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or after December 10, 2001.30 Members holding Common II
interests also had no voting rights in SMP.
Under the SMP LLC agreement, if the members holding
preferred interests exercised their conversion rights, SMP had
the right to redeem all the preferred interests at a price equal
to the sum of the preferred capital accounts for all holders of
preferred interests. SMP also had the option to convert the
preferred interests into debt of SMP beginning on December 31,
1997, and on conversion, the debt would have a principal amount
equal to $5 million for a term of 5 years at an interest rate of
8 percent per annum.
Mr. Lerner was appointed SMP’s manager. The SMP LLC
agreement provided that no member could sell, assign, transfer or
dispose of, directly or indirectly, by operation of law or
otherwise (including by merger, consolidation, dividend, or
distribution) any membership interest, without the prior written
consent of SMP’s manager. It also provided that no member could
retire or withdraw from SMP without SMP’s manager’s written
consent except in certain defined circumstances.
Pursuant to the SMP LLC agreement, with certain exceptions,
each SMP member (including any additional members) agreed that it
30 Members holding preferred interests could immediately
convert their preferred interests to Common II interests if
certain required annual distributions of excess cashflow were not
made.
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