Members, said distributions
shall be made:
(a) first, to the repayment of any accrued and unpaid interest
on, and the then outstanding principal balance of, any Default Loan, in
proportion to the aggregate amount of interest, and then principal, owed, and if
more than one Member shall have made a Default Loan, then in proportion to the
amounts so loaned. If there shall be more than one instance in which a Default
loan has been made, the Default loans shall be repaid in the order in which they
shall have been outstanding the longest;
(b) second, to the payment of an obligation owed
pursuant to Section 11.3 (c).
(c) third, to all Members in proportion to and to the extent
of any remaining positive balances in such Member's Capital Account
after giving effect to all locations to such Member under Article 10 of
this Operating Agreement so that liquidation proceeds shall be
<PAGE>
distributed in accordance with each Member's positive Capital Account
balance (within the meaning of Treasury Regulation Section 1.704-1(b)
(2) (ii) (b) as in effect on the date hereof); and
(d) last, to all Members pro rata in accordance with
their Company Interests.
ARTICLE 20
GENDER
20.1 All terms and words used in this Operating Agreement, regardless
of the sense or gender in which they are used, shall be deemed to include each
other sense and gender unless the context requires otherwise.
ARTICLE 21
FURTHER ASSURANCES
21.1 The Members agree immediately and from time to time to execute,
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and to do all such other
acts and things as may be required by law, or as may, in the opinion of a
majority in interest of the Members, be necessary or advisable to carry out the
intent and purposes of this Operating Agreement.
ARTICLE 22
COVENANT AGAINST PARTITION
22.1 The Members, on behalf of themselves, their legal representatives,
heirs, successors and assigns, hereby specifically renounce, waive and fofeit
all rights whether arising under contract, statute, or by operation of law, to
seek, bring, or maintain any action for partition in any court of law or equity
pertaining to any real property which the Company may now or in the future own,
regardless of the manner in which title to any such property may be held.
ARTICLE 23
NOTICES
23.1 Unless otherwise specified in this Operating Agreement, all
notices, demands, requests or other communications which any of the parties to
this Operating Agreement may desire or be required to give hereunder
(hereinafter referred to collectively as "Notices") shall be in writing and
shall be given by mailing the same by postage prepaid certified or registered
mail, return receipt requested, or by nationally recognized overnight courier to
the appropriate Member at the address set forth in this Operating Agreement.
Notices given in compliance with the provisions of this Article shall be deemed
<PAGE>
given one (1) business day after delivery to a nationally recognized overnight
courier or four (4) business days after mailing in a repository of the United
States Postal Service.
ARTICLE 24
APPLICABLE LAW
24.1 The parties agree that the parties shall be governed by, and this
Operating Agreement construed in accordance with, the laws of the State of New
Jersey applicable to agreements made and to be performed in such state and that
all claims and suits shall be heard in the courts located in the State of New
Jersey.
ARTICLE 25
CAPTIONS
25.1 All section titles or captions contained in this Operating
Agreement are for convenience only and shall not be deemed a part of this
Operating Agreement.
ARTICLE 26
COUNTERPARTS
26.1 This Operating Agreement may be executed in counterparts and each
counterpart so executed by each Member shall constitute and original, all of
which when taken together shall constitute one agreement, notwithstanding that
all the parties are not signatories to the same counterpart.
ARTICLE 27
BINDING EFFECT
27.1 This Operating Agreement may not be changed, modified, waived or
discharged, in whole or in part, unless in writing and signed by all of the
Members. This Operating Agreement shall be binding upon the Members and their
respective executors, administrators, legal representatives, heirs, successor
and assigns. The singular of any defined term or term used herein shall be
deemed to include the plural.
ARTICLE 28
PARTIAL INVALIDITY
28.1 If any term or provision of this Operating Agreement or the
application thereof to any person or circumstance shall to any extent be invalid
<PAGE>
or unenforceable, the reminder of this Operating Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby and each term
and provision of this Operating Agreement shall be valid and enforced to the
fullest extent permitted by law.
ARTICLE 29
INTEGRATION
29.1 This Operating Agreement is the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
relative to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Operating
Agreement as of the day and year first above written.
/S/ Lawrence Seidman
/S/ Sonia Seidman
/S/ SEIDCAL ASSOCIATES
By:
/S/ Angelo R. Cali, Partner
/S/ Paul Schmidt
/S/ Richard Greenberg
<PAGE>
SCHEDULE A
Required Contributions
Lawrence Seidman
$50,000
Sonia Seidman
$200,000
SEIDCAL Associates
$1,500,000
Paul Schmidt
$100,000
Richard Greenberg
$250,000
<PAGE>
SCHEDULE B
PERCENTAGE INTEREST
Lawrence Seidman:
%
Sonia Seidman:
%
SEIDCAL Associates:
%
Paul Schmidt:
%
Richard Greenberg:
%
<PAGE>
SCHEDULE B
EXAMPLE OF THE OPERATION OF SECTION 7.3
Assume the following facts:
(a) The interests are as follows:
A 10%
B 30%
C 60%
(b) The aggregate capital contributions made by the Members in
proportion to their respective interests is $2,000,000.
(c) The Company requires additional funds of $1,000,000.
(d) A and B each contribute their Additional Contributions to the
Company ($100,000 and $300,000, respectively) and C fails to contribute his
Additional Contribution ($600,000).
(e) B contributes C's Additional Contribution to Company.
The amount that C's Interest is decreased and the amount that B's
Interest is increased is computed as follows:
(i) Multiply the amount of the contribution not made by C
($600,000) by 200% resulting in a product of $1,200,000;
(ii) Divide the result of (i) above ($1,200,000) by the aggregate
amount of all capital
contributions made by the Members ($3,000,000), resulting in a product of .40;
(iii) Convert the product arrived at in computation (ii) above (.40) to
a percentage (by multiplying the same by 100) resulting in 40%. Subtract such
percentage from the Company Interest of C (40%) resulting in a new Interest for
C of 20%; and
(iv) Increase the Interest of B (30%) by adding thereto the same
Percentage that was subtracted from Member C (40%) resulting in a new Interest
for B of 70%.
OPERATING AGREEMENT
FOR
SEIDMAN AND ASSOCIATES II, L.L.C.
Dated: February , 1996
<PAGE>
INDEX
Page No.
Article 1 - Definitions 1
Article 2 - Formation 5
Article 3 - Principal Office 5
Article 4 - Term and Duration 6
Article 5 - Purpose 7
Article 6 - Capital Contributions by the Member 7
Article 7 - Additional Capital Contributions 9
Article 8 - Cash Contributions 10
Article 9 - Tax Allocations 11
Article 10 - Rights, Powers and Representation of
the Members 15
Article 11 - Managing Member 17
Article 12 - Books, Records and Reports 19
Article 13 - Bank Accounts 20
Article 14 - Rights and Duties of Members 20
Article 15 - Tax Matters 21
Article 16 - Bankruptcy 21
Article 17 - Assignability or Transfer of I 22
Article 18 - Admission of Substituted Members; Death
or Incapacity; Further Conditions 24
Article 19 - Liquidation 25
Article 20 - Gender 26
Article 21 - Further Assurances 26
Article 22 - Covenant Against Partition 26
Article 23 - Notices 26
Article 24 - Applicable Law 27
Article 25 - Captions 27
Article 26 - Counterparts 27
Article 27 - Binding Effect 27
Article 28 - Partial Invalidity 27
Article 29 - Integration 28
Exhibit A - Property Description
Exhibit B - Contract of Sale
Schedule A - Members' Percentage Interests
Schedule B - Example of the Operation of Section 8.3
<PAGE>
OPERATING AGREEMENT
FOR
SEIDMAN AND ASSOCIATES II, L.L.C.
AGREEMENT made February , 1996 by and between SONIA SEIDMAN
("Seidman"), having an address at 19 Veteri Place, Wayne, New Jersey 07470; and
SEIDCAL ASSOCIATES L.L.C. ("Seidcal"), a New Jersey limited liability company
having an address c/o Cali Realty Corporation, 11 Commerce Drive, Cranford, New
Jersey 07016 (hereinafter Seidman and Seidcal may sometimes be referred to
individually as a "Member" and collectively as the "Members").
WITNESSETH:
WHEREAS, the Members desire to form a limited liability company (the
"Company") pursuant to the New Jersey Limited Liability Company Act (the"Act")
and adopt this Operating Agreement in connection therewith; and
WHEREAS, the purpose of the Company shall be to purchase stock in
private and public companies and manage and invest the funds of others for these
purposes and for any and all other purposes permitted pursuant to the Act; and
WHEREAS, the Members wish to set forth the terms and conditions as to
the manner in which the Company shall be operated and to set forth the rights,
obligations and duties of the Members to each other and to the Company; and
WHEREAS, by executing this Operating Agreement, each Member represents
that she has sufficient right and authority to execute this Operating Agreement
and is not acting on behalf of any undisclosed or partially disclosed principal.
NOW, THEREFORE, in consideration of ten ($10) dollars and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows effective as of the date first
written above.
<PAGE>
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, the following terms shall have
the definitions set forth below:
"Additional Contribution": Each Member's pro-rata portion of a
Required Amount, determined by multiplying the Required Amount by each Member's
Interest.
"Additional Member": Any person or entity who acquires an additional
interest in the Company.
"Adjusted Capital Account": As defined in Section 9.4(h).
"Capital Account" or "Capital Accounts": As defined in Section 6.4.
"Capital Contributions": The respective capital contributions,
including any Additional Contribution,of each Member to the Company.
"Capital Transaction" or "Capital Transactions": Sale, transfer,
assignment or exchange of stock purchases or other investments made by the
Company or other similar transactions which, in accordance with generally
accepted principles, are treated as a capital transaction.
"Certificate of Formation": The Certificate of Formation of the Company
filed with the Secretary of State of the State of New Jersey pursuant to the Act
to form the Company, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"Code": The Internal Revenue Code of 1986, as amended, and any
reference to a particular section of the Code shall be deemed to include any
successor section to such section.
"Company": Seidman and Associates II, L.L.C.
"Contributing Member": A Member which has made its Additional
Contribution.
<PAGE>
"Default Loan": A loan to the Company of an amount equal to the
Additional Contribution not made by a Defaulting Member.
"Defaulting Member": A Member which fails to make her Additional
Contribution as required herein.
"Default Rate": A floating rate equal to the lesser of (a) ten (10%)
percent per annum in excess of the rate of interest announced from time to time
in The Wall Street Journal as the "prime rate" or "base rate" charged by
institutional commercial lenders from time to time, or (b) the maximum rate of
interest then permitted according to the laws of the State of New Jersey or
according to Federal law, to the extent applicable.
"Gain from a Capital Transaction": The gain recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes. In the event
there is a revaluation of Company property and the Capital Accounts are adjusted
pursuant to Section 6.4(c), Gain from a Capital Transaction shall be computed by
reference to the "book items" and not the corresponding "tax items".
"Income": Net Proceeds and all other income or amounts, however
characterized, received by the Company.
"Interest": The respective percentage interest of each Member as set
forth on Schedule A.
"Loss from a Capital Transaction": The loss recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes. In the event
there is a revaluation of the Company property and the Capital Accounts are
adjusted pursuant to Section 6.4(c), Loss from a Capital Transaction shall be
computed by reference to the "book items" and not the corresponding "tax items".
<PAGE>
"Manager": Lawrence B. Seidman, or such successor appointed by a
majority in interest of the Members.
"Member": Each of the parties who has executed this Operating
Agreement and any party who may hereafter become an Additional Member or a
Substitute Member pursuant to this Operating Agreement.
"Member Nonrecourse Debt": Any nonrecourse debt of the Company for
which a Member bears the economicrisk of loss, determined in accordance with
Treasury Regulation Section 1.704-2(b) (4).
"Member Nonrecourse Debt Deductions": With regard to any Member
Nonrecourse Debt, the amount of the net increase during any taxable year to the
Company in the amount of Minimum Gain Attributable to Member Nonrecourse Debt,
over the aggregate amount of any distributions during such year to the Member
who bears the economic risk of loss for such debt of proceeds of such debt that
are allocable to an increase in the Minimum Gain Attributable to such Member
Nonrecourse Debt. Such amounts shall be determined in accordance with Treasury
Regulation Section 1.704-2(I) (2).
"Minimum Gain": The amount of gain which would be recognized to the
Company for federal income tax purposes if all Company property secured by
Nonrecourse Liability were transferred to the creditor of such debt in
satisfaction thereof (and for no other consideration) in a taxable transaction.
The amount of such gain shall be determined and calculated in accordance with
Treasury Regulation Section 1.704--2(g) (I).
"Minimum Gain Attributable to Member Nonrecourse Debt": The amount of
gain which would be recognized by the Company for federal income tax purposes if
all Company property secured by Member Nonrecourse Debt were transferred to the
creditor of such debt in satisfaction thereof (and for no other consideration)
in a taxable transaction. The amount of such gain shall be determined and
calculated in accordance with Treasury Regulation Section 1.704-2(f) (I) (4).
"Net Proceeds": The net proceeds available to the Company from a
Capital Transaction after deducting (I) all costs and expenses incurred in
connection therewith, (ii) any liens or other indebtedness which is satisfied or
refinanced as a result of such Capital Transaction, and (iii) reasonable
reserves established by the Company from time to time for working capital and
other purposes.
<PAGE>
"Net Profit" and "Net Loss": The net income (including income exempt
from tax) and net loss (including expenditures that can neither be capitalized
nor deducted), respectively, of the Company, determined in accordance with the
method of accounting used by the Company for federal income tax purposes, but
computed without regard for Gain from Capital Transactions, Loss from Capital
Transactions and items of income or loss, if any, that are specifically
allocated to Members. In the event there is a revaluation of Company property
and the Capital Accounts are adjusted pursuant to Section 6.4(c), Net Profits
and Net Losses shall be computed by reference to the "book items" and not
corresponding "tax items".
"Nonrecourse Liability": Any Company debt for which no Member has any
economic risk of loss, determined in accordance with Treasury Regulation
Section 1.704-2(b) (3).
"Operating Agreement": This Operating Agreement as originally
executed and as amended, modified,supplemented or restated from time to time.
"Required Amount": The amount of cash required by the Company as
determined by a majority in interest of the Members.
"Substitute Member": Any transferee of a Member's Interests who is
admitted as a Member in the Company pursuant to Article 17 or 18.
"Unrecovered Additional Contributions": The aggregate amount of
Additional Contribution made by a Member pursuant to Section 7.1 hereof less
prior distributions to such Member of Income which is distributed to repay
outstanding Additional Contributions and any interest on any Default Loan
specially allocated to such Member.
<PAGE>
ARTICLE 2
FORMATION
2.1 The parties hereto do hereby form the Company under the name of
SEIDMAN AND ASSOCIATES II, L.L.C. pursuant to the Act. Pursuant to the
provisions of the Act, the formation of the Company shall be effective upon the
filing of the Certificate of Formation.
In order to maintain the Company as a limited liability company under
the laws of the State of New Jersey, the Company shall from time to time take
appropriate action, including the preparation and filing of such amendments to
the Certificate of Formation and such other assumed name certificates,
documents, instruments and publications as may be required by law, including,
without limitation, action to reflect:
(I) a change in the Company name;
(ii) a correction of a defectively or erroneously executed
Certificate of Formation;
(iii) a correction of false or erroneous statements in the
Certificate of Formation or the desire of the Members
to make a change in any statement therein in order
that it shall accurately represent the agreement
among the Members; or
(iv) a change in the time for dissolution of the Company
as stated in the Certificate of Formation and in this Agreement.
Section 2.2 Other Instruments. Each Member hereby agrees to execute and
deliver to the Company within five (5) days after receipt of a written request
therefor, such other and further documents and instruments, statements of
interest and holdings, designations, powers of attorney and other instruments
and to take such other action as the Company deems necessary, useful or
appropriate to comply with any laws, rules or regulations as may be necessary to
enable the Company to fulfill its responsibilities under this Operating
Agreement, to preserve the Company as a limited liability company under the Act
and to enable the Company to be taxed as a partnership for federal and state
income tax purposes.
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ARTICLE 3
PRINCIPAL OFFICE
3.1 The Company's registered office in New Jersey shall be at 19 Veteri
Place, Wayne, New Jersey 07470. The Company's registered agent who is a resident
of New Jersey is Lawrence B. Seidman, whose address is 19 Veteri Place, Wayne,
New Jersey 07470. At any time, the Company may designate another registered
agent and/or office.
3.2 The principal place of business of the Company shall be at 19
Veteri Place, Wayne, New Jersey 07470. At any time, the Company may change the
location of its principal place of business and may establish additional
offices.
ARTICLE 4
TERM AND DURATION
4.1 The Company shall commence upon the filing of the Certificate of
Formation, and shall continue in full force and effect until May 1, 2024,
provided, however, that the Company shall be dissolved prior to such date upon
the happening of any of the following events:
(a) The mutual written consent of the Members to dissolve the
Company.
(b) The sale or other divestiture of all or substantially all of the
assets of the Company and the distribution of the proceeds thereof to the
Members, including real estate or interests held or owned by the Company (other
than a transfer to a nominee of the Company for any Company purpose, which event
shall not be construed as an event of termination); provided, however, that (I)
if the Company receives a purchase money mortgage or other collateral security
in connection with such sale, the Company shall continue (A) until such mortgage
or security interest is paid in full or otherwise disposed of, or (B) in the
event of foreclosure of such mortgage, or security interest provided the Company
retains title therein; and (ii) the Company shall continue if the assets of the
Company are exchanged under Section 1031 of the Code.
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(c) Upon the death, retirement, expulsion, bankruptcy or dissolution of
a Member or occurrence of any other event that terminates the continued
membership of a Member in the Company (a "Dissolution Event") unless the
business of the Company is continued by the unanimous consent of the remaining
Member(s) within ninety (90) days following the Dissolution Event.
(d) The entry of a decree of judicial dissolution under Section
49 of the Act.
(e) The happening of any other prior event which pursuant to the terms
and provisions of this Operating Agreement shall cause a dissolution or
termination of the Company.
4.2 Upon any dissolution of the Company, the distribution of the Company's
assets and the winding up of its affairs shall be concluded in accordance with
Article 19 of this Operating Agreement.
ARTICLE 5
PURPOSE
5.1 The business of the Company shall be for the purpose of:
(a) Purchasing stock in private and public companies and managing
and investing funds of others for these purposes.
(b) Such other activities incident or appropriate to the foregoing,
including acting directly or in conjunction with others through joint ventures,
partnerships or otherwise.
5.2 The business of the Company shall also be for any lawful
purpose.
ARTICLE 6
CAPITAL CONTRIBUTIONS BY THE MEMBERS
6.1 (a) Upon execution hereof, or at such other times as determined by
the Manager, each Member shall contribute in cash to the capital of the Company
an amount in the aggregate equal to that set forth opposite her/its name on
Schedule A attached hereto.
(b) A Member's interest in the Company shall be represented by the
percentage interest held by such Member. Each Member's respective initial
interest in the Company is set forth opposite her/its name on Exhibit B attached
hereto.
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6.2 No Member shall have the right to withdraw any part of her/its
Capital Contribution or receive any distribution, except in accordance with the
provisions of this Operating Agreement. No interest shall be paid on any Capital
Contribution.
6.3 No Member shall have any priority over any other Member with
respect to the return of Capital Contributions.
6.4 The Company shall maintain a capital account (a "Capital Account")
for each Member within the provisions of Treasury Regulation Section 1.704-1 (b)
(2) (iv) as such regulation may be amended from time to time. Without limiting
the foregoing, the Member's Capital Accounts shall be adjusted as follows:
(a) Subject to the last sentence of Section 6.4 (c), the Capital
Account of each Member shall be credited with (I) an amount equal to such
Member's initial cash contribution and any additional cash contributions to the
Company and the fair market value of property or securities contributed to the
Company (net of liabilities secured by such property) if a contribution of
property or securities shall be permitted by the Company and (ii) such Member's
share of the Company's Net Profits and Gain from Capital Transactions (including
income and gain exempt from tax).
(b) Subject to the last sentence of Section 6.4 (c), the Capital
Account of each Member shall be debited by (I) the amount of cash distributions
to such Member and the fair market value of property and/or securities
distributed to the Member (net of liabilities secured by such property and/or
securities) and (ii) such Member's share of the Company's Net Loss and Net Loss
from Capital Transactions (including expenditures which are not permitted to be
capitalized or deducted for tax purposes).
(c) Upon the transfer of an interest in the Company, the Capital
Account of the transfer Member (as adjusted, if at all, as required by this
Section 6.4) that is attributable to the transferred interest will be carried
over to the transferee Member. The Capital Account will not be adjusted to
<PAGE>
reflect any adjustment under Section 743 of the Code except as specifically
provided in Treasury Regulation Section 1.704-1 (b) (2) (iv) (m). Upon (I) the
"liquidation of the Company" (as hereinafter defined), (ii) the "liquidation of
a Member's interest in the Company" (as hereinafter defined), (iii) the
distribution of money, property or securities to a Member as consideration for
an interest in the Company, or (iv) the contribution of money or (if permitted
pursuant to (a) above) property and/or securities to the Company by a new or
existing Member as consideration for an interest in the Company, or upon any
transfer causing a termination of the Company for tax purposes within the
meaning of Section 708(b) (1) (B) of the Code, then adjustments shall be made to
the Members' Capital Accounts in the following manner: all property and
securities of the Company which are not sold in connection with such event shall
be valued at their then fair market value; such fair market value shall be used
to determine both the amount of gain or loss which would have been recognized by
the Company if the property and securities had been sold for its fair market
value (subject to any debt secured by the property and securities) at such time,
and the amount of Income, which would have been distributable by the Company
pursuant to Article 9 if the property and securities had been sold at such time
for said fair market value, less the amount of any debt secured by the property;
the Capital Accounts of the Members shall be adjusted to reflect the deemed
allocation of such hypothetical gain or loss in accordance with Article 10; and
the Capital Accounts of the Members (or of a transferee of a Member) shall
thereafter be adjusted to reflect "book items" and not "tax items" in accordance
with Treasury Regulation Sections 1.704-1 (b) (2) (iv) (g) and 1.704-1 (b) (4)
(I).
(d) For purposes of this Article 6, (I) the term "liquidation of the
Company" shall mean (A) a termination of the Company effected in accordance with
this Operating Agreement, which shall be deemed to occur, for purposes of
Article 6, on the date upon which the Company ceases to be a going concern and
is continued in existence solely to wind-up its affairs, or (B) a termination of
the Company pursuant to Section 708(b)(1) of the Code; and (ii) the term
"liquidation of a Member's interest in the Company" shall mean the termination
of the Member's entire interest in the Company effected by a distribution, or a
series of distributions, by the Company to the Member.
<PAGE>
ARTICLE 7
ADDITIONAL CAPITAL CONTRIBUTIONS
7.1 No Member shall be obligated to make additional capital
contributions to the Company. If the Manager, with the concurrence of Members
holding a majority in interest of the Company, shall determine there shall be a
Required Amount for any Company purpose, including, without limitation, those
purposes set forth in Article 5, then within fifteen (15) days of notice of such
requirement, each Member may, but shall not be obligated to, contribute to the
Company his Additional Contribution.
7.2 If a Member fails to make his Additional Contribution, in whole or
in part, as required in Section 7.1 above (the "Noncontributing Member"), then,
so long as any other Member shall make his Additional Contribution as provided
herein (each such Member making his Additional Contribution being hereinafter
referred to as "Contributing Member"), any Contributing Member shall have the
option (a) with the consent of a majority in interest of the Contributing
Members (I) to make a capital contribution equal to the Additional Contribution
not made by the Noncontributing Member or (ii) to make a Default Loan equal to
the Additional Contribution not made by the Noncontributing Member or (b) with
the unanimous written consent of each Contributing Member, to declare the
Company terminated as a result of the Noncontributing Member's default. In the
event that more than one Contributing Member desires to make an Additional
Contribution, or is permitted to make a Default Loan, on account of the
Noncontributing Member, each such Contributing Member shall be permitted to
participate in proportion to their respective Interests. All loans made pursuant
to this Section 7.2 shall bear interest at the Default Rate.
7.3 Upon the making of a capital contribution to the Company pursuant
to Section 7.2, the Interest of the Noncontributing Member and the Contributing
Members shall be adjusted as follows: (a) the Noncontributing Member's Interest
shall be decreased (but not below zero) by subtracting therefrom an amount equal
to the percentage equivalent of the quotient of (I) the Additional Contribution
not made by the Noncontributing Member giving rise to application of this
Section 7.3 multiplied by (A) 200% upon the first failure of the Noncontributing
Member to make an Additional Contribution, (B) 300% upon the second such failure
and (C) 400% upon the third such failure, divided by (ii) the aggregate amount
<PAGE>
of all Capital Contributions made by the Members (including the Additional
Contributions received by the Company), and (b) the Contributing Members'
Interest shall be increased by adding thereto an amount equal to the percentage
by which the Noncontributing Member's Interest was decreased pursuant to clause
(a) above. Upon the fourth and each subsequent failure of the Noncontributing
Member to make an Additional Contribution giving rise to the application of this
Section 7.3, a majority-in-interest of the Contributing Members shall have the
option, exercisable in their sole discretion, to cause the remaining Interest of
the Noncontributing Member to be forfeited and allocated to the Contributing
Members or to continue re-allocating the Interests of the Noncontributing Member
and Contributing Members as provided in the preceding sentence except that the
percentage multiple set forth in clause (I) (c) shall be increased 100% for each
failure of the Noncontributing Member to make an Additional Contribution. An
example of the operation of this Section 7.3 with respect to a re-allocation of
Interests upon the first failure of a Noncontributing Member to make an
Additional Contribution, is set forth in Schedule B attached hereto.
7.4 The obligations of the Members contained in this Section 7 are
personal and run only to the benefit of the Company and the Members and may not
be enforced by any third parties. No creditor of the Company may rely on the
foregoing provisions of this Article 7 or any other provision of this Operating
Agreement to make any contributions or returns to the Company, notwithstanding
any agreement, representation, intention, indication or otherwise to the
contrary.
ARTICLE 8
CASH DISTRIBUTIONS
8.1 The Company shall distribute Income to the Members at such times as
the Company shall determine (but not less often than quarterly), in the
following order of priority:
(a) first, to any Member who made a Default Loan, to the
payment of accrued and unpaid interest, and the then outstanding principal
balance of, any Default Loan, such distribution to be in proportion to the
aggregate amount of interest, and the principal, owed. If more than one Member
participates in the making of a Default Loan, then distributions to such Members
on account of this Section 8.1(a) shall be made in proportion to the amounts so
<PAGE>
loaned. If there shall be more than one instance in which a Default Loan has
been made, then Default Loans shall be repaid in the order in which they shall
have been outstanding the longest;
(b) second, to the Members in an amount equal to and in
proportion to their Unrecovered
Additional Contributions;
(c) next, to the Members in an amount sufficient to give them
a ten percent (10%) return compounded annually on the aggregate of their Capital
Contributions and Additional Contributions;
(d) next, to Sonia Seidman and the Manager in an amount
sufficient to pay to them, in the aggregate, up to twenty percent (20%) of the
net annual profits of the Company for each year calendar that the Company is in
existence to be paid 5% to the Manager and 15% to Sonia Seidman; and
(e) the balance, if any, shall be distributed to the
Members in proportion to their Interests.
8.2 Notwithstanding Section 8.1, Net Proceeds from a Capital
Transaction which constitutes a liquidation of the Company, together with other
funds remaining to be distributed, shall be distributed to the Members no later
than the later of (a) the end of the taxable year of the Company in which such
liquidation occurs; or (b) within ninety (90) days after the date of such
liquidation event, after payment of all Company liabilities and expenses (or
adequate provision therefor), in accordance with Section 9.1, except that in no
event shall (x) a distribution be made to any Member if, after giving effect to
such distribution, all liabilities of the Company, other than liabilities to
Members on account of their Interests and liabilities for which the recourse of
creditors of the Company is limited to specified property of the Company, exceed
the fair value of the assets of the Company, except that the fair value of
property that is subject to a liability for which the recourse of creditors is
limited shall be included in the assets of the Company only to the extent that
the fair value of the property exceeds that liability and (y) the distribution
to a Member exceed the positive balance in such Member's Capital Account after
giving effect to all allocations to such Member under Article 9 of Net Profits,
Net Losses, and Gain and Loss from Capital Transactions so that liquidation
proceeds shall be distributed in accordance with each Member's positive Capital
<PAGE>
Account balance (within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(b) as in effect on the date hereof). If a members shall
receive a distribution that should not have been made based upon the provisions
of Section 8.2 (x), the provisions of Section 42:2B-42 (b) of the act shall
apply. Section 42:2B-42(c) of the Act shall apply to all distributions made to
the Members.
ARTICLE 9
TAX ALLOCATIONS
10.1 Net Profits, Net Losses and any investment tax credit for each
fiscal year or part thereof shall be allocated to the Members in proportion to
their Interests.
10.2 Gain from a Capital Transaction shall be allocated in the
following order:
(a) There shall first be allocated to those Members, if any,
who have deficit balances in their Capital Accounts immediately prior to such
Capital Transaction an amount of such gain equal to the aggregate amount of such
deficit balances, which amount shall be allocated in the same proportion as such
deficit balances.
(b) There shall next be allocated to each of the Members gain
in proportion to (but not greater than) the amount by which (x) the amount of
Net Losses theretofore allocated to each Member and not theretofore taken into
account under this Section 9.2(b), exceeds (y) the gain allocated to such Member
under Section 9.2(a).
(c) There shall next be allocated to each of the Members gain
equal to the amount by which (x) the aggregate proceeds derived from a Capital
Transaction distributable to each Member in accordance with the provisions of
Section 8.1 or 8.2 other than with respect to Default Loans, as the case may be,
exceeds (y) the positive balance, if any, in such Member's Capital Account after
such Member's Capital Account has been adjusted to reflect the gain allocated to
such Member pursuant to Sections 9.2(a) and 9.2(b); provided, however, that if
there shall be an insufficient amount of gain determined by this Section 9.2(c),
then the gain shall be allocated to the Members in proportion to the respective
amounts determined pursuant to this Section 9.2(c).
<PAGE>
(d) Any remaining gain shall be allocated among the
Members in proportion to their Interests.
(e) If the Company shall realize, upon a Capital Transaction,
gain which is treated as ordinary income under Sections 1245 or 1250 of the
Code, such ordinary income shall be allocated to the Members who receive the
allocation of the depreciation or cost recovery deduction that generated the
ordinary income in the same proportions as such deductions.
(f) Notwithstanding the foregoing, distributions of Income
made to a Member for interest and in repayment of the principal on any Default
Loan shall not be treated as Income for the purpose of allocating gain pursuant
to this Section 9.2 or for any other purpose. Any interest on a Default Loan
shall be treated as a "guaranteed payment" for purposes of Section 707(c) of the
Code.
10.3 Losses from Capital Transactions shall be allocated in the
following order:
(a) There shall first be allocated to those Members, if any,
whose positive balances in their Capital Accounts exceed their Unrecovered
Additional Contributions, an amount of such loss equal to such excess amount,
which amount shall be allocated in the same proportion as such excess amounts.
(b) There shall next be allocated to those Members, if any,
that have positive balances in their Capital Accounts, an amount of such loss
equal to the aggregate amount of such positive balances, which amount shall be
allocated in the same proportion as such positive balances.
(c) The balance of such loss shall be allocated to the
Members in proportion to their Percentage Interests.
10.4 Notwithstanding the preceding provisions of this Article 10:
(a) Except as provided in sub-section (e) below, no allocation
of loss or deduction shall be made to a Member if such allocation would cause at
<PAGE>
the end of any taxable year a deficit in such Member's Adjusted Capital Account
to exceed his allocable share of Minimum Gain; and any such loss or deduction
not allocated to a Member by reason of this Section 9.4 shall be allocated
pro-rata to each other Member if and to the extent that such allocation shall
not create a deficit in such other Member's Adjusted Capital Account in excess
of his allocable share of Minimum Gain; provided, however, that if such
allocation would create such deficit in all Members' Adjusted Capital Accounts
in excess of their share of Minimum Gain, then such allocation shall be made in
accordance with the principles of Treasury Regulation Section 1.704-1(b).
(b) If, during any taxable year, there is a net decrease in
Minimum Gain then, before any other allocations are made for such year, each
Member shall be allocated items of Company income and gain for such year (and,
if necessary, subsequent years) in an amount equal to each Member's share of the
net decrease in Company Minimum Gain (within the meaning of Treasury Regulation
Section 1.704-2(g)(2)) in a manner so as to satisfy the requirements of Treasury
Regulation Section 1.704-2(f).
(c) If, during any taxable year, there is a net decrease in
Company Minimum Gain Attributable to Member to Member Nonrecourse Debt, then,
before any other allocations are made for such year other than those pursuant to
Section 9.4(b) above, each Member with a share of the Company Minimum Gain
Attributable to Member Nonrecourse Debt at the beginning of the year shall be
allocated items of Company income and gain for such year (and, if necessary, for
subsequent years) in an amount equal to each Member's share of the net decrease
in Minimum Gain Attributable to Member Nonrecourse Debt as determined in
accordance with Treasury Regulation Section 1.704-2(I)(4) in a manner so as to
satisfy the requirements of said Treasury Regulation.
(d) If during any taxable year a Member unexpectedly receives
(I) a distribution of cash or property from the Company or (ii) an adjustment or
allocation described in either Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4) as in effect on the date hereof (concerning depletion
allowances with respect to oil and gas properties) or Treasury Regulation
Section 1.704-1 (b) (2) (ii) (d) (5) as in effect on the date hereof (concerning
allocations of loss and deduction in interests change during the year, if an
interest is acquired by gift or if a Member receives certain Company property in
<PAGE>
redemption of part or all his interest), and if such adjustment, allocation or
distribution would cause at the end of the taxable year a deficit balance in
such Member's adjusted capital account in excess of his allocable share of
Minimum Gain, then a pro-rata portion of each item of Company income, including
gross income, and gain for such taxable year (and, if necessary, subsequent
taxable years) shall be allocated to such Member in an amount and in a manner
sufficient to eliminate such excess balance as quickly as possible before any
other allocation is made for such year other than pursuant to Section 9.4(b)
above so as to satisfy the requirements of Treasury Regulation Section
1.704-1(b) (2) (ii) (d) (qualified income offset).
(e) To the extent required by Treasury Regulation Section
1.704-2(I) (1), Member Nonrecourse Debt Deductions for any taxable year shall be
allocated to the Member (or Members) who bear(s) the economic risk of loss of
such Member Nonrecourse Debt.
(f) In the event that any allocation is or has been made to a
Member pursuant to Sections 9.4(a), (b), (c), (d) or (e) above, subsequent items
of income, deduction, gain and loss shall be allocated before any other
allocations are made (subject to the provisions of said Sections) to the Members
in the manner which would result in each Member having a Capital Account balance
equal to what it would have been had the allocation pursuant to said Sections.
(g) Upon the occurrence of an event described in Section
6.4(c), all Company property shall be revalued on the Company's books at fair
market value, Capital Accounts will be adjusted in accordance with Section 6.4
(c), and subsequent allocations of taxable income, gain, loss and deductions
shall, solely for tax purposes, be made necessary so as to take account of the
variation between the adjusted tax basis and the fair market value of such
property in accordance with Section 704 of the Code and the Treasury Regulations
thereunder.
(h) For the purposes of this Article, each Member's "Adjusted
Capital Account" shall equal the Capital Account of each Member (1) reduced at
the end of each taxable year by the sum of (x) the excess of distributions
reasonable expected to be made to such Member over the offsetting increases to
such Member's Capital Account reasonably expected to be made in the same taxable
year as the aforesaid distributions, (y) adjustments expected to be made to such
<PAGE>
Member's Capital Account described in Treasury Regulation Section 1.704-1(b) (2)
(ii) (d) (4) as in effect on the date hereof (concerning depletion allowances
with respect to oil and gas properties), and (z) allocations expected to be made
described in Treasury Regulation Section 1.704-1 (b) (2) (ii) (d) (5) as in
effect on the date hereof (concerning allocations of loss and deduction if
Interests change during the year, if an Interest is acquired by gift or if a
Member receives certain Company property in redemption of part or all of his
Interest in the Company), and (2) increased by the sum of (I) the amount, if
any, which the Member is obligated to restore the Company upon liquidation of
his Interest if a deficit balance exists in his Capital Account at such time,
(ii) the outstanding principal balance of any promissory note made by such
Member and contributed to the company if such note is not readily tradable on an
established securities market and if such note must be satisfied within ninety
(90) days after the date said Member's Interest is liquidated and (iii) the sum
of (a) the amount the Member would be personally liable for either as a Member
or in his individual capacity as a guarantor or otherwise, and (b) the economic
risk of loss the Member would bear attributable to any Company liability (as
determined in accordance with Treasury Regulation Section 1.752-2).
(I) In accordance with Section 704(b) and (c) of the Code and
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company (including all or part of any
deemed capital contribution under Section 708 of the Code) shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company and its agreed value.
In the event that Capital Accounts are ever adjusted pursuant to Treasury
Regulation Section 1.704-1(b) (2) to reflect the fair market value of any
Company property, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset and its value as adjusted in the same manner as
required under Section 704(c) of the Code and the Regulations thereunder.
(j) The allocations provided in this Section 10.4 are intended
to comply with the provisions of Section 704(b) of the Code and the regulations
thereunder. However, if any such allocation causes a distortion in the Members'
Interest in contravention of the Members' economic arrangement as reflected in
<PAGE>
Article 6, the Company has the authority to make curative allocations to bring
such allocations in accordance with such Member's Interest, as if such
allocations which caused the distortion had not occurred and to bring such
allocations in compliance with Section 794(b) of the Code and regulations
thereunder.
ARTICLE 10
RIGHTS, POWERS AND REPRESENTATIONS OF THE MEMBERS
10.1 All decisions, consents, authorizations and rights in connection
with the business and affairs the company shall be carried on and managed by a
majority in interest of the Members, who shall have full, exclusive and complete
discretion with respect thereto. Any Member or person acting pursuant to any
authority granted to him in writing by a majority in interest of the Members
shall have all necessary and appropriate powers to carry out the authority so
granted, and no other Member or person without such authority so granted shall
have the right to take any action or give any consent, by affirmative act or
acquiescence, to any matter or thing, affecting the Company. In furtherance of
the foregoing, any Member or person so authorized as provided above may:
(a) negotiate, execute, deliver and perform on behalf of, and
in the name of, the Company any and all contracts, deeds, assignments, deeds of
trust, leases, subleases, promissory notes and other evidences of indebtedness,
mortgages, bills of sale, financing statements, security agreements, easements,
stock powers, and any and all other instruments necessary or incidental to the
business of the Company and the financing thereof,
(b) borrow money, without limit as to amount, and to secure
the payment thereof by mortgage, pledge, or assignment of, or security interest
in, all or any part of the assets then owned or thereafter acquired by the
Company,
(c) effectuate the purpose of the Company as provided in
Article 5 hereof,
<PAGE>
(d) establish, maintain and draw upon checking and other
accounts of the Company,
(e) execute any notifications, statements, reports, returns or
other filings that are necessary or desirable to be filed with any state or
Federal agency, commission or authority,
(f) enter into contracts in connection with the business
of the Company,
(g) arrange for facsimile signatures for the Members in
executing and all documents, papers, checks or other writings or legal
instruments which may be necessary or desirable in the Company business, and
(h) execute, acknowledge and deliver any and all contracts,
documents and instruments deemed appropriate to carry out any of the foregoing
purposes and intent of this Operating Agreement.
10.2 In the management of the Company, and with respect to any and all
decisions with respect to the Company and its business and the conduct of its
operations, the Members of the Company shall have a cumulative total of one
hundred (100) votes, and each Member shall have the number of votes equal to
his/her/its Interest. Wherever and whenever the word "majority" appears in this
Operating Agreement, either as a noun or as an adjective, it shall mean for all
purposes that number of Members whose votes when considered or added together
constitute more than fifty (50) of the total one hundred (100) votes of all the
Members. Any act or decision of any of the Members may be confirmed, overruled
or precluded by the majority of the Members.
10.3 Each of the Members, on their own behalf and on behalf of anyone
who shall represent their Interests, hereby waives notice of the time, place or
purpose of any meeting at which any matter is to be voted on by the Members or
anyone acting by or for them, waives any requirement that there be such a
meeting and agrees that any action may be taken by consent without a meeting.
10.4 The fact that the Members are directly or indirectly interested in
or connected with any person, firm or corporation employed by the Company to
<PAGE>
render or perform a service, or from which or whom the Company may buy
merchandise, material or other property shall not prohibit the Company from
employing such persons, firms or corporations, or from otherwise dealing with
him under such reasonable terms and conditions as the Company may determine.
ARTICLE 11
MANAGER
11.1 Notwithstanding any provision contained in Article 10 to the
contrary, the daily affairs of the Company shall be conducted by the Manager who
shall have the power and authority to make ordinary and usual decisions
concerning the business and affairs of the Company. The Manager shall have the
power and authority, on behalf of the Company, to do the following:
(a) open one or more depository accounts and make
deposits into and checks and withdrawals against such accounts;
(b) invest the capital resources of the Company, in amounts
not to exceed one hundred and twenty-five percent (125%) of the capital of the
Company without the prior consent of a majority in interest of the Members, in
stocks, bonds and other securities of publicly traded companies (collectively
"Permitted Investments"), including the ability to buy, sell, exchange, swap or
transfer such securities;
(c) open one or more cash or margin brokerage accounts
in
(d) obtain insurance covering the business and affairs
of the Company;
(e) commence, prosecute or defend any proceeding in the
Company's name; and
(f) enter into any and all agreements and execute any and
all contracts, documents and instruments necessary or required to effectuate the
foregoing.
<PAGE>
11.2 Notwithstanding any provision contained in this Operating
Agreement to the contrary, it is specifically agreed between the Members that
the Company shall make no investment in Cali Realty Corporation without the
unanimous prior consent of all Members.
11.3 (a) The Manager shall perform and discharge his duties as a
manager in good faith, with the care an ordinary prudent person in a like
position would exercise under similar circumstances, and in a manner he
reasonably believes to be in the best interests of the Company. The Manager
shall not be liable for any monetary damages to the Company for any breach of
such duties except for: receipt of a financial benefit to which the Manager is
not entitled; voting for or assenting to a distribution to Members in violation
of this Operating Agreement or the Act; a knowing violation of the law; fraud;
or a willful breach of fiduciary obligations owed to the Members.
(b) The Manager shall devote a significant amount of his time
and efforts to furthering the business and investments of the Company and any
other corporations and partnerships formed to invest in the stock in private and
public companies or real estate assets and mortgages. The Manager shall also be
permitted to perform consulting and legal services for Environmental Waste
Management Associates, Inc., its principal shareholders, Richard Greenberg, and
for Glenn Woo and other real estate related clients. The Manager shall not
receive a salary or other compensation from the Company for performing his
duties under this Agreement..
(c) The Manager may be removed or replaced at any time by
a majority in interest of the Members.
11.4 Unless otherwise provided by law or expressly assumed, a person
who is a Member or manager, or both, shall not be liable for the acts, debts or
liabilities of the Company.
11.5 The Company shall indemnify the Manager and each Member and may
indemnify any employee or agent of the Company who was or is a party or is
threatened to be made a party to threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, or investigative, and
whether formal or informal, other than action by or in the right of the Company,
<PAGE>
by reason of the fact that such person is or was a manager, employee or agent of
the Company against expenses, including attorneys fees, judgements, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with the action, suit or proceeding, if the person acted in
good faith, with the care an ordinary prudent person in a like position would
exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company and with respect
to a criminal action or proceeding, if such person had no reasonable cause to
believe such person's conduct was unlawful. To the extent that a Member,
employee or agent of the Company has been successful on the merits or otherwise
in defense of an action, suit or proceeding or in defense of any claim, issue or
other matter in the action, suit or proceeding, such person shall be indemnified
against actual and reasonable expenses, including attorneys fees incurred by
such person in connection with the action, suit or proceeding and any action,
suit or proceeding brought to enforce the mandatory indemnification provided
herein. Any indemnification permitted under this Article, unless ordered by a
court, shall be made by the Company only as authorized in the specific case upon
a determination that the indemnification is proper under the circumstances
because the person to be indemnified has met the applicable standard of conduct
and upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by a majority vote
of the Members who are not parties or threatened to be made parties to the
action, suit or proceeding. Notwithstanding the foregoing to the contrary, no
indemnification shall be provided to the Manager or any Member, employee or
agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Operating Agreement of the Act, or
a knowing violation of law.
ARTICLE 12
BOOKS, RECORDS AND REPORTS
12.1 At all times during the continuance of the Company, the Company
shall keep or cause to be kept full and true books of account, in which shall be
entered fully and accurately each transaction of the Company. The books of
account, together with an executed copy of the Certificate of Formation of the
Company and any amendments thereto, shall at all times be maintained at the
<PAGE>
principal office of the Company and shall be open to inspection and examination
by the members or their representatives at reasonable hours and upon reasonable
notice. For purpose hereof, the Company shall keep its books and records on the
same method of accounting employed for tax purposes.
12.2 The fiscal year of the Company shall be the calendar year. Within
a reasonable time after the end of each fiscal year and in any event on or
before thirty (30) days prior to the filing date for individual tax returns
(including extensions), the accountants for the Company shall deliver to each
Member (a) upon request of a Member, an annual statement of the Company's
accountants, and (b) a report or a tax return setting forth such Member's share
of the Company's profit or loss for such year and such Member's allocable share
of all items of income, gain, loss, deduction and credit for Federal income tax
purposes.
12.3 The Company shall also cause to be prepared and filed all Federal,
state and local tax returns required of the Company. All books, records, balance
sheets, statements, reports and tax returns required pursuant to Section 12.1
and 12.2 hereof shall be prepared at the expense of the Company.
ARTICLE 13
BANK ACCOUNTS
13.1 All funds and income of the Company (a) shall be deposited in the
name of the Company in such bank account or accounts as shall be designated by
the Manager, (b) shall be invested in such Permitted Investments as Manager
shall determine and (C) shall be kept separate and apart from the funds of any
other individual or entity.
13.2 Withdrawals from any such bank account or accounts shall be made
upon the signature of any person so designated by the Company in writing.
ARTICLE 14
RIGHTS AND DUTIES OF MEMBERS
14.1 Subject to duties and obligations of the Manager, it is expressly
understood that each Member may engage in any other business or investment,
<PAGE>
whether or not in direct competition with the business of the Company, and
neither the Company nor any other Member shall have any rights in and to said
businesses or investments, or the income or profits derived therefrom.
14.2 The Manager may employ, on behalf of the Company, such persons,
firms or corporations, including those firms or corporations in which any Member
has an interest, and on such terms as the Manager shall deem advisable in the
operation and management of the business of the Company, including, without
limitation, such accountants, attorneys, architects, engineers, contractors,
appraisers and experts.
14.3 No Member shall be personally liable to the Company or any of the
other Members for any act or omission performed or omitted by him/her/it, except
if such act or omission was attributable to willful misconduct or gross
negligence.
14.4 Each Member (and each former Member) shall be indemnified and
saved harmless by the Company from any loss, damage or expense incurred by him
by reason of any act or omission performed or omitted by him, except if such act
or omission was attributable to willful misconduct or gross negligence.
ARTICLE 15
TAX MATTERS
15.1 (a) Notwithstanding any provisions hereof to the contrary, each of
the Members hereby recognizes that the Company will be a partnership for United
States federal income tax purposes and that the Company will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, that the filing of U.S. Partnership Returns of Income shall not be
construed to extend the purposes of the company or expand the obligations or
liabilities of the Members. At the request of any Member, the Company shall file
an election under Section 754 of the Code.
(b) The Company shall engage an accountant (the "Accountant")
to prepare at the expense of the company all tax returns and statements, if any,
<PAGE>
which must be filed on behalf of the Company regarding the Premises and the
operation, dissolution and liquidation of the Company with any taxing authority.
(c) Lawrence Seidman is designated Tax Matters Member (herein
"TMM") for purposes of Chapter 63 of the Code and the Members will take such
actions as may be necessary, appropriate, or convenient to effect the
designation of Lawrence Seidman as TMM. The TMM shall attempt to comply with the
responsibilities outlined in this Section 15.1 and in Sections 6222 through 6231
of the Code (including any Treasury Regulations promulgated thereunder).
ARTICLE 16
BANKRUPTCY OF A MEMBER
16.1 Unless a majority in interest of the Members shall elect
otherwise, a Member shall cease to be a Member of the Company:
(a) if he/she/it:
(I) Makes an assignment for the benefit of
creditors;
(ii) Files a voluntary petition in bankruptcy;
(iii) Is adjudged bankrupt or insolvent, or has
entered against him/her/it an order for relief, in
any bankruptcy or indolvency proceeding;
(iv) Files a petition or answer seeking for
himself/herself/itself any reorganization,
arrangement, composition, readjustment,liquidation,
dissolutionor similar relief under any statute, law
or regulation;
(v) Files an answer or other pleading
admitting or failing to contest the
material allegations of a petition filed against
him/her/it in any proceeding of this
nature; or
(vi) Seeks, consents to or acquiesces in
the appointment of a trustee, receiver or liquidator
of the Member or of all or any substantial part of
his/her/its properties; or
<PAGE>
(b) One hundred twenty (120) days after the commencement of
any proceeding against the Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, if the proceeding has not been dismissed, or within
ninety (90) days after the appointment without his consent or acquiescence of a
trustee, receiver or liquidator of the Member or of all or any substantial part
of his/her properties, the appointment is not vacated or stayed, or within
ninety (90) days after the expiration of any such stay, the appointment is not
vacated.
ARTICLE 17
ASSIGNABILITY, TRANSFER OR PLEDGE OF
INTERESTS; RESIGNATION OF MEMBER
17.1 (a) No Member shall have the right to assign, convey, sell or
otherwise transfer or dispose of, or pledge, mortgage, hypothecate or otherwise
encumber his/her/its Interest, whether record or beneficial interest thereof,
without the prior written consent of the Company. Notwithstanding the preceding
sentence, but subject to the restrictions on transferability required by law, or
set forth in any instrument or agreement by which the Company may be bound, or
which may be contained in this Operating Agreement, an individual Member, if
any, may, without any consent, assign, convey, sell or otherwise transfer or
dispose of all or any portion of his interest in the Company to any one or more
of the members of his/her immediate family or families (defined for the purposes
of this Operating Agreement as a mother, father, sister, brother, son, daughter,
stepson, stepdaughter or spouse (in each instance whether by marriage or
otherwise)) and/or a trust or other entity for the benefit thereof or
themselves, by a written instrument of assignment and assumption, provided that
the instrument of transfer provides for the assumption of the assignor's
liabilities and obligations hereunder and has been duly executed by the assignor
of such interest and by the transferee. The Member shall notify the Company of
any assignment, transfer or disposition of a beneficial interest in any interest
of the Member which occurs without a transfer of record ownership, although such
notification, or the absence of a response thereto, shall not be deemed a
consent thereof.
<PAGE>
(b) An assignee or transferee of any portion of the interest
of the Member shall be entitled to receive allocations and distributions
attributable to the interest acquired by reason of such assignment from and
after the effective date of the assignment of such interest to such assignee;
however. anything herein to the contrary notwithstanding, the Company shall be
entitled to treat the assignor of such interest of the Member as the absolute
owner thereof in all respects, and shall incur no liability for allocations of
net income, net losses, or gain or loss on sale of Company property, or
transmittal of reports and notices required to be given to Members hereunder
which are made in good faith to such assignor until such time as the written
assignment has been received by the Company, approved and recorded on its books
and the effective date of the assignment has passed. Provided that the Company
has actual notice of any assignment of the interest of the Member, the effective
date of such assignment on which the assignee shall be deemed an assignee of
record shall be the date set forth on the written instrument of assignment.
(c) Any assignment, sale, exchange, transfer or other
disposition in contravention of any of the provisions of this Article 17 and
Article 18 hereof shall be void and ineffective and shall not bind or be
recognized by the Company.
(d) In the event that there shall be more than one assignee,
transferee, representative or other successor in interest as permitted herein
(collectively, the "Transferees") and the Member as of the date of this
Operating Agreement shall remain a Member, then the Member shall be authorized
to act, and shall so act, on behalf of the Member and all of the Transferees
acting as such by, through or under the Member. In the event that there shall be
more than one Transferee, and the Member as of the date of this Operating
Agreement shall no longer be a Member, then the Company must be advised by the
Member whose interest is the subject of such event or failing which by a
two-thirds (2/3) majority in interest of those holding any portion of the
interests of the Member, of one person to act on behalf of all the Transferees.
The Member, if the first sentence of this paragraph shall be applicable, or the
person so noted to the Company, if the second sentence of this paragraph shall
be applicable, shall be authorized to act, and shall so act, for all of the
Transferees, all of whom shall be bound by any decision or action taken by such
person, and the Company, the Company and all of the other Members, shall be
<PAGE>
entitled to rely on the decisions or actions taken by such person. Until the
Company shall be advised as to the identity of such person, (I) the Transferees
shall be entitled only to distributions and tax allocations as provided in
Article 8 and 9 hereof, but shall have no right, power or authority with respect
to any decision making reserved herein to the Members or any of them and (ii)
wherever in this Operating Agreement provision shall be made for the Members to
make decisions with respect to Company matters, the interests of the Member, as
transferred to the Transferees, shall not be included in determining whether the
requisite interest of members have consented to or approved of such decision.
17.2 Without the prior written consent of all Members and other than as
provided in Section 6.1(b) above, a Member may not resign from the Company prior
to the dissolution and winding up of the Company.
ARTICLE 18
ADMISSION OF SUBSTITUTED MEMBERS;
DEATH OR INCAPACITY; FURTHER CONDITIONS
18.1 No assignment or transfer of all or any part of the interest of a
Member permitted to be made under this Operating Agreement shall be binding upon
the Company unless and until a duplicate original of such assignment or
instrument of transfer, duly executed and acknowledged by the assignor and the
transferee, has been delivered to the Company.
18.2 As a condition to the admission of any substituted Member, as
provided in Article 17 hereof, the person so to be admitted shall execute and
acknowledge such instruments, in form and substance reasonably satisfactory to
the Company, as a majority in interest of the Members may deem necessary or
desirable to effectuate such admission and to confirm the agreement of the
person to be admitted as a Member to be bound by all of the covenants, terms and
conditions of this Operating Agreement, as the same may have been amended.
18.3 Any person to be admitted as a member pursuant to the provisions
of this Operating Agreement shall, as a condition to such admission as a Member,
pay all reasonable expenses in connection with such admission as a Member,
including, but not limited to, the cost of the preparation, filing and
publication of any amendment to this Operating Agreement and/or Certificate of
Formation.
<PAGE>
18.4 In the event of the death or adjudication of incompetency of a
Member, or upon the happening of any event described in Article 16, the
executor, administrator, committee or other legal representative of such Member,
or the successor in interest of such Member, shall succeed only to be right of
such Member to receive allocations and distributions hereunder, and may be
admitted to the Company as a Member in the place and stead of the deceases,
incompetent, or bankrupt Member in accordance with this Article 18, but shall
not be deemed to be a substituted Member unless so admitted. Such event,
however, shall cause a termination or dissolution of the Company within one
hundred twenty (120) days of such event unless a majority in interest of the
Members shall elect to continue the Company within said one hundred twenty (120)
day period.
18.5 Notwithstanding anything to the contrary contained in this
Operating Agreement, no sale or exchange of an interest in the Company may be
made if the interest sought to be sold or exchanged, when added to the total of
all other interests sold or exchanged within the period of twelve (12)
consecutive months prior thereto, results in the termination of the Company
under Section 708 of the Code without the prior written consent of a majority in
interest of the Members.
18.6 In the event of a permitted transfer of all or part of the
interest of a Member, the Company shall, if requested, file an election in
accordance with Section 754 of the Code or a similar provision enacted in lieu
thereof, to adjust the basis of the Property of the Company. The Member
requesting said election shall pay all costs and expenses incurred by the
Company in connection therewith.
ARTICLE 19
LIQUIDATION
19.1 Upon the dissolution of the Company, the Company shall be
liquidated and its assets distributed as required by Section 42:2B-51 of the
Act.
19.2 The assets of the Company shall be liquidated as promptly as
possible, but in an orderly and businesslike manner so as not to involve undue
sacrifice.
<PAGE>
19.3 In the event that any proceeds are to be distributed to the
Members same shall be distributed, if practicable, no later than the later of
(I) the end of the taxable year of the Company in which such liquidation occurs;
or (ii) within ninety (90) days after the date of such liquidation event.
19.4 In any liquidation, the Company's assets shall be used first to
pay the costs and expenses of the dissolution and liquidation. The liquidation
trustee (which may be a Member) shall be entitled to establish reserves to
provide for any contingent or unforeseen liabilities or obligations of the
Company.
19.5 With respect to distributions to Members, said distributions
shall be made:
(a) first, to the repayment of any accrued and unpaid interest
on, and the then outstanding principal balance of, any Default Loan, in
proportion to the aggregate amount of interest, and then principal, owed, and if
more than one Member shall have made a Default Loan, then in proportion to the
amounts so loaned. If there shall be more than one instance in which a Default
loan has been made, the Default loans shall be repaid in the order in which they
shall have been outstanding the longest;
(b) second, to the payment of an obligation owed pursuant
to Section 11.3 (c).
(c) third, to all Members in proportion to and to
the extent of any remaining positive balances in such Member's
Capital Account after giving effect to all locations to such Member under
Article 10 of this Operating Agreement so that liquidation proceeds shall be
distributed in accordancewith each Member's positive Capital Account balance
(within the meaning of Treasury Regulation Section 1.704-1(b) (2) (ii)
(b) as in effect on the date hereof); and
(d) last, to all Members pro rata in accordance with thei
Company Interests.
<PAGE>
ARTICLE 20
GENDER
20.1 All terms and words used in this Operating Agreement, regardless
of the sense or gender in which they are used, shall be deemed to include each
other sense and gender unless the context requires otherwise.
ARTICLE 21
FURTHER ASSURANCES
21.1 The Members agree immediately and from time to time to execute,
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and to do all such other
acts and things as may be required by law, or as may, in the opinion of a
majority in interest of the Members, be necessary or advisable to carry out the
intent and purposes of this Operating Agreement.
ARTICLE 22
COVENANT AGAINST PARTITION
22.1 The Members, on behalf of themselves, their legal representatives,
heirs, successors and assigns, hereby specifically renounce, waive and forfeit
all rights whether arising under contract, statute, or by operation of law, to
seek, bring, or maintain any action for partition in any court of law or equity
pertaining to any real property which the Company may now or in the future own,
regardless of the manner in which title to any such property may be held.
ARTICLE 23
NOTICES
23.1 Unless otherwise specified in this Operating Agreement, all
notices, demands, requests or other communications which any of the parties to
this Operating Agreement may desire or be required to give hereunder
(hereinafter referred to collectively as "Notices") shall be in writing and
shall be given by mailing the same by postage prepaid certified or registered
mail, return receipt requested, or by nationally recognized overnight courier to
the appropriate Member at the address set forth in this Operating Agreement.
Notices given in compliance with the provisions of this Article shall be deemed
given one (1) business day after delivery to a nationally recognized overnight
courier or four (4) business days after mailing in a repository of the United
States Postal Service.
<PAGE>
ARTICLE 24
APPLICABLE LAW
24.1 The parties agree that the parties shall be governed by, and this
Operating Agreement construed in accordance with, the laws of the State of New
Jersey applicable to agreements made and to be performed in such state and that
all claims and suits shall be heard in the courts located in the State of New
Jersey.
ARTICLE 25
CAPTIONS
25.1 All section titles or captions contained in this Operating
Agreement are for convenience only and shall not be deemed a part of this
Operating Agreement.
ARTICLE 26
COUNTERPARTS
26.1 This Operating Agreement may be executed in counterparts and each
counterpart so executed by each Member shall constitute and original, all of
which when taken together shall constitute one agreement, notwithstanding that
all the parties are not signatories to the same counterpart.
ARTICLE 27
BINDING EFFECT
27.1 This Operating Agreement may not be changed, modified, waived or
discharged, in whole or in part, unless in writing and signed by all of the
Members. This Operating Agreement shall be binding upon the Members and their
respective executors, administrators, legal representatives, heirs, successor
and assigns. The singular of any defined term or term used herein shall be
deemed to include the plural.
<PAGE>
ARTICLE 28
PARTIAL INVALIDITY
28.1 If any term or provision of this Operating Agreement or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Operating Agreement or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby and each
term and provision of this Operating Agreement shall be valid and enforced to
the fullest extent permitted by law.
ARTICLE 29
INTEGRATION
29.1 This Operating Agreement is the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
relative to such subject matter.
<PAGE>
/s/SONIA SEIDMAN
SEIDCAL ASSOCIATES, L.L.C.
By:
/s/Brant B. Cali, Member
<PAGE>
SCHEDULE A
REQUIRED CONTRIBUTIONS
SONIA SEIDMAN $150,000
SEIDCAL ASSOCIATES, L.L.C. $450,000
<PAGE>
SCHEDULE B
PERCENTAGE INTEREST
Sonia Seidman: 25%
Seidcal Associates, L.L.C.: 75%
Total 100%
<PAGE>
SCHEDULE B
EXAMPLE OF THE OPERATION OF SECTION 7.3
Assume the following facts:
(a) The interests are as follows:
A 10%
B 30%
C 60%
(b) The aggregate capital contributions made by the Members in
proportion to their respective Company Interests is $2,000,000.
(c) The Company requires additional funds of $1,000,000.
(d) A and B each contribute their Additional Contributions to the
Company ($100,000 and $300,000, respectively) and C fails to contribute his
Additional Contribution ($600,000).
(e) B contributes C's Additional Contribution to Company.
The amount that C's Interest is decreased and the amount that B's
Interest is increased is computed as follows:
(I) Multiply the amount of the contribution not made by C
($600,000) by 200% resulting in a product
of $1,200,000;
(ii) Divide the result of (I) above ($1,200,000) by the aggregate
amount of all capital contributions made by the Members ($3,000,000), resulting
in a product of .40;
(iii) Convert the product arrived at in computation (ii) above (.40) to
a percentage (by multiplying the same by 100) resulting in 40%. Subtract such
percentage from the Company Interest of C (40%) resulting in a new Interest for
C of 20%; and
<PAGE>
(iv) Increase the Interest of B (30%) by adding thereto the same
Percentage that was subtracted from Member C (40%) resulting in a new Interest
for B of 70%.
OPERATING AGREEMENT
FOR
FEDERAL HOLDINGS L.L.C.
Dated: June 12,1995
<PAGE>
INDEX
Page No.
Article 1 Definitions
Article 2 Formation
Article 3 Principal Office
Article 4 Term and Duration
Article 5 Purpose
Article 6 Capital Contributions by the Members
Article 7 Additional Capital Contributions
Article 8 Distributions of Net Proceeds
Article 9 Tax Allocations and Distributions
Article 10 Rights, Powers and Representations of the Investment
Manager and Administrative Manager; Management Fee
Article 11 Books, Records and Reports
Article 12 Indemnification
Article 13- Tax Matters
Article 14- Death, Dissolution or Bankruptcy of A Member
Article 15- Assignability, Transfer or Pledge of
Interests; Resignation of A Member
Article 16- Admission of Substituted Members;
Incapacity; Further Condition
Article 17 Liquidation
Article 18 Miscellaneous
Schedule A - Members' Percentage Interests and Capital
Contributions
<PAGE>
OPERATING AGREEMENT
FOR
FEDERAL HOLDINGS L.L.C.
AGREEMENT made June 12,1995 by and among the members listed on Schedule A
annexed hereto (individually, a "Member" and collectively, the "Members").
W I T N E S S E T H:
WHEREAS, the Members desire to form a limited liability company pursuant to the
New York Limited Liability Company Law (the "Law") and adopt this Agreement in
connection therewith; and
WHEREAS, by executing this Agreement, each Member represents that it has
sufficient right and authority to execute this Agreement and is not acting on
behalf of any undisclosed or partially disclosed principal.
NOW, THEREFORE, in consideration of ten ($10) dollars and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows effective as of the date first
written above.
ARTICLE 1
DEFINITIONS
1.1 For purposes of this Agreement, the following terms shall have the
definitions set forth below:
"Account": As defined in Section 10.4
"Additional Member": Means any person or entity other than the Members of
the Company as of the date hereof who acquires an interest in the Company.
"Administrative Manager': Kevin Moore.
"Advance": As defined in Section 7.2.
<PAGE>
"Agreement": This Operating Agreement as originally executed and as amended,
modified, supplemented or restated
from time to time.
"Articles of Organization": The Articles of Organization of the Company filed
with the Secretary of State of the State of New York, pursuant to the Law to
form the Company, as originally executed and as amended, modified, supplemented
or restated from time to time.
"Capital Account" or "Capital Accounts": As defined in Section 6.4.
"Capital Contributions": The respective capital contributions, including any
additional Capital Contribution,of each Member to the Company.
"Capital Transaction" or "Capital Transactions": Any transaction which, in
accordance with generally accepted accounting principles consistently applied,
is treated as a capital transaction including, without limitation, any sale of
all or substantially all of the assets of the Company.
"Closing Price": As defined in Section 16.4
"Code": The Internal Revenue Code of 1986, as amended, and any reference
to a particular section of the Code shall be deemed to include any successor
section to such section.
"Company": FEDERAL HOLDINGS L.L.C., a New York limited liability company.
"Contributing Member": A Member which has made its additional Capital
Contribution.
"Current Market Value": As defined in Section 16.4.
"Fair Market Value": As defined in Section 16.4.
"Gain from a Capital Transaction": The gain recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes.
"Interest": The respective percentage interest of each Member as set forth on
Schedule A.
"Investment Manager": Shall mean Lawrence Seidman, subject to the provisions
of Section 10.5.
<PAGE>
"Loss from a Capital Transaction": The loss recognized by the Company
attributable to a Capital Transaction, determined in accordance with the method
of accounting used by the Company for federal income tax purposes.
"Management Fee": As defined in Section 10.2.
"Member": Means each of the parties who has executed this Agreement and any
party who may hereafter become an Additional Member or a Substitute Member
pursuant to this Agreement.
"Net Proceeds": As defined in Section 8.1.
"Net Profit" and "Net Loss": The net income (including income exempt from tax)
and net loss (including expenditures that can neither be capitalized nor
deducted), respectively, of the Company, determined in accordance with the
method of accounting used by the Company for federal income tax purposes, but
computed without regard for Gain from Capital Transactions, Loss from Capital
Transactions and items of income or loss, if any, that are specially allocated
to Members. In the event there is a revaluation of Company assets and the
Capital Accounts are adjusted pursuant to Section 704(b) of the Code and
applicable regulations promulgated thereunder, Net Profits and Net Losses shall
be computed by reference to the "book items" and not corresponding "tax items".
"Preferred Return": With respect to a Member, an amount equal to 7.5% per annum
simple interest (prorated for any partial year) on the amount of such Member's
Unrecovered Capital Contribution, from time to time, calculated from the date a
Capital Contribution is made.
"Substitute Member": Any transferee of a Member's Interests who is admitted
as a Member in the Company pursuant to Article 15 or 16.
"Trading Day": As defined in Section 16.4.
"Unrecovered Capital Contribution": For any Member, the aggregate amount of
capital contributed by such Member reduced by the aggregate amount of capital
theretofore distributed to such Member pursuant to Articles 16 and 17.
"Unrecovered Preferred Return": For any Member an amount equal to the
Preferred Return reduced by the aggregate amount of distributions theretofore
made to such Member pursuant to Section 8.1(b)(i).
<PAGE>
"Unrecovered 20% IM Fee": An amount equal to 20% of the aggregate annual
Preferred Return for all Members divided by .8, reduced by the aggregate amount
of distributions of Net Proceeds theretofore made pursuant to Section 8.1(b)
(ii).
ARTICLE 2
FORMATION
2.1 The parties hereto do hereby form the Company under the name of FEDERAL
HOLDINGS L.L.C. pursuant to the Law.
In order to maintain the Company as a limited liability company under the laws
of the State of New York, the Company shall from time to time take appropriate
action, including the preparation and filing of such amendments to the Articles
of Organization and such other assumed name certificates, documents, instruments
and publications as may be required by law, including, without limitation,
action to reflect:
(i) a change in the Company name;
(ii) a correction of a defectively or erroneously executed Articles of
Organization;
(iii) a correction of false or erroneous statements in the Articles of
Organization or the desire of the Members to make a change in any statement
therein in order that it shall accurately represent the agreement among the
Members; or
(iv) a change in the time for dissolution of the Company as stated in
the Articles of Organization and in this Agreement.
2.2 Each Member hereby agrees to execute and deliver to the Company within five
(5) days after receipt of a written request therefor, such other and further
documents and instruments, statements of interest and holdings, designations,
powers of attorney and other instruments and to take such other action as the
Company deems necessary, useful or appropriate to comply with any laws, rules or
regulations as may be necessary to enable the Company to fulfill its
responsibilities under this Agreement, to preserve the Company as a limited
liability company under the Law and to enable the Company to be taxed as a
partnership for federal and state income tax purposes.
<PAGE>
ARTICLE 3
PRINCIPAL OFFICE
3.1 The Company's registered office in New York shall be at 30 Wall
Street, Ninth Floor, New York, New
York. The Company's registered agent who is a resident of New York is
Jonathan A. Bernstein, Esq. whose business address is Pryor, Cashman,
Sherman & Flynn, 410 Park Avenue, New York, New York 10022. At any time, the
Company may designate another registered agent and/or office.
3.2 The principal place of business of the Company shall be at 30 Wall Street,
Ninth Floor, New York, New York. At any time, the Company may change the
location of its principal place of business and may establish additional
offices.
ARTICLE 4
TERM AND DURATION
4.1 The Company shall commence upon the filing of the Articles of Organization,
and shall continue in full force and effect until April 30, 2045; provided,
however, that the Company shall be dissolved prior to such date upon the
happening of any of the following events:
(a) The mutual written consent of all of the Members to dissolve the
Company;
(b) The divestiture or distribution of all or substantially
all of the assets of the Company, (other than a transfer to a nominee of the
Company for any Company purpose, which event shall not be construed as an event
of termination);
(c) The entry of a decree of judicial dissolution under Section 702 of the
Law; or
(d) The happening of any other prior event which pursuant to the terms and
provisions of this Agreement shall cause a dissolution or termination of the
Company.
4.2 Upon any dissolution of the Company, the liquidation of the Company's assets
and the winding up of its affairs shall be concluded in accordance with Article
17 of this Agreement.
<PAGE>
ARTICLE 5
PURPOSE
5.1 The purpose of the Company is to legally or beneficially acquire, own, sell,
transfer, hold and vote shares of common stock, preferred stock, convertible or
exchangeable securities of any bank, bank holding company, savings and loan
association or trust company (hereinafter referred to as "Stock") and to enter
into any contracts or commitments, assume any obligation, execute any documents
and do any and all other acts and things, either directly or in conjunction with
others through corporations, joint ventures, partnerships, trusts, limited
liability companies or otherwise, which may be necessary, incidental or
convenient to carry on the business of the Company as contemplated by this
Agreement. The Company may also sell covered calls, repurchase such calls and
buy puts, but the Company shall not sell uncovered calls or puts.
5.2 The purpose of the Company shall also be for any other lawful purpose for
which the Members shall herewith agree in writing by amendment to this
Agreement.
ARTICLE 6
CAPITAL CONTRIBUTIONS BY THE MEMBERS
6.1 Each Member shall contribute to the capital of the Company the amounts
set forth on Schedule A.
6.2 No Member shall have the right to withdraw any part of his Capital
Contribution or receive any distribution, except in accordance with the
provisions of this Agreement. No interest shall be paid on any Capital
Contribution other than the Preferred Return.
6.3 No Member shall have any priority over any other Member with respect to the
return of Capital Contributions.
6.4 The Company shall maintain a capital account (a "Capital Account") for each
Member within the provisions of Treasury Regulation Section 1.704-1(b) (2) (iv)
as such regulation may be amended from time to time.
<PAGE>
6.5 To the extent not inconsistent with the foregoing, the following shall
apply:
(a) The Capital Account of each Member shall be credited with (1) an amount
equal to such Member's cash contributions and the fair market value of property
contributed to the Company by such Member (net of liabilities securing such
contributed property that the Company is considered to assume or take subject to
under Section 752 of the Code) and (2) such Member's share of the Company's Net
Proceeds (or items thereof) and Gain from a Capital Transaction. The Capital
Account of each Member shall be debited by (1) the amount of cash distributions
to such Member and the fair market value of property distributed to such Member
(net of liabilities assumed by such Member and liabilities to which such
distributed property is subject) and (2) such Member's share of the Company's
Net Losses (or items thereof) and Loss from a Capital Transaction.
(b) Upon the transfer of an Interest in the Company after the date of this
Agreement, (x) if such transfer does not cause a termination of the Company
within the meaning of Section 708 (b) (1) (B) of the Code, the Capital Account
of the transferor Member that is attributable to the transferred Interest will
be carried over to the transferee Member but, if the Company has a Section 754
election in effect, the Capital Account will not be adjusted to reflect any
adjustment under Section 743 of the Code, or (y) if such transfer causes a
termination of the Company within the meaning of Section 708 (b) (1) (B) of the
Code, the income tax consequences of the deemed distribution of the property and
of the deemed immediate contribution of the property to a new Company (which for
all other purposes continues to be the Company) shall be governed by the
relevant provisions of Subchapter K of Chapter 1 of the Code and the regulations
promulgated thereunder, and the initial Capital Accounts of the Members in the
new Company shall be determined in accordance with Treasury Regulation Sections
1.704-1(b) (2) (iv) (d, (e), (f), (g), and (i) and thereafter in accordance with
Section 6.5 (a).
(c) Upon (i) the "liquidation of the Company" (as hereinafter defined), (ii) the
"liquidation of a Member's Interest in the Company" (as hereinafter defined),
(iii) the distribution of money or property to a Member as consideration for an
Interest in the Company , or (iv) the contribution of money or (if permitted
pursuant to (a) above) property to the Company by a new or existing Member as
consideration for an Interest in the Company, or upon any transfer causing a
termination of the Company for tax purposes within the meaning of Section 708
(b) (1) (B) of the Code, then adjustments shall be made to the Members' Capital
Accounts in the following manner: All property of the Company which is not sold
in connection with such event shall be valued at its then "agreed value". Such
"agreed value" shall be used to determine both the amount of gain or loss which
would have been recognized by the Company if the property had been sold for its
agreed value (subject to any debt secured by the property) at such time, and the
amount of Net Proceeds, as the case may be, which would have been distributable
by the Company pursuant to Section 9.2 if the property had been sold at such
time for said value, less the amount of any debt secured by the property. The
Capital Accounts of the Members shall be adjusted to reflect the deemed
allocation of such hypothetical gain or loss in accordance with Section 9.1. The
Capital Accounts of the Members (or of a transferee of a Member) shall
thereafter be adjusted to reflect "book items" and not tax items in accordance
with Treasury Regulation Section 1.704 1(b) (2) (iv) (g) and 1.704-1(b) (4) (i).
(d) For purposes of this Section 6.5, (i) the term "liquidation of the Company"
shall mean (A) a termination of the Company effected in accordance with this
Agreement, which shall be deemed to occur, for purposes of this Article 6, on
the date upon which the Company ceases to be a going concern and is continued in
existence solely to wind-up its affairs, or (B) a termination of the Company
pursuant to Section 708 (b) (1) of the Code; and (ii) the term "liquidation of a
Member's Interest in the Company" shall mean the termination of the Member's
entire Interest in the Company effected by a distribution, or a series of
distributions, by the Company to the Member.
ARTICLE 7
ADDITIONAL CAPITAL CONTRIBUTIONS
7.1 No Member shall be obligated to make additional Capital Contributions to the
Company. If the Administrative Manager determines that the Company shall need
additional funds for any Company purpose, including, without limitation, (a)
those purposes set forth in Article 5, or (b) cash in excess of Net Proceeds in
order to satisfy any obligations and liabilities of the Company, then within
fifteen (15) days of notice of such requirement, each Member may, but shall not
be obligated to, contribute to the Company his pro rata share.
If a Member elects to make an additional Capital Contribution and another Member
forgoes contributing additional capital, the Company shall, for purposes of
distributions and allocations, recompute each Member's percentage Interest in
the Company in proportion to the total capital contributed to the Company such
that thereafter each Member's Interest shall be equal to the percentage that
such Member's aggregate Capital Contribution theretofore made to the Company
bears to the total Capital Contributions theretofore made by all the Members.
7.2 A Member may from time to time, upon the consent of the Administrative
Manager but without the consent of a majority in interest of the Members,
<PAGE>
advance additional monies (an "Advance") to or for the benefit of the Company,
and such advances shall not be treated as Capital Contributions but shall be
considered as loans to be repaid upon demand together with annual interest at a
rate not less than the lowest applicable federal rate of interest which allows
for the avoidance of imputed or unstated interest, for federal income tax
purposes. Such loans shall be evidenced by a promissory note executed and
delivered by the Company to the Member making such Advance.
ARTICLE 8
DISTRIBUTIONS OF NET PROCEEDS
8.1 (a) Net Proceeds shall be computed and distributed by the Company once, on
an aggregated basis of all stocks in which the Company has traded, at the
earlier of (i) a determination by the Investment Manager in his sole discretion,
(ii) the resignation or other termination of the Investment Manager, (iii) the
liquidation or winding up of the Company or (iv) the end of the Management Term.
"Net Proceeds" shall be defined as dividends received, interest income, all net
trading profits (i.e. proceeds from the sale of Stock less the Company's basis
in the Stock) less all expenses (including but not limited to brokerage
commissions, the Management Fee and other applicable accounting or professional
fees but not including the Unrecovered 20% IM Fee) all as computed in accordance
with generally accepted accounting principles.
(b) Net Proceeds shall be distributed as follows:
(i) first, to the Members, pro rata, an amount equal to each Member's cumulative
Unrecovered Preferred Return in proportion to their Unrecovered Preferred Return
until the Preferred Return shall be paid in full;
(ii) second, to the Investment Manager an amount equal to the Unrecovered
20% IM Fee; and
(iii) the balance, if any, shall be paid 80% to the Members in proportion
to their Interests and 20% to the Investment Manager.
(c) If Stock cannot be readily sold because of the lack of its liquidity in the
market or if the Administrative Manager elects not to sell the Stock at the time
of a distribution of Net Proceeds, the Company shall calculate the fair market
value of the Stock by averaging the closing sale prices (or if there is no sale
on a particular day, the average closing bid and ask prices) for the five
consecutive trading days preceding the date of computation. Thereafter, based
<PAGE>
upon its valuation, the Company shall calculate the amount of Net Proceeds that
would be distributed if the Stock had actually been sold for its fair market
value (including all applicable commissions). The Company shall then distribute
the Stock in kind in accordance with Section 8.1(b) as if the Stock were Net
Proceeds.
(d) Notwithstanding Section 8.1(c), if the Investment Manager makes a
determination to distribute Net Proceeds in accordance with Section 8.1(a)(i)
and the Stock cannot be readily sold because of its lack of liquidity in the
market, the Investment Manager shall liquidate the Stock in an orderly fashion
over a six (6) month period. Thereafter, Net Proceeds shall be distributed in
accordance with Section 8.1(b).
8.2 Notwithstanding Section 8.1, Net Proceeds from a Capital Transaction which
constitutes a liquidation of the Company, together with other funds remaining to
be distributed, shall be distributed to the Members no later than the later of
(a) the end of the taxable year of the Company in which such liquidation occurs
or (b) within ninety (90) days after the date of such liquidation event, after
payment of all Company liabilities and expenses (or adequate provision therefor)
including the Management Fee, except that in no event shall (x) a distribution
be made to any Member if, after giving effect to such distribution, all
liabilities of the Company, other than liabilities to Members on account of
their Interests and liabilities for which the recourse of creditors of the
Company is limited to specified property of the Company, exceed the Fair Market
Value (as defined in Section 16.4(c)) of the assets of the Company, except that
the Fair Market Value of assets that is subject to a liability for which the
recourse of creditors is limited shall be included in the assets of the Company
only to the extent that the Fair Market Value of those assets exceeds that
liability and (y) the distribution to a Member exceed the positive balance in
such Member's Capital Account after giving effect to all allocations to such
Member under Article 9 50 that liquidation proceeds shall be distributed in
accordance with each Member's positive Capital Account balance (within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(~ as in effect on the
date hereof). If a Member shall receive a distribution that should not have been
made based upon the provisions of Section 8.2(x), the provisions of Section
508(b) of the Act shall apply. Section 508(c) of the Law shall apply to all
distributions made to the Members.
ARTICLE 9
TAX ALLOCATIONS AND DISTRIBUTIONS
9.1 The Net Profits of the Company for each fiscal year shall be allocated
among the Members as follows:
<PAGE>
(a) First to the Members in an amount equal to, and in proportion to,
the aggregate amount of Net Losses
theretofore allocated to each Member; and
(b) Thereafter, in proportion to their respective Interests in the Company
Any credit available for income tax purposes shall be allocated among the
Members in proportion to their respective Interests in the Company.
9.2 Gain from a Capital Transaction shall be allocated in the following
order:
(a) There shall first be allocated to those Members, if any, who have deficit
balances in their Capital Accounts immediately prior to such transaction, an
amount of such gain equal to the aggregate amount of such deficit balances,
which amount shall be allocated in the same proportion as such deficit balances.
(b) There shall next be allocated to each of the Members, gain equal to the
amount by which (x) the aggregate Net Proceeds derived from such transaction
distributable to each Member in accordance with the provisions of Section 8.1(b)
(i) and (iii), assuming such amounts are distributable, exceeds (y) the positive
balance, if any, in such Member's Capital Account after such Member's Capital
Account has been adjusted to reflect the gain allocated to such Member pursuant
to paragraph (a) above; provided, however, that if there shall be an
insufficient amount of gain determined by this paragraph, then the gain shall be
allocated to the Members in proportion to the respective amounts determined
pursuant to this paragraph.
(c) Any remaining gain shall be allocated among the Members in
proportion to their respective Interests in the Company.
(d) If the Company shall realize, upon such transaction, gain which is treated
as ordinary income under Section 1245 or 1250 of the Code, such ordinary income
shall be allocated to the Members who receive the allocation of the depreciation
or cost recovery deduction that generated the ordinary income, which amount
shall be allocated in the same proportions as such deductions.
9.3 Net Losses of the Company shall be allocated among the Members as follows:
(a) First, to the Members in proportion to their respective positive
Capital Account balances until such balances are reduced to zero; and
(b) The balance shall be allocated to the Members in proportion to their
respective Interests in the Company.
<PAGE>
9.4 Loss from a Capital Transaction from the sale or other disposition of all or
substantially all of the assets shall be allocated in the following order:
(a) First, to those Members, if any, who have positive balances in their Capital
Accounts, an amount of such loss equal to the aggregate amount of such positive
balances, which amount shall be allocated in the same proportion as such
positive balances; and
(b) The balance of such loss shall be allocated to the Members in
proportion to their respective Interests in the Company
9.5 Notwithstanding the foregoing provisions of Article 9:
(a) In accordance with Sections 704 (b) and (c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company (including all or part of any
deemed Capital Contribution under Section 708 of the Code) shall, solely for tax
purposes, be allocated among the Members so as to take into account any
variation between the adjusted basis of such property to the Company and its
agreed value. In the event that Capital Accounts are ever adjusted pursuant to
Treasury Regulation Section 1.704-1(b) (2) to reflect the fair market value of
any Company property, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset and its value as adjusted in the same manner as
required under Section 704 (c) of the Code and the Treasury Regulations
thereunder.
(b) At no time shall any allocation of losses be made to a Member if such
allocation would cause the deficit in the Member's adjusted Capital Account, if
any, to exceed his allocable share of "Company Minimum Gain" or "Minimum Gain
Attributable to Member Nonrecourse Debt" (as defined in Treasury Regulation
Sections 1.704-2 (g) (1) and (i) (5), respectively), and any losses not
allocated to a Member by reason of this clause (b) shall be allocated to each
Member whose deficit, if any, in the Member's adjusted Capital Account of such
Member shall not exceed his allocable share of such minimum gain by reason of
such allocation.
<PAGE>
(c) If there is a net decrease in the Company's minimum gain (within the meaning
of Treasury Regulation Section 1.704-2 (g) (2)) for a Company taxable year and,
at the end of such taxable year, the deficit, if any, in a Member's Capital
Account exceeds his allocable share of such minimum gain, gross income of the
Company shall be allocated to such Member in an amount equal to such excess so
as to satisfy the requirements of Treasury Regulation Section 1.704-2 (f)
(minimum gain chargeback).
(d) If, during any taxable year, there is a net decrease in Company Minimum Gain
Attributable to Member Nonrecourse Debt, then, before any other allocations are
made for such year other than those pursuant to clause (b) above, each Member
with a share of the Company Minimum Gain Attributable to Member Nonrecourse Debt
at the beginning of the year shall be allocated items of Company income and gain
for such year (and, if necessary, for subsequent years) in an amount equal to
each Member's share of the net decrease in Minimum Gain Attributable to Member
Nonrecourse Debt as determined in accordance with Treasury Regulation Section
1.704-2 (i) (4) in a manner so as to satisfy the requirements of said Treasury
Regulation.
(e) If, during any taxable year, a Member unexpectedly receives an adjustment,
allocation or distribution described in paragraph (4), (5) or (6) of Treasury
Regulation Section 1.704-1(b) (2) (ii) (~, and if such adjustment, allocation or
distribution would cause at the end of the taxable year a deficit balance in
such Member's Capital Account in excess of his allocable share of minimum gain
as described above, then such Member shall be allocated items of income and gain
for such taxable year (and, if necessary, subsequent taxable years) in an amount
and in a manner sufficient to eliminate such excess balance as quickly as
possible before any other allocation is made for such year, other than pursuant
to Sections 9.5(b) and (c), so as to satisfy the requirements of Treasury
Regulation Section 1.704-1(b) (2) (ii) (~ (qualified income offset).
(f) In the event any Member has a deficit balance in his Capital Account at the
end of the fiscal year which is in excess of the sum of (i) the amount such
Member is obligated to restore pursuant to any provision of this Agreement, if
any, and (ii) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2
(g) (1) and 1.704-2 (i) (5), each Member shall be specially allocated items of
Company income and gain in the amount of such excess as quickly as possible.
ARTICLE 10
RIGHTS, POWERS AND REPRESENTATIONS
OF THE INVESTMENT MANAGER AND
ADMINISTRATIVE MANAGER: MANAGEMENT FEE
10.1 The Investment Manager shall have the full, exclusive and complete power
and authority to buy, sell and vote the Stock. The Investment Manager shall have
all necessary and appropriate powers to carry out the authority so granted, and
no other party, including any Member, shall have the right to take any action
with respect to the acquisition, sale or voting of the Stock. "Management Term"
shall mean a term of two (2) years commencing on the date hereof, unless sooner
<PAGE>
terminated by the Administrative Manager for cause. The Administrative Manager
may terminate the Investment Manager for cause upon 30 days written notice to
the Investment Manager setting forth with specificity the grounds for
termination. For purposes of this Section, "cause" means any willful (i)
dissemination of genuine trade secrets or other confidences of the Company or
any of its affiliates by the Investment Manager; (ii) dishonesty of the
Investment Manager as punishable by criminal law or for which the Investment
Manager would be liable to the Company or its affiliates under civil law; (iii)
deliberate activity of the Investment Manager which is prejudicial to the
interests of the Company or its affiliates; and (iv) deliberate failure by the
Investment Manager to perform any of his material obligations hereunder which is
not cured by the Investment Manager within 30 days after ~ from the Company of
such failure. In the event of a termination of the Investment Manager under this
Section, or upon the death or adjudication of incompetency of the Investment
Manager, the Company shall, within 30 days, make a distribution of Net Proceeds
in accordance with Section 8.1 above.
10.2 The Company shall pay the Investment Manager a Management Fee. The
"Management Fee" shall be equal to .25% of the Fair Market Value (as defined
Section 16.4(c)) of the assets of the Company, payable quarterly, on the last
day of March, June, September and December of each calendar year of the
Management Term. The Management Fee shall be prorated as to the first such
quarter and upon the termination, resignation, death or adjudication of
incompetency of the Investment Manager
10.3 Except for the matters set forth in Section 10.1, all other decisions,
consents, authorizations and rights in connection with the management of the
Company shall be made, given or performed, as the case may be, by the
Administrative Manager. In furtherance of the foregoing, the Administrative
Manager may: i (a) negotiate, execute, deliver and perform on behalf of, and in
the name of, the Company any, wire transfer instructions, disbursement
authorizations, agreements, contracts, promissory notes and other evidences of
indebtedness, and any and all other instruments necessary or incidental to the
business of the Company and the financing thereof;
(b) to secure the payment thereof by all or any part of the assets then
owned or thereafter acquired by the
Company;
(c) effectuate the purpose of the Company as provided in Article 5 hereof;
<PAGE>
(d) establish, maintain and draw upon any brokerage, money market,
demand deposit, checking and other accounts of the Company;
(e) execute any notifications, statements, reports, returns or other filings
that are necessary or desirable to be filed with any state or federal agency,
commission or authority;
(f) enter into contracts in connection with the business of the Company;
(g) retain professionals, accountants, lawyers, consultants as the
case may be to further the purpose and business of the Company;
(h) arrange for facsimile signatures for the Members in executing any and all
documents, papers, checks or other writings or legal instruments which may be
necessary or desirable in the Company's business;
(i) execute, acknowledge and deliver any and all contracts, documents and
instruments deemed appropriate to carry out any of the foregoing purposes and
intent of this Agreement;
(j) establish reserves for anticipated expenses, debts and obligations
incident to the operation of the Company's business; and
(k) perform all other duties and make all other decisions in furtherance of the
management and operation of the Company's business in accordance with the Law
except as otherwise set forth in this Agreement.
10.4 The Administrative Manager, on behalf of the Company, shall establish a
brokerage account (the "Account") at Spear, Leeds and Kellogg or any other
brokerage company (the "Broker") approved by the Administrative Manager through
which the Investment Manager shall have the exclusive power and authority to
direct the Broker to disburse the funds necessary to acquire Stock and to sell
Stock. The Investment Manager shall have no power or authority to cause funds to
be disbursed from the Account other than for the purpose of acquiring Stock. Any
withdrawals of any kind from the Account shall be made by the Administrative
Manager.
10.5 Upon the expiration of the Management Term, the Administrative Manager
shall, upon the concurrence of the Investment Manager, have the right to extend
the Management Term or, in his sole discretion, select a successor Investment
Manager. The duties of a successor Investment Manager shall commence upon the
date so designated by the Administrative Manager, and from and after such date,
the prior existing Investment Manager shall be relieved of all duties and
<PAGE>
obligations with respect to the Company, shall no longer hold himself or herself
out to any other person or entity as the Investment Manager of the Company,
shall turn over to the Administrative Manager any and all books and records of
the Company, and shall take such action as the Company shall request in order to
effectuate such discharge and termination. No such discharge shall affect any
obligations of the Company to the Investment Manager, including reimbursement
and indemnity obligations as set forth herein or in the Law.
10.6 The fact that the Members, the Investment Manager or the Administrative
Manager are directly or indirectly interested in or connected with any person,
firm or corporation employed by the Company to render or perform a service, or
from which or whom the Company may buy merchandise, material, services or other
property shall not prohibit the Company from employing such persons, firms or
corporations, or from otherwise dealing with such persons, firms or corporations
so long as such terms and conditions are equivalent to those available at the
Company and the transaction was on an arms-length basis.
ARTICLE 11
BOOKS, RECORDS AND REPORTS
11.1 At all times during the continuance of the Company, the Administrative
Manager shall keep or cause to be kept full and true books of account, in which
shall be entered fully and accurately each transaction of the Company. The books
of account, together with an executed copy of the Articles of Organization of
the Company and any amendments thereto, shall at all times be maintained at the
principal office of the Company and shall be open to inspection and examination
by the Members or their representatives at reasonable hours and upon reasonable
notice. For purposes hereof, the Company shall keep its books and records on the
same method of accounting employed for tax purposes.
11.2 The fiscal year of the Company shall be the calendar year. Within a
reasonable time after the end of each fiscal year and in any event on or before
thirty (30) days prior to the filing date for individual tax returns (including
extensions), the accountants for the Company shall deliver to each Member (a) an
annual statement of the Company's receipts and expenses for such year and the
Capital Account of such Member as of the end of each such year, prepared by the
Company's accountants, and (b) a report or a tax return setting forth such
Member's share of the Company's profit or loss for such year and such Member's
allocable share of all items of income, gain, loss, deduction and credit for
federal income tax purposes.
<PAGE>
11.3 The Company shall also cause to be prepared and filed all federal, state
and local tax returns required of the Company. All books, records, balance
sheets, statements, reports and tax returns required pursuant to this Section 11
shall be prepared at the expense of the Company.
11.4 In accordance with Section 301(e) of the Law,. the Administrative Manager
shall cause to be prepared and filed biennially the requisite statements for
which service of process shall be accepted by the Secretary of State on behalf
of the Company.
ARTICLE 12
INDEMNIFICATION
12.1 Subject to the limitations and conditions provided in this Article 12 and
in the Law, each person ("Indemnified Person") who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative ("Proceeding"), or any appeal in such a Proceeding
or any action or investigation that could lead to such a Proceeding, by reason
of the fact that any manager or member was or is a Member, a Manager or an
officer of the Company or was or is the legal representative of or a manager,
director, officer, member, venturer, proprietor, trustee, employee, agent or
similar functionary of a Member, shall be indemnified by the Company against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable costs and expenses (including, without
limitation, attorneys' fees) actually incurred by such Indemnified Person in
connection with such Proceeding if such Indemnified Person acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any Proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal action or proceeding, that the Indemnified
Person had reasonable cause to believe that such conduct was unlawful.
12.2 Subject to the limitations and conditions provided in this Article 12 and
in the Law, the Company shall and does hereby indemnify any person who was or is
a party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that such person is or was a Member, a
<PAGE>
Manager or an officer of the Company, the legal representative of a Member or
officer, or manager, director, officer, member, venturer, proprietor, trustee,
employee, agent or similar functionary of a Member against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, if such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company, provided that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Company unless, and only to the extent that, the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper.
12.3 To the extent that a person has been successful, on the merits or
otherwise, in the defense of any action, suit or proceeding referred to in
Sections 12.1 or 12.2, or in defense of any claim, issue or matter there;-' such
person shall be indemnified against expenses (including attorneys' fee3)
actually and reasonably incurred by such person in connection therewith.
<PAGE>
12.4 Any indemnification under Sections 12.1 or 12.2 (unless ordered by a court)
shall be made by the Company except upon a reasonable determination that
indemnification is proper in the circumstances because such person has not met
the applicable standard of conduct set forth therein; and if such standard is
met indemnification shall be mandatory. Such determination shall be made (i) by
the holders of a majority of the Interests held by Members who were not parties
to such action, suit or proceedings, or (ii) if such a quorum is not obtainable,
or even if obtainable, if a quorum of disinterested Members so directs, by the
Company's independent legal counsel in a written opinion.
12.5 Indemnification under this Article 12 shall continue as to a person who has
ceased to serve in the capacity which initially entitled such person to
indemnity hereunder. The rights granted pursuant to this Article 12 shall be
deemed contract rights, and no amendment, modification or repeal of this Article
12 shall have the effect of limiting or denying any such rights with respect to
actions taken or Proceedings arising prior to any such amendment, modification
or repeal.
12.6 The right to indemnification conferred by this Article 12 shall include the
right to be paid or reimbursed by the Company for the reasonable expenses
incurred in advance of the final disposition of the Proceeding and without any
determination as to the person's ultimate entitlement to indemnification;
provided, however, that the payment of such expenses incurred in advance of the
final disposition of a Proceeding shall be made only upon delivery to the
<PAGE>
Company of a written affirmation by such person of his good faith belief that he
has met the standard of conduct necessary for indemnification under this Article
12 and a written undertaking, by or on behalf of such person, to repay all
amounts so advanced if it shall ultimately be determined that such person is not
entitled to be indemnified under this Article 12 or otherwise.
12.7 The right to indemnification and the advancement and payment of expenses
conferred by this Article 12 shall not be exclusive of any other right which a
person may have or hereafter acquire under any law (common or statutory),
provision of the Articles of Organization or this Agreement, agreements, vote of
Members or otherwise.
12.8 Insurance. The Company may purchase and maintain insurance, at its expense,
to protect itself and any Indemnified Person against any expense, liability or
loss, whether or not the Company would have the power to indemnify such person
against such expense, liability or loss under this Article 12.
12.9 Savings Clause. If Sections 12.1,12.2 or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Indemnified Person
as to costs, charges and expenses (including attorneys' fees), judgments, fines
and accounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative to the full extent
permitted by any applicable portion of this Article 12 that shall not have been
invalidated and to the fullest extent permitted by applicable law.
ARTICLE 13
TAX MATTERS
13.1 (a) Notwithstanding any provisions hereof to the contrary, each of the
Members hereby recognizes that the Company will be a Company for United States
federal income tax purposes and that the Company will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided,
however, that the filing of United States Company Returns of Income shall not be
construed to extend the purposes of the Company or expand the obligations or
liabilities of the Members. At the request of any Member, the Company shall file
an election under Section 754 of the Code.
(b) The Company shall engage an accountant (the "Accountant") to prepare at the
expense of the Company all tax returns and statements, if any, which must be
<PAGE>
filed on behalf of the Company regarding the operation, dissolution and
liquidation of the Company with any taxing authority.
(c) The Administrative Manager is designated the Tax Matters Member (herein
"TMM") for purposes of Chapter 63 of the Code and the Members will take such
actions as may be necessary, appropriate, or convenient to effect the
designation of the Administrative Manager as TMM. The TMM shall attempt to
comply with the responsibilities outlined in this Section 13.1 and in Sections
6222' through 6231 of the Code (including any Treasury Regulations promulgated
thereunder.
ARTICLE 14
DEATH, DISSOLUTION OR
BANKRUPTCY OF A MEMBER
14.1 Upon the death, dissolution, resignation, retirement, expulsion,
adjudication of bankruptcy or adjudication of incompetency of a Member, the
Company shall be dissolved and its affairs shall be wound up unless within 180
days after such event, the Company is continued by the vote of the majority in
Interest of the Members (which approval may be granted or withheld in such
Member's sole discretion). In the event the Company is continued, such Member
(a) making an assignment for the benefit of creditors; (b) filing a voluntary
petition in bankruptcy; (c) being adjudged bankrupt or insolvent, or having
entered against him an order for relief, in any bankruptcy or insolvency
proceeding; (d) filing a petition or answer seeking for himself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation; (e) filing an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against him in any proceeding of this nature; or (f) seeking,
consenting to or acquiescing in the appointment of a trustee, receiver or
liquidator of the Member or of all or any substantial part of its assets, shall
not be entitled to vote on any matters regarding the operation of the Company
except for matters described in Articles 14 and 15.
ARTICLE 15
ASSIGNABILITY, TRANSFER OR PLEDGE OF
INTERESTS RESIGNATION OF MEMBER
15.1 (a) No Member shall have the right to assign, convey, sell or otherwise
transfer or dispose of, or pledge, mortgage, hypothecate or otherwise encumber
his Interest, whether record or beneficial interest thereof, without the prior
<PAGE>
written consent of the Administrative Manager and a majority in Interest of the
Members, which consent may be withheld or delayed in each Member's sole
discretion. Notwithstanding the preceding sentence, but subject to the
restrictions on transferability required by law, or set forth in any instrument
or agreement by which the Company may be bound, or which may be contained in
this Agreement, an individual Member may, with the consent of a majority in
interest of the other Members, assign, convey, sell or otherwise transfer or
dispose of all or any portion of his Interest in the Company to any one or more
of the members of his immediate family or families (defined for the purposes of
this Agreement as a mother, father, sister, brother, son, daughter, stepson,
stepdaughter or spouse (in each instance whether by marriage or otherwise))
and/or to a trust or other entity for the benefit thereof or themselves, by a
written instrument of assignment and assumption, provided that the instrument of
transfer provides for the assumption of the assignor's liabilities and
obligations hereunder and has been duly executed by the assignor of such
Interest and by the transferee. Upon consent of the Administrative Manager, such
assignee shall become a Member and shall thereafter have the rights, powers,
preferences and limitations and be subject to the restrictions and limitations
of a Member under this Agreement. The Member shall notify the Company of any
assignment, transfer or disposition of a beneficial interest in any Interest of
the Member which occurs without a transfer of record ownership, although such
notification, or the absence of a response thereto, shall not be deemed a
consent thereof.
(b) An assignee or transferee of any portion of the Interest of a Member shall
be entitled to receive allocations and distributions attributable to the
Interest acquired by reason of such assignment, from and after the effective
date of the assignment of such Interest to such assignee; however, anything
herein to the contrary notwithstanding, the Company shall be entitled to treat
the assignor of such Interest of the Member as the absolute owner thereof in all
respects, and shall incur no liability for allocations of net profits, net
losses, or gain or loss on sale of Company assets or property, or transmittal of
reports and notices required to be given to Members hereunder which are made in
good faith to such assignor until such time as the written assignment has been
received by the Company, approved and recorded on its books and the effective
date of the assignment has passed. Provided that the Company has actual notice
of any assignment of the Interest of the Member, the effective date of such
assignment on which the assignee shall be deemed an assignee of record shall be
the date set forth on the written instrument of assignment.
(c) Any assignment, sale, exchange, transfer or other disposition in
contravention of any of the provisions of this Article 15 and Article 16 hereof
shall be void and ineffective and shall not bind or be recognized by the
Company.
<PAGE>
(d) In the event that there shall be more than one assignee, transferee,
representative or other successor-in-interest as permitted herein (collectively,
the "Transferees") and the Member as of the date of this Agreement shall remain
a Member, then the Member shall be authorized to act, and shall so act, on
behalf of the Member and all of the Transferees acting as such by, through or
under the Member. In the event that there shall be more than one Transferee, and
the Member as of the date of this Agreement shall no longer be a Member, then
the Company must be advised by the Member whose Interest is the subject of such
event or failing which by a two-thirds (2/3) majority in interest of those
holding any portion of the Interests of the Member, of one person to act on
behalf of all of the Transferees. The Member, if the first sentence of this
paragraph shall be applicable, or the person so noted to the Company, if the
second sentence of this paragraph shall be applicable, shall be authorized to
act, and shall so act, for all of the Transferees, all of whom shall be bound by
any decision or action taken by such person, and the Company and all of the
other Members shall be entitled to rely on the decisions or actions taken by
such person. Until the Company shall be advised as to the identity of such
person, (i) the Transferees shall be entitled only to distributions and tax
allocations as provided in Article 8 and 9 hereof, but shall have no right,
power or authority with respect to any decision making reserved herein to the
Members or any of them and (ii) wherever in this Agreement provision shall be
made for the Members to make decisions with respect to. Company matters, the
Interest of the Member, as transferred to the Transferees, shall not be included
in determining whether the requisite Interest of Members have consented to or
approved of such decision.
15.2 Without the prior written consent of all Members, a Member may not resign
from the Company prior to the dissolution and winding up of the Company.
<PAGE>
ARTICLE 16
ADMISSION OF SUBSTITUTED MEMBERS;
INCAPACITY FURTHER CONDITIONS
16.1 No assignment or transfer of all or any part of the Interest of a Member
permitted to be made under this Agreement shall be binding upon the Company
unless and until a duplicate original of such assignment or instrument of
transfer, duly executed and acknowledged by the assignor and the transferee, has
been delivered to the Company.
16.2 As a condition to the admission of any Substituted Member, as provided in
Article 16 hereof, the person so to be admitted shall execute and acknowledge
such instruments, in form and substance as the Administrative Manager may deem
<PAGE>
necessary or desirable to effectuate such admission and to confirm the agreement
of the person to be admitted as a Member to be bound by all of the covenants,
terms and conditions of this Agreement, as the same may have been amended.
16.3 Any person to be admitted as a Member pursuant to the provisions of this
Agreement shall, as a condition to such admission as a Member, pay all
reasonable expenses in connection with such admission as a Member, including,
but not limited to, the cost of the preparation, filing and publication of any
amendment to this Agreement and/or Articles of Organization.
16.4 (a) In the event of the death or adjudication of incompetency of a Member,
or upon the happening of any event described in Article 14, the executor,
administrator, committee or other legal representative of such Member, or the
successor-in-interest of such Member, shall succeed to the rights of such Member
to receive allocations and distributions hereunder, and at such party's election
may be admitted to the Company as a Member in the place and stead of the
deceased, incompetent, or bankrupt Member (as defined in Article 14), but shall
not be deemed to be a Substituted Member until admitted in accordance with the
procedures of this Article 16.
(b) Upon the death of a Member, the estate of a deceased Member or his heirs or
legatees thereunder, as the case may be, shall have the option to continue in
the Company, or, alternatively, may elect within ninety (90) days of the
deceased Member's death, to offer in writing, within nine (9) months of such
deceased Member's death, to sell the deceased Member's Interest to the Company
at a price equal to the then Fair Market Value thereof, and upon such additional
terms and conditions as may be agreed upon. If the Company does not elect to
purchase the deceased Member's Interest within thirty (30) days of said written
offer, then the remaining Member or Members, as the case may be, shall have the
option, for a period of thirty (30) days thereafter, to purchase the deceased
Member's entire Interest, either in proportion to their respective Interests in
the Company or in such other proportions as they may agree, at a price equal to
the Fair Market Value thereof and upon such additional terms and conditions as
may be agreed upon.
(c) For purposes of this Agreement, "Fair Market Value" shall be the then
aggregate value of the Company's assets including cash or cash equivalents and
Stock as determined by the Current Market Value, computed as of the Trading Day
immediately preceding the valuation date. "Current Market Value" on any date
shall mean the average of the Closing Price for a share of Stock for five (5)
consecutive Trading Days ending on such date. "Closing Price" shall mean, on any
date, with respect to a share of Stock, the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, for one share of Stock in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on its national securities exchange.
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Stock is listed or admitted to trading is open for the
transaction of business or, if the Stock is not listed or admitted to trading on
any national securities exchange, any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
16.5 Notwithstanding anything to the contrary contained in this Agreement, no
sale or exchange of an Interest in the Company may be made if the Interest
sought to be sold or exchanged, when added to the total of all other Interests
sold or exchanged within the period of twelve (12) consecutive months prior
thereto, results in the termination of the Company under Section 708 of the Code
without the prior written consent of a majority in Interest of the Members.
16.6 In the event of a permitted transfer of all or part of the Interest of a
Member, the Company shall, if requested, file an election in accordance with
Section 754 of the Code or a similar provision enacted in lieu thereof, to
adjust the basis of the assets of the Company. The Member requesting said
election shall pay all costs and expenses incurred by the Company in connection
therewith.
ARTICLE 17
LIQUIDATION
17.1 Upon the dissolution of the Company, the Company shall be liquidated and
its assets distributed as required by Article VII of the Law.
17.2 The assets of the Company shall be liquidated as promptly as possible, but
in an orderly and businesslike manner so as not to involve undue sacrifice.
17.3 In the event that any proceeds are to be distributed to the Members, same
shall be distributed, if practicable, no later than the later of (i) the end of
the taxable year of the Company in which such liquidation occurs; or (ii) within
ninety (90) days after the date of such liquidating event.
17.4 In any liquidation, the Company's assets shall be used first to pay the
costs and expenses of the dissolution and liquidation. In connection with any
liquidation, the Members may establish any reserves they deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Company or of the Members arising out of or in connection with the Company. Such
reserves shall be paid over by the Members to an attorney-at-law of the State of
New York as escrowee designated by the Members, to be held by him for the
<PAGE>
purpose of disbursing such reserves in payment of any of the aforementioned
contingencies. At the expiration of such period as the Members shall deem
advisable, said escrowee shall distribute the balance remaining in the manner
hereinafter provided. No reserves shall be held for longer than two (2) years.
17.5 Any remaining proceeds shall be distributed as follows:
(a) first, to all Members in proportion to and to the extent of any remaining
positive balances in such Member's Capital Account after giving effect to all
allocations to such Member under Article 9 of this Agreement so that liquidation
proceeds shall be distributed in accordance with each Member's positive Capital
Account balance (within the meaning of Treasury Regulation Section 1.704-1(b)
(2) (ii) (~ as in effect on the date hereof); and
(b) second, in accordance with Section 8.1 hereof.
17.6 Each of the Members shall be furnished with a statement prepared by the
Company's then Accountants, which shall set forth the assets and liabilities of
the Company as at the date of completion of liquidation. Upon the Company's
compliance with the provisions of Section 17.4 (including payment over to the
Attorney-Escrowee if there are sufficient funds therefor), the Members shall
cease to be such under this Agreement, and shall execute, acknowledge and cause
to be filed the Articles of Dissolution of the Company.
ARTICLE 18
MISCELLANEOUS
18.1 All terms and words used in this Agreement, regardless of the sense or
gender in which they are used, shall be deemed to include each other sense and
gender unless the context requires otherwise.
18.2 The Members agree immediately and from time to time to execute,
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and to do all such other
acts and things as may be required by law, or as may, in the opinion of a
majority in Interest of the Members, be necessary or advisable to carry out the
intent and purposes of this Agreement.
18.3 The Members, on behalf of themselves, their legal representatives, heirs,
successors and assigns, hereby specifically renounce, waive and forfeit all
<PAGE>
rights whether arising under contract, statute, or by operation of law, to seek,
bring, or maintain any action for partition in any court of law or equity
pertaining to any property which the Company may now or in the future own,
regardless of the manner in which title to any such real property may be held.
18.4 Unless otherwise specified in this Agreement, all notices, demands,
requests or other communications which any of the parties to this Agreement may
desire or be required to give hereunder (hereinafter referred to collectively as
"Notices") shall be in writing and shall be delivered by personal delivery
against receipt or by any nationally recognized overnight courier to the
appropriate Member at the address first set forth above, with a copy of any
Notice being sent simultaneously to Pryor, Cashman, Sherman & Flynn, Attention:
Jonathan A. Bernstein, Esq., 410 Park Avenue, New York, New York 10022. Notice
may also be sent to such other addresses or substitute addresses of which a
Member advises the Company by notice given in the manner set forth herein.
Notices given in compliance with the provisions of this Article shall be deemed
given on the day received or attempted delivery.
18.5 The parties agree that the parties shall be governed by, and this Agreement
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed in such State and that all claims and suits
shall be heard in the courts located in the State of New York.
18.6 All section titles or captions contained in this Agreement are for
convenience only and shall not be deemed a part of this Agreement.
18.7 This Agreement may be executed in counterparts and each counterpart so
executed by each Member shall constitute an original, all of which when taken
together shall constitute one agreement, notwithstanding that all the parties
are not signatories to the same counterpart.
18.8 This Agreement may not be changed, modified, amended waived or discharged,
in whole or in part, unless in writing and signed by a majority in Interest of
the Members. This Agreement shall be binding upon the Members and their
respective executors, administrators, legal representatives, heirs, successors
and assigns. The singular of any defined term or term used herein shall be
deemed to include the plural.
18.9 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
<PAGE>
remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
18.10 This Agreement is the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements relative to such
subject matter.
18.11 It is expressly understood that the Investment Manager, the Administrative
Manager and each Member may engage in any other business or investment,
including the ownership of or investment in stocks, options, bonds, funds, and
other investment vehicles, whether or not in direct competition with the
business of the Company and neither the Company nor any other Member shall have
any rights in and to said businesses or investments, or the income or profits
derived therefrom.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
CHARISMA PARTNERS, L.P., a New York
limited Partnership
By: 8th Floor Realty Corp., its sole general
partner
By:
Name: /S/ Kevin S. Moore
Title: Vice President
---------------------------
/S/Anne L. Peretz
---------------------------
/S/Jesse W. Peretz
---------------------------
/S/Eugenia Peretz
---------------------------
/S/David L. Farnsworth
---------------------------
/S/ Anne Farnsworth
---------------------------
/S/ Edmund S. Twining III
---------------------------
/S/Taylor Twining
---------------------------
/S/ Edmund S. Twining IV
FIRST AMENDMENT TO
OPERATING AGREEMENT
This First Amendment to Operating Agreement -dated August 1, 1995 by
and among the parties who are Members in Federal Holdings L.L.C. prior to the
date hereof (the "Original Members*) and Jonathan A. Bernstein ('JAB').
STATEMENT OF FACTS
By execution of that certain Operating Agreement (the
"Agreementm) for Federal Holdings L.L.C. (the OLLC") dated
June 12, 1995, the Original Members formed the LLC. The
Original Members have agreed to amend the Agreement to provide
for the inclusion of JAB as an Additional Member and to permit
the Administrative Manager (a) to admit such other persons as
he shall deem proper as Additional Members and (b) provide for
and accept Substitute Members as he shall deem proper, all in
his sole and exclusive discretion.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. All terms used in this First Amendment and not
defined hereinshall be as defined in the Agreement.
2. JAB is hereby admitted into the LLC as an
Additional Member as of the date hereof, with all of the rights and obligations
of a Member, and fromand after the date hereof, JAB shall be considered
a Member for all purposes under the Agreement, as the same may be modified or
amended from time to time.
3. On the date hereof, JAB is making an Initial Capital
Contribution to the LLC of $100,000. As a result of JAB becoming a Member and
making his Initial Capital Contribution, the Interests of each Member in the LLC
is as set forth on Schedule A annexed hereto and by this reference made a part
hereof.
4. The Administrative Manager shall have the sole and
exclusive right to admit Additional Members and provide for and accept
Substitute Members.
5. Except as modified by this First Amendment, the
Agreement remains unmodified and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the day and year first above written.
CHARISMA PARTNERS, L.P., a New York
limited Partnership
By: 8th Floor Realty Corp.,
its sole general partner By:
Name: /S/ Kevin S. Moore
Title: Vice President
/s/ Attorney in fact
Anne L. Peretz
/s/ Attorney in fact
Jesse W. Peretz
/s/ Attorney in fact
Eugenia Peretz
/s/ Attorney in fact
Anne Farnsworth
/s/ Attorney in fact
Edmund S. Twining III
/s/ Attorney in fact
Taylor Twining
/s/ Attorney in fact
Edmund S. Twining IV
/s/ Attorney in fact
Jonathan A. Bernstein
<PAGE>
SCHEDULE A
INITIAL CAPITAL
CONTRIBUTION
CHARISMA PARTNERS, LP $600,000.00
ANNE PERETZ $100,000.00
JESSE W. PERETZ $50,000.00
EUGENIA PERETZ $50,000.00
DAVID L. FARNSWORTH $50,000.00
ANNE FARNSWORTH $50,000.00
EDMUND TWINING III $50,000.00
TAYLOR TWINING $25,000.00
EDMUND S. TWINING IV $25,000.00
JONATHAN A. BERNSTEIN $100,000.00
Exhibit E
LAWRENCE B. SEIDMAN, ESQ.
Lanidex Center
100 Misty Lane
P. O. Box 5430
Parsippany, NJ 07054
June 6, 1996
Mr. Jeffrey Greenberg
Heritage Management
P. O. Box 627
50 W. Ridgewood Avenue
Ridgewood, New Jersey 07451
Dear Mr. Greenberg:
The following are the terms and conditions in reference to the
investment account for the purchase of stock in public companies:
1. A margin brokerage account will be opened at Bear Stearns
through The Benchmark company, Inc.
in the name of Jeffrey Greenberg.
2. The account will be a discretionary account with Larry Seidman
having the Power of attorney to buy and sell stock in said account provided all
funds deposited into the account are for Jeffrey Greenberg and all stock
purchased in the account is in the name of Jeffrey Greenberg.
3. The account will be funded with a minimum of $50,000.
4. Jeffrey Greenberg shall have the right to terminate the
relationship anytime after June 15,
1998.
5. Upon such termination, my discretion shall be terminated
automatically.
6. My compensation shall be 1/4 of 1% of the value of the assets in the
account computed as of the last day of each calendar quarter. An incentive fee
will be paid me equal to 20% of the net profits earned in the account as of the
termination date whether same shall be the above termination date or later if
agreed to between the parties. 100% of all funds shall go to Jeffrey Greenberg
until 100% of the capital is returned, and then the division shall be 80% to
Jeffrey Greenberg and 20% to Larry Seidman.
<PAGE>
Mr. Jeffrey Greenberg
June 6, 1996
Page 2
7. I shall have the sole right to vote the shares in the account
until termination of my Power of
Attorney.
8. In the event any portion of this agreement is not in compliance with
law, then Jeffrey Greenberg shall have the sole right to terminate this letter,
and an accounting shall be done based upon the above quoted administrative fee
and profit participation to the date of the termination.
Very truly yours,
/s/ LAWRENCE B. SEIDMAN
AGREED AND ACCEPTED:
/s/Jeffrey Greenberg
<PAGE>
LAWRENCE B. SEIDMAN, ESQ.
Lanidex Center
100 Misty Lane
P. O. Box 5430
Parsippany, NJ 07054
June 6, 1996
Mr. Steven Greenberg
Heritage Management
P. O. Box 627
50 W. Ridgewood Avenue
Ridgewood, New Jersey 07451
Dear Mr. Greenberg:
The following are the terms and conditions in reference to the
investment account for the purchase of stock in public companies:
1. A margin brokerage account will be opened at Bear Stearns through
The Benchmark Company, Inc., in the name of Steven Greenberg.
2. The account will be a discretionary account with Larry Seidman
having the Power of attorney to buy and sell stock in said account provided all
funds deposited into the account are for Steven Greenberg and all stock
purchased in the account is in the name of Steven Greenberg.
3. The account will be funded with a minimum of $50,000.
4. Steven Greenberg shall have the right to terminate the
relationship anytime after February 1,
1997.
5. Upon such termination, my discretion shall be terminated
automatically.
6. My compensation shall be 1/4 of 1% of the value of the assets in the
account computed as of the last day of each calendar quarter. An incentive fee
will be paid me equal to 20% of the net profits earned in the account as of the
termination date whether same shall be the above termination date or later if
agreed to between the parties. 100% of all funds shall go to Steven Greenberg
until 100% of the capital is returned, and then the division shall be 80% to
Steven Greenberg and 20% to Larry Seidman.
<PAGE>
Mr. Steven Greenberg
June 6, 1996
Page 2
7. I shall have the sole right to vote the shares in the account
until termination of my Power of Attorney.
8. In the event any portion of this agreement is not in compliance with
law, then Steven Greenberg shall have the sole right to terminate this letter,
and an accounting shall be done based upon the above quoted administrative fee
and profit participation to the date of the termination.
Very truly yours,
/s/ LAWRENCE B. SEIDMAN
AGREED AND ACCEPTED:
/s/Steven Greenberg
