"Those of you who think Tom's gonna screw us, do you think there are a lot of locals gonna get shafted too, or did Tom tell them not to buy the stock"
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Is it possible that Tom's friends, and the "locals" are not
invested in the stock itself, but rather in SEAWAY VALLEY FUND, LLC. There must be a reason Tom set up this company.
Please read the filing, comments welcome.
SEAWAY VALLEY FUND, LLC,
a Delaware limited liability company
THIS SECOND AMENDED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the "Agreement") is made on July 1, 2007 to amend the original August 14, 2002 (and amended July 1, 2003) LIMITED LIABILITY OPERATING AGREEMENT by and among Seaway Valley Capital Corporation, a Delaware corporation, as the manager (the "Manager") and those persons executing this Agreement as members, whether in counterpart or by separate instrument or otherwise, (collectively referred to as the "Members" and singularly as a "Member"). The Manager and Members hereby form a limited liability company (the "Company") under the Delaware Limited Liability Company Act, as amended from time to time (the "Act").
W I T N E S S E T H:
WHEREAS, the Manager authorized the formation of the Company for the purposes described in Article 2.5 below; and
WHEREAS, the Members and the Manager desire to enter into this Agreement to define their respective rights and liabilities and to state their agreement regarding owning and dealing with the assets of the Company.
AGREEMENT:
NOW, THEREFORE, to state the entire agreement of the Members and the Manager with respect to their respective rights and obligations as Members and as Manager and with respect to the Company and its affairs, and in consideration of these premises, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
In this Agreement, the following terms, unless the context otherwise requires, have the meanings indicated:
"Accountant" means the certified public accountant or firm of certified public accountants, if any, selected by the Manager, to perform certain accounting functions on behalf of the Company.
"Accredited Investor" means any Person who qualifies as an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended.
"Act" means the Delaware Revised Uniform Limited Liability Company Act, as amended and as hereafter amended, or any successor law.
"Advisers Act" means the Investment Advisers Act of 1940, as amended and as hereafter amended, or any successor law.
"Advisory Board" has the meaning set forth in Article 4.2.
"Affiliate" means, with respect to any person, (i) any Person directly or indirectly controlling, controlled by, or under common control with such Person, or (ii) a Person directly or indirectly owning, controlling, or having beneficial interest in more than fifty percent (50%) of the outstanding voting securities or interests of a Person identified in clause (i). As used in this definition of Affiliate, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities of Company interest, by contract, or otherwise.
"Agreement" means this Limited Liability Company Operating Agreement, as amended from time to time.
"Annual Financial Statement" has the meaning set forth in Article 7.1
"Approval of the Members" or "Approved by the Members" means the affirmative approval of Members then entitled to vote, who hold more than 50% of the issued and outstanding Membership Units, including, without limitation, Members who are Affiliates of the Manager.
"Approval of the Nonaffiliated Members" or "Approval by the Nonaffiliated Members" means the affirmative approval of Members then entitled to vote, who hold more than 50% of the issued and outstanding Membership Units, excluding the Members who are Affiliates of the Manager at the time of determination or, if such approval is made in connection with a dissolution or liquidation of the Company, the last remaining Manager.
"Bankruptcy" means, for any Member, that Member's taking or acquiescing in the taking of an action seeking relief under, or advantage of, an applicable debtor relief, liquidation, receivership, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization, or similar law affecting the rights or remedies of creditors generally, as in effect from time to time (the term "acquiescing" including, without limitation, the failure to file, within twenty
(20) days after its entry, a petition, answer, or motion to vacate or to discharge an order, judgment, or decree providing for any such relief).
"Capital Account" or "Member's Capital Account" means with respect to each Member the capital account established and maintained on behalf of such Member as described in, Article 3.3.
"Capital Contribution" means, with respect to any Member on any date, the amount of money, and the reasonable value of Securities, property and services that have been contributed to the Company by that Member on or by that date in exchange for Membership Units.
"Cause" means (a) a determination by a vote of Members holding a majority of outstanding Membership Units that the Manager has acted with gross negligence or willful malfeasance in the performance of its obligations under this Agreement or (b) a conviction of the Manager in a court of competent jurisdiction of any criminal act involving fraud.
"Covered Person" has the meaning set forth in Article 4.8.
"Certificate" means the Certificate of Formation referred to in Article 2.1.
"Closing Date" means the first date as of which one or more Members are admitted to the Company.
"Code" means the Internal Revenue Code of 1986, as amended and as hereafter amended, or any successor law.
"Company" means the limited liability company formed pursuant to this Agreement (i.e. the Seaway Valley Fund, LLC) and the business organization continuing the business of the Company in the event of dissolution as herein provided.
"Fiscal Period" means each period which starts on the day immediately following the last day of the preceding Fiscal Period, and which ends on the first to occur of the following dates:
(a) the last day of any calendar month;
(b) any date as of which any withdrawal or distribution of capital is made by or to any Members or as of which this Agreement provides for any amount to be debited against the Capital Account of any Member, other than a withdrawal or distribution by or to, or an allocation to the Capital Accounts of, all Members which does not result in any change of any Member's Company Percentage; or
(c) the date which immediately precedes any date as of which a contribution to capital is accepted by the Company from any new or existing Member or as of which this Agreement provides for any amount to be credited to the Capital Account of any Member, other than an allocation to the Capital Accounts of all Members which does not result in any change of any Member's Membership Percentage.
"Fiscal Year" means each period commencing on January 1st of each year and ending on December 31st of each year (or on the date of a final distribution pursuant to Article 6.1(a)(iii)), unless the Manager shall elect another fiscal year for the Company which is a permissible tax year under the Code.
"Interest" means the rights and obligations of a Member under this Agreement and the Act attributable to each Membership Unit.
"Investment" means the purchase by the Company in any Security.
"Investment Committee" has the meaning set forth in Article 4.2.
"Loss Carryforward Account" means a memorandum account to be recorded in the books and records of the Company with respect to each Member, which shall have an initial balance of zero and which shall be adjusted as follows:
(a) As of the first day following the close of each Performance Period for such Member, the balance of the Loss Carryforward Account shall be increased by the amount, if any, of such Member's Negative Performance Change for such Performance Period and shall be reduced (but not below zero) by the amount, if any, of such Member's Positive Performance Change for such Performance Period.
(b) As of the close of any Performance Period during which the Capital Account of any Member is reduced as the result of any withdrawal or distribution of capital, any positive balance of the Loss Carryforward Account shall be reduced (but not below zero) by an amount determined by multiplying (i) such positive balance by (ii) a fraction, of which (A) the numerator is equal to the amount of such withdrawal or distribution, and (B) the denominator is equal to the balance of such Member's Capital Account immediately before giving effect to such withdrawal or distribution, and by multiplying the resulting amount by
(iii) a fraction, of which (A) the numerator is equal to the number of days from the date on which such withdrawal or distribution is effective through the close of the Performance Period in which such withdrawal or distribution was made and (B) the denominator is equal to the total number of days in such Performance Period. Solely for the purposes of the foregoing adjustment, any withdrawal or distribution which is effective on the last day of the immediately preceding Performance Period shall be treated as a withdrawal or distribution effective on the first day of the current Performance Period. In the case of any adjustment which is based on a withdrawal or distribution effective (or deemed effective) as of any date other than the commencement of such Performance Period, a further adjustment shall be made to the Loss Carryforward Account as of the first day of the subsequent Performance Period by reducing any positive balance therein (but not below zero) by an amount determined by multiplying the amount referred to in clause (i) by the fraction referred to in clause (ii) and by multiplying the resulting amount by the difference between one
(1) and the fraction referred to in clause (iii).
No transferee of any interest in the Company (other than a successor to an interest as a result of an involuntary transfer by operation of law) shall succeed to any Loss Carryforward Account balance or portion thereof attributable to the transferor without the express prior consent of the Manager.
"Manager" means, initially, Seaway Valley Capital Corporation, a corporation organized in Delaware and currently operating in New York, and any successor to the Manager.
"Manager Unit" means the rights and obligations of the Manager under this Agreement.
"Managed Account" means any assets or investment of the Manager, or any assets managed by the Manager for the account of any third party, which are invested or available for investment in investment or trading activities whether or not of the specific type being conducted by the Company.
"Management Fee" means, with respect to each Member, an amount equal to one-half of one percent (0.5%) of the value of the Capital Account of such Member calculated and payable in advance as of the first business day of each quarter (after taking into account the allocation of net profit or net loss and withdrawals or distributions or other allocations to such Member's Capital Account effective as of the end of the preceding quarter and capital contributions as of the beginning of the current quarter). In the case of a Member who is admitted (or if a previously admitted Member contributes additional capital) to the Company on a day which is not the first day of a calendar quarter (that is, not the first day of January, April, July or October) or who withdraws from the Company prior to the last day of a calendar quarter, the Management Fee for such quarter shall be prorated to reflect the number of days during which such Member was a Member. Manager may waive the Management Fee for any Member for any period.
"Member" means any Person who signs this Agreement as a Member and any Person who has become an additional or substituted member of the Company pursuant to this Agreement; provided such Person has not ceased to be a member pursuant to this Agreement. "Members" means all such Persons.
"Membership Percentage" means a percentage established for each Member on the Company's books as of the first day of each Fiscal Period. The Membership Percentage of a Member for a Fiscal Period shall be determined by dividing the amount of the Member's Capital Account as of the beginning of the Fiscal Period (after adjustment for any contributions to the capital of the Company which are effective on such date) by the sum of the Capital Accounts of all of the Members as of the beginning of the Fiscal Period (after adjustment for any contributions to the capital of the Company which are effective on such date). The sum of the Membership Percentages of all Members for each Fiscal Period shall equal one hundred percent (100%).
"Membership Unit" means, with respect to each Member, the Interest held by that Member and representing a Capital Contribution of $1.00 per Unit.
"Net Assets" means the total value, as determined by the Manager in accordance with Article 7.2, of all Securities and other assets of the Company (including net unrealized appreciation or depreciation of Securities and accrued interest and dividends receivable net of withholding taxes), less an amount equal to all accrued debts, liabilities and obligations of the Company (including any reserves for contingencies accrued pursuant to Article 3.6). Except as otherwise expressly provided herein, Net Assets as of the first day of any Fiscal Period shall be determined on the basis of the valuation of assets conducted as of the close of the immediately preceding Fiscal Period but after giving effect to (i) any of the amounts set forth in (a) or (b) below payable by the Company which are effective as of the close of such immediately preceding Fiscal Period and
(ii) any capital contributions made by any Member subsequent to the last day of such immediately preceding Fiscal Period, and before giving effect to any Management Fees accruing as of the first day of the current Fiscal Period; and Net Assets as of the last day of any Fiscal Period shall be determined before giving effect to any of the following amounts payable by the Company which are effective as of the date on which such determination is made:
(a) any withdrawals or distributions payable to any Member which are effective as of the date on which such determination is made; and
(b) withholding taxes and other items payable, and any increases or decreases in any reserves or other amounts recorded pursuant to Article 3.6, during the Fiscal Period ending as of the date on which such determination is made, to the extent the Manager determines that, pursuant to any provisions of this Agreement, such items are not to be charged ratably to the Capital Accounts of all Members on the basis of their respective Member Percentages as of the commencement of the Fiscal Period.
"Net Loss" means the excess of the Net Assets on the first day of a Fiscal Period over the Net Assets on the last day of the same Fiscal Period.
"Net Profit" means the excess of the Net Assets on the last day of a Fiscal Period over the Net Assets on the first day of the same Fiscal Period.
"Offering Memorandum" means the Confidential Offering Memorandum of this Company, as amended from time to time, relating to the offering of Membership Units in the Company.
"Person" means any corporation, partnership, limited liability company, co-tenancy, joint venture, trust, individual, or any other legal entity, whether or not a party to this Agreement.
"Performance Allocation" means with respect to any Member twenty percent (20%) of the amount, determined as of the close of each Performance Period with respect to each Member, by which such Member's Positive Performance Change for such Performance Period, if any, exceeds any positive balance in such Member's Loss Carryforward Account as of the close of such Performance Period after all adjustments thereto effective as of such date. If a Performance Period shall end on a date other than at the end of a Fiscal Year solely due to a partial withdrawal by a Member on such date, then the Performance Period shall be deemed to have ended only with respect to the portion of such Member's Capital Account withdrawn on such date and the Performance Allocation otherwise due shall be prorated by multiplying the Performance Allocation by the fraction referred to in clause (ii) of the definition of Loss Carryforward Account.
"Performance Change" means, with respect to each Member for each Performance Period, any amount by which:
(a) the sum of (i) the balance of such Member's Capital Account as of the close of the Performance Period (after giving effect to all allocations to be made to such Member's Capital Account as of such date other than any Performance Allocation to be debited against such Member's Capital Account), plus (ii) any debits to such Member's Capital Account during the Performance Period to reflect any actual or deemed distributions or withdrawals with respect to such Member's interest, plus (iii) any debits to such Member's Capital Account during the Performance Period to reflect any items allocable to such Member's Capital Account pursuant to Article 3.5 hereof other than Management Fees;
exceeds:
(b) the sum of (i) the balance of, such Member's Capital Account as of the commencement of the Performance Period, plus (ii) any credits to such Member's Capital Account during the Performance Period to reflect any contributions by such Member to the capital of the Company.
If the amount specified in clause (a) exceeds the amount specified in clause
(b), such difference shall be a 'Positive Performance Change", and if the amount specified in clause (b) exceeds the amount specified in clause (a), such difference shall be a "Negative Performance Change."
"Performance Period" means, with respect to each Member, the initial period commencing as of the date of admission of such Member to the Company, and thereafter each period commencing as of the day following the last day of the preceding Performance Period with respect to such Member, and ending at the close of business on the first to occur of the following:
(a) the last day of a Fiscal Year;
(b) the day as of which such Member withdraws all or part of his interest in the Company; and
(c) the day as of which the Company admits as a substituted Member a person to whom the entire interest of such Member in the Company has been Transferred.
"Record Date" means (i) in the event of any sale of Securities, the date of such sale or (ii) in the event of any other event requiring a determination of the Fair Market Value of Securities, the date set by the Manager which is not fewer than ten nor more than fifteen Business Days prior to such determination.
"Regulations" means the Income Tax Regulations, including temporary regulations, promulgated under the Code, as those regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
"Securities" means publicly traded or privately placed securities of any kind (including, without limitations "securities" as that term is defined in Article 2(l) of the Securities Act of 1933, as amended); any contracts for future or forward delivery of any security, commodity or currency; any contracts based on any securities or currency index or group of securities or currencies; any evidences of indebtedness (including participations in or assignments of bank loans or trade credit claims); any options to acquire any of the above; and any derivative instrument of any kind.
"Security" means the singular of Securities.
"Schedule of Members" means a schedule to be maintained by the Manager in accordance with this Agreement showing the name, address, date of admission, classification as Member, amount of initial capital contribution and of any additional capital contribution, subsequent capital contribution, amount of any withdrawal and amount of any transfer with respect to each Member.
"Transfer" means any sale, exchange, transfer, assignment, pledge or granting of another form of security interest or other disposition by a Member of all or a part of an interest in the Membership Unit to another party, whether voluntary or involuntary.
"Withdrawal Event" has the meaning set forth in Article 5.5.
All defined terms used in this Agreement that are not defined in this Article 1 have the meanings given to them elsewhere in this Agreement.
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