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SECURlTIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. 10)*
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)
January 23, 1997
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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).
CUSIP NO. 44922Q105
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Veteri Place Corporation,as General Partner of Seidman Investment Partnership
22-3342636
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
wc
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
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7 SOLE VOTING POWER
NUMBER OF
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SHARES
BENFICIALLY 8 SHARED VOTING POWER
30,855
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OWNED BY
9 SOLE DISPOSITIVE POWER
PERSON -----------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
30,855
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 30,855
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .292%
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14 TYPE OF REPORTING PERSON* CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
CUSIP NO. 44922Q105
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 The Benchmark Company, Inc. 11-2950925
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
NUMBER OF
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SHARES
BENFICIALLY 8 SHARED VOTING POWER
217,830
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OWNED BY
9 SOLE DISPOSITIVE POWER
PERSON -----------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
217,830
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 217,830
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.067%
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14 TYPE OF REPORTING PERSON* BD
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
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, Amendment #8 which was filed on November
19, 1996 and Amendment #9 which was filed on December 16, 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
(a)(b)(c) Veteri Place Corporation ("Veteri") is the sole general partner
of SIP. Veteri is a New Jersey corporation whose principal business is being the
general partner of SIP. The address of Veteri's principal office is 19 Veteri
Place, Wayne, NJ 07470. Lawrence B. Seidman is the only director, shareholder
and officer of Veteri.
(d) During the last five years neither Veteri or Seidman has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) Neither Veteri nor Seidman 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.
(f) Veteri is incorporated in the State of New Jersey.
3. Source and Amount of Funds or Other Consideration
Veteri contributed $100 to SIP. The aggregate purchase price of the 855,651
Shares owned beneficially by the Reporting Persons on January 24, 1997 was
approximately $10,521,097.78 (inclusive of brokerage commissions). Such Shares
have been (or will in the case of transactions which have not yet settled) be
paid for with working capital of the respective entities and personal funds of
the individual persons. As of January 24, 1997, SAL and SALII had an outstanding
margin balance with Bear Stearns Securities Corp. which totaled $428,648.07 and
$259,485.67, respectively.
4. Purpose of Transaction
See previously filed Schedule 13D and Amendments #1 - #9.
In a lawsuit filed by IBS Financial Corporation against Lawrence Seidman
and members of the Committee to Maximize Shareholder Value (the "Committee"),
Judge Joseph E. Irenas of the U.S. District Court of New Jersey on January 23,
1997 ruled overwhelmingly for Lawrence Seidman and the Committee. In the Court's
ruling, District Judge Joseph E. Irenas declared that the Committee's disclosure
filings were adequate. The judge also ruled that IBSF may not reject the
Committee's director nominations and IBSF must provide the Committee a
shareholder list to allow the Committee to communicate with all stockholders. In
the Court's final ruling, Judge Irenas declared that IBSF may not reduce the
size of the Board in an attempt to limit the number of directors that will be up
for reelection at the next annual meeting.
5. Interest in Securities of the Issuer
Seidman as President of Veteri has the sole power to vote or to direct the
vote and to dispose of or direct the disposition of the Common Stock owned by
SIP.
Whitman and DiPaolo, individually, and in their capacity as general
partners of Partners and President and Executive Vice President, respectively,
of TBCI may be deemed to own beneficially (as defined in rule 13d-3 promulgated
under the Exchange Act) the 342,830 shares of Common Stock which constituted
approximately 3.25% of the Issuer's outstanding Common Stock owned beneficially
by Partners and TBCI. In addition, Whitman and DiPaolo may be deemed to share
the power to vote or to direct the vote and to dispose of or to direct the
disposition of the Common Stock owned beneficially by Partners and TBCI since
they are their authorized representatives
1. TBCI 217,830 Shares 3. Whitman 3,080 Shares
2. Partners 125,000 Shares 4. DiPaolo 28,415 Shares
The schedule below describes transactions in the Common Stock effected by
the Reporting Persons from November 23, 1996 to January 24, 1997. Except as set
forth in this Item 5, none of the Reporting Persons owns beneficially or has a
right to acquire beneficial ownership of any Common Stock, and except as set
forth in this Item 5, none of the Reporting Persons has effected transactions in
the Common Stock during the past sixty (60) days.
Trade No of Total
Date Shares Price Cost/(Proceeds) Entity
12/4/96 1,500 15.25 22,875 TBCI
12/4/96 700 15.25 10,675 TBCI
12/4/96 700 15.25 10,675 TBCI
12/24/96 300 15.25 (4,575) TBCI
12/24/96 300 15.25 4,575 TBCI
12/26/96 2400 15.375 36,780 TCBI
(d) N/A
(e) N/A
6. Contracts. Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Mr. Seidman is the President of Veteri and is Veter's only officer,
director and shareholder. Veteri is the sole general partner of SIP and in that
capacity Mr. Seidman has the authority through Veteri to acquire, trade and hold
the securities of the Issuer. Mr. Seidman is the president of Veteri, the
corporate general partner of SIP; and, in that capacity, Mr. Seidman has the
authority to cause SIP to acquire, hold, trade and vote the securities owned by
SIP. SIP was created to acquire, hold and sell publicly traded securities. SIP
was not formed to solely acquire, hold and sell the Issuer's securities. SIP
owns securities issued by one company other than the Issuer. The limited
partners in SIP are all passive investors, who do not - and can not - directly
or indirectly participate in the management of SIP, including without limitation
proxy contests. Mr. Seidman's compensation is, in part, dependent upon the
profitability of the operations of SIP, but no provision is made to compensate
Mr. Seidman solely based upon the profits resulting from transactions from the
Issuer's securities.
The voting power over the Issuer's securities is not subject to any
contingencies beyond standard provisions for entities of this nature, (i.e.,
limited partnerships) which govern the replacement of a general partner.
The following are certain terms of the Agreements for SAL, SALII, SIP and
Federal:
(i) Mr. Seidman is entitled to 5% of the net profits and his wife is
entitled to 15% of the net profits pursuant to Article 8.1 (d) of the SAL and
SALII Agreements. (See Articles 8 Cash Distributions, Exhibit A and B attached
hereto, and incorporated herein by reference.)
(ii) Pursuant to Article 11.3 (b) of the SAL operating agreement Mr.
Seidman is entitled to an annual compensation of $125,000. (See Article 11 -
Managing Member, attached hereto as Exhibit C and incorporated herein by
reference.)
(iii) Pursuant to Article 8.1 (b) of the of the operating agreement of
Federal, Mr. Seidman is entitled to 20% of the net profits. (See Article 8 -
Distributions of Net Proceeds, attached hereto as Exhibit D and incorporated
herein by reference.)
(iv) Pursuant to Article 9 (a)(i), 20% of the net profit of SIP shall be
allocated to the general partner, Veteri Place Corporation (Seidman is the sole
shareholder, director and officer of Veteri), for each fiscal year as an
incentive allocation. (See Article 9 Adjustments to Capital Accounts, Exhibit E,
attached hereto and incorporated herein by reference.)
(v) Pursuant to the letter agreements dated June 6, 1996 with Jeffrey
Greenberg and Steven Greenberg, Mr. Seidman is entitled to a fee computed as of
the last day of each calendar quarter equal to a quarter of 1% of the value of
the assets in each account. In addition Mr. Seidman shall be entitled to an
incentive fee equal to 20% of the net profits earned in the account as of the
termination date. Jeffrey Greenberg has the right to terminate the agreement any
time after June 15, 1998 and Steven has the same right after February 1, 1997.
(vi) Pursuant to the letter agreement with Michael Mandelbaum, Mr. Seidman
is entitled to a fee computed as of the last day of each calendar quarter equal
to a quarter of 1% of the value of the assets in the account. In addition Mr.
Seidman is entitled to 20% of the net profits after Mr. Mandelbaum receives a
"hurdle" return on his invested capital. Mr. Mandelbaum has the right to
terminate the agreement any time after February 15, 1997.
(vii) Pursuant to Section 16 of the Amended and Restated Agreement of
Limited Partnership (Partnership Agreement), Veteri Place Corporation, as of the
end of each fiscal quarter shall be entitled to receive an administrative fee
equal to a quarter of 1% of SIP's assets. (See Section 16 of the Partnership
Agreement Exhibit F, attached hereto and incorporated herein by reference.)
(viii) The scheduled term of SIP is until December 1, 2014 unless sooner
terminated as provided in the Partnership Agreement. (See Term of Partnership,
page 16 of the Partnership Agreement, Exhibit G, attached hereto and
incorporated herein by reference.)
(ix) SAL's term shall continue in full force and effect until May 1, 2024
unless terminated as provided for in its operating agreement. (See Article 4 -
Term and Duration, Exhibit H, attached hereto and incorporated herein by
reference.)
(x) SALII's term shall continue in full force and effect until May 1, 2024
unless terminated as provided for in its operating agreement. (See Article 4 -
Term and Duration, Exhibit I, attached hereto and incorporated herein by
reference.)
(xi) Federal's term shall continue in full force and effect until April 30,
2045 as provided for in its operating agreement. (See Article 4 - Term and
Duration, Exhibit J, attached hereto and incorporated herein by reference.)
Pursuant to Article 10.1 of the operating agreement, Mr. Seidman's initial
management term expires on June 13, 1997, unless sooner terminated. (See Article
10, Exhibit K, attached hereto and incorporated herein by reference.)
None of the limited partners of SIP, or the members of SAL, or the members
of SALII, or the members of Federal, own any shares of the Issuer except as
disclosed in Schedule 13D and amendments thereto filed on behalf of those
entities.
A copy of the following Exhibits were filed as part of Amendment 9 of
Schedule 13D. The Letter Agreement with Michael Mandelbaum was filed as Exhibit
A to Amendment 8 of Schedule 13D.
Exhibit A Offering Prospectus and Amended and
Restated Agreement of Limited Partnership
of Seidman 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 L.L.C.
and First amendment to Operating Agreement
Exhibit E Seidman's Letter Agreements with Clients
Jeffrey Greenberg
Steven Greenberg
7. Material to be filed as Exhibits
Exhibit A Operating Agreement for Seidman and
Associates, L.L.C., Article 8 - Cash Distributions
Exhibit B Operating Agreement for Seidman and
Associates II, L.L.C., Article 8 - Cash Distributions
Exhibit C Operating Agreement for Seidman and
Associates, L.L.C., Article 11 - Managing Member
Exhibit D Operating Agreement for Federal Holding LLC,
Article 8 - Distributions of Net Proceeds
Exhibit E Amended and Restated Agreement of
Partnership, L.P., Article 9 - Adjustments
to Capital Accounts
Exhibit F Amended and Restated Agreement of
Partnership, L.P., Article 16 - Administrative Fee
Exhibit G Limited Partnership Agreement
of Seidman Investment Partnership, L.P.,
Term of Partnership, Page 16.
Exhibit H Operating Agreement for Seidman and
Associates, L.L.C., Article 4 - Term and Duration
Exhibit I Operating Agreement for Seidman and
Associates, L.L.C. II, Article 4 - Term and Duration
Exhibit J Operating Agreement for Federal Holdings, L.L.C.
Article 4 - Term and Duration
Exhibit K Operating Agreement for Federal Holdings, L.L.C.
Article 10 - Rights, Powers and Representations
of the Investment Manager and Administrative
Manger; Management Fee
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.
/s/ Lawrence B. Seidman
1/24/97 Lawrence B. Seidman, Manager
Date Seidman and Associates, L.L.C.
/s/ Lawrence B. Seidman
1/24/97 Lawrence B. Seidman, Manager
Date Federal Holdings, L.L.C.
/s/ Lawrence B. Seidman
1/24/97 Lawrence B. Seidman, General Partner
Date Seidman Investment Partnership, L.P.
1/24/97 /s/ Lawrence B. Seidman
Date Lawrence B. Seidman, Individually
1/24/97 /s/ Richard Whitman
Date Richard Whitman, President
The Benchmark Company, Inc.
1/24/97 /s/ Richard Whitman
Date Richard Whitman, General Partner
Benchmark Partners, LP
1/24/97 /s/ Richard Whitman
Date Richard Whitman, Individually
1/24/97 /s/ Lorraine DiPaolo
Date Lorraine DiPaolo, Individually
1/24/97 /s/ Ernest Beier, Jr.
Date Ernest Beier, Jr., Individually
1/24/97 /s/ Dennis Pollack
Date Dennis Pollack, Individually
1/24/97 /s/ Lawrence B. Seidman
Date Lawrence B. Seidman, Manager
Seidman & Associates II, L.L.C.
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 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 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 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
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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.
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.
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(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.
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.
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.
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 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.
<PAGE>
(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 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.
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
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.
