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NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020
Exhibit 3
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OPERATING AGREEMENT
OF
LYNCREST GARDENS CO., LLC
OPERATING AGREEMENT, nade as of this day of , 1996,
among Jacqueline Slepoy Trust, Arline Slepoy, Trustee, with an
address at .1303 Harbor Road, Hewlett, New York 11557; Estate of
Rubin Chait, Seymour Chait and Arlene Estrin, Executors with an
address at 3025 Timothy Road, Bellmore, New York 11710; Doris Kern,
with an address at 20379 W. Country Club Drive, No. Miami Beach,
Florida 33180; Herbert Slepoy, Grantor, with an address at 104
South Central Avenue, Room 20, Valley Stream, New York 11580; Myrna
Dauer, with an address at 360 East 72nd Street, Apt. 709B, New
York, New York 10021; Meryle Rosenzweig, with an address at 7
Hallmark Drive, New City, New York 10956; Andrew Slepoy, with an
address at 104 South Central Avenue, Room 20, Valley Stream, New
York 11580; William Slepoy, with an address at 104 South Central
Avenue, Room 20, Valley Stream, New York 11580; Stephen Gardner,
with an address at 1 Wesley Court North, Huntington, New York
11743; and Wendy Bicknell, with an address at 66 Seabury Point
Road, Duxbury, Massachusetts 02332 (said individuals are
"Member"
hereinafter individually referred to as a and collectively
referred as the "Members"); and Herbert Slepoy.
H I I N E S S E I H:
WHEREAS, the Members have previously conducted business as
members of a partnership under the name Lyncrest Gardens Co. (the
"Partnership") pursuant to the laws of the State of New York;
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. -
WHEREAS, the Members now desire to conduct business as members
of a limited liability company pursuant to the laws of the State of
New York.
WHEREAS, all the Members have approved and executed a
Conversion Agreement setting forth the terms and conditions of the
conversion of the interests of the Members as partners in the
Partnership into membership interests in the limited liability
company.
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and representations set forth herein the parties hereto
hereby agree as follows:
1. Name. The name of the limited liability company is
Lyncrest Gardens Co., LLC (the "LLC"). The Members have caused to
be filed with the Department of State of New York a Certificate of
Conversion for the LLC and shall hereafter satisfy all other
requirements of the New York Limited Liability Company Law to
conduct the business of the LLC in the state of New York.
2. Office. The principal office(s) of the LLC is 104 South
Central Avenue, Suite 20, Valley Stream, New York 11580-5461 or
such other place or places as the Members shall determine. ·
3. Business. The business of the LLC shall be to:
(a) own, manage and operate that certain real property
located at 230 Atlantic Avenue, East Rockaway, New York 11518 (the
"Property") ;
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(b) hold, maintain, lease, alter, perform construction
with respect to, develop, rehabilitate, subdivide, sell, exchange,
dispose of or otherwise take ·such action as the Members shall
determine with respect to the Property;
(c) borrow money and issue evidence of indebtedness in
furtherance of any or all of the objectives of its business, and to
secure the same by mortgage pledge or other liens;
(d) enter, perform and carry out contracts or take
action of any kind necessary to, in connection with, or incidental
to, the accomplishment of the foregoing purposes;
(e) engage in any other lawful act or activity as all
the Members shall determine; and
(f) from time to time, to do any one or more of the
things and acts set forth herein.
4. Term. The term of the LLC shall continue until terminated
as hereinafter provided.
5. Canital and Loans,
5.1 Each Member has previously contributed to the
P.artnership such capital as is reflected in the books and records
of the LLC. Upon the recommendation of the Managers, the Members
may, by a vote of 2/3 in interest of the Members, request that the
Members contribute such additional capital, on a pro rata basis in
proportion to their respective Membership Interests set forth in
Section 6 hereof, as the Members shall, in good faith, determine to
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be required to accomplish the purposes of the LLC. If all Members
contribute their proportionate share of such additional capital,
such amounts shall be treated as additional capital contributions.
However, if less than all Members contribute their proportionate
shares of such additional capital, then all such amounts paid by
the Members shall not be considered as additional capital but
instead shall be treated as loans (each a "Member Loan") from each
contributing Member to the LLC. The Member Loans shall be valid
debts of the LLC and shall be repaid, together with interest, at
the rate per annum equal to 28 above the prime rate published in
the Wall Street Journal (as modified from time to time), out of
available cash flow of the LLC and in any event before any
distributions (whether from cash flow, Distribution Proceeds or
otherwise) are made to any Member. Any amounts available to repay
any Member Loan shall be paid to the respective lenders in
proportion to the outstanding amount of all such loans and all
repayments shall be applied first to outstanding interest on such
loans and then to the outstanding principal balance.
5.2 An individual capital account is maintained for each
Member. Each Member's capital account shall be increased by (i)
such Member's additional contributions to the capital of the LLC,
if any, and (ii) such Member's share of the net profits of the LLC
and decreased by (i) distributions to such Member by the LLC, (ii)
such Member's distributive share of net losses of the LLC and (iii)
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--
such Member's distributive share of expenditures of the LLC not
deductible in computing net profits or losses and not properly.
treated as capital expenditures.
5.3 No interest shall be paid by the LLC on the capital
contributions of the Members and no Member shall, except as
otherwise provided herein, have the right to withdraw, or demand a
refund or return of, all or any part of his capital contributions,
.or receive or demand property other than cash.
6. Eiscal Year; Profits and Losses; Distributions.
6.1 The fiscal year of the LLC shall be the calendar
year.
6.2 All net profits, net losses, credits, deductions and
all other items of the LLC shall be allocated to, or be borne by,
the Members in accordance with the following fractional interests
(the "Membership Interests"):
Name Membership Interest
Jacqueline Slepoy Trust,
Arline Slepoy Trustee 1.6304%
Estate of Rubin Chait,
Seymour Chait and Arlene
Estrin, Executors 33.3334%
Doris Kern 9.4808%
Herbert Slepoy, Grantor 18.9615%
Myrna Dauer 7.1859%
Meryle Rosenzweig 7.1859%
Andrew Slepoy 1.6303%
William Slepoy 1.63C3%
Stephen Gardner 9.48075%
Bicknell 9.48075%
Wendy
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6.3 Distributions of net cash flow of the LLC, if any,
less such reasonable reserves as the Managers (as hereinafter
defined) shall determine to be necessary for present operations
and/or future contingencies, shall be made at such times as agreed
upon by the Managers. For purposes hereof, net cash flow shall be
the net profits or losses of the LLC for the fiscal year as
determined by the LLC's accountants plus there shall be added back
to the net profits or losses the amount deducted during such period
for depreciation and there shall be subtracted an amount equal to
the total paid during such period for mortgage amortization and
capital improvements. In determining net cash flow the LLC's
accountants shall make any other adjustments that are appropriate
including, without limitation, adjustments relating to timing of
items such as the payment of an expense in a period that was
accrued in a prior period but was theretofore unpaid. Net cash
flow shall be distributed in proportion to each Member's Membership
Interest; provided however that all Member Loans together with
interest thereon shall be repaid prior to the distribution of cash
flow to any Member.
6.4 The net cash proceeds (herein referred to as
"Distribution Proceeds") resulting from the refinancing of any
mortgage, or the sale, condemnation (or similar eminent domain
taking), exchange, casualty or other dispositio.n of the Property or
a substantial part of the Property or from the liquidation of the
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assets of the LLC following a dissolution thereof, which are not
reinvested or retained by the LLC for the continuation of its
business, and after deducting all related expenses, shall be
distributed and applied in the following order of priority:
(i) to pay any debts or liabilities of the LLC,
including, but not limited to, all commissions and other expenses
thereof, any Member Loans (together with interest thereon) and all
necessary expenses of liquidation, if applicable;
(ii) to establish any reserves which the Members
deem reasonably necessary to provide for any contingent or
unforeseen liabilities or obligations of the LLC, provided,
however, that at the expiration of such period of time as the
Members deem advisable, the balance of such reserves remaining
after the payment of such contingencies shall be distributed to the
Members in accordance with paragraphs (iii) and (iv) below;
(iii) to pay the Members, in accordance with and
the proportionate to, their positive capital account balances; and
(iv) to pay the Members in proportion to each
Member's Membership Interest.
6.5 Prior to making any allocations under Section 6.2,
the following allocations shall be effected in the order or
priority in which they are listed:
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(a) Minimum Gain Chargeback. This Agreement
Requirement"
incorporates by reference the "Minimum Gain Chargeback
of Section 1.704-2(f) of the Treasury Regulations.
(b) Qualifigqi Income Offset. This Agreement
Offset"
incorporates by reference the "Qualified Income requirement
of Section 1.704-1(b) (2) (ii) (d) of the Treasury Regulations.
(c) Curative Allocations. Subject to the provisions
of subparagraphs 6.5(a) and 6.5(b) above, if any allocation is made
pursuant to one or more of subparagraph 6.5(a) or 6.5(b) above,
then items of income and gain (including gross income, if
necessary) and deduction and loss shall be allocated among the
Members as soon as possible (without violating the requirements of
the regulations under Section 704(b) of the Code) to restore the
Capital Accounts to the balances that would have existed if such
allocations pursuant to subparagraphs 6.5(a) and 6.5(b) had not
occurred so as to preserve the intended economic arrangement among
the Members as otherwise expressed herein.
7. Management.
7.1 The Members designate Herbert Slepoy, Andrew Slepoy
and William Slepoy as the Managers of the LLC. Except as otherwise
provided herein, the exclusive management and control of the LLC
and its business and Property shall be vested in the Managers.
Among the Managers, decisions shall be made by a majority of the
Managers, but once made, any Manager shall have the authority to
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bind the LLC through his signature or otherwise. Not in limitation
of the powers conferred by law or as otherwise provided in this
Agreement, it is expressly understood that the Managers shall have
the power to employ persons or agents in the operation or
management of the LLC or its Property on such terms and for such
compensation as the Managers deem appropriate and the Managers, on
behalf of the LLC, are hereby authorized to enter into any
agreement (provided it is on arm's length terms) with any
individual, corporation or other entity affiliated with them for
the performance of such services to the LLC. In particular, it is
understood and agreed that the Managers are authorized on behalf of
the LLC to retain an affiliated entity to serve as the managing
agent for the Property and to pay such managing agent a base
management fee of 6% of the gross revenues derived at or from the
Property. The Managers shall have the power to bind the LLC by
executing documents, instruments, drafts, checks, deeds, mortgages
and all other manner of written obligations, direction or
authorizations, all of which shall be valid upon the signature of
any Manager. Additionally, the Managers shall have sole
discretionary rights to sell the Property or any portion thereof,
as well as with respect to executing mortgages or other forms of
borrowing, leases or granting any other agreements or privileges
with respect to the Property. Notwithstanding the foregoing, the
Managers may not act to make an.expenditure, incur indebtedness or
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otherwise obligate the LLC for an amount in excess of $50,000
without the prior approval of 2/3 in interest of all the Members.
7.2 In the event of the death, resignation or withdrawal
of any Manager and the subsequent vote of the Members to continue
the LLC, as hereinafter provided, then the surviving Managers shall
continue as the Managers with all rights and powers of the Managers
as provided herein, except that all decisions shall then require
the approval or consent of both Managers. In the event there is
only one Manager in the LLC such Manager shall be the sole Manager
with all rights and powers of the Managers as provided herein.
8. Books and Records.
8.1 Proper accounting records of all LLC business
shall be kept and shall remain open to inspection of any of the
Members, or their designees or legal representatives, at all
reasonable times. At the end of each calendar year, a complete
accounting of the affairs of the LLC shall be furnished to each
Member, together with such appropriate information as may be
required by each Member for the purpose of preparing his or her
income tax return for that year. All matters of accounting for
which there is no provision in this Agreement are to be governed by
generally accepted principles of accounting applied on a consistent
basis.
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8.2 The books and records of the LLC shall be kept
at the principal place of business of the LLC, or in such other
place as designated by the Members.
8.3 In the event of (i) a transfer of any interest
in the LLC, or (ii) any other circumstance in which an election
under Section 754 of the Internal Revenue Code, as amended, may be
appropriate, the transferee shall have the right to cause the LLC
to make the election permitted by Section 754 of the Internal
Revenue Code, as amended, provided that such election shall be
allowable at the time and provided further there is no detriment to
the other Members. -
9. Transfer of Member's Interest.
No Member shall, without the written consent of a
majority in interest of the other Members, sell, assign, mortgage
or otherwise encumber his or her interest in this LLC or in its
capital assets or Properties, or enter into any agreement of any
kind that would result in any person, firm or corporation becoming
interested with him or her in the LLC, except that a Member may
transfer the economic rights to his or her interest in the LLC
(i.e. the right to such Member's share of the profits and losses of
the LLC and the right to receive distributions from the LLC) to his
spouse or to a child or grandchild and/or a spouse of either a
child or grandchild and/or a trust for the benefit (exclusively) of
any of the foregoing or to the Member's beneficiaries (if the
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Member is a trust), upon the condition, however, that the
transferor shall remain liable with respect to all obligations
created or referred to under the terms of this Agreement.
10. Digsç11,ition anqi Terminatio_rl.
10.1 Upon the first to occur of the following
events, the LLC shall be dissolved and its affairs wound up:
(a) the death, retirement, resignation,
expulsion, bankruptcy or dissolution (other than a dissolution
described in Section 10.3 below) of a Member, or any other
occurrence which terminates .a Member's membership in the LLC,
except where within 180 days after any such event a majority in
interest of the Members, other than the affected Member, vote to
continue the business of the LLC;
(b) the sale or transfer of the Property or
substantially all of the assets of the LLC;
(c) the LLC ceases its business operations;
(d) two-thirds in interest of the Members vote
to dissolve and terminate the LLC; or
(e) the entry of a decree of judicial
dissolution.
10.2 Notwithstanding Section 9, upon the occurrence
of an event set forth in Section 10-1(a), if the Members vote to
continue the business under Section 10.1(a)., unless otherwise
specified, such vote shall also be deemed authorization for the
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effected Member's personal representative, executor, administrator
or successor in interest to have all of the rights of the Member
for the purpose of managing or settling his estate, and to have the
right to transfer the Member's interest to the Member's
beneficiaries (if the Member was a trust), the Member's spouse,
child, grandchild and/or spouse of a child or grandchild and/or a
trust for the benefit (exclusively) of any of the foregoing, but to
none other (unless the transferor first obtains the consent of a
majority in interest of all other Members) -
10.3 Notwithstanding Section 10.1(a), the Estate of
Rubin Chait may be dissolved and liquidated and its entire interest
in the LLC transferred to Seymour Chait and Arlene Estrin as
beneficiaries thereof without such dissolution and transfer giving
rise to an event which would cause dissolution of the LLC under
Section 10.1(a) unless a majority in interest of the Members vote
to continue the business of the LLC. All Members consent to such
dissolution and transfer.
10..4 In the event of the dissolution of the LLC, the
business and affairs of the LLC shall continue to be governed by
this Agreement during the Winding up of the LLC's business and
affairs.
11. Competing Business Activities.
(a) Any Member may engage in business ventures and
investments, other than in connection with the LLC, of any nature
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whatsoever and whether or not competitive with the ownership of the
Property, including, but not limited to, the acquisition,
ownership, management and sale of other real estate. Neither the
LLC nor any of the other Members shall have any right to or
interest in any such other business venture or investment, or to
share in any income, profit or other benefit derived therefrom.
(b) No Member shall be required to devote full time
or any specific amount of time to the business of the LLC.
12. Notices. Any notice required or given with respect
to this Agreement shall be valid and effective when delivered by
registered or certified mail or by hand to the address hereinabove
set forth. Any notice provided hereunder to be given to or
received by a Member shall be given by or to the legal
representative of any Member who is deceased. Any party hereto may
change such address by notice given to the LLC and the other
Members in accordance with this Section 12.
13. Miscellaneous.
13.1 This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. Any party that
receives an assignment of the interest of a Member in accordance
with the terms hereof shall be required to execute and deliver to
each other Member a legally enforceable agreement expressly
assuming all of the terms, conditions and covenants of this
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Agreement and such other documents as the Members shall reasonably
require prior to such assignment becoming effective.
13.2 This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly in such
State.
13.3 This Agreement sets forth the entire agreement
and understanding of the parties in respect of the subject matter
hereof and supersedes all prior and contemporaneous agreements,
arrangements and understandings relating to the subject matter
hereof.
13.4 This Agreement may be amended or modified only
by a written instrument executed by all of the Members. The
failure of a party at any time or times to require performance of
any provisions hereof shall in no manner affect the party's right
Preview
FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 Exhibit 3 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 OPERATING AGREEMENT OF LYNCREST GARDENS CO., LLC OPERATING AGREEMENT, nade as of this day of , 1996, among Jacqueline Slepoy Trust, Arline Slepoy, Trustee, with an address at .1303 Harbor Road, Hewlett, New York 11557; Estate of Rubin Chait, Seymour Chait and Arlene Estrin, Executors with an address at 3025 Timothy Road, Bellmore, New York 11710; Doris Kern, with an address at 20379 W. Country Club Drive, No. Miami Beach, Florida 33180; Herbert Slepoy, Grantor, with an address at 104 South Central Avenue, Room 20, Valley Stream, New York 11580; Myrna Dauer, with an address at 360 East 72nd Street, Apt. 709B, New York, New York 10021; Meryle Rosenzweig, with an address at 7 Hallmark Drive, New City, New York 10956; Andrew Slepoy, with an address at 104 South Central Avenue, Room 20, Valley Stream, New York 11580; William Slepoy, with an address at 104 South Central Avenue, Room 20, Valley Stream, New York 11580; Stephen Gardner, with an address at 1 Wesley Court North, Huntington, New York 11743; and Wendy Bicknell, with an address at 66 Seabury Point Road, Duxbury, Massachusetts 02332 (said individuals are "Member" hereinafter individually referred to as a and collectively referred as the "Members"); and Herbert Slepoy. H I I N E S S E I H: WHEREAS, the Members have previously conducted business as members of a partnership under the name Lyncrest Gardens Co. (the "Partnership") pursuant to the laws of the State of New York; FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 . - WHEREAS, the Members now desire to conduct business as members of a limited liability company pursuant to the laws of the State of New York. WHEREAS, all the Members have approved and executed a Conversion Agreement setting forth the terms and conditions of the conversion of the interests of the Members as partners in the Partnership into membership interests in the limited liability company. NOW, THEREFORE, in consideration of the mutual covenants, conditions and representations set forth herein the parties hereto hereby agree as follows: 1. Name. The name of the limited liability company is Lyncrest Gardens Co., LLC (the "LLC"). The Members have caused to be filed with the Department of State of New York a Certificate of Conversion for the LLC and shall hereafter satisfy all other requirements of the New York Limited Liability Company Law to conduct the business of the LLC in the state of New York. 2. Office. The principal office(s) of the LLC is 104 South Central Avenue, Suite 20, Valley Stream, New York 11580-5461 or such other place or places as the Members shall determine. · 3. Business. The business of the LLC shall be to: (a) own, manage and operate that certain real property located at 230 Atlantic Avenue, East Rockaway, New York 11518 (the "Property") ; 2 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 (b) hold, maintain, lease, alter, perform construction with respect to, develop, rehabilitate, subdivide, sell, exchange, dispose of or otherwise take ·such action as the Members shall determine with respect to the Property; (c) borrow money and issue evidence of indebtedness in furtherance of any or all of the objectives of its business, and to secure the same by mortgage pledge or other liens; (d) enter, perform and carry out contracts or take action of any kind necessary to, in connection with, or incidental to, the accomplishment of the foregoing purposes; (e) engage in any other lawful act or activity as all the Members shall determine; and (f) from time to time, to do any one or more of the things and acts set forth herein. 4. Term. The term of the LLC shall continue until terminated as hereinafter provided. 5. Canital and Loans, 5.1 Each Member has previously contributed to the P.artnership such capital as is reflected in the books and records of the LLC. Upon the recommendation of the Managers, the Members may, by a vote of 2/3 in interest of the Members, request that the Members contribute such additional capital, on a pro rata basis in proportion to their respective Membership Interests set forth in Section 6 hereof, as the Members shall, in good faith, determine to 3 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 be required to accomplish the purposes of the LLC. If all Members contribute their proportionate share of such additional capital, such amounts shall be treated as additional capital contributions. However, if less than all Members contribute their proportionate shares of such additional capital, then all such amounts paid by the Members shall not be considered as additional capital but instead shall be treated as loans (each a "Member Loan") from each contributing Member to the LLC. The Member Loans shall be valid debts of the LLC and shall be repaid, together with interest, at the rate per annum equal to 28 above the prime rate published in the Wall Street Journal (as modified from time to time), out of available cash flow of the LLC and in any event before any distributions (whether from cash flow, Distribution Proceeds or otherwise) are made to any Member. Any amounts available to repay any Member Loan shall be paid to the respective lenders in proportion to the outstanding amount of all such loans and all repayments shall be applied first to outstanding interest on such loans and then to the outstanding principal balance. 5.2 An individual capital account is maintained for each Member. Each Member's capital account shall be increased by (i) such Member's additional contributions to the capital of the LLC, if any, and (ii) such Member's share of the net profits of the LLC and decreased by (i) distributions to such Member by the LLC, (ii) such Member's distributive share of net losses of the LLC and (iii) 4 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 -- such Member's distributive share of expenditures of the LLC not deductible in computing net profits or losses and not properly. treated as capital expenditures. 5.3 No interest shall be paid by the LLC on the capital contributions of the Members and no Member shall, except as otherwise provided herein, have the right to withdraw, or demand a refund or return of, all or any part of his capital contributions, .or receive or demand property other than cash. 6. Eiscal Year; Profits and Losses; Distributions. 6.1 The fiscal year of the LLC shall be the calendar year. 6.2 All net profits, net losses, credits, deductions and all other items of the LLC shall be allocated to, or be borne by, the Members in accordance with the following fractional interests (the "Membership Interests"): Name Membership Interest Jacqueline Slepoy Trust, Arline Slepoy Trustee 1.6304% Estate of Rubin Chait, Seymour Chait and Arlene Estrin, Executors 33.3334% Doris Kern 9.4808% Herbert Slepoy, Grantor 18.9615% Myrna Dauer 7.1859% Meryle Rosenzweig 7.1859% Andrew Slepoy 1.6303% William Slepoy 1.63C3% Stephen Gardner 9.48075% Bicknell 9.48075% Wendy FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 6.3 Distributions of net cash flow of the LLC, if any, less such reasonable reserves as the Managers (as hereinafter defined) shall determine to be necessary for present operations and/or future contingencies, shall be made at such times as agreed upon by the Managers. For purposes hereof, net cash flow shall be the net profits or losses of the LLC for the fiscal year as determined by the LLC's accountants plus there shall be added back to the net profits or losses the amount deducted during such period for depreciation and there shall be subtracted an amount equal to the total paid during such period for mortgage amortization and capital improvements. In determining net cash flow the LLC's accountants shall make any other adjustments that are appropriate including, without limitation, adjustments relating to timing of items such as the payment of an expense in a period that was accrued in a prior period but was theretofore unpaid. Net cash flow shall be distributed in proportion to each Member's Membership Interest; provided however that all Member Loans together with interest thereon shall be repaid prior to the distribution of cash flow to any Member. 6.4 The net cash proceeds (herein referred to as "Distribution Proceeds") resulting from the refinancing of any mortgage, or the sale, condemnation (or similar eminent domain taking), exchange, casualty or other dispositio.n of the Property or a substantial part of the Property or from the liquidation of the 6 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 assets of the LLC following a dissolution thereof, which are not reinvested or retained by the LLC for the continuation of its business, and after deducting all related expenses, shall be distributed and applied in the following order of priority: (i) to pay any debts or liabilities of the LLC, including, but not limited to, all commissions and other expenses thereof, any Member Loans (together with interest thereon) and all necessary expenses of liquidation, if applicable; (ii) to establish any reserves which the Members deem reasonably necessary to provide for any contingent or unforeseen liabilities or obligations of the LLC, provided, however, that at the expiration of such period of time as the Members deem advisable, the balance of such reserves remaining after the payment of such contingencies shall be distributed to the Members in accordance with paragraphs (iii) and (iv) below; (iii) to pay the Members, in accordance with and the proportionate to, their positive capital account balances; and (iv) to pay the Members in proportion to each Member's Membership Interest. 6.5 Prior to making any allocations under Section 6.2, the following allocations shall be effected in the order or priority in which they are listed: 7 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 (a) Minimum Gain Chargeback. This Agreement Requirement" incorporates by reference the "Minimum Gain Chargeback of Section 1.704-2(f) of the Treasury Regulations. (b) Qualifigqi Income Offset. This Agreement Offset" incorporates by reference the "Qualified Income requirement of Section 1.704-1(b) (2) (ii) (d) of the Treasury Regulations. (c) Curative Allocations. Subject to the provisions of subparagraphs 6.5(a) and 6.5(b) above, if any allocation is made pursuant to one or more of subparagraph 6.5(a) or 6.5(b) above, then items of income and gain (including gross income, if necessary) and deduction and loss shall be allocated among the Members as soon as possible (without violating the requirements of the regulations under Section 704(b) of the Code) to restore the Capital Accounts to the balances that would have existed if such allocations pursuant to subparagraphs 6.5(a) and 6.5(b) had not occurred so as to preserve the intended economic arrangement among the Members as otherwise expressed herein. 7. Management. 7.1 The Members designate Herbert Slepoy, Andrew Slepoy and William Slepoy as the Managers of the LLC. Except as otherwise provided herein, the exclusive management and control of the LLC and its business and Property shall be vested in the Managers. Among the Managers, decisions shall be made by a majority of the Managers, but once made, any Manager shall have the authority to 8 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 bind the LLC through his signature or otherwise. Not in limitation of the powers conferred by law or as otherwise provided in this Agreement, it is expressly understood that the Managers shall have the power to employ persons or agents in the operation or management of the LLC or its Property on such terms and for such compensation as the Managers deem appropriate and the Managers, on behalf of the LLC, are hereby authorized to enter into any agreement (provided it is on arm's length terms) with any individual, corporation or other entity affiliated with them for the performance of such services to the LLC. In particular, it is understood and agreed that the Managers are authorized on behalf of the LLC to retain an affiliated entity to serve as the managing agent for the Property and to pay such managing agent a base management fee of 6% of the gross revenues derived at or from the Property. The Managers shall have the power to bind the LLC by executing documents, instruments, drafts, checks, deeds, mortgages and all other manner of written obligations, direction or authorizations, all of which shall be valid upon the signature of any Manager. Additionally, the Managers shall have sole discretionary rights to sell the Property or any portion thereof, as well as with respect to executing mortgages or other forms of borrowing, leases or granting any other agreements or privileges with respect to the Property. Notwithstanding the foregoing, the Managers may not act to make an.expenditure, incur indebtedness or 9 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 otherwise obligate the LLC for an amount in excess of $50,000 without the prior approval of 2/3 in interest of all the Members. 7.2 In the event of the death, resignation or withdrawal of any Manager and the subsequent vote of the Members to continue the LLC, as hereinafter provided, then the surviving Managers shall continue as the Managers with all rights and powers of the Managers as provided herein, except that all decisions shall then require the approval or consent of both Managers. In the event there is only one Manager in the LLC such Manager shall be the sole Manager with all rights and powers of the Managers as provided herein. 8. Books and Records. 8.1 Proper accounting records of all LLC business shall be kept and shall remain open to inspection of any of the Members, or their designees or legal representatives, at all reasonable times. At the end of each calendar year, a complete accounting of the affairs of the LLC shall be furnished to each Member, together with such appropriate information as may be required by each Member for the purpose of preparing his or her income tax return for that year. All matters of accounting for which there is no provision in this Agreement are to be governed by generally accepted principles of accounting applied on a consistent basis. 10 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 8.2 The books and records of the LLC shall be kept at the principal place of business of the LLC, or in such other place as designated by the Members. 8.3 In the event of (i) a transfer of any interest in the LLC, or (ii) any other circumstance in which an election under Section 754 of the Internal Revenue Code, as amended, may be appropriate, the transferee shall have the right to cause the LLC to make the election permitted by Section 754 of the Internal Revenue Code, as amended, provided that such election shall be allowable at the time and provided further there is no detriment to the other Members. - 9. Transfer of Member's Interest. No Member shall, without the written consent of a majority in interest of the other Members, sell, assign, mortgage or otherwise encumber his or her interest in this LLC or in its capital assets or Properties, or enter into any agreement of any kind that would result in any person, firm or corporation becoming interested with him or her in the LLC, except that a Member may transfer the economic rights to his or her interest in the LLC (i.e. the right to such Member's share of the profits and losses of the LLC and the right to receive distributions from the LLC) to his spouse or to a child or grandchild and/or a spouse of either a child or grandchild and/or a trust for the benefit (exclusively) of any of the foregoing or to the Member's beneficiaries (if the 11 ._ FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 Member is a trust), upon the condition, however, that the transferor shall remain liable with respect to all obligations created or referred to under the terms of this Agreement. 10. Digsç11,ition anqi Terminatio_rl. 10.1 Upon the first to occur of the following events, the LLC shall be dissolved and its affairs wound up: (a) the death, retirement, resignation, expulsion, bankruptcy or dissolution (other than a dissolution described in Section 10.3 below) of a Member, or any other occurrence which terminates .a Member's membership in the LLC, except where within 180 days after any such event a majority in interest of the Members, other than the affected Member, vote to continue the business of the LLC; (b) the sale or transfer of the Property or substantially all of the assets of the LLC; (c) the LLC ceases its business operations; (d) two-thirds in interest of the Members vote to dissolve and terminate the LLC; or (e) the entry of a decree of judicial dissolution. 10.2 Notwithstanding Section 9, upon the occurrence of an event set forth in Section 10-1(a), if the Members vote to continue the business under Section 10.1(a)., unless otherwise specified, such vote shall also be deemed authorization for the 12 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 effected Member's personal representative, executor, administrator or successor in interest to have all of the rights of the Member for the purpose of managing or settling his estate, and to have the right to transfer the Member's interest to the Member's beneficiaries (if the Member was a trust), the Member's spouse, child, grandchild and/or spouse of a child or grandchild and/or a trust for the benefit (exclusively) of any of the foregoing, but to none other (unless the transferor first obtains the consent of a majority in interest of all other Members) - 10.3 Notwithstanding Section 10.1(a), the Estate of Rubin Chait may be dissolved and liquidated and its entire interest in the LLC transferred to Seymour Chait and Arlene Estrin as beneficiaries thereof without such dissolution and transfer giving rise to an event which would cause dissolution of the LLC under Section 10.1(a) unless a majority in interest of the Members vote to continue the business of the LLC. All Members consent to such dissolution and transfer. 10..4 In the event of the dissolution of the LLC, the business and affairs of the LLC shall continue to be governed by this Agreement during the Winding up of the LLC's business and affairs. 11. Competing Business Activities. (a) Any Member may engage in business ventures and investments, other than in connection with the LLC, of any nature 13 FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 whatsoever and whether or not competitive with the ownership of the Property, including, but not limited to, the acquisition, ownership, management and sale of other real estate. Neither the LLC nor any of the other Members shall have any right to or interest in any such other business venture or investment, or to share in any income, profit or other benefit derived therefrom. (b) No Member shall be required to devote full time or any specific amount of time to the business of the LLC. 12. Notices. Any notice required or given with respect to this Agreement shall be valid and effective when delivered by registered or certified mail or by hand to the address hereinabove set forth. Any notice provided hereunder to be given to or received by a Member shall be given by or to the legal representative of any Member who is deceased. Any party hereto may change such address by notice given to the LLC and the other Members in accordance with this Section 12. 13. Miscellaneous. 13.1 This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. Any party that receives an assignment of the interest of a Member in accordance with the terms hereof shall be required to execute and deliver to each other Member a legally enforceable agreement expressly assuming all of the terms, conditions and covenants of this 14 ._ FILED: NASSAU COUNTY CLERK 11/12/2020 11:59 AM INDEX NO. 605758/2020 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 11/12/2020 Agreement and such other documents as the Members shall reasonably require prior to such assignment becoming effective. 13.2 This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed wholly in such State. 13.3 This Agreement sets forth the entire agreement and understanding of the parties in respect of the subject matter hereof and supersedes all prior and contemporaneous agreements, arrangements and understandings relating to the subject matter hereof. 13.4 This Agreement may be amended or modified only by a written instrument executed by all of the Members. The failure of a party at any time or times to require performance of any provisions hereof shall in no manner affect the party's right