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Limited Liability Company Agreement

This is an actual contract by NCO Group,.

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Sectors: Services
Governing Law: Nevada, View Nevada State Laws
Effective Date: August 31, 2007
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Exhibit 10.4

Execution Version

NCOP/CF II, LLC

A NEVADA LIMITED LIABILITY COMPANY

LIMITED LIABILITY COMPANY AGREEMENT

DATED AS OF AUGUST 31, 2007

Execution Version

TABLE OF CONTENTS

Page No.

ARTICLE I. DEFINITIONS 1

ARTICLE II. ORGANIZATION 7

Section 2.1. Formation of the Company 7

Section 2.2. Name 7

Section 2.3. Registered Office; Principal Place of Business 8

Section 2.4. Term 8

Section 2.5. Filings. 8

Section 2.6. Title to Assets 8

Section 2.7. Payments of Individual Obligations 9

ARTICLE III. PURPOSES, BUSINESS AND POWERS 9

Section 3.1. Purposes and Business 9

Section 3.2. Business Plan 9

Section 3.3. Bid Package 10

ARTICLE IV. CAPITAL, LOANS, ALLOCATIONS AND DISTRIBUTIONS 10

Section 4.1. Asset Pool Acquisitions 10

Section 4.2. Additional Capital 10

Section 4.3. Capital Accounts; Allocations. 10

Section 4.4. Non-Liquidation Distributions 13

Section 4.5. Timing of Distributions 13

Section 4.6. Distributions in Kind 13

Section 4.7. Capital Matters. 14

ARTICLE V. RIGHTS, POWERS, DUTIES AND OBLIGATIONS OF THE MEMBERS 14

Section 5.1. Liability of Members 14

Section 5.2. Management 15

Section 5.3. Powers of the Manager 15

Section 5.4. Approval of the Members 15

Section 5.5. Company Liabilities 17

Section 5.6. Indemnification 17

Section 5.7. Rights of Competition 17

Section 5.8. Transactions with Affiliates 18

Section 5.9. Compensation and Expenses of the Manager 18

Section 5.10. Devotion of Time 18

Section 5.11. Prohibited Activities 18

ARTICLE VI. BOOKS AND RECORDS, REPORTS, BANKING AND INCOME TAX ELECTIONS 19

Section 6.1. Books and Records 19

Section 6.2. Reporting Requirements 19

Section 6.3. Tax Reporting Information 19

Section 6.4. Asset Reports 20

Section 6.5. Servicing Reporting 20

Section 6.6. Tax Matters Partner 20

Section 6.7. Record Retention 21


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Execution Version

ARTICLE VII. BANKING 22

ARTICLE VIII. REPRESENTATIONS OF MEMBERS 22

ARTICLE IX. CHANGES IN MEMBERS; CERTIFICATED MEMBERSHIP INTERESTS 23

Section 9.1. Transfer of Interests Held by the Manager or Affiliate of the Manager 23

Section 9.2. Transfer of Company Interests Held by Members not Affiliated with the Manager 24

Section 9.3. Incapacity of Member 24

Section 9.4. Assignees. 24

Section 9.5. Obligations and Rights of Transferees and Assignees 25

Section 9.6. Non-Recognition of Certain Transfers 25

Section 9.7. General Conditions. 25

Section 9.8. Appointment of Substituted Manager 26

Section 9.9. Certification of Membership Interests. 26

ARTICLE X. LIQUIDATION AND DISSOLUTION OF COMPANY 28

Section 10.1. Causes 28

Section 10.2. Method of Liquidation 29

Section 10.3. Date of Termination 30

Section 10.4. Waiver of Partition 30

ARTICLE XI. POWER AND CONSENTS 30

Section 11.1. Appointment. 30

Section 11.2. Exercise of Power of Attorney 31

Section 11.3. Action by Members 31

Section 11.4. Meetings and Consents of the Members. 31

ARTICLE XII. REMOVAL OF THE MANAGER 32

Section 12.1. Right to Remove 32

Section 12.2. No Right to Withdraw, Assign or Delegate 32

Section 12.3. Consequences of Removal or Withdrawal of Manager 32

ARTICLE XIII. MISCELLANEOUS 32

Section 13.1. Notice 32

Section 13.2. Construction 33

Section 13.3. Effect of Agreement 33

Section 13.4. Amendment; Waiver 33

Section 13.5. Counterparts 33

Section 13.6. Severability 33

Section 13.7. Captions 33

Section 13.8. Numbers and Gender 33

Section 13.9. Confidentiality. 33

Section 13.10. Exhibits 35

Section 13.11. Entire Agreement 35

Section 13.12. Negation of Third Party Beneficiaries 35

Section 13.13. Jurisdiction 35

Section 13.14. Waiver of Jury Trial 35

Section 13.15. Interpretation 35

Section 13.16. Specific Performance 36

Section 13.17. Expenses 36


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Execution Version

Exhibit A Members' Names and Addresses

Exhibit B Asset Pool Percentages

Exhibit C Form of Membership Certificate

Exhibit D Specimen Signatures of Authorized Representatives of Members


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LIMITED LIABILITY COMPANY AGREEMENT THIS LIMITED LIABILITY COMPANY AGREEMENT is made and entered into as of the 31 st day of August, 2007, among the parties signing below as Members.

In consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I.

DEFINITIONS

Unless the context otherwise requires, as used in this Agreement the following terms shall have the meanings specified in this Article I .

Act means the Nevada Limited Liability Company Act, Nev. Rev. Stat. a7 86.011 et seq. , as amended from time to time (or any corresponding provisions of any successor law).

Additional Capital Contributions has the meaning set forth in Section 4.2 of this Agreement.

Adjusted Capital Account Balance means, with respect to any Member, the balance, if any, in that Member' s Capital Account as of the end of the relevant taxable year, increased by the amount of the minimum gain that such Member is treated as being obligated to restore pursuant to the next to last sentences of Treasury Regulation Sections 1.704-2(g)(1) and (i)(5).

Adjusting Action has the meaning designated in Section 9.9(c) of this Agreement.

Affiliate means with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another Person. For purposes of this definition, the term " control" (including the terms " controlled by" and " under common control with" ) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Agreement means this limited liability agreement, as the same may be amended, modified or extended. Approved Asset Pool has the meaning set forth in Section 3.2 of this Agreement. Asset means each asset of the Company, consisting primarily of U.S.-based consumer receivables, together with all documents evidencing such receivables.

Asset Pool means a pool of Assets acquired by the Company in one or more acquisitions, (including forward flow commitments) which pool has a purchase price equal to or greater than $1 million but less than $4 million.

Execution Version


Asset Pool Percentage means, with respect to each Asset Pool, a Member' s percentage interest in such Asset Pool, as set forth and described in Exhibit B hereto, as amended and modified from time to time.

Asset Pool Proceeds means, with respect to each Asset Pool, the gross proceeds received by the Company from the servicing, sale or financing of the Assets in such Asset Pool, less any servicing, sale or refinancing expenses incurred by the Company in connection therewith.

Business Day shall mean any day other than (a) a Saturday or Sunday and (b) a day on which banking institutions in the States of Minnesota, Nevada and Pennsylvania are authorized or obligated by law, executive order or governmental decree to be closed.

Capital Account has the meaning set forth in Section 4.3(a) of this Agreement.

Capital Contribution means any capital contribution made by a Member.

CarVal shall mean CarVal Investors, LLC, a Delaware limited liability company.

Change of Control means any event, circumstance or occurrence that results in (i) NCO Portfolio Management, Inc. holding and owning, directly or indirectly, less than one hundred percent (100%) of the issued and outstanding equity interests in the NCO Member free and clear of all liens, security interests and other encumbrances; or (ii) NCO Group, Inc. holding and owning, directly or indirectly, less than fifty percent (50%) of the issued and outstanding equity interests in either NCO Portfolio Management, Inc. or the Servicer. Code means the Internal Revenue Code of 1986, as amended.

Company means NCOP/CF II, LLC, a Nevada limited liability company, governed by this Agreement.

Company Account means the account created and maintained by the Manager or by the Servicer, which shall be an Eligible Account and shall be entitled " NCOP/CF II, LLC Company Account." Company Accounts has the meaning set forth in Article VII of this Agreement. CVI Member means CVI GVF Finco, LLC, a Delaware limited liability company, or any successor thereto. CarVal Affiliate means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with CarVal. For purposes of this definition, " control" (including, with correlative meanings, the terms " controlling," " controlled by," and " under common control with" ), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. Default Asset Pool Percentage has the meaning set forth in Section 4.1 of this Agreement.

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Execution Version


Depreciation means, for each taxable year or other period with respect to an Asset, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to such Asset for the year or other period, except that if the Gross Asset Value of an Asset differs from its adjusted basis for federal income tax purposes at the beginning of the year or other period, Depreciation will be an amount which bears the same ratio to the beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for the year or other period bears to the beginning adjusted tax basis, provided that if the federal income tax depreciation, amortization, or other cost recovery deduction for the year or other period is zero, Depreciation will be determined with reference to the beginning Gross Asset Value using any reasonable method selected by the Manager upon the advice of tax counsel to the Company.

Due Diligence Expenses shall include out-of-pocket costs and expenses incurred by the Company, or by the Manager or any Member on behalf of the Company, directly and exclusively in connection with the formation and organization of the Company, or the purchase of Assets, provided such costs and expenses are part of any approved Company Budget or are otherwise unanimously approved by the Members.

Effective Time has the meaning designated in Section 9.9(c) of this Agreement.

Eligible Account means a segregated account held by a depository institution approved by the Company that is either: (i) an account maintained with a federal or state chartered depository institution or trust company, the long-term unsecured debt obligations of which (or, in the case of a depository institution or a trust company that is the principal subsidiary of a holding company, the long-term unsecured debt obligations of such holding company) have been rated by two of the Rating Agencies in one of their two highest rating categories or the short-term commercial paper of which is rated by two of the Rating Agencies in their highest rating category or (ii) an account or accounts maintained with a federal or state chartered depository institution or trust company with trust powers acting in its fiduciary capacity provided that any such state chartered institution or trust company shall be subject to regulations regarding fiduciary funds on deposit substantially similar to federal regulation 12 CFR a7910(b).

ERISA means the federal Employee Retirement Income Security Act of 1974, as amended.

Exclusivity Agreement means that certain Second Amended and Restated Exclusivity Agreement dated as of August 31, 2007 among CarVal Investors, LLC, a Delaware limited liability company, CVI GVF Finco, LLC, a Delaware limited liability company, NCOP Lakes, Inc., a Nevada corporation, NCO Financial Systems, Inc., a Delaware corporation, NCO Portfolio Management, Inc., a Delaware corporation, NCO Group, Inc., a Pennsylvania corporation, NCOP Capital, Inc., a Nevada corporation, NCOP Capital I, LLC, a Nevada limited liability company, NCOP/CF, LLC, a Nevada limited liability company, NCOP/CF II, LLC, a Nevada limited liability company, NCOP Capital III, LLC, a Nevada limited liability company, and NCOP Capital IV, LLC, a Nevada limited liability company, as such agreement is further amended or supplemented from time to time.


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Execution Version


Fair Market Value means the price that would be paid by a willing buyer for an item of property being sold by a willing seller in an open market, arm' s length transfer with respect to which time is not of the essence.

Fiscal Year means January 1 through December 31 of each year.

For Cause means, with respect to the Manager, any of the following: (i) failure to follow written directions received by such Manager from the Members which are permitted to provide such directions under this Agreement after the applicable notice and cure period, if any, expressly provided with respect thereto in this Agreement, (ii) fraud or willful misconduct, (iii) negligence in the performance of its duties hereunder, (iv) the occurrence and continuance of an Event of Default, as that term is defined and used in the Servicing Agreement, (v) material breach of any of its covenants or obligations under this Agreement or (vi) the occurrence of a Change of Control.

Gross Asset Value means, with respect to any Asset, the adjusted basis of the Asset for federal income tax purposes, except as follows: (a) The initial Gross Asset Value of any Asset contributed (or deemed contributed under Code Sections 704(b) and 752 and the Regulations promulgated thereunder) by a Member to the Company will be the Fair Market Value of the Asset on the date of the contribution, as determined by the Manager; provided that if the contributing Member is the Manager or an Affiliate of the Manager, the determination of the Fair Market Value of the Asset shall require the unanimous consent of the Members.

(b) The Gross Asset Values of all Assets may be adjusted to equal the respective Fair Market Values of the Assets, as determined by the Manager, as of (i) the acquisition of an additional Interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of the Assets as consideration for an Interest in the Company; provided, however, that the adjustments pursuant to clauses (i) and (ii) shall be made only if the Manager reasonably determines an adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (iii) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g);

(c) The Gross Asset Value of any Asset distributed to any Member will be the gross Fair Market Value of the Asset on the date of distribution as determined by the distributee and the Manager, provided that, if the distributee is the Manager or an affiliate of the Manager, the determination of the Fair Market Value of the distributed Asset shall be determined by unanimous consent of the Members.

(d) The Gross Asset Values of Assets will be increased or decreased to reflect any adjustment to the adjusted basis of such Assets under Code Section 734(b) or 743(b), but only to the extent that the adjustment is taken into account in determining Capital Accounts under Treasury Regulations Section 1.704-1(b)(2)(iv)(m), provided that Gross Asset Values will not be adjusted under this paragraph to the extent that the Manager


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Execution Version


determines that an adjustment under paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment under this paragraph (d).

After the Gross Asset Value of any Asset has been determined or adjusted under paragraphs (a), (b) or (d) above, Gross Asset Value will be adjusted by the Depreciation (if any) taken into account with respect to the Asset for purposes of computing Net Income or Net Loss. Incapacity means the bankruptcy, dissolution, liquidation, adjudication of incompetency or death of any Person. The term " bankruptcy" as used herein shall mean the occurrence of any of the following in respect of any Person:

(i) such Person shall make an assignment for the benefit of creditors, commence (as a debtor) a case in bankruptcy, or commence (as a debtor) any proceeding under any other insolvency law; (ii) a case in bankruptcy or any other proceeding under any other insolvency law is commenced against such Person (as a debtor) and is consented to by such Person or remains undismissed for thirty (30) days, or such Person consents to or admits the material allegations against such Person in any such case or proceeding; (iii) a trustee, receiver, agent, liquidator or sequestrator (however named) is appointed or authorized to take charge of all or substantially all of the property of such Person for the purpose of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of creditors; (iv) such Person shall fail generally to pay such Person' s debts as they become due, or suffer any writ of attachment or execution or any similar process to be issued or levied against such Person or all or substantially all of its property which is not released, stayed, bonded or vacated within ninety (90) days after its issue or levy; or (v) such Person shall suffer any writ of attachment or execution or any similar process to be issued or levied against the interest of such Person in the Company which is not released, stayed, bonded or vacated within thirty (30) days after its issue or levy.

Interest means, at a given point in time, all of a Member' s rights and interests in the Company in such Member' s capacity as Member, all as provided in this Agreement and the Act, including, without limitation, such Member' s interest in (i) the capital, income, gain, deductions, losses and credits of the Company generally, and (ii) the aggregate Asset Pool Proceeds, not previously distributed, to which such Member is entitled hereunder.

Investment Company Act means the Investment Company Act of 1940, as amended. Manager means the NCO Member and any successor thereto.


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Execution Version


Members means collectively the Persons listed on Exhibit A to this Agreement and singularly, any Person listed on Exhibit A to this Agreement, as the same may be modified or amended from time to time.

NCO Member means NCOP Nevada Holdings, Inc., a Nevada corporation.

Net Cash Flow means with respect to any calendar month or other period, the gross revenues received by the Company during such period from any source whatsoever, (but excluding Capital Contributions), less the following: (i) servicing fees paid to the Servicer during such period and other expenses reimbursable to the Servicer under the Servicing Agreement; (ii) Operating Expenses; (iii) interest and principal payments on account of any indebtedness of the Company, together with fees and other payments due thereunder; and (iv) any other expenditures approved in the Company Budget or as otherwise unanimously approved by the Members. Net Cash Flow shall be determined separately for each calendar month or other period and shall not be cumulative. Net Income and Net Loss mean, an amount equal to the Company' s taxable income or loss, respectively, for federal income tax purposes, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703 (a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant hereto shall be included in income; (ii) any expenditures of the Company described in Section 705 (a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net Income or Net Loss pursuant thereto, shall be deducted from income; and (iii) income, gain, loss and deduction of the Company shall be computed (A) as if the Company had purchased any property contributed by a Member on the date of such contribution at a price equal to its Fair Market Value on such date, and (B) as if the Company had sold any property distributed to a Member on the date of such distribution at a price equal to its Fair Market Value on such date.

Net Proceeds means (i) the gross proceeds received by the Company from the servicing, sale or financing of the Assets less any servicing, sale or refinancing expenses incurred by the Company in connection therewith; (ii) the proceeds of the liquidation or termination of the Company, less any expenses incurred by the Company in connection therewith; (iii) any damage recoveries, insurance payments or condemnation proceeds (net of applicable expenses) payable to the Company and not used to repair or restore any of the property of the Company; (iv) any financing or refinancing of debt of the Company not applied to the reduction of Company liabilities or to the payment of related financing or refinancing expenses; and (v) any revenues or proceeds (net of applicable expenses) derived from any other event in the nature of a capital transaction.

Nonrecourse Deductions has the meaning assigned to it in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(c).


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Execution Version


Nonrecourse Liability has the meaning assigned to it in Treasury Regulations Sections 1.704-2(b)(3).

Operating Expenses means, if and to the extent approved as part of the Company Budget or otherwise unanimously approved by the Members pursuant to this Agreement, all third party out-of-pocket costs and expenses incurred by the Company, or by any Manager or Member on behalf of the Company, or by any Servicer on behalf of the Company, which are commercially reasonable and negotiated on an arms length basis and which are incurred directly and exclusively in connection with the administration and operation of the Company and the ownership of the Assets, including, without limitation, accounting fees, legal fees and other expenses.

Person means any individual, partnership, limited partnership, limited liability partnership, corporation, limited liability company, trust, estate, association or other entity whether domestic or foreign.

Rating Agencies means Duff & Phelps Credit Rating Co., Standard & Poor' s Rating Group, Fitch Investors Services, Inc., Moody' s Investors Services, Inc. or such other nationally recognized statistical rating agency unanimously approved by the Members.

Securities Act means the Securities Act of 1933, as amended. Servicer means the Person retained by the Company to collect, service and manage Asset Pools acquired from time to time by the Company.

Servicing Agreement means a Servicing Agreement entered into, by and among the Company and the Servicer, relating to the servicing, collection and management of the Asset Pools acquired by the Company from time to time.

Treasury Regulations means the regulations (including any temporary regulations) issued under the Code by the Department of the Treasury, as such regulations may be amended from time to time, or any applicable successor regulations. Reference herein to any particular section of the Treasury Regulations shall be deemed to refer to the corresponding provision of any applicable successor regulations.

ARTICLE II.

ORGANIZATION

Section 2.1. Formation of the Company . The Company was formed as of the date of the filing of the Articles of Organization for the Company with the Secretary of State of the State of Nevada as a limited liability company pursuant to the provisions of the Act. The rights and liabilities of the Members shall be as provided in the Act, except as otherwise set forth herein. If any provision in this Agreement conflicts with the Act, such provision in this Agreement shall control and govern to the extent permitted by applicable law.

Section 2.2. Name . The name of the Company shall be NCOP/CF II, LLC, and all business of the Company shall be conducted under such name. Upon compliance with all applicable laws, the business of the Company may be conducted under any other name


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Execution Version


designated in writing by the Manager and unanimously approved by the Members, provided such name contains the initials " LLC" or the words " limited liability company."

Section 2.3. Registered Office; Principal Place of Business . The Company' s principal place of business and registered office in the State of Nevada shall be located at Hughes Center, Suite 170, 3763 Howard Hughes Pkwy., Las Vegas, Nevada 89109.

Section 2.4. Term . The Company commenced on the date of filing of appropriate Articles of Organization for the Company with the Secretary of State of the State of Nevada and shall continue until terminated as provided in this Agreement or in the Act.

Section 2.5. Filings. (a) The Manager is hereby authorized to and shall execute and cause the certificate of formation to be filed in the office of the Secretary of the State of Nevada as an authorized person within the meaning of, and otherwise in accordance with, the Act. The Manager shall take any and all other actions reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of the State of Nevada, including the preparation, execution, and filing of such amendments to the articles of organization and such other assumed name certificates, documents, instruments, and publications as may be required by law, including action to reflect:

(i) A change in the Company name; or (ii) A correction of false or erroneous statements in the articles of organization or the desire of the Members to make a change in any statement therein in order that it shall accurately represent the agreement between the Members.

(b) The Manager shall execute and cause to be filed original or amended certificates and shall take any and all other actions as may reasonably be necessary to perfect and maintain the status of the Company as a limited liability company or similar type of entity under the laws of any other jurisdictions in which the Company engages in business.

(c) Upon the dissolution and completion of the winding up of the Company in accordance with Article X , the Members shall promptly execute and cause to be filed Articles of Dissolution in accordance with the Act and the laws of any other jurisdictions in which the Members deem such filing or any similar filling to be necessary or advisable.

Section 2.6. Title to Assets . All assets owned by the Company shall be owed by the Company as an entity and no Member shall have any ownership interest in such assets in its individual name. Each Member' s Interest in the Company shall be personal property for all purposes. The Company shall hold title to all of its assets in the name of the Company and not in the name of any Member.


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Execution Version


Section 2.7. Payments of Individual Obligations . The Company' s credit and assets shall be used solely for the benefit of the Company, and no asset of the Company shall
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