Operating Agreement
of
10 SOUTH 45
a Michigan Limited Liability Company
Effective: May 1, 2008
Explanatory Statement: The members signed below have decided to
organize and operate a limited liability company according to the terms
and conditions of this agreement.
Now, therefore, the terms and conditions are as follows:
Section 1: Defined Terms
COMPANY means 10 SOUTH 45 LLC.
MEMBER means any person signing this agreement and any person who is subsequently admitted who has not withdrawn.
WITHDRAWAL means a member’s dissociation from the company by any means.
PERSON means any individual, corporation, entity or estate that operates with respect to this agreement.
SHARE means a fraction of the total ownership of the company. All individual shares are equal and have the same rights.
SHARE PERCENTAGE means the total number of shares held by any member,
divided by the total number of shares held by all members and
multiplied by 100 in order to obtain a percentage.
MAJORITY means any amount more than 50%.
SUPER MAJORITY means any amount equal to, or greater than 66%.
COMMON USE means those weeks of property use which are open to all
members, the costs of operation to be born by 10 SOUTH 45 LLC.
AVAILABLE DAYS means three hundred and sixty-five (365) days a year
minus those allocated for common use and the use of Barbara Ann Malocha
presently of Saginaw, Michigan.
PUT OPTION means the right of a member to divest in whole or in part from their shares of the company.
CALL OPTION means the right of the company to buy back shares of the company from an owner.
FAIR MARKET VALUE means the amount determined in accordance with section 2 of this document.
PROPERTY means all real estate, buildings and goods owned by 10 SOUTH 45 LLC.
UNADMITTED INTERESTED PARTY means any person who is not a member, but
owns a number of shares in the company. Such parties are not
entitled to management rights or membership privileges and their shares
are not factored into share percentage calculations.
Section 2: Membership
2.1 A list of the members of this company will be kept and updated as Attachment A of this agreement.
2.2 All persons admitted as members are entitled to management rights
as specified in section 5 and membership privileges as specified in
section 10.
2.3 Members may exercise a put option with one year notice to the
rest of the membership. The company will purchase from the member
all put option shares at fair market value and may opt to do so
outright, or under the following terms: 20% down with up to fifteen
years to pay the remainder at the National Mortgage Contract Interest
Rate in effect at the time the put is exercised. In no case,
shall the company be required to fulfill one put option while any other
put option is still under contract.
2.4 The company may exercise a call option for any member that is more
than one year in arrears for any amount owed . Such a call option
will cause a member to sell to the company at least half of their
shares to pay off the indebtedness. If that member is so called a
second time, the remainder of their shares will be called.
2.5 If the company exercises any call option, it will do so at seventy-five percent (75%) of a share's fair market value.
2.6 Fair market value of a share will be determined by competent
appraisal(s) of the whole property (the owner or member who puts or is
called may obtain one at their own expense, the other will be obtained
by 10 SOUTH 45 LLC at its expense) and averaging
them. A competent appraisal is one that is performed by an
MAI or Member of the Appraisal Institute. The averaged value will
then be added to amount of cash held on deposit by the company and have
from that sum the amount of company indebtedness subtracted. That
new total will then be divided by the total number of shares to arrive
at a price per share. An owner or member may opt to use an
appraisal obtained previously, provided that no more than two (2) years
have elapsed and the property remains in the same condition with
the same buildings and developments. The fair market value of the
property may also be established by unanimous consent of the membership.
2.7 By unanimous consent of the membership, any share may be offered
and transferred from a willing member to a successor member without
recourse to the rest of this section. In every event current
members will be given the right of first refusal before new members are
able to purchase shares of the company.
2.8 No person shall become a member of this company as a result of
court judgment or civil action. In the event of a member’s
shares being surrendered, or divided by a court of law, beneficiaries
of said actions will become unadmitted interested parties or assignees
without benefit of membership, and shall be entitled to profit, loss
and distribution according to their fractional share, but shall be
wholly without recourse to the management of the property as indicated
in section 5 and shall not be entitled to property use as outlined in
section 10.
2.9 All unadmitted interested parties and assignees can be subject to a
call option upon the demand of the company at any time without recourse.
Section 3: Capital
3.1 The initial members will contribute to the company the sum of
one thousand dollars ($1000.00) and relinquish any subsequent claim to
any part of the property described below, except that determined by
fractional share.
3.2 No member or owner shall have any personal liability for any obligations of the Company.
3.3 Any member may, at anytime, make or cause a loan to be made
to the company in any amount and upon those terms that the company and
the member agree, in an amount limited to five hundred ($500) dollars.
Section 4: Profit, Loss and Distributions
All profit, loss and distributions will be allocated by percentage of ownership.
Section 5: Management
5.1 The company will be managed by majority vote of the membership
except in those specific cases which require a super majority or
unanimity.
5.2 In all issues, decisions, and votes that come before the
membership, every member will be entitled to cast a number of votes
equal to the number of shares owned. Record of ownership shares
will be kept and updated in Attachment A.
5.3 In the event of any unresolved tie vote, Barbara Ann Malocha will
be entitled to cast one (1) vote to determine a course of action.
Nothing in this subsection will be construed to provide Barbara Ann
Malocha with company membership outside of regular means. If
Barbara Ann Malocha becomes a member through any subsequent means, this
subsection will be invalidated and her votes shall be tallied as any
other member.
5.4. All members will be required to render certain personal services
as decided on by the membership in consideration of the allocation of
profits and the continued use of the property, including but not
limited to maintenance, cleaning and/or to bear a share percentage cost
of the same.
5.5 Members who do not abide by the rules of the agreement will be
responsible to 10 SOUTH 45 LLC for the costs of their infraction,
plus any fines decided on by a vote of the remaining members.
5.6 In all meetings of the membership a super-majority will be
considered a quorum (provided all members have been given 30 days
notice of the meeting) and a chairman will be elected from among the
membership.
5.7 Meetings of the membership may take place on an electronic chat
room, bulletin board, conference call or other medium that may become
available.
Section 6. Acceptable Use
6.1 Property belonging to 10 SOUTH 45 LLC will be kept and
procured for the common good of all its members and subject to the
following regulations.
6.2 No trees will be cut, nor land cleared, nor major landscape
altered, nor buildings raised nor razed except as provided by super
majority vote or when necessary due to catastrophe as determined in
section 12 following.
6.3 There will be no smoking in the house at 2758 Woodlands Way, at any
time by any member or member's guest. Smoking is permitted in the
garage or on the porch.
6.4 The amenities listed in Attachment B will be kept on premises at a cost to be born by 10 SOUTH 45 LLC.
6.5 The services listed in Attachment C will be retained for the
benefit of members and their guests at a cost to be born by 10 SOUTH
45 LLC.
6.6 No pets will be kept nor harbored in the house at 2758 Woodlands Way at any time.
6.7 The members that reserve a given block of time will be responsible
for leaving the property in the condition specified in Attachment E at
the end of their time there. Members will be held responsible for
the actions of their guests. Failure to leave the property in
said condition may result in the member being fined so as to cover the
cost of professional cleaning.
Section 7. Dissolution
7.1 Unless a unanimous vote of the membership decides otherwise, this
company shall dissolve two (2) calendar years after it is founded.
7.2 Unless a unanimous vote of the membership decides otherwise, this
company shall dissolve five (5) calendar years after it is founded.
7.3 Beyond the fifth year, the company shall only be dissolved by super-majority consent of the members.
7.4 If the company is dissolved, 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 owners of
the Company in proportion to their fractional share.
7.5 If the Company is dissolved, Articles of Dissolution shall be
promptly filed with the State. If there are no remaining Members, the
Articles shall be filed by the last Person to be a Member.
Section 8. Accounting
8.1 All funds of the Company shall be deposited in a bank account or accounts opened in the Company’s name.
8.2 The annual accounting period of the Company shall be the calendar year.
8.3 Disbursements from the account will require two signatures.
Section 9. Disputes
9.1 All questions concerning the construction, validity and
interpretation of this agreement and the performance of the obligations
imposed by this agreement shall be governed internally wherever
possible and by arbitration under the rules adopted by the American
Arbitration Association and the Michigan Association of Realtors
wherever it is not.
9.2 This agreement is binding upon, and inures to the benefit of the
members, their heirs, executors, administrators, personal and legal
representatives, successors, and permitted assigns.
9.3 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 these Regulations which are valid.
9.4 Amendments to this agreement (except for the attachments attached) can be made by unanimous votes of the membership.
9.5 Amendments to attachment A can only be made with respect to sections 2 and 3 of this agreement.
9.6 Amendments to attachments B and C and D can be made by majority vote and the time requirement shall be 30 days notice.
Section 10. Membership Privilege
10.1 Each member shall have the right to exclusive use of the property
according to share percentage. Exclusive use of the property will
include personally visiting, inviting guests to stay in their stead, or
allowing it to sit vacant without recourse or justification to the rest
of the membership. To determine the number of days usable by a
member, the individual share percentage will be multiplied times the
number of available days and rounded down to the nearest whole
day. Whole days leftover as a result of this rounding will revert
to common use.
10.2 Notwithstanding the intended or actual use, the member shall remit
to 10 SOUTH 45 LLC the annual operating assessment based on their
share percentage.
10.3 Each member will be responsible to 10 SOUTH 45 LLC for any
non-routine costs or damages that occur during a day of use. The
definition of non-routine costs and damages will be determined on a
case by case basis by a majority vote of the remaining members.
10.4 Fourteen (14) days are reserved for the use of Barbara Ann
Malocha. Upon Barbara’s death or subsequent enrollment as a
member, those days may revert to days allocated to common use or be
placed into the pool of available days, depending on the majority vote
of the membership.
10.5 Initially, there are fourteen (14) days allocated for common use,
seven (7) of which will be the week that encompasses Easter Sunday.
10.6 Except for the first year or partial year that the company is in
business, available use will be distributed according to a yearly draft
held during the Fall of each year. The draft will be conducted
according to section 11 of this agreement. During the first year
that the company is in business another system may be used.
10.7 As a matter of courtesy the members shall notify 10 SOUTH
45 LLC of any friends and guests who visit the property when that
member is not personally present.
Section 11. The Draft
11.1 The draft will be take place on a yearly basis. Days must be
used in whole week increments, whenever enough shares are held to do
so.
11.2 A calendar will be produced for the year following and maintained by a person selected by the membership.
11.3 For purposes of this agreement, a week begins at 3 pm on Tuesday
afternoon. The days held in common will be determined first, and
the calendar filled accordingly.
11.4 The initial draft list will be drawn up from Attachment A
indicating the members of the company. With respect to this
initial list, the membership shall be listed by drawing lots.
11.5 The first name on the draft list shall pick one (1) week, followed
by the second name on the draft list and so on until the last name on
the list is reached. The last name on the draft list shall then
pick two (2) weeks of use, if eligible. After those two weeks are
picked, the round is over. The second round then begins in
reverse order with the second-to-last name and rising up toward the
first name. The first name shall end that second round by picking
twice, if eligible. The draft list will work down again beginning
with the second name and continuing to the last eligible name.
The picks will continue in this fashion until all of the members have
exhausted their picks.
11.6 Barbara Ann Malocha shall have her two (2) weeks picked from what
is left after the members have exhausted their picks, unless she
subsequently becomes a member. In which case, the section shall
be invalidated.
11.7 After the draft is concluded, the names and weeks shall be
recorded on the calendar and kept conspicuously. Then the first
name on the draft list shall fall to the bottom of the list and that
amended list shall be kept for the following year by a person selected
by the membership to do so.
11.8 Nothing in this section shall preclude members from trading
and bargaining for draft picks as they see fit and in consideration of
other matters that come before them,
11.9 New members of the company will have their names placed at
the bottom of the draft list in the order that they are admitted to the
company, and shall rise up through the list as it rotates each year.
Section 12. Insurance, repairs, maintenance and catastrophic events
12.1 The members shall insure the property sufficiently.
12.2 Repairs to the property shall be conducted as soon as practical at
a cost and time to be determined by the majority of the
membership. Whenever the majority of the membership is not
available, three quotes for work should be obtained with the work going
to the middle bidder.
12.3 The costs of repairs due to negligence will be born by the member
responsible for the time that the damage occurred. The definition
of negligence will be determined by majority vote of the membership on
a case by case basis. During common weeks, the cost will be born
by 10 SOUTH 45 LLC.
12.4 The costs of routine maintenance will be performed by the members
or caused to be performed by the members at a cost to be born by 10
SOUTH 45 LLC. The definition of routine will be determined
by majority vote of the membership on a case by case basis.
12.5 10 SOUTH 45 LLC shall hold its excess funds on deposit and
not distribute them to the members unless they exceed twenty-thousand
dollars ($20,000.00) and only in the amount of excess and only
according to share percentage and only at the end of the calendar year.
12.6 The annual operating assessment will be derived by using the
previous years' operating costs, plus a comfort margin decided by
majority vote of the membership, the sum of which will divided by the
number of total shares owned.
12.7 Operating costs shall include the amenities of attachment B, the
services of attachment C, property taxes and assessments, plus routine
maintenance and repairs.
Attachment A: A list of members and unadmitted interested parties
Name
Shares Owned
Share Percentage
Lynnette Marie Bilbro
100
20%
Stanley Anthony Baugh Sr.
100
20%
Theadora Jo Felice
100
20%
Edward Thomas Daniel Baugh
100
20%
Kathleen Margaret Hernandez
100
20%
TOTAL
500
Attachment B: Amenities
The cost for the following list of amenities maintained for the common
good of the members will be born by 10 SOUTH 45 LLC. This
list may be altered or amended by a simple majority vote of the
membership.
Telephone with local service.
Cable television.
Electrical service.
Natural Gas service.
Heating.
In-house access to potable water.
Flush toilets via a septic system.
Attachment C: Services
The cost for the following list of services obtained for the common
good of the members will be born by 10 SOUTH 45 LLC. This
list may be altered or amended by a simple majority vote of the
membership.
Snow plowing and removal.
Regular trash pickup.
Landscaping.
Attachment D: Checklist
Each member will be responsible for ensuring that the property will be
left in appropriate condition at the end of their block of time,
whether or not that member is actually personally present, or
not. The following checklist will be used to determine what is
"appropriate". This checklist may be amended by a majority
vote of the membership.
(The ladies are to submit a formal checklist, room by room, that the rest of the company will adhere to.)