POINT WEST SECURITIES LLC
OPERATING AGREEMENT
by
Point West Capital Corporation
and
Point West Securities, LLC
as of
July 8, 1998
TABLE OF CONTENTS
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PAGE
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SECTION I. DEFINED TERMS........................................................................ 1
SECTION II. FORMATION AND NAME; OFFICE; PURPOSE; TERM............................................ 3
2.1 ORGANIZATION.................................................................................. 3
2.2 NAME OF THE COMPANY........................................................................... 3
2.3 PURPOSE....................................................................................... 3
2.4 TERM.......................................................................................... 4
2.5 PRINCIPAL OFFICE.............................................................................. 4
2.6 RESIDENT AGENT................................................................................ 4
2.7 MEMBERS....................................................................................... 4
2.8 OFFICERS, DIRECTORS, AND MANAGERS............................................................ 4
SECTION III. MEMBERS; CAPITAL; CAPITAL ACCOUNTS................................................... 4
3.1 INITIAL CAPITAL CONTRIBUTIONS................................................................. 4
3.2 NO OTHER CAPITAL CONTRIBUTIONS REQUIRED....................................................... 4
3.3 LOANS......................................................................................... 4
SECTION IV. PROFIT, LOSS AND DISTRIBUTIONS....................................................... 4
4.1 DISTRIBUTIONS OF CASH FLOW.................................................................... 4
4.2 ALLOCATION OF PROFIT OR LOSS.................................................................. 4
4.3 LIQUIDATION AND DISSOLUTION................................................................... 4
SECTION V. MANAGEMENT: RIGHTS, POWER AND DUTIES................................................. 5
5.1 MANAGEMENT.................................................................................... 5
5.2 PERSONAL SERVICES............................................................................. 5
5.3 LIABILITY AND INDEMNIFICATION................................................................. 5
SECTION VI. TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS..................................... 5
6.1 TRANSFERS..................................................................................... 5
6.2 TRANSFER TO A SUCCESSOR....................................................................... 5
SECTION VII. DISSOLUTION, LIQUIDATION AND TERMINATION OF THE
COMPANY.............................................................................. 5
7.1 EVENTS OF DISSOLUTION......................................................................... 5
7.2 PROCEDURE FOR WINDING UP AND DISSOLUTION...................................................... 6
7.3 FILING OF ARTICLES OF CANCELLATION............................................................ 6
SECTION VIII. BOOKS, RECORDS, ACCOUNTING AND TAX ELECTIONS......................................... 6
8.1 BANK ACCOUNTS................................................................................. 6
8.2 BOOKS AND RECORDS............................................................................. 6
(i)
TABLE OF CONTENTS - Cont.
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8.3 ANNUAL ACCOUNTING PERIOD...................................................................... 6
8.4 DISREGARD OF ENTITY........................................................................... 6
8.5 TAX MATTERS PARTNER........................................................................... 6
SECTION IX. GENERAL PROVISIONS................................................................... 7
9.1 ASSURANCES.................................................................................... 7
9.2 NOTIFICATIONS................................................................................. 7
9.3 SPECIFIC PERFORMANCE.......................................................................... 7
9.4 COMPLETE AGREEMENT............................................................................ 7
9.5 APPLICABLE LAW................................................................................ 7
9.6 SECTION TITLES................................................................................ 7
9.7 BINDING PROVISIONS............................................................................ 8
9.8 JURISDICTION AND VENUE........................................................................ 8
9.9 TERMS......................................................................................... 8
9.10 SEPARABILITY OF PROVISIONS.................................................................... 8
9.11 COUNTERPARTS.................................................................................. 8
Exhibit A - Member Taxpayer Identification and Percentage
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Exhibit B - Point West's Cash and Property Contribution
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(ii)
POINT WEST SECURITIES LLC
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OPERATING AGREEMENT
-------------------
This Operating Agreement (this "Agreement") is entered into as of this
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8th day of July, 1998, by and among Point West Capital Corporation, a Delaware
corporation ("Point West") and Point West Securities, L.L.C.
(the "Company").
EXPLANATORY STATEMENT
---------------------
The Company was organized as a limited liability company in Delaware on
July 8, 1998 in accordance with the terms of, and subject to the conditions set
forth in, this Agreement. This Agreement sets forth the agreements under which
the Company will operate. The Company was formed as a single Member limited
liability company, which is intended to be disregarded for federal income tax
purposes.
NOW, THEREFORE, for good and valuable consideration, the parties,
intending legally to be bound, agree as follows:
I.
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DEFINED TERMS
=============
The following capitalized terms shall have the meanings specified in
this Section I. Other terms are defined in the text of this Agreement; and,
throughout this Agreement, those terms shall have the meanings respectively
ascribed to them.
"Agreement" means this Agreement, as amended from time to time.
==========
"Code" means the Internal Revenue Code of 1986, as amended, or any
======
corresponding provision of any succeeding law.
"Company" means the limited liability company organized in accordance
=========
with this Agreement.
"Delaware Act" means the Delaware Limited Liability Company Act, as
===============
amended from time to time.
"Interest" means a Person's share of the Profits and Losses of, and the
==========
right to receive distributions from, the Company.
"Interest Holder" means any Person who holds an Interest, whether as a
=================
Member or as an unadmitted assignee of a Member.
"Involuntary Withdrawal" means, with respect to Point West, the
=========================
occurrence of any of the following events:
(a) Point West makes an assignment for the benefit of
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creditors;
(b) Point West files a voluntary petition of bankruptcy
---
(c) Point West is adjudged bankrupt or insolvent or there
---
is entered against Point West an order for relief in any bankruptcy or
insolvency proceeding;
(d) Point West files a petition or answer seeking for
---
Point West any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute, law, or
regulation;
(e) Point West seeks, consents to, or acquiesces in the
---
appointment of a trustee for, receiver for, or liquidation of Point
West or of all or any substantial part of Point West's properties;
(f) Point West files an answer or other pleading
---
admitting or failing to contest the material allegations of a petition
filed against Point West in any proceeding described in subsections (a)
through (e);
(g) any proceeding against Point West seeking
---
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation,
continues for one hundred twenty (120) days after the commencement
thereof, or the appointment of a trustee, receiver, or liquidator for
Point West or all or any substantial part of Point West's properties
without Point West's Agreement or acquiescence, which appointment is
not vacated or stayed for one hundred twenty (120) days or, if the
appointment is stayed, for one hundred twenty (120) days after the
expiration of the stay during which period the appointment is not
vacated; or
(h) Point West's death or adjudication by a court of
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competent jurisdiction as incompetent to manage Point West's person or
property.
"Member" means Point West and any Person who subsequently is
========
admitted as a member of the Company.
"Membership Rights" means all of the rights of a Member in the Company,
===================
including a Member's (a) Interest; (b) right to inspect the Company's books and
records; (c) right to participate in the management of and vote on matters
coming before the Company; and (d) unless this Agreement or the Articles of
Organization provide to the contrary, right to act as an agent of the Company.
"Person" means and includes an individual, corporation, partnership,
========
association, limited liability company, trust, estate, or other entity.
"Positive Capital Account" means a Capital Account with a balance
===========================
greater than zero.
2
"Profit" and "Loss" means, for each taxable year of the Company (or
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other period for which Profit or Loss must be computed) the Company's taxable
income or loss determined in accordance with the Code.
"Regulation" means the income tax regulations, including any temporary
============
regulations, from time to time promulgated under the Code.
"Successor" means all Persons to whom all or any part of an Interest is
===========
transferred either because of (a) the sale or gift by Point West of all or any
part of its Interest, (b) an assignment of Point West's Interest due to Point
West's Involuntary Withdrawal, or (c) because such Person dies and the persons
are such Person's personal representatives, heirs, or legatees.
"Transfer" means, when used as a noun, any voluntary sale,
==========
hypothecation, pledge, assignment, attachment, or other transfer, and, when used
as a verb, means voluntarily to sell, hypothecate, pledge, assign, or otherwise
transfer.
"Withdrawal" means a Member's dissociation from the Company by any
============
means.
II.
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FORMATION AND NAME; OFFICE; PURPOSE; TERM
=========================================
II.1 ORGANIZATION. Point West Securities, LLC has organized a
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limited liability company pursuant to the Act and the provisions of this
Agreement and, for that purpose, has caused Articles of Organization to be
prepared, executed and filed under the Delaware Act on July 8, 1998.
II.2 NAME OF THE COMPANY. The name of the Company shall be
--- ====================
"Point West Securities LLC". The Company may do business under that name and
under any other name or names upon which Point West may, in its sole discretion,
determine. If the Company does business under a name other than that set forth
in its Articles of Organization, then the Company shall file a trade name
certificate as required by law.
II.3 PURPOSE. Company is organized to engage in any lawful act
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or activity for which a limited liability company may be organized under the
Delaware Act, and to do any and all things necessary, convenient, or incidental
to that purpose.
II.4 TERM. The term of the Company began upon the filing of the
---- ====
Articles of Organization under the Delaware Act and shall continue in existence
until July 31, 2028, unless its existence is sooner terminated pursuant to
Section VII of this Agreement.
II.5 PRINCIPAL OFFICE. The principal office of the Company in the
---- ================
State of Delaware shall be located at 1220 North Market Street, Suite 606,
Wilmington, Delaware 19801, or at any other place within the State of Delaware
which Point West, in its sole discretion, determines.
3
II.6 RESIDENT AGENT. The name and address of the Company's resident
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agent in the State of Delaware shall be Registered Agents, Ltd.
II.7 MEMBERS. The name, present mailing address, taxpayer
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identification number and Percentage of each Member are set forth on Exhibit
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"A".
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SECTION III.
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MEMBERS; CAPITAL; CAPITAL ACCOUNTS
==================================
III.1 INITIAL CAPITAL CONTRIBUTIONS. Upon the execution of this
---- =============================
Agreement, Point West shall contribute to the Company the cash and property set
forth on Exhibit "B", as the single and sole Member of the Company.
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III.2 NO OTHER CAPITAL CONTRIBUTIONS REQUIRED. No Member shall be
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required to contribute any additional capital to the Company, and except as set
forth in the Act, no Member shall have any personal liability for any
obligations of the Company.
III.3 LOANS. Any Member may, at any time, make or cause a loan to be
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made to the Company in any amount and on those terms upon which the Company and
the Member agree.
IV
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PROFIT, LOSS AND DISTRIBUTIONS
==============================
IV.1 DISTRIBUTIONS OF CASH FLOW. Cash Flow for each taxable year of
---- ==========================
the Company shall be distributed to Point West no later than seventy-five (75)
days after the end of the taxable year.
IV.2 ALLOCATION OF PROFIT OR LOSS. All Profit or Loss shall be
---- ============================
allocated to Point West, as the single and sole Member of the Company.
IV.3 LIQUIDATION AND DISSOLUTION. If the Company is liquidated, the
---- ===========================
assets of the Company shall be distributed to Point West or to a Successor or
Successors.
V.
MANAGEMENT: RIGHTS, POWER AND DUTIES
====================================
V.1 MANAGEMENT. The Company shall be managed solely by the Members.
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V.2 PERSONAL SERVICES. No member shall be required to perform
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services for the Company solely by virtue of being a Member.
4
V.3 LIABILITY AND INDEMNIFICATION.
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1. The Members shall not be liable, responsible, or
accountable, in damages or otherwise, to the Company for any act
performed by any of them with respect to Company matters, except for
fraud.
2. The Company shall indemnify Members for any act performed
by any of them with respect to Company matters, except for fraud.
VI
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TRANSFER OF INTERESTS AND
=========================
WITHDRAWALS OF MEMBERS
======================
VI.1 TRANSFERS. Point West may Transfer all, or any portion of, or
---- =========
its interest or rights in, its Membership Rights to one or more Successors.
VI.2 TRANSFER TO A SUCCESSOR. In the event of any Transfer of all
---- =========================
or any part of Point West's Interest to a Successor, the Successor shall
thereupon become a Member and the Company shall be continued.
VII.
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DISSOLUTION, LIQUIDATION AND
============================
TERMINATION OF THE COMPANY
===========================
VII.1 EVENTS OF DISSOLUTION. The Company shall be dissolved upon the
----- =====================
happening of any of the following events:
1. When the period fixed for its duration in Section 2.4 has
expired; or
2. If one or all of the Members unanimously determine to
dissolve the Company.
The Company shall not dissolve merely because of Point West's
Involuntary Withdrawal.
VII.2 PROCEDURE FOR WINDING UP AND DISSOLUTION. If the Company is
----- ==========================================
dissolved, the affairs of the Company shall be wound up. On winding up of the
Company, the assets of the Company shall be distributed, first, to creditors of
the Company in satisfaction of the liabilities of the Company, and then to the
Persons who are the Members of the Company in proportion to their Interests.
VII.3 FILING OF ARTICLES OF CANCELLATION. If the Company is dissolved,
----- ==================================
Articles of Cancellation shall be promptly filed with the Delaware Secretary of
State. If there are no remaining Members, the Articles shall be filed by the
last Person to be a Member; if there are no remaining
5
Members, or a Person who last was a Member, the Articles shall be filed by the
legal or personal representatives of the Person who last was a Member.
VIII.
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BOOKS, RECORDS, ACCOUNTING
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AND TAX ELECTIONS
=================
VIII.1 BANK ACCOUNTS. All funds of the Company shall be deposited
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in a bank account or accounts opened in the Company's name. The Member shall
unanimously determine the institution or institutions at which the accounts will
be opened and maintained, the types of accounts, and the Persons who will have
authority with respect to the accounts and the funds therein.
VIII.2 BOOKS AND RECORDS. The Members shall keep or cause to be kept
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complete and accurate books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the Company's
business. The books and records shall be maintained in accordance with sound
accounting principles and practices.
VIII.3 ANNUAL ACCOUNTING PERIOD. The annual accounting period of the
------ ========================
Company shall be its taxable year. The Company's taxable year shall be selected
by the Members, subject to the requirements and limitations of the Code.
VIII.4 DISREGARD OF ENTITY. Point West and the Company intend for the
------ ====================
Company to be treated as a partnership for federal income tax purposes, if the
Company has two or more Members, and otherwise as an entity that is disregarded
as an entity separate from its owner for federal income tax purposes pursuant to
Treasury Regulation Section 301.7701-3.
VIII.5 TAX MATTERS PARTNER. To the extent applicable, Point West shall
------ ===================
act as the "tax matters partner" within the meaning of Section 623(a)(7) of the
Code.
IX.
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GENERAL PROVISIONS
==================
IX.1 ASSURANCES. Each Member shall execute all such certificates
---- ==========
and other documents and shall do all such filing, recording, publishing, and
other acts as the Members deem appropriate to comply with the requirements of
law for the formation and operation of the Company and to comply with any laws,
rules, and regulations relating to the acquisition, operation, or holding of the
property of the Company.
IX.2 NOTIFICATIONS. Any notice, demand, consent, election, offer,
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approval, require, or other communication (collectively, a "notice") required or
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permitted under this Agreement must be in writing and either delivered
personally or sent by certified or registered mail, postage prepaid, return
receipt requested. A notice must be addressed to an Interest Holder at the
Interest Holder's last known address on the records of the Company. A notice to
the Company must be addressed to the Company's principal office. A notice
delivered personally will be deemed given only when
6
acknowledged in writing by the person to whom it is delivered. A notice that is
sent by mail will be deemed given three (3) business days after it is mailed.
Any party may designate, by notice to all of the others, substitute addresses or
addresses for notices; and, thereafter, notices are to be directed to those
substitute addresses or addressees.
IX.3 SPECIFIC PERFORMANCE. The parties recognize that irreparable
---- ====================
injury will result from a breach of any provision of this Agreement and that
money damages will be inadequate to fully remedy the injury. Accordingly, in the
event of a breach or threatened breach of one or more of the provisions of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more preliminary or
permanent orders 1. restraining and enjoining any act which would constitute a
breach or 2. compelling the performance of any obligation which, if not
performed, would constitute a breach.
IX.4 COMPLETE AGREEMENT. This Agreement constitutes the complete
---- ==================
and exclusive statement of the agreement among the Company and the original
Member. It supersedes all prior written and oral statements, including any prior
representation, statement, condition, or warranty. Except as expressly provided
otherwise herein, this Agreement may not be amended without the written consent
of all of the Members.
IX.5 APPLICABLE LAW. All questions concerning the construction,
---- ================
validity, and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal law, not
the law of conflicts, of the State of Delaware.
IX.6 SECTION TITLES. The headings herein are inserted as a matter of
---- ===============
convenience only, and do not define, limit or describe the scope of this
Agreement or the intent of the provisions hereof.
IX.7 BINDING PROVISIONS. This Agreement is binding upon, and inures to
---- ==================
the benefit of, the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, Successors, and permitted
assigns.
IX.8 JURISDICTION AND VENUE. Any suit involving any dispute or matter
---- =======================
arising under this Agreement may only be brought in the United States District
Court for the District of Delaware or any Delaware State Court having
jurisdiction over the subject matter of the dispute or matter. All Members
hereby consent to the exercise of personal jurisdiction by any such court with
respect to any such proceeding.
IX.9 TERMS. Common nouns and pronouns shall be deemed to refer to the
---- =====
masculine, feminine, neuter, singular and plural, as the identity of the Person
may in the context require.
IX.10 SEPARABILITY OF PROVISIONS. Each provision of this Agreement
----- ==========================
shall be considered separable; and if, for any reason, any provision or
provisions herein are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.
7
IX.11 COUNTERPARTS. This Agreement may be executed simultaneously
----- ============
in two or more counterparts each of which shall be deemed an original, and all
of which, when taken together, constitute one and the same document. The
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
IN WITNESS WHEREOF, the parties have executed, or caused this Agreement
to be executed, under seal, as of the date set forth hereinabove.
WITNESS OR ATTEST:
=================
POINT WEST SECURITIES, LLC
By: Michael Gallo
------------------------
Managing Director
POINT WEST CAPITAL CORPORATION
By: Alan B. Perper
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President
8
Exhibit A
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Point West Capital Corporation
1700 Montgomery Street, Suite 250
San Francisco, CA 94111
EIN: 94-3165263
Percentage of Member: 100%
9
Exhibit B
3.1 INITIAL CAPITAL CONTRIBUTIONS.
Cash contribution to Point West Securities, LLC
$250,000
10