0000912057-01-535096.txt : 20011019 0000912057-01-535096.hdr.sgml : 20011019 ACCESSION NUMBER: 0000912057-01-535096 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20011011 GROUP MEMBERS: BALCO HOLDINGS, LLC GROUP MEMBERS: DANA C. BRADFORD GROUP MEMBERS: DENNIS M. O'BRIEN GROUP MEMBERS: FULCRUM GROWTH PARTNERS, L.L.C. GROUP MEMBERS: SCOTT A. SCHMIDT SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BALLANTYNE OF OMAHA INC CENTRAL INDEX KEY: 0000946454 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 470587703 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-50163 FILM NUMBER: 1756678 BUSINESS ADDRESS: STREET 1: 4350 MCKINLEY ST CITY: OMAHA STATE: NE ZIP: 68112 BUSINESS PHONE: 4024534444 MAIL ADDRESS: STREET 1: 4350 MCKINLEY ST CITY: OMAHA STATE: NE ZIP: 68112 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MCCARTHY GROUP INC CENTRAL INDEX KEY: 0001009804 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 222 S 15TH STREET SUITE 600 N CITY: OMAHA STATE: NE ZIP: 68102 BUSINESS PHONE: 4023931300 MAIL ADDRESS: STREET 1: 222 S 15TH STREET STREET 2: SUITE 600 N CITY: OMAHA STATE: NE ZIP: 68102 SC 13D/A 1 a2060927zsc13da.txt SC 13D/A ----------------------------- UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- OMB Number 3235-0145 Expires: October 31, 2002 Estimated average burden hours per response. . . 14.9 -----------------------------
SCHEDULE 13D (RULE 13d-101) UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* BALLANTYNE OF OMAHA, INC. ----------------------------------------- (Name of Issuer) COMMON STOCK ----------------------------------------- (Title of Class of Securities) 058516105 ----------------------------------------- (CUSIP Number) MARGARET L. DOYLE ONE PACIFIC PLACE, 1125 SOUTH 103RD STREET, SUITE 450, OMAHA, NE 68124 PH.(402) 393-1300 -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) OCTOBER 3, 2001 -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following box |_|. NOTE. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. SEE Rule 13d-7(b) for other parties to whom copies are to be sent. ------------ *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, SEE the Notes). ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 2 OF 17 PAGES ---------------------- ---------------------- SEC 1746 (2-98) (Continued on following pages) (Page 1 of 17 Pages) -------------------------------------------------------------------------------- (1) Names of reporting persons. I.R.S. Identification No. of above person (entities only). MCCARTHY GROUP, INC. I.R.S. Identification No. 47-0697955 -------------------------------------------------------------------------------- (2) Check the appropriate box if a member of a group (SEE Instructions) (a): /X/ (b): / / -------------------------------------------------------------------------------- (3) SEC Use Only -------------------------------------------------------------------------------- (4) Source of Funds (SEE Instructions) WC/AF (SEE ITEM 3) -------------------------------------------------------------------------------- (5) Check If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) or 2(e) / / N/A -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S.A. - ORGANIZED UNDER THE LAWS OF THE STATE OF NEBRASKA -------------------------------------------------------------------------------- Number of (7) Sole voting power shares 3,917,026 (1), (2) beneficially ------------------------------------------------------- owned by each (8) Shared voting power reporting 0 person with: ------------------------------------------------------- (9) Sole dispositive power 3,593,141 (1) ------------------------------------------------------- (10) Shared dispositive power 323,885 (2) -------------------------------------------------------------------------------- (11) Aggregate amount beneficially owned by each reporting person 3,917,026 (1), (2) -------------------------------------------------------------------------------- (12) Check if the aggregate amount in row (11) excludes certain shares : / / (SEE Instructions) N/A -------------------------------------------------------------------------------- (13) Percent of class represented by amount in row (11) 31.3% (3) -------------------------------------------------------------------------------- (14) Type of reporting person (SEE Instructions) CO (NEBRASKA CORPORATION) ================================================================================ (1) Includes 3,593,141 shares owned of record by BalCo Holdings, LLC ("BalCo"). McCarthy Group, Inc. ("MGI") is the sole manager of BalCo and, as such, exercises sole voting and dispositive power over these shares. In addition, MGI is the managing member of Fulcrum Growth Partners, L.L.C. ("Fulcrum"), the sole equity member of BalCo. (2) Includes a total of 323,885 shares owned of record by Dana C. Bradford, Dennis M. O'Brien and Scott A. Schmidt. Each of Messrs. Bradford, O'Brien and Schmidt has assigned all voting rights to these shares to MGI, along with certain rights regarding disposition of these shares. (3) The percentage reported in row (13) is calculated based upon 12,512,672 shares of common stock of Ballantyne of Omaha, Inc. (the "Issuer") issued and outstanding as of July 31, 2001, as reported by the Issuer in its Quarterly Report on Form 10-Q for quarter ended June 30, 2001. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 3 OF 17 PAGES ---------------------- ---------------------- -------------------------------------------------------------------------------- (1) Names of reporting persons. I.R.S. Identification No. of above person (entities only). BALCO HOLDINGS, LLC -------------------------------------------------------------------------------- (2) Check the appropriate box if a member of a group (SEE Instructions) (a): /X/ (b): / / -------------------------------------------------------------------------------- (3) SEC Use Only -------------------------------------------------------------------------------- (4) Source of Funds (SEE Instructions) WC/AF (SEE ITEM 3) -------------------------------------------------------------------------------- (5) Check If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) or 2(e) / / N/A -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S.A. - ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE -------------------------------------------------------------------------------- Number of (7) Sole voting power shares 3,593,141 (1) beneficially ------------------------------------------------------- owned by each (8) Shared voting power reporting 0 person with: ------------------------------------------------------- (9) Sole dispositive power 3,593,141 (1) ------------------------------------------------------- (10) Shared dispositive power 0 -------------------------------------------------------------------------------- (11) Aggregate amount beneficially owned by each reporting person 3,593,141 (1) -------------------------------------------------------------------------------- (12) Check if the aggregate amount in row (11) excludes certain shares : / / (SEE Instructions) N/A -------------------------------------------------------------------------------- (13) Percent of class represented by amount in row (11) 28.7% (2) -------------------------------------------------------------------------------- (14) Type of reporting person (SEE Instructions) OO (DELAWARE LIMITED LIABILITY COMPANY) ================================================================================ (1) Consists of 3,593,141 shares owned of record by BalCo Holdings, LLC ("BalCo"). McCarthy Group, Inc. ("MGI"), in its capacity as sole manager of BalCo, exercises all voting and dispositive powers with respect to these shares on behalf of BalCo. (2) The percentage reported in row (13) is calculated based upon 12,512,672 shares of common stock of Ballantyne of Omaha, Inc. (the "Issuer") issued and outstanding as of July 31, 2001, as reported by the Issuer in its Quarterly Report on Form 10-Q for quarter ended June 30, 2001. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 4 OF 17 PAGES ---------------------- ---------------------- -------------------------------------------------------------------------------- (1) Names of reporting persons. I.R.S. Identification No. of above person (entities only). FULCRUM GROWTH PARTNERS, L.L.C. I.R.S. Identification No. 47-0819413 -------------------------------------------------------------------------------- (2) Check the appropriate box if a member of a group (SEE INSTRUCTIONS) (a): /X/ (b): / / -------------------------------------------------------------------------------- (3) SEC Use Only -------------------------------------------------------------------------------- (4) Source of Funds (See Instructions) WC/AF (SEE ITEM 3) -------------------------------------------------------------------------------- (5) Check If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) or 2(e) / / N/A -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S.A. - ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE -------------------------------------------------------------------------------- Number of (7) Sole voting power shares 0 (1) beneficially ------------------------------------------------------- owned by each (8) Shared voting power reporting 0 person with: ------------------------------------------------------- (9) Sole dispositive power 0 (1) ------------------------------------------------------- (10) Shared dispositive power 0 -------------------------------------------------------------------------------- (11) Aggregate amount beneficially owned by each reporting person 0 (1) -------------------------------------------------------------------------------- (12) Check if the aggregate amount in row (11) excludes certain shares : / / (SEE Instructions) N/A -------------------------------------------------------------------------------- (13) Percent of class represented by amount in row (11) 0% -------------------------------------------------------------------------------- (14) Type of reporting person (SEE Instructions) OO (DELAWARE LIMITED LIABILITY COMPANY) ================================================================================ (1) Fulcrum Growth Partners, L.L.C. ("Fulcrum") owns a 100% membership interest in BalCo Holdings, LLC ("BalCo"), the record owner of 3,593,141 shares, and therefore has an economic interest in these shares, but not a beneficial ownership interest as defined in Rule 13d-3. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 5 OF 17 PAGES ---------------------- ---------------------- -------------------------------------------------------------------------------- (1) Names of reporting persons. I.R.S. Identification No. of above person (entities only). DANA C. BRADFORD -------------------------------------------------------------------------------- (2) Check the appropriate box if a member of a group (SEE Instructions) (a): /X/ (b): / / -------------------------------------------------------------------------------- (3) SEC Use Only -------------------------------------------------------------------------------- (4) Source of Funds (SEE Instructions) PF (SEE ITEM 3) -------------------------------------------------------------------------------- (5) Check If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) or 2(e) / / N/A -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S.A. -------------------------------------------------------------------------------- Number of (7) Sole voting power shares 0 beneficially ------------------------------------------------------- owned by each (8) Shared voting power reporting 0 person with: ------------------------------------------------------- (9) Sole dispositive power 0 ------------------------------------------------------- (10) Shared dispositive power 173,885 (1) -------------------------------------------------------------------------------- (11) Aggregate amount beneficially owned by each reporting person 173,885 (1) -------------------------------------------------------------------------------- (12) Check if the aggregate amount in row (11) excludes certain shares :/ / (SEE Instructions) N/A -------------------------------------------------------------------------------- (13) Percent of class represented by amount in row (11) 1.4% (2) -------------------------------------------------------------------------------- (14) Type of reporting person (SEE Instructions) IN (NEBRASKA RESIDENT) ================================================================================ (1) Consists of 173,885 shares owned of record by Dana C. Bradford in his individual capacity. Mr. Bradford has assigned all voting rights to the shares to McCarthy Group, Inc. ("MGI") and may not dispose of such shares without the prior approval of MGI. (2) The percentage reported in row (13) is calculated based upon 12,512,672 shares of common stock of Ballantyne of Omaha, Inc. (the "Issuer") issued and outstanding as of July 31, 2001, as reported by the Issuer in its Quarterly Report on Form 10-Q for quarter ended June 30, 2001. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 6 OF 17 PAGES ---------------------- ---------------------- -------------------------------------------------------------------------------- (1) Names of reporting persons. I.R.S. Identification No. of above person (entities only). DENNIS M. O'BRIEN -------------------------------------------------------------------------------- (2) Check the appropriate box if a member of a group (SEE Instructions) (a): /X/ (b): / / -------------------------------------------------------------------------------- (3) SEC Use Only -------------------------------------------------------------------------------- (4) Source of Funds (SEE Instructions) OO/PF (SEE ITEM 3) -------------------------------------------------------------------------------- (5) Check If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) or 2(e) / / N/A -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S.A. -------------------------------------------------------------------------------- Number of (7) Sole voting power shares 0 beneficially ------------------------------------------------------- owned by each (8) Shared voting power reporting 0 person with: ------------------------------------------------------- (9) Sole dispositive power 0 ------------------------------------------------------- (10) Shared dispositive power 100,000 (1) -------------------------------------------------------------------------------- (11) Aggregate amount beneficially owned by each reporting person 100,000 (1) -------------------------------------------------------------------------------- (12) Check if the aggregate amount in row (11) excludes certain shares :/ / (SEE Instructions) N/A -------------------------------------------------------------------------------- (13) Percent of class represented by amount in row (11) 0.8% (2) -------------------------------------------------------------------------------- (14) Type of reporting person (SEE Instructions) IN (NEBRASKA RESIDENT) ================================================================================ (1) Consists of 100,000 shares owned of record by Dennis M. O'Brien in his individual capacity. Mr. O'Brien has assigned all voting rights to the shares to McCarthy Group, Inc. ("MGI") and may not dispose of such shares without the prior approval of MGI. (2) The percentage reported in row (13) is calculated based upon 12,512,672 shares of common stock of Ballantyne of Omaha, Inc. (the "Issuer") issued and outstanding as of July 31, 2001, as reported by the Issuer in its Quarterly Report on Form 10-Q for quarter ended June 30, 2001. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 7 OF 17 PAGES ---------------------- ---------------------- -------------------------------------------------------------------------------- (1) Names of reporting persons. I.R.S. Identification No. of above person (entities only). SCOTT A. SCHMIDT -------------------------------------------------------------------------------- (2) Check the appropriate box if a member of a group (SEE Instructions) (a): /X/ (b): / / -------------------------------------------------------------------------------- (3) SEC Use Only -------------------------------------------------------------------------------- (4) Source of Funds (SEE Instructions) PF (SEE ITEM 3) -------------------------------------------------------------------------------- (5) Check If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) or 2(e) / / N/A -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S.A. -------------------------------------------------------------------------------- Number of (7) Sole voting power shares 0 beneficially ------------------------------------------------------- owned by each (8) Shared voting power reporting 0 person with: ------------------------------------------------------- (9) Sole dispositive power 0 ------------------------------------------------------- (10) Shared dispositive power 50,000 (1) -------------------------------------------------------------------------------- (11) Aggregate amount beneficially owned by each reporting person 50,000 (1) -------------------------------------------------------------------------------- (12) Check if the aggregate amount in row (11) excludes certain shares :/ / (SEE Instructions) N/A -------------------------------------------------------------------------------- (13) Percent of class represented by amount in row (11) 0.4% (2) -------------------------------------------------------------------------------- (14) Type of reporting person (SEE Instructions) IN (NEBRASKA RESIDENT) ================================================================================ (1) Consists of 50,000 shares owned of record by Scott A. Schmidt in his individual capacity. Mr. Schmidt has assigned all voting rights to the shares to McCarthy Group, Inc. ("MGI") and may not dispose of such shares without the prior approval of MGI. (2) The percentage reported in row (13) is calculated based upon 12,512,672 shares of common stock of Ballantyne of Omaha, Inc. (the "Issuer") issued and outstanding as of July 31, 2001, as reported by the Issuer in its Quarterly Report on Form 10-Q for quarter ended June 30, 2001. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 8 OF 17 PAGES ---------------------- ---------------------- ITEM 1. SECURITY AND ISSUER This statement on Schedule 13D (this "Statement") relates to the common stock, par value $.01 per share (the "Common Stock"), of Ballantyne of Omaha, Inc., a Delaware corporation, with principal offices located at 4350 McKinley Street, Omaha, NE 68112 (the "Issuer"). ITEM 2. IDENTITY AND BACKGROUND Pursuant to Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended (the "Act") and the agreement attached to this Statement as Exhibit 99(1), the undersigned, McCarthy Group, Inc. ("MGI"), hereby files this Statement on behalf of MGI, BalCo Holdings, LLC ("BalCo"), Fulcrum Growth Partners, L.L.C. ("Fulcrum"), Dana C. Bradford, Dennis M. O'Brien and Scott A. Schmidt (each a "Reporting Person" and, collectively, the "Reporting Persons"). MGI currently owns a 20% membership interest in Fulcrum and is the sole Managing Member of Fulcrum, and, as such, MGI is vested with, and exercises, full discretion and authority with respect to the management and control of the business activities and affairs of Fulcrum. Fulcrum owns a 100% membership interest in BalCo, and MGI serves as the sole Manager of BalCo with discretion and authority with respect to the management and control of the business activities and affairs of BalCo. MGI, as the sole manager of BalCo, has voting and dispositive control of the shares of Common Stock owned of record by BalCo. Neither Fulcrum nor BalCo have any officers or directors, as each of them are managed solely by MGI. Dana C. Bradford, Dennis M. O'Brien and Scott A. Schmidt each have executed agreements assigning all voting rights to the shares of Common Stock they own of record to MGI, together with certain rights regarding the disposition of the shares of Common Stock. BALCO BalCo Holdings, LLC ("BalCo"), a Delaware limited liability company, maintains its principal place of business at 1125 South 103rd Street, Suite 450, Omaha, NE 68124, and is engaged in any lawful business or activities for which a limited liability company may be formed under the Delaware Limited Liability Company Act, including, without limitation, the acquisition and ownership of the Common Stock. BalCo has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which BalCo was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. FULCRUM Fulcrum Growth Partners, L.L.C. ("Fulcrum"), a Delaware limited liability company, maintains its principal place of business at One Pacific Place, 1125 South 103rd Street, Suite 450, Omaha, NE 68124 and is engaged in any lawful business or activities for which a limited liability company may be formed under the Delaware Limited Liability Company Act, ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 9 OF 17 PAGES ---------------------- ---------------------- including, without limitation, the ownership and operation of BalCo. Neither Fulcrum nor, to the knowledge of Fulcrum, BalCo, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which neither Fulcrum nor BalCo was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. MGI McCarthy Group, Inc. ("MGI"), a Nebraska corporation, maintains its principal place of business at One Pacific Place, 1125 South 103rd Street, Suite 450, Omaha, NE 68124 and is engaged in merchant banking and, through McCarthy & Co. and McCarthy Group Asset Management, Inc. ("MGAMI"), investment banking and investment management. MGAMI is an institutional investment manager, that periodically files reports on Form 13F. Fulcrum and MGAMI have entered into a Management Agreement, dated March 17, 1999 (the "Management Agreement"), pursuant to which MGAMI provides, in exchange for a fee, investment advice to Fulcrum and MGI, as the Managing Member of Fulcrum. Additionally, McCarthy & Co., a Nebraska corporation, has entered into an Investment Services Agreement, dated March 15, 1996 (the "Services Agreement"), under which McCarthy & Co. in exchange for a fee has agreed to use its best efforts and provide services in connection with the identification of suitable investments for MGI. However, MGAMI and McCarthy & Co. do not, collectively or individually, have the right or the ability to control or direct the voting or disposition of any securities of the Issuer. Accordingly, MGAMI and McCarthy & Co. are not beneficial owners of the Common Stock of the Issuer and, therefore, are not included as Reporting Persons on this Statement. Exhibit 99(2) to this Statement contains a list of and information regarding the executive officers and directors of MGI required by General Instruction C to this Statement, which exhibit is incorporated herein by reference with respect to each such officer and director of MGI. MGI and, to the knowledge of MGI, none of the other Reporting Persons or the persons listed on Exhibit 99(2), have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or were a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which MGI, the other Reporting Persons or the individuals identified on Exhibit 99(2) were or are subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. DANA C. BRADFORD Dana C. Bradford ("Bradford") is an individual resident of Nebraska, maintains his principal place of business at 1125 South 103rd Street, Suite 450, Omaha, NE 68124, and is a principal with McCarthy Group, Inc. ("MGI"). Bradford has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which Bradford was or is subject to a judgment, decree or final order enjoining future violations of, ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 10 OF 17 PAGES ---------------------- ---------------------- or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. DENNIS M. O'BRIEN Dennis M. O'Brien ("O'Brien") is an individual resident of Nebraska, maintains his principal place of business at One Pacific Place, 1125 South 103rd Street, Suite 450, Omaha, NE 68124 and is a principal with McCarthy Group, Inc. ("MGI"). O'Brien has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which O'Brien was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. SCOTT A. SCHMIDT Scott A. Schmidt ("Schmidt") is an individual resident of Nebraska, maintains his principal place of business at One Pacific Place, 1125 South 103rd Street, Suite 450, Omaha, NE 68124 and is a principal with McCarthy Group, Inc. ("MGI"). Schmidt has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which Schmidt was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION BalCo originally acquired 3,238,845 shares of Common Stock from GMAC Commercial Credit LLC f/k/a BNY Financial Corporation on May 1, 2001 pursuant to a letter agreement regarding the purchase of the Common Stock, dated April 30, 2001, for an aggregate cash payment of $1,250,000. BalCo then acquired an additional 678,181 shares of the Common Stock from George Guttman on October 3, 2001 pursuant to a Stock Purchase Agreement dated October 1, 2001 for an aggregate cash payment of $305,181. BalCo funded these purchases out of its working capital, which is composed of contributions to capital made by the Members of BalCo on a pro rata basis determined by their respective percentage of ownership interest in BalCo. The contributions to the capital of BalCo made by Fulcrum and MGI were derived from their respective working capital. On October 4, 2001, MGI's membership interest in BalCo was totally redeemed in exchange for 323,885 shares of Common Stock owned by BalCo, pursuant to an Agreement Relating to Withdrawal and Redemption of Member Interest dated October 4, 2001. These shares were immediately sold to Bradford, O'Brien and Schmidt individually pursuant to separate Stock Purchase Agreements each dated October 4, 2001. Bradford purchased 173,885 shares of Common Stock for $67,109, funded by personal funds. O'Brien purchased 100,000 shares of Common Stock for $38,594 funded by a 30-day note to MGI which will be repaid from ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 11 OF 17 PAGES ---------------------- ---------------------- O'Brien's personal funds. Schmidt purchased 50,000 shares of Common Stock for $19,207 funded by personal funds. ITEM 4. PURPOSE OF TRANSACTION MGI, acting for and on behalf of BalCo, Fulcrum, Bradford, O'Brien and Schmidt in the capacities set forth in Item 2, intends to monitor the business and affairs of the Issuer closely and to periodically review the investment of the Reporting Persons in securities of the Issuer. Depending upon the results of such activities and such other facts and circumstances then existing, including evaluation of the business and prospects of the Issuer, availability of funds, alternative uses for funds and investments to which such funds of the Reporting Persons may be dedicated and general market conditions, BalCo or one or more of the other Reporting Persons may, from time to time, acquire additional Common Stock or other debt or equity securities of the Issuer. Such additional investments may occur at any time and may include purchases in one or more open market or private transactions, including purchases by tender offer, transactions with the Issuer or other similar investments or acquisitions. If any of the Reporting Persons subsequently makes any such additional investments or acquisitions of Common Stock or other Issuer securities, such investments or acquisitions may be undertaken with a view to acquiring a greater or controlling interest (possibly even a majority interest) in the Issuer and a commensurately greater influence with respect to the business activities and affairs of the Issuer. As a result of, or in connection with, any such investment or acquisition, BalCo or one or more of the other Reporting Persons may propose, effect or cause to occur any one or more of the following: an extraordinary business transaction, such as a merger, reorganization or liquidation or similar transaction, involving the Issuer or any of its hereafter existing subsidiaries; either or both of a change in the present number of Directors and the present composition of the Board of Directors of the Issuer; changes in the present capitalization of the Issuer; and a change in the Issuer's corporate structure, any of which may cause a class of securities of the Issuer to be delisted from a national securities exchange or cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association. In addition to the foregoing, any or all of the Reporting Persons may dispose of some or all of the Common Stock or other Issuer securities from time to time, whether now owned or hereafter acquired, if any such Reporting Person deems such transaction to be in its best interest, except that Bradford, O'Brien and Schmidt cannot sell their respective shares without the prior approval of MGI. As mentioned above, BalCo or one or more of the other Reporting Persons continue to evaluate the prospects of additional investment in the Issuer, but at the present time, except as described in this Item 4, none of the Reporting Persons presently has any plans or proposals which relate to or would result in: (a) the acquisition by any Reporting Person of additional securities of the Issuer or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) any change in the present Board of Directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board; (e) any material change in the present capitalization or ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 12 OF 17 PAGES ---------------------- ---------------------- dividend policy of the Issuer; (f) any other material change in the Issuer's business or corporate structure; (g) any changes in the Issuer's charter or by-laws or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) causing a class of equity securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar to those enumerated in (a) through (i) of this Item 4. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER MGI (a) Aggregate Number and Percentage of Common Stock Beneficially Owned: 3,917,026 shares of Common Stock representing 31.3% of the issued and outstanding Common Stock. (b) Number of shares of Common Stock over which Reporting Person has (i) sole power to vote or direct the vote: 3,917,026 (ii) shared power to vote or direct the vote: 0 (iii) sole power to dispose or direct the disposition of: 3,593,141 (iv) shared power to dispose or direct the disposition of: 323,885 Pursuant to the terms of the Stock Purchase Agreements described in Item 6, MGI exercises sole voting power and shares dispositive power over the shares of Common Stock owned of record by Messrs. Bradford, O'Brien and Schmidt. (c) Except with respect to the transactions reported in this Statement, none of the Reporting Persons has effected any transactions involving the Common Stock of the Issuer (or any other Issuer securities) during the past sixty days. (d) Not applicable. (e) Not applicable. BALCO (a) Aggregate Number and Percentage of Common Stock Beneficially Owned: 3,593,141 shares of Common Stock representing 28.7% of the issued and outstanding Common Stock. (b) Number of shares of Common Stock over which Reporting Person has (i) sole power to vote or direct the vote: 3,593,141 (ii) shared power to vote or direct the vote: 0 (iii) sole power to dispose or direct the disposition of: 3,593,141 (iv) shared power to dispose or direct the disposition of: 0 ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 13 OF 17 PAGES ---------------------- ---------------------- (c) Except with respect to the transactions reported in this Statement, none of the Reporting Persons has effected any transactions involving the Common Stock of the Issuer (or any other Issuer securities) during the past sixty days. (d) Not applicable. (e) Not applicable. FULCRUM (a) Aggregate Number and Percentage of Common Stock Beneficially Owned: None (b) Number of shares of Common Stock over which Reporting Person has (i) sole power to vote or direct the vote: 0 (ii) shared power to vote or direct the vote: 0 (iii) sole power to dispose or direct the disposition of: 0 (iv) shared power to dispose or direct the disposition of: 0 Fulcrum exercises no voting or dispositive power over any shares of Common Stock. However, as sole equity member of BalCo, it has an economic interest in 3,593,141 shares. (c) Except with respect to the transactions reported in this Statement, none of the Reporting Persons has effected any transactions involving the Common Stock of the Issuer (or any other Issuer securities) during the past sixty days. (d) Not applicable. (e) Not applicable. BRADFORD (a) Aggregate Number and Percentage of Common Stock Beneficially Owned: 173,885 shares of Common Stock representing 1.4% of the issued and outstanding Common Stock. (b) Number of shares of Common Stock over which Reporting Person has (i) sole power to vote or direct the vote: 0 (ii) shared power to vote or direct the vote: 0 (iii) sole power to dispose or direct the disposition of: 0 (iv) shared power to dispose or direct the disposition of: 173,885 ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 14 OF 17 PAGES ---------------------- ---------------------- Pursuant to the terms of the Stock Purchase Agreement described in Item 6, Bradford has granted MGI the sole right to vote such shares and may not sell such shares without the prior approval of MGI. (c) Except with respect to the transactions reported in this Statement, none of the Reporting Persons has effected any transactions involving the Common Stock of the Issuer (or any other Issuer securities) during the past sixty days. (d) Not applicable. (e) Not applicable. O'BRIEN (a) Aggregate Number and Percentage of Common Stock Beneficially Owned: 100,000 shares of Common Stock representing 0.8% of the issued and outstanding Common Stock. (b) Number of shares of Common Stock over which Reporting Person has (i) sole power to vote or direct the vote: 0 (ii) shared power to vote or direct the vote: 0 (iii) sole power to dispose or direct the disposition of: 0 (iv) shared power to dispose or direct the disposition of: 100,000 Pursuant to the terms of the Stock Purchase Agreement described in Item 6, O'Brien has granted MGI the sole right to vote such shares and may not sell such shares without the prior approval of MGI. (c) Except with respect to the transactions reported in this Statement, none of the Reporting Persons has effected any transactions involving the Common Stock of the Issuer (or any other Issuer securities) during the past sixty days. (d) Not applicable. (e) Not applicable. SCHMIDT (a) Aggregate Number and Percentage of Common Stock Beneficially Owned: 50,000 shares of Common Stock representing 0.4% of the issued and outstanding Common Stock. (b) Number of shares of Common Stock over which Reporting Person has (i) sole power to vote or direct the vote: 0 (ii) shared power to vote or direct the vote: 0 ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 15 OF 17 PAGES ---------------------- ---------------------- (iii) sole power to dispose or direct the disposition of: 0 (iv) shared power to dispose or direct the disposition of: 50,000 Pursuant to the terms of the Stock Purchase Agreement described in Item 6, Schmidt has granted MGI the sole right to vote such shares and may not sell such shares without the prior approval of MGI. (c) Except with respect to the transactions reported in this Statement, none of the Reporting Persons has effected any transactions involving the Common Stock of the Issuer (or any other Issuer securities) during the past sixty days. (d) Not applicable. (e) Not applicable. The percentage figures reported in this Item 5 were calculated based upon 12,512,672 shares of the Common Stock of the Issuer issued and outstanding as of July 31, 2001, as reported by the Issuer in its Quarterly Report on Form 10-Q for Quarter ended June 30, 2001. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Pursuant to the Operating Agreement of BalCo, dated as of April 20, 2001, (the "BalCo Agreement"), a copy of which is attached hereto as Exhibit 99(3), Fulcrum, the sole remaining Member of BalCo, has agreed that MGI shall be the sole Manager of BalCo and, as such, MGI has the sole and exclusive right and ability to vote or dispose of the Common Stock of the Issuer to which this Statement relates. Pursuant to an Agreement Relating to Withdrawal and Redemption of Membership Interest dated October 4, 2001, a copy of which is attached hereto as Exhibit 99(4), MGI withdrew as a member of BalCo and received a distribution from BalCo of 323,885 shares of Common Stock as the redemption price for its membership interest. Pursuant to the Stock Purchase Agreements of Bradford, O'Brien and Schmidt, each dated October 4, 2001 and each substantially in the form which is attached hereto as Exhibit 99(5), each of them has assigned all voting rights with respect to their respective shares of Common Stock to MGI and none of them may sell their respective shares of Common Stock without obtaining the prior written approval of MGI. In addition, O'Brien funded his acquisition of Common Stock by entering into a 30-day note to MGI attached hereto as Exhibit 99(6). The Issuer has entered into a Rights Agreement, dated as of May 25, 2000, with ChaseMellon Shareholder Services, L.L.C., as amended by the First Amendment to Rights Agreement, dated April 30, 2001, and further amended by the Second Amendment to the Rights Agreement, dated July 18, 2001 (the "Rights Agreement"). Pursuant to action by the Board of Directors of the Issuer on October 2, 2001, the Issuer has agreed to waive certain provisions of the Rights Agreement in connection with the additional acquisition of the Common Stock by BalCo and the addition of the three individuals to the Group. ---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 16 OF 17 PAGES ---------------------- ---------------------- The Limited Liability Company Agreement of Fulcrum, dated March 17, 1999, between KFS Corporation, a Nebraska corporation ("KFS"), and MGI (the "Fulcrum Agreement"), a copy of which is attached hereto as Exhibit 99(7), governs all of the rights, interests and liabilities of the Members of Fulcrum and vests MGI with full discretion and authority with respect to the management and control of the business activities and affairs of Fulcrum. The Fulcrum Agreement prescribes the respective rights of its Members with respect to the rights and interests in and to the profits and losses distributable from, and any distributions of the property of Fulcrum, including its ownership interest in BalCo and similar rights in and to the profits and losses distributable from, and any distributions of the property of BalCo, including the Common Stock. The Management Agreement and the Services Agreement referenced in Item 2 do not affect the ability of MGI to vote or control the Common Stock, and, therefore, they are not included as exhibits to this Statement. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS The following items are attached hereto as exhibits to this Statement:
Exhibit Description ------ ------------ 99(1) Joint Filing Agreement 99(2) Executive Officers and Directors of MGI 99(3) Operating Agreement of BalCo 99(4) Agreement Relating to Withdrawal and Redemption of Membership Interest 99(5) Stock Purchase Agreement 99(6) O'Brien Note to MGI 99(7) Limited Liability Company Agreement of Fulcrum
---------------------- ---------------------- CUSIP NO. 058516105 13D PAGE 17 OF 17 PAGES ---------------------- ---------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: October 10, 2001 MCCARTHY GROUP, INC. By /s/ MICHAEL R. MCCARTHY -------------------------------- Michael R. McCarthy, Chairman FULCRUM GROWTH PARTNERS, L.L.C., a Delaware limited liability company By McCarthy Group, Inc., its Managing Member By /s/ MICHAEL R. MCCARTHY -------------------------------- Michael R. McCarthy, Chairman BALCO HOLDINGS, LLC, a Delaware limited liability company By McCarthy Group, Inc., its Manager By /s/ MICHAEL R. MCCARTHY -------------------------------- Michael R. McCarthy, Chairman /s/ DANA C. BRADFORD ----------------------------------- Dana C. Bradford /s/ DENNIS M. O'BRIEN ----------------------------------- Dennis M. O'Brien /s/ SCOTT A. SCHMIDT ----------------------------------- Scott A. Schmidt EX-99.1 3 a2060927zex-99_1.txt JOINT FILING AGREEMENT EXHIBIT 99(1) JOINT FILING AGREEMENT The undersigned hereby agree that (i) this Joint Filing Agreement (this "Agreement") shall be attached as an exhibit to that certain Statement on Schedule 13D (the "Statement") regarding the common stock of Ballantyne of Omaha, Inc., a Delaware corporation, (ii) the Statement (and any amendment thereto) shall be filed with the Securities and Exchange Commission by McCarthy Group, Inc. on behalf of all of the undersigned as, and shall constitute, a joint filing pursuant to and in accordance with Rule 13d-1(k)(iii) of the Securities Exchange Act of 1934, as amended. IN WITNESS WHEREOF, each of the undersigned has executed this Agreement, or caused this Agreement to be executed on its behalf, as of this 4th day of October, 2001 MCCARTHY GROUP, INC., a Nebraska corporation By /s/ MICHAEL R. MCCARTHY --------------------------------- Michael R. McCarthy, Chairman FULCRUM GROWTH PARTNERS, L.L.C., a Delaware limited liability company By McCarthy Group, Inc., its Managing Member By /s/ MICHAEL R. MCCARTHY --------------------------------- Michael R. McCarthy, Chairman BALCO HOLDINGS, LLC, a Delaware limited liability company By McCarthy Group, Inc., its Manager By /s/ MICHAEL R. MCCARTHY --------------------------------- Michael R. McCarthy, Chairman /s/ DANA C. BRADFORD --------------------------------- Dana C. Bradford /s/ DENNIS M. O'BRIEN --------------------------------- Dennis M. O'Brien /s/ SCOTT A. SCHMIDT --------------------------------- Scott A. Schmidt EX-99.2 4 a2060927zex-99_2.txt EXECUTIVE OFFICERS AND DIRECTORS EXHIBIT 99(2) The Executive Officers and Directors of McCarthy Group, Inc. are as follows:
NAME AND ADDRESS BUSINESS INFORMATION CITIZENSHIP ---------------- -------------------- ----------- (1) Michael R. McCarthy Chairman and Director, U.S. 1125 South 103rd Street McCarthy Group, Inc. Suite 450 1125 South 103rd Street Omaha, NE 68124 Suite 450 Omaha, NE 68124 Business: See Item 2 of Schedule 13D (2) Richard L. Jarvis Director, Vice Chairman and Chief Investment Officer U.S. 1125 South 103rd Street McCarthy Group, Inc. Suite 450 Omaha, NE 68124 (SEE (1) above for business information) (3) John T. Reed Director U.S. 1125 South 103rd Street McCarthy Group, Inc. Suite 450 Omaha, NE 68124 (SEE (1) above for business information) (4) Margaret L. Doyle Secretary and Chief Financial Officer, U.S. 1125 South 103rd Street McCarthy Group, Inc. Suite 450 Omaha, NE 68124 (SEE (1) above for business information) (5) John Gottschalk Director, McCarthy Group, Inc. and U.S. Omaha World-Herald Chairman, President and CEO, World-Herald Square Omaha World-Herald Company 1334 Dodge Street 14th & Dodge Street Omaha, NE 68102 Omaha, NE 68102 Business: Publishing and related industries (6) Robert D. Bates Director, McCarthy Group, Inc. U.S. Jefferson Pilot Corporation President-Benefit Partners 8801 Indian Hills Drive Jefferson Pilot Corporation Omaha, NE 68114 8801 Indian Hills Drive Omaha, NE 68114 Business: Insurance and financial services
NAME AND ADDRESS BUSINESS INFORMATION CITIZENSHIP ---------------- -------------------- ----------- (7) Gerald H. Timmerman Director, McCarthy Group, Inc. U.S. Box 367 President Springfield, NE 68059 Timmerman & Sons Feeding Company Box 367 Springfield, NE 68059 Business: Cattle feeding and ranching (8) Howard L. Hawks Director, McCarthy Group, Inc. U.S. 1044 North 115th Street President and CEO, Suite 400 Tenaska, Inc. Omaha, NE 68154 1044 North 115th Street Suite 400 Omaha, NE 68154 Business: Power development and marketing and related businesses (9) Steven W. Seline Director, McCarthy Group, Inc. U.S. 13906 Gold Circle Vice Chairman, Suite 210 Waitt Media, Inc. Omaha, NE 68144 13906 Gold Circle Suite 210 Omaha, NE 68144 Business: Radio and television broadcasting, advertising and related businesses
To the knowledge of MGI, Fulcrum, BalCo, Bradford, O'Brien and Schmidt, the persons identified on this Exhibit 99(2) do not own, beneficially, or otherwise, or have an interest in the Common Stock, and no such individual has acquired any such interest in connection with the transaction which requires the filing of this Statement. Therefore, Items 3 through 6 of Schedule 13D are not applicable with respect to such individuals. EX-99.3 5 a2060927zex-99_3.txt OPERATING AGREEMENT EXHIBIT 99(3) OPERATING AGREEMENT OF BALCO HOLDINGS, LLC The undersigned Fulcrum Growth Partners L.L.C. ("Fulcrum") and McCarthy Group, Inc. ("MGI") each MGI and Fulcrum being each "a Member" and collectively "the Members" all being the Members of BalCo Holdings, LLC, a Delaware limited liability company (the "Company") formed and will operate a limited liability company according to the Delaware Limited Liability Company Act as it may be enacted and amended from time to time (the "Act"), hereby adopt this Operating Agreement as of April 20, 2001. 1. NAME. The name of the Company shall be "BalCo Holdings, LLC." 2. PRINCIPAL PLACE OF BUSINESS, REGISTERED AGENT. The address of the principal place of business of the Company is 1125 South 103 Street, Omaha, Nebraska 68124 or such other address as the Members shall from time to time determine. The name and address of the initial registered agent of the Company in the State of Delaware is Corporation Service Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The Members may change the registered agent at any time. 3. PURPOSE. The purposes for which the Company has been organized are for: A. engaging in any lawful act or activity that may be taken by, and exercising any powers permitted to, limited liability companies organized under the Act that are incidental to and necessary or desirable for the accomplishment of the above-mentioned purposes; and B. entering into and performing obligations pursuant to agreements necessary or desirable to effectuate the foregoing. The Company is authorized to engage in any and all acts necessary, advisable or incidental to the conduct of its business and may engage in any other business or activity which may be lawfully conducted by limited liability companies organized under the Act. 4. POWERS. The Company shall have any and all powers enumerated in the Act. 5. DURATION. The period of duration of the Company shall be perpetual. 6. MEMBERS. A. The Members of the Company, and the amount of capital contribution each Member has made or has agreed to make to the Company (the "Capital Commitments") are set forth in Schedule A hereto. Additional Members may be admitted to the Company only with the affirmative vote of the Members representing a majority of the total Capital commitments. B. Management of the Company shall be vested in the Members in proportion to their Capital Commitments. The affirmative vote of Members representing a majority of the total Capital Commitments shall constitute the act of the Members. C. No Member shall have any authority to enter into any agreement or contract for any debt or other obligation on behalf of the Company, except as specifically authorized by the Manager. No Member may take any action in contravention of this Operating Agreement or which would make it impossible to carry on the ordinary business of the Company. 7. MANAGEMENT BY MANAGER. A. The management of the business and affairs of the company shall be vested in a Manager who may exercise all such powers and do all such lawful acts allowed under the act. B. McCarthy Group, Inc. or its designated affiliate is hereby appointed as the Manager of the Company and shall hold office until a successor is appointed by the affirmative vote of the Members representing a majority of the total Capital commitments. 8. LIMITED LIABILITY OF MEMBERS. A. Except as may be otherwise provided under the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member. B. Notwithstanding paragraph A. of this Section 8, a Member shall be liable to the Company for the difference between the contributions to capital of the Member that have been actually made by such Member and such Member's Capital Commitment set forth in Schedule A hereto. The Company may compromise or waive any such liability upon the written approval of the Manager. Each Member acknowledges and agrees that, notwithstanding any such waiver or compromise, such waiver or compromise shall not affect the right of a creditor of the Company to enforce the liabilities of such Member to the Company if such creditor extended credit or had a claim that arose before the Certificate of Formation was amended to reflect such waiver or compromise or was cancelled. In addition, a Member who has rightfully received the return of all or part of such Member's capital contribution will, nevertheless, be liable to the Company for any sum, not in excess of the returned capital with interest thereon, necessary to discharge the Company's liability to all creditors of the Company who extended credit or whose claims arose before such return of capital for a period of three (3) years from the date of distribution. C. A Member shall hold as trustee for the Company (i) specific property stated in this Agreement as contributed by such Member, but which was not contributed or which has been wrongfully or erroneously returned to such Member; and (ii) money or other property paid or conveyed to such Member on account of such Member's contributions to capital. 9. CONTRIBUTIONS TO CAPITAL. A. The contributions to capital of a Member to the Company shall consist of cash. Each Member has agreed to make a contribution to the capital of the Company in the amount of such Member's Capital Commitment set forth in Schedule A hereto. This Agreement shall be amended from time to time as necessary to reflect (i) additional contributions of capital made by, or agreed to be made by, Members, (ii) permitted withdrawals of capital and redemption of Units, (iii) the admission of new Members to the Company and (iv) the withdrawal of Members from the Company. No Member shall be obligated to contribute any amount to the capital of the Company in excess of such Member's Capital Commitment as set forth in Exhibit A. Each Member acknowledges and understands that any additional capital which is voluntarily contributed to the Company may however reduce the non-contributing Member's respective percentage of ownership B. No Member shall have any priority over any other Member as to the return of capital contributions or distributions. A Member shall not be entitled to receive out of the property of the Company any part of the Member's contribution to capital unless (i) all liabilities of the Company, except liabilities to Members on account of their contributions to capital, have been paid or there remains unencumbered property in the Company sufficient to pay all such liabilities, (ii) all other Members have consented thereto or the return of the contribution to capital may be rightfully demanded under the Act and (iii) the Certificate of Formation are amended so as to reflect the withdrawal of capital or are cancelled. Without the prior written consent of all Members of the Company, a Member, irrespective of the nature of the Member's contribution, has only the right to demand and receive cash in return for the Member's contribution to capital. 10. MEMBERS' CAPITAL ACCOUNTS. A capital account shall be maintained and adjusted for each Member in accordance with generally accepted accounting principles. The capital account of each Member shall be credited with the Member's contributions to capital and such Member's share of Company profits, and there shall be charged against the capital account of each Member such Member's share of all cash distributions and Company losses and any permitted withdrawals of capital. Any person who acquires the interest of a Member from another Member shall have a capital account with respect to such interest equal to the capital account of the Member from which such interest was acquired. 11. PROFITS, LOSSES AND CASH DISTRIBUTIONS. A. The Company's profits and losses shall be determined in accordance with accounting principles as the Manager shall determine is in the best interest of the Company. B. All profits and losses of the Company shall be allocated to the Members as determined by the Manager and in proportion to the Capital Commitments of the respective Members; provided, however, that if any Member has a negative capital account balance at the time any profits are to be allocated, such profits will be first allocated to such Member to the extent of such negative capital account balance. C. Cash distributions may be declared by the affirmative vote of the Members representing a majority of the total Capital commitments at any meeting of the Members, provided that cash distributions may be made only to the extent that, after giving effect to the distribution, the fair value of the assets of the Company exceeds all liabilities of the Company (other than liabilities to Members on account of their capital contributions) on the date the cash distribution is declared. All cash distributions shall be paid to Members in proportion to their respective Capital Commitments on the date such cash distribution is declared or on such other record date as the Members shall establish for the determination of Members who are entitled to receive such distribution. D. Members shall have no right to receive cash distributions unless and until declared by a majority, by percentage ownership, of the Members. Upon declaration of a cash distribution, a Member shall have the status of a creditor of the Company with respect to such distribution and is entitled to all remedies available thereto. E. Members shall not receive salaries or compensation from the Company solely in their capacities as Members and shall not be paid interest on their capital contributions. 12. ADMISSION OF NEW MEMBERS. Manager of the Company may admit new Members from time to time upon the affirmative vote of the Members representing a majority of the total Capital commitments. 13. TRANSFERABILITY OF MEMBER INTERESTS. A. No Member may sell, transfer, assign, pledge or in any other manner whatsoever alienate such Member's interest in the Company without the prior written consent of the Manager. B. In the event of the death, adjudication of incompetency, dissolution or bankruptcy of any Member, and provided that the remaining Members vote to continue the business thereof as provided in Section 13 hereof, the successor-in-interest of the former Member shall not be entitled to become a Member unless it is admitted as a new Member pursuant to Section 12. 14. DISSOLUTION, LIQUIDATION AND TERMINATION. A. The Company shall be dissolved and its affairs shall be wound up by the Manager upon the occurrence of any of the following events: (i) the expiration of the period fixed for the duration of the Company; (ii) the affirmative vote of the Members representing a majority of the total Capital commitments to dissolve the Company by delivery of a written request to dissolve to each of the other Members; or (iii) any event causing a dissolution under the laws of the State of Delaware. The affairs of a member can not force the dissolution of the Company. B. Dissolution of the Company shall be effective on the day on which the event giving rise to the dissolution occurs, but the Company shall not terminate until the assets of the Company are distributed as herein provided and Articles of Dissolution are filed by the Company as provided by the Act. Notwithstanding a dissolution of the Company, the business of the Company will continue to be governed by the terms of this Agreement at all times prior to the termination of the Company. C. Upon the dissolution of the Company, the Manager shall cause the assets of the Company to be distributed as follows: (i) to creditors, other than Members who are creditors, in satisfaction of liabilities of the Company; (ii) to Members who are creditors of the Company in satisfaction of the liabilities of the Company; and (iii) to the Members, to the extent of the positive balances of their respective capital accounts as of the time of the distribution (after any adjustment to reflect a deemed allocation of profits or losses from in-kind distribution of the Company's assets, if any) and then in proportion to their respective Capital Commitments. Notwithstanding the foregoing, after the payment of liabilities owing to the creditors of the Company, the affirmative vote of the Members representing a majority of the total Capital commitments may require the Members to set aside as a reserve such amount as it deems to be reasonably necessary for any contingent or unforeseen liability or obligation of the Company. At such time as the affirmative vote of the Members representing a majority of the total Capital commitments shall determine, any such amount shall be distributed as set forth above. D. Upon dissolution of the Company and the distribution of its assets as set forth above, the Members shall cause Articles of Dissolution to be filed in accordance with the Act. The Members shall have the power and authority to make, execute, acknowledge and file all documents required to effectuate the dissolution and termination of the Company. 15. BOOKS AND RECORDS, ACCOUNTING AND REPORTS. A. The Manager shall, at all times during the term of the Company, maintain full and accurate books of account in which shall be entered all the transactions of the Company. The books of account shall be kept at the principal office of the Manager and shall be open to reasonable inspection and examination by the Members and their duly authorized representatives during normal business hours subject to the conditions provided for in such Section of the Act. B. The books of the Company shall be kept according to such method of accounting as the Members shall determine to be in the best interests of the Company. C. Within one hundred twenty (120) days after the expiration of each fiscal year, the Company shall deliver financial statements of the Company for such fiscal year to each Member. In addition, the Company shall deliver to each Member such tax information relating to the Company as shall be necessary for the preparation by such Members' federal income tax returns for such year. 16. FISCAL YEAR. The fiscal year of the Company shall be the calendar year. 17. INDEMNITY. The Company shall indemnify and hold harmless every Member of the Company, as well as the heirs, executors, administrators, successors or assigns of such persons, for all expenses actually and reasonably incurred or liability incurred by such persons in connection with the defense of any claim, suit or proceeding, civil or criminal, in which such persons may be made a party by reason of being or having been a Member of the Company, except in relation to matters as to which such persons shall be finally adjudged in such claim, action, suit or proceeding to be guilty of fraud, gross negligence or willful misconduct. In the event of a settlement of such claim, action, suit or proceeding, such payment or indemnification shall be provided only in connection with such matters covered by the settlement which the Company has approved after being advised by counsel that the persons to be indemnified were not guilty of such fraud, gross negligence or willful misconduct. The foregoing right of indemnification shall not exclude other rights to which such persons may be entitled. The Company may obtain insurance against any liability for which it has agreed to indemnify the Members. 18. BINDING EFFECT. This Agreement and all of the terms and provisions hereof shall be binding upon the Members, new Members who subsequently execute this Agreement and their respective legal representatives, heirs, successors and assigns. 19. NOTICES. All notices or other communications under this Agreement shall be in writing and shall be considered properly given if sent by national overnight delivery service or mailed by registered or certified United States Mail, postage prepaid, addressed in care of the respective Members at their last-known address. Each Member agrees to promptly notify the Manager in writing of a change of such Member's address, and, upon receipt of such notice by the Manager, the change of address shall be effective. When notice is required to be given to a Member of the Company, a waiver in writing signed by the person or persons to which the notice is to be given, whether before or after the time stated therein, is equivalent to the giving of notice. 20. APPLICABLE LAW. This Agreement and the rights of the Members thereunder shall be construed and interpreted under the laws of the State of Delaware, without giving effect to its choice of laws provisions. 21. VALIDITY. In the event that any provision of this Agreement is held invalid by a court of competent jurisdiction, such holding shall not affect in any manner the validity of the other provisions. The titles of the Sections of this Agreement are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text hereof. 22. AMENDMENTS. Amendments to this Agreement may be adopted only with the affirmative vote of the Members representing a majority of the total Capital commitments. Each Member agrees to promptly execute such amendments or other documents appropriate to reflect such amendments under the laws of the State of Delaware. 23. ENTIRE AGREEMENT. This Agreement sets forth all, and is intended by all parties to be an integration of all, promises, agreements and understandings among the parties hereto with respect to the Company, and no other promises, agreements or understandings, whether written or oral, expressed or implied, with respect thereto shall have any force or effect whatsoever. IN WITNESS WHEREOF, this Operating Agreement is executed by each of the parties hereto as of the date set forth above. FULCRUM GROWTH PARTNERS, L.L.C., Member By McCarthy Group, Inc., Its Managing Member By /s/ MICHAEL R. MCCARTHY ------------------------------------- Name Michael R. McCarthy ----------------------------------- Title Chairman ---------------------------------- MCCARTHY GROUP, INC., Member By /s/ MICHAEL R. MCCARTHY ------------------------------------- Name Michael R. McCarthy ----------------------------------- Title Chairman ---------------------------------- EX-99.4 6 a2060927zex-99_4.txt AGREEMENT RELATING TO WITHDRAWAL EXHIBIT 99(4) AGREEMENT RELATING TO WITHDRAWAL AND REDEMPTION OF MEMBERSHIP INTEREST IN BALCO HOLDINGS, L.L.C. THIS AGREEMENT is made as of this 4th day of October, 2001 by and among McCarthy Group, Inc., a Nebraska Corporation (the "Withdrawing Member") and BalCo Holdings, L.L.C., a Delaware limited liability company (the "Company"). W I T N E S S E T H : WHEREAS, Withdrawing Member is a Member of the Company having a 10% membership interest in the Company and is entitled to all the rights and privileges as such as set forth in the Operating Agreement of the Company, dated April 20, 2001 (the "Operating Agreement"); and WHEREAS, the Withdrawing Member desires to withdraw as a member of the Company and to have its membership interests in the Company redeemed by the Company on the terms and conditions herein set forth; and WHEREAS, the continuing members of the Company have consented to the withdrawal of the Withdrawing Member and the redemption of its respective membership interest in the Company pursuant to the terms and conditions of this Agreement; NOW THEREFORE, in consideration of the mutual covenants and promises made herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. WITHDRAWAL AND ASSIGNMENT. (a) The Withdrawing Member hereby withdraws as a member of the Company effective as of the date hereof and assigns, conveys, transfers and delivers to the Company, absolutely and without reservation, all of such Withdrawing Member's membership interest including, without limitation, all rights of such Withdrawing Member to receive cash distributions, all rights of such Withdrawing Member to receive a return of its capital and other distributions upon the dissolution of the Company, all rights of such Withdrawing Member to allocations of profits and losses and all other rights, powers and obligations provided to such Withdrawing Member under the Operating Agreement. (b) The Company hereby acknowledges and accepts the withdrawal of the Withdrawing Member from the Company and agrees to take any and all such actions as are necessary to reflect such withdrawal. SECTION 3. PAYMENT OF REDEMPTION PRICE. Upon execution of this Agreement, the Company agrees to pay the Withdrawing Member a total redemption price of ONE HUNDRED TWENTY FIVE THOUSAND AND 00/100 DOLLARS ($125,000.00) which shall be paid in full by the distribution by the Company to the Withdrawing Member of 323,885 shares of the 3,238,846 shares of common stock of Ballantyne of Omaha, Inc. owned by the Company. Such distribution shall be made in kind and the shares shall in no manner be liquidated. SECTION 3. MUTUAL RELEASE FROM LIABILITY. (a) As a condition to its withdrawal from the Company, the Withdrawing Member hereby releases and discharges the Company from any and all claims which the Withdrawing Member has or may have against the Company. (b) The Company hereby releases and discharges the Withdrawing Member from any and all claims which the Company has or may have against the Withdrawing Member. SECTION 4. MISCELLANEOUS. (a) This Agreement contains the entire understanding and agreement among the parties hereto with respect to the subject matter hereof and supersedes any prior agreements or understandings between them pertaining thereto, including the provisions of the Operating Agreement. No amendment or waiver of any provision of this Agreement shall be binding unless it is in writing. (b) This Agreement shall be construed and interpreted in accordance with the substantive laws of the State of Nebraska without giving effect to its conflict of laws principles. (c) This Agreement may be signed in any number of counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one agreement. [Signatures begin on the next page] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BALCO HOLDINGS, L.L.C., a Delaware limited liability company, McCarthy Group, Inc., Manager By /s/ MARGARET L. DOYLE ------------------------------------- Margaret L. Doyle Chief Financial Officer MCCARTHY GROUP, INC., a Nebraska Corporation By /s/ MICHAEL R. MCCARTHY ------------------------------------- Michael R. McCarthy, Chairman EX-99.5 7 a2060927zex-99_5.txt STOCK PURCHASE AGREEMENT EXHIBIT 99(5) STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of this 4th day of October, 2001 by and among MCCARTHY GROUP, INC., a Nebraska Corporation (the "Seller") and , an individual resident of the state of Nebraska (the "Buyer"). W I T N E S S E T H: WHEREAS, the Seller owns 323,885 shares of the Class A Common Stock, par value $0.01 per share (the "Stock") of Ballantyne of Omaha, Incorporated, a Delaware corporation (the "Corporation"), which Stock represents approximately 2.5885% of the issued and outstanding voting shares of the Corporation as of the date hereof; and WHEREAS, the Buyer desires to purchase from the Seller a total of of the 323,885 shares of the Stock, representing approximately % of the issued and outstanding voting shares of the Corporation as of the date hereof on the terms and subject to the conditions and in the manner reflected herein; and WHEREAS, Seller is willing to sell such shares of Stock on the terms and subject to the conditions and in the manner reflected herein; NOW THEREFORE, in consideration of the mutual agreements and covenants contained herein, the parties do hereby agree as follows: SECTION 1. PURCHASE AND SALE OF STOCK. The Seller agrees to sell to the Buyer and the Buyer agrees to purchase from the Seller, shares of the Stock for an aggregate purchase price of $ (the "Purchase Price"). SECTION 2. THE CLOSING. The closing (the "Closing") with respect to the purchase and sale of the Stock hereunder shall, subject to the satisfaction or waiver of the applicable conditions set forth in Sections 6 and 7 hereof, take place on such date (the "Closing Date") as is agreed to by the Seller and the Buyer; provided that in no event shall such Closing Date be later than October 8, 2001. SECTION 3. DELIVERIES AT CLOSING. At the Closing, the Seller shall deliver one or more certificates representing the shares of the Stock purchased by the Buyer which shall be duly registered in the name of the Buyer or its designees. At Closing, the Buyer shall deliver good funds to the Seller in an amount equal to the Purchase Price as provided in Section 1 hereof. SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby represents, warrants and covenants to the Buyer as of the date of this Agreement and as of the Closing Date, as follows: (a) SOLE OWNER. Seller owns the shares of the Stock free and clear of any (i) charge, claim, community property interest or similar right or interest, (ii) lien (statutory of otherwise), security interest or other encumbrance, (iii) option, pledge, right of first refusal or similar right or (iv) other agreement or restriction of any kind affecting the transferability or ownership of the Stock (collectively, "Encumbrances"). Seller will convey such Stock to the Buyer free and clear of any Encumbrances at the Closing. Seller has not granted any proxy or other right to vote the shares of the Stock owned by Seller to any other person or assigned the right to receive the payment of dividends or any other distributions made with respect to such shares of the Stock to any other person. The Seller has full power and authority to consummate the transactions contemplated by this Agreement and the execution, delivery and performance by it of this Agreement and the consummation of the transaction contemplated hereby have been duly authorized by all necessary action. (b) ENFORCEABILITY. This Agreement is a valid and binding obligation of the Seller, enforceable upon and against the Seller in accordance with the terms and conditions, except to the extent such enforceability may be limited by bankruptcy or insolvency laws, public policy or general principles of equity. (c) NONCONTRAVENTION. The execution and delivery of the Agreement by the Seller and the consummation of the transactions as contemplated on each do not or will not violate or result, with the giving of notice or the lapse of time or both, in a material violation of any provision of (i) any existing law or regulation or any order, award or decree of any court, arbitrator or governmental authority by which the Corporation or any Seller is bound or (ii) any mortgage, indenture, security agreement, shareholders agreement, contract, agreement or other undertaking to which the Corporation or the Seller is a party or by which the Corporation or the Seller is bound. (d) CLAIMS AND PROCEEDINGS. There are no pending or, to the Knowledge of the Seller, threatened claims, complaints, proceedings, demands, liabilities, suits or actions against the Seller or the Corporation before any court or governmental, administrative or regulatory agency or authority which seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the transaction contemplated by the Agreement. There are no attachments, executions, assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy pending or, to the Knowledge of Seller, threatened against the Seller. (e) ACCESS TO INFORMATION. The Seller represents, warrants and agrees that it shall not assert any claim of whatsoever nature against the Buyer or its affiliates arising out of the Seller (i) not having been provided sufficient access to all information concerning the Company, including without limitation, its financial condition, business, results of operations and prospects, that Seller have requested; (ii) not having been properly able to evaluate the Company's financial condition and the value of the Shares transferred hereunder; and/or (iii) not having been given the opportunity to obtain any additional information or documents from, and to ask questions and receive answers of the Company's officers and representatives to the extent the Seller has deemed necessary or appropriate. (f) ALL STOCK. The Stock transferred hereunder represents all of Seller's interest, directly or indirectly, of record and beneficially held, individually or in trust. (g) NO BROKERS. The Seller has not engaged any broker, finder, commission agent or other such intermediary in connection with the sale of the Stock to the Buyer or is otherwise obligated to pay any broker's or finder's fee or commission or similar payment in connection therewith. SECTION 5. REPRESENTATIONS OF THE BUYER. The Buyer represents, warrants and covenants to the Seller as of the date of this Agreement and the Closing Date, which representations, warranties and covenants shall survive Closing, as follows: (a) AUTHORITY. The Buyer has full power and authority to consummate the transactions contemplated by this Agreement and the execution, delivery and performance by it of this Agreement and the consummation of the transaction contemplated hereby have been duly authorized by all necessary action. (b) ENFORCEABILITY. This Agreement and all other agreements and instruments to be executed in connection with this Agreement are valid and binding and enforceable upon and against the Buyer in accordance with their respective terms, except to the extent such enforceability may be limited by bankruptcy or insolvency laws, public policy, or general principles of equity. (c) NONCONTRAVENTION. The execution and delivery of this Agreement by the Buyer and the consummation of the transactions as contemplated on its part does not or will not violate or result, with the giving of notice or the lapse of time or both, in a material violation of any provision of (i) any existing law or regulation or any order, award or decree of any court, arbitrator or governmental authority by which it is bound or (ii) any mortgage, indenture, security agreement, contract, agreement or other undertaking to which it is a party or by which it is bound. (d) PURCHASING FOR OWN ACCOUNT-ACKNOWLEDGEMENT OF RISKS. The Buyer represents, warrants and acknowledges that the Shares are being sold to Buyer without the sale being registered under the Securities Act of 1933, as amended, or any state securities law. Buyer represents and warrants that it is purchasing the Stock solely for its own account for investment purposes only and not as nominee or agent for any other person and not with a view to, or for offer or sale in connection with, any current distribution thereof. Buyer represents and warrants that it has evaluated the risks of investing in the Corporation and have determined that the investment is suitable for the Buyer. The Buyer represents that it can bear the economic risk of the investment and can afford a complete loss of the investment. Buyer is knowledgeable and experienced in evaluating investments and experienced in financial and business matters and is capable of evaluating the merits and risks of investing in the Corporation. Buyer is an "Accredited Investor" as that term is defined in Rule 501 of Regulation D of the Securities and Exchange Commission under the Securities Act of 1933, as amended. (e) ACCESS TO INFORMATION. The Buyer represents, warrants and agrees that it shall not assert a claim of whatsoever nature against the Seller or its affiliates arising out of the Buyer (i) not having been provided sufficient access to all information concerning the Company, including without limitation, its financial condition, business, results of operations and prospects, that Buyer has requested; (ii) not having been properly able to evaluate the Company's financial condition and the value of the Shares transferred hereunder; and/or (iii) not having been given the opportunity to obtain any additional information or documents from, and to ask questions and receive answers of the Company's officers and representatives to the extent the Buyer has deemed necessary or appropriate. (f) NO BROKERS. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the purchase of the Stock by the Buyer under this Agreement. SECTION 6. CONDITIONS TO BUYER'S OBLIGATIONS AT CLOSING. The obligation of the Buyer to purchase the Stock shall be subject to the fulfillment of each of the following conditions at or prior to the Closing Date, unless the Buyer shall waive fulfillment of such condition: (a) Each of the representations and warranties of the Seller set forth in this Agreement shall have been true in all material respects as of the date of this Agreement and as of the Closing Date; (b) The Seller shall have performed each of his agreements and obligations under this Agreement required to be performed on or prior to the Closing Date; (c) The Seller shall have obtained all consents of, or waivers by, third parties necessary to perform the obligations hereunder including, but not limited to, any consent or waiver required to be obtained from the Corporation or other shareholders of the Corporation concerning the Corporation's Rights Agreement, and (d) The Seller shall have delivered to the Buyer one or more certificates representing the Stock which shall be duly registered in the name of the Buyer or its designee SECTION 7. CONDITIONS TO SELLER'S OBLIGATIONS AT CLOSING. The obligation of the Seller to sell the Stock shall be subject to the fulfillment of each of the following conditions at or prior to the Closing Date, unless the Seller shall waive fulfillment of such condition: (a) Each of the representations and warranties of the Buyer set forth in this Agreement shall have been true in all material respects as of the date of this Agreement and as of the Closing Date; (b) The Buyer shall have performed each of its other agreements and obligations under this Agreement required to be performed on or prior to the Closing Date; and (c) The Buyer shall have delivered good funds to the Seller for the Purchase Price as provided in Section 1 hereof; SECTION 8. COVENANTS OF THE BUYER. The Buyer agrees that unless otherwise agreed to in writing by both parties hereto: (a) The shares of Stock transferred hereunder shall not be assigned or pledged in any manner. (b) The shares of Stock transferred hereunder shall be registered in the name of the Buyer but shall remain in the physical possession of the Seller. (c) At all times during which the Buyer owns, either directly or beneficially, the Stock, the Seller, or the Seller's designee shall vote all shares of said Stock in all matters that require the vote of the shareholders. Buyer agrees to execute any and all documents at any and all times as may be required designating transferring or assigning such voting right to the Seller. (d) It shall not sell the Stock without the written approval of the Seller, which may be withheld for any reason. (e) For the purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended ("The Act"), Buyer shall be included as part of the group, as that term is defined in The Act, which includes the Seller. As such, Buyer agrees to cooperate with the Seller in all respects concerning the filing of all required material, forms and reports regarding the ownership of the Stock by the Buyer, the Seller or other members of the group as that term is defined by The Act, and agrees not to sell, acquire, transfer, pledge or hypothecate any shares of the Corporation either for its own account or for the account of others without the written consent of the Seller. SECTION 9. TERMINATION. This Agreement and all other documents and agreements delivered in connection herewith and the transaction contemplated herein may be terminated at any time prior to the Closing Date by either party hereto if the Closing Date has not occurred by October 8, 2001. SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS TO SURVIVE/KNOWLEDGE. (a) The representations and warranties of the Seller and the Buyer contained in this Agreement shall survive the Effective Date indefinitely. (b) No party to this Agreement shall be entitled to rely on or seek recovery from breach of a representation or warranty contained in or made pursuant to this Agreement if such party had Knowledge of the inaccuracy of the same prior to or as of the Closing Date. (c) Each of the parties hereto agree to indemnify each other and each others managers, members, controlling persons and employees and hold each of them harmless from and against any loss, damage, liability, cost or expense (including reasonable attorneys' fees and disbursements) arising out of or in connection with a breach of any representation, warranty or agreement made by the respective party in this Agreement. (d) As used throughout this Agreement, the term "Knowledge", when capitalized, shall mean actual knowledge of the person(s) indicated. SECTION 11. EXPENSES. Each party shall be responsible for the payment of such party's own costs and expenses, including legal fees. SECTION 12. NOTICES. All notices and other communications delivered hereunder (whether or not required to be delivered hereunder) shall be deemed to be sufficient and duly given if contained in a written instrument (a) personally delivered, (b) sent by telecopier, (c) sent by nationally recognized overnight courier guaranteeing next Business Day delivery or (d) sent by first class registered or certified mail, postage prepaid, return receipt requested, in each case addressed to the other party at such address as the party to whom such notice or other communication is to be given may have furnished to each other party in writing. SECTION 13. ENTIRE AGREEMENT. This Agreement contains and constitutes the entire agreement of the parties regarding the purchase and sale of the Stock from the Seller to the Buyer, and there are no other agreements, written or oral, between the parties affecting the subject matter hereof. SECTION 14. WAIVERS. Any party hereto may waive any of the conditions contained herein or any of the obligations of the other parties hereunder, but any such waiver shall be effective only if it is in writing and signed by the party waiving such condition or obligation. SECTION 15. ASSIGNMENT OR DELEGATION. No rights, obligations or duties of any party hereto may be assigned or delegated without the prior written consent of the other parties hereto other than by operation of law with respect to a deceased Seller. This Agreement shall bind and inure to the benefit of the Seller and the Buyer and their respective successors, assigns, heirs, devisees and personal representatives who shall each be bound by, and entitled to the benefits of, this Agreement. SECTION 16. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute one in the same agreement. SECTION 17. GOVERNING LAW. This agreement shall be construed and interpreted in accordance with the laws of the State of Nebraska without giving effect to its conflict of laws principles. SECTION 18. FURTHER ASSURANCES. Each of the parties hereto agrees to take such further action and to execute such further instruments as may be reasonably required by any of the other parties in order to consummate the transactions contemplated by this Agreement and to carry out the intentions expressed in this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. SELLER: McCarthy Group, Inc., A Nebraska Corporation By /s/ MARGARET L. DOYLE --------------------------------- Margaret L. Doyle Chief Financial Officer BUYER ---------------------------------- EX-99.6 8 a2060927zex-99_6.txt PROMISSORY NOTE EXHIBIT 99(6) PROMISSORY NOTE $38,594.00 October 4, 2001 Omaha, Nebraska FOR VALUE RECEIVED, the undersigned, DENNIS M. O'BRIEN, hereby promises to pay to the order of McCARTHY GROUP, INC., a Nebraska corporation, the principal sum of Thirty-eight thousand, five hundred ninety-four dollars ($38,594.00) plus per annum interest from the date hereof on the unpaid principal balance at the rate of 5.25%. The entire amount of the principal and accrued interest due hereunder shall be due and payable on or before October 31, 2001. The privilege is reserved to prepay, with savings of interest, all or any part of the principal balance upon the payment of all accrued interest. The undersigned waives presentment for payment, demand, protest, notice of nonpayment, notice of protest, protest of nonpayment, and consent to any and all renewals, extensions and modifications which might be made by the holder hereof as to the time of payment of this Note, from time to time. /s/ DENNIS M. O'BRIEN -------------------------------- Dennis M. O'Brien EX-99.7 9 a2060927zex-99_7.txt LIMITED LIABILITY COMPANY EXHIBIT 99(7) FULCRUM GROWTH PARTNERS, L.L.C. LIMITED LIABILITY COMPANY AGREEMENT between KFS CORPORATION and MCCARTHY GROUP, INC., as Members Dated as of March 17, 1999 FULCRUM GROWTH PARTNERS, L.L.C. (a Delaware Limited Liability Company) LIMITED LIABILITY COMPANY AGREEMENT THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is made and entered into as of March 17, 1999 by and between KFS CORPORATION ("KFS"), a Nebraska corporation, and MCCARTHY GROUP, INC. ("MGI"), a Nebraska corporation, to provide for the formation, management and operation of FULCRUM GROWTH PARTNERS, L.L.C (the "Company"), a Delaware limited liability company, pursuant to the Act. In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.01. DEFINITIONS. Unless the context shall otherwise require, the capitalized terms used in this Agreement shall have the respective meanings specified or referred to in Exhibit A attached hereto. SECTION 1.02. INTERPRETATION. Each definition in this Agreement includes the singular and the plural, and reference to the neuter gender includes the masculine and feminine where appropriate. References to any statute or regulation mean such statute or regulation as amended at the time and include any successor legislation or regulation. Each agreement referred to in this Agreement shall mean such agreement as amended, supplemented and modified from time to time to the extent permitted by the applicable provisions thereof and hereof. The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this Agreement. Except as otherwise stated, references to Articles, Sections, Exhibits and Schedules mean the Articles, Sections, Exhibits and Schedules of this Agreement. The Exhibits and Schedules are hereby incorporated by reference into and shall be deemed a part of this Agreement. For purposes of this Agreement, if any day specified for notice to be given or any other action to be taken or period to expire falls on a day which is not a Business Day, such notice shall be due, action shall be taken or period shall expire on the next following Business Day. ARTICLE II ORGANIZATION SECTION 2.01. FORMATION. The Company has been organized as a Delaware limited liability company under and pursuant to the Act by the filing of a Certificate of Formation with the Office of the Secretary of State of Delaware as required by the Act. In the event of a conflict between the terms of this Agreement and the Certificate of Formation, the terms of the Certificate of Formation shall prevail. This Agreement shall be effective as of the date of filing of the Certificate of Formation (the "Formation Date"). SECTION 2.02. NAME. The name of the Company is Fulcrum Growth Partners, L.L.C. To the extent permitted by the Act, the Company may conduct its business under one or more assumed names deemed advisable by the Managing Member. SECTION 2.03. PURPOSES. The purposes of the Company are to engage in any activity and/or business for which limited liability companies may be formed under the Act. The Company shall have all the powers necessary or convenient to effect any purpose for which it is formed, including all powers granted by the Act. SECTION 2.04. DURATION. The term of existence of the Company shall expire on the fortieth anniversary of the Formation Date; provided, however, that the Company shall not continue in existence beyond the date the Company is dissolved and its affairs wound up in accordance with the Act or this Agreement. SECTION 2.05. REGISTERED OFFICE AND REGISTERED AGENT; PRINCIPAL OFFICE. (a) The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the initial registered office named in the Certificate of Formation or such other office (which need not be a place of business of the Company) as the Managing Member may designate from time to time in the manner provided by the Act. (b) The registered agent of the Company in the State of Delaware shall be the initial registered agent named in the Certificate of Formation or such other Person as the Managing Member may designate in the manner provided by the Act. (c) The principal office of the Company shall be at such place as the Managing Member may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records there for inspection as required by the Act. SECTION 2.06. NO PARTNERSHIP. No provisions of this Agreement shall be deemed or construed to constitute the Company a partnership (including, without limitation, a limited partnership) or joint venture, or any Member or Managing Member a partner or joint venturer of or with any other Member or Managing Member, for any purposes other than federal and state tax purposes. ARTICLE III MEMBERS SECTION 3.01. MEMBERS. The initial Members of the Company are KFS and MGI and the addresses of such Members are as set forth on Schedule I. As of the date hereof, there are no other Members of the Company and no other Person has any right to take part in the ownership of the Company. SECTION 3.02. ADMISSION OF ADDITIONAL MEMBERS. Additional Members of the Company may only be added if the addition of any such proposed additional Member is approved unanimously in writing, prior to such admission, by all the then existing Members and such proposed additional Member executes a counterpart of, or an agreement adopting, this Agreement and such other agreements as the existing Members may require. ARTICLE IV CAPITAL CONTRIBUTIONS SECTION 4.01. CAPITAL CONTRIBUTIONS. (a) On the date of execution and delivery of this Agreement each Member shall contribute or cause to be contributed to the capital of the Company its initial cash capital contribution ("Initial Capital Contribution") as set forth in Schedule I, payable by check or wire transfer. (b) Upon the occurrence of a Funding Event prior to the third anniversary of the Formation Date, the Managing Member may call for the Members to make mandatory additional cash capital contributions ("Additional Capital Contributions"). Upon such call, each Member shall be required to make an Additional Capital Contribution not exceeding, in the aggregate (including the Initial Capital Contribution and all prior Additional Capital Contributions of such Member), its Capital Contribution Commitment. The respective portion of any Additional Capital Contribution to be contributed by each Member pursuant to this Section 4.01(b) shall be determined on a pro rata basis in accordance with each Member's Membership Interest at the time of the call. Any call for Additional Capital Contributions from the Members shall be evidenced in a Notification from the Managing Member delivered to the Members which shall specify (i) the amount of the Additional Capital Contribution required from each Member, (ii) the Portfolio Investment (if any) to be acquired with such Additional Capital Contributions, (iii) the other uses (if any) for such Additional Capital Contributions, (iv) the transfer instructions for such Additional Capital Contributions and (v) the date on which payment is due, which shall be not less than 15 days after delivery of such Notification. On or prior to the due date specified in such Notification, each Member shall contribute or cause to be contributed to the Company an amount (in cash) equal to such Member's required Additional Capital Contribution so called for. In the case of a call for Additional Capital Contributions for purposes of acquiring Portfolio Investments, if the Additional Capital Contributions are not invested as described in the related Notification within 30 days after the date they are due, the Managing Member shall notify each Member and, upon the request of any Member, shall return such Additional Capital Contributions to the contributing Members. Notwithstanding anything contained herein to the contrary, in no event shall any Member be obligated to contribute to the Company, in the aggregate, more than its Capital Contribution Commitment or to make any Additional Capital Contribution after the third anniversary of the Formation Date. (c) All contributions by a Member to the Company must be paid in immediately available funds and must be in the amount required by Schedule I and the relevant Notification. The Company will not accept contributions from Members in excess of the Capital Contributions required pursuant to this Section 4.01. (d) If a Member (the "Noncontributing Member") does not contribute an Additional Capital Contribution required pursuant to Section 4.01(b) on or before the due date specified in the Notification thereof, such Noncontributing Member shall be liable to the Company for any actual costs and expenses incurred by the Company as a result of such default (e.g. attorney's fees and costs and termination fees incurred in connection with any pending investment which is not completed by the Company due to a lack of capital). If there is a Noncontributing Member, any Member (the "Contributing Member") which funds its Additional Capital Contribution shall be entitled to the return of such contribution by the Company, together with an amount equal to any interest earnings from the interim investment of such funds. If the Managing Member has already utilized such funds to acquire Portfolio Investments, the funds contributed by the Contributing Member shall be considered a loan to the Company rather that a Capital Contribution and the Contributing Member shall be entitled to interest at the Funding Rate in effect from time to time calculated on a 360-day year and the actual number of days elapsed from the time of such funding until it is returned. SECTION 4.02. MEMBERSHIP INTERESTS. Each Member shall have a Membership Interest in the Company as specified in Schedule I. SECTION 4.02. CAPITAL ACCOUNTS. (a) A Capital Account shall be established and maintained for each Member. Each Member's Capital Account (i) shall be increased by (A) the amount of cash contributed by that Member to the Company and (B) allocations to that Member of Company income and gain (or items thereof), and (ii) shall be decreased by (A) the amount of cash and property distributed to that Member by the Company and (B) allocations of Company loss and deduction (or items thereof). (b) The foregoing provisions of this Section 4.03 are intended to comply with Section 1.704-1(b)(2)(iv) of the Treasury Regulations and shall be interpreted and applied in a manner consistent with such Treasury Regulations. If the Managing Member determines that it is prudent to modify the manner in which the Capital Accounts are adjusted or maintained in order to comply with Section 1.704-1(b)(2)(iv) of the Treasury Regulations, the Managing Member may make such modification. SECTION 4.03. RETURN OF CAPITAL CONTRIBUTIONS. Except as otherwise provided herein or in the Act, no Member shall have the right to withdraw, or receive any return of, all or any portion of such Member's Capital Contributions. SECTION 4.04. INTEREST. No interest shall be paid by the Company on Capital Contributions or on balances in Members' Capital Accounts. SECTION 4.05. LOANS FROM MEMBERS. Loans by a Member to the Company shall not be considered Capital Contributions. ARTICLE V ALLOCATIONS AND DISTRIBUTIONS SECTION 5.01. ALLOCATION OF PROFITS AND LOSSES. The Company's income, gains, losses, deductions and credits (and each item thereof) shall be allocated among the Members in proportion to their respective Membership Interests. SECTION 5.02. DISTRIBUTIONS. (a) Upon the written request of any Member delivered to the Managing Member within 30 days of the Member's receipt of the Company's federal income tax return, Distributions shall be declared by the Managing Member in such amounts as the requesting Member may request, not to exceed an amount equal to the Applicable Percentage of taxable income attributable to the Members in connection with their ownership of Membership Interests for the taxable year of such return. Distributions requested and declared pursuant to this Section 5.02(a) shall be paid to the Members within 30 days of receipt of the request by the Managing Member. For purposes of this Agreement, "Applicable Percentage" means the highest combined tax rate applicable to either Member for the relevant taxable year. All Distributions shall be paid to Members in proportion to their Membership Interests on the date such Distribution is declared or on such other record date as the Managing Member shall establish for the determination of Members who are entitled to receive such Distribution. Notwithstanding the above rights, no Distribution shall be made during the period from the Effective Date to the end of the Buy/Sell Period. (b) Members shall have no right to receive Distributions unless and until declared by the Managing Member, in accordance with the provisions of this Agreement and the applicable limitations of the Act. Upon declaration of a Distribution, a Member shall have the status of a creditor of the Company with respect to such Distribution and be entitled to all remedies available thereto. All Distributions shall be in cash except as otherwise required by Section 10.03 or consented to by all Members. All Distributions of property shall be valued at the Fair Market Value of such property as of the date of distribution. (c) Members shall not receive salaries or compensation from the Company solely in their capacities as Members or for the use of their capital. (d) Subject to the provisions of subparagraph (b) of this Section 5.02, MGAM, as Advisor, shall be entitled to receive the Carried Fee in accordance with the terms of its Management Agreement (i) when the Members shall have actually received Distributions (either cash or in property) equal in the aggregate to their Capital Contributions, or (ii) at the time of any Distribution in cash to the Members even if the condition in (i) has not been met, but only with the consent of all Members in such amount as the Members may agree, each acting reasonably and taking into account the Fair Market Value of the Portfolio Investments as of the preceding December 31 and future prospects for such investments and other relevant considerations, or (iii) upon the date of the closing of a purchase of a Member's interest pursuant to Section 6.05. ARTICLE VI RIGHTS, POWERS AND OBLIGATIONS OF MEMBERS SECTION 6.01. AUTHORITY; LIABILITY TO THIRD PARTIES. (a) Except as otherwise provided herein, no Member has the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company, or to incur any expenditures on behalf of the Company. (b) Except as may be otherwise required under the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member. (c) Notwithstanding Section 6.01(b), a Member shall be liable to the Company for any unpaid portion of the Initial Capital Contribution stated in Schedule I as having been made by such Member. (d) A Member shall hold as trustee for the Company money or other property wrongfully paid or conveyed to such Member by the Company or received by such Member from third parties for the account of the Company. SECTION 6.02. TRANSFER OF MEMBERSHIP INTERESTS. (a) Except for transfers pursuant to Section 6.05 or Section 6.06, no Member shall Transfer any Membership Interest (including economic rights associated therewith) to any Person, except with the unanimous written consent of all other Members. No Member shall Transfer less than all of its Membership Interest. (b) Any purported Transfer of any Membership Interest in violation of the provisions of this Agreement shall be wholly void and shall not effectuate the Transfer contemplated thereby. No Member may Transfer any Membership Interest in violation of the Securities Act or any applicable state securities laws. SECTION 6.03. ADMISSION OF TRANSFEREE AS MEMBER. A transferee of a Membership Interest desiring to be admitted as a Member must execute an amendment to this Agreement, signed by the new Member and all existing Members, by which the new Member agrees to be bound by the terms and conditions of this Agreement and which amends Schedule I as needed to reflect each Member's Initial Capital Contribution, Capital Contribution Commitment and Membership Interest. The admission of such transferee is subject to the unanimous approval of the Members. Upon admission of the transferee as a Member, the transferee shall have, to the extent of the Membership Interest transferred, the rights and powers and shall be subject to the restrictions and liabilities of a Member under this Agreement, the Certificate of Formation and the Act and shall assume any obligations of the transferor Member under this Agreement, whereupon the transferor Member shall be released from all liability under this Agreement. SECTION 6.04. RESIGNATION OF A MEMBER. Except in connection with a Transfer pursuant to Section 6.05 or Section 6.06, no member shall resign, withdraw, retire or otherwise take action to effect the foregoing. SECTION 6.05. BUY/SELL OPTION. (a) During the period of June 1, 2002 through June 30, 2002 and June 1 through June 30 of each calendar year thereafter prior to dissolution of the Company, either Member (the "Initiating Member") may give the other Member (the "Recipient Member") Notification initiating the buy/sell provisions of this Section 6.05 (the "Buy/Sell Notice"). (b) On or before December 31 of the year in which a Buy/Sell Notice is given but effective as of such December 31 (the "Effective Date"), the Initiating Member shall give the Recipient Member Notification setting forth a dollar amount as the aggregate value of all Portfolio Investments (other than Publicly Traded Securities) of the Company based upon which the price at which the Initiating Member is willing to buy the Recipient Member's Membership Interest or sell the Initiating Member's Membership Interest shall be determined (the "Price Notice"). Based upon such dollar amount, a calculation of the allocations called for under Article V shall be made, assuming hypothetically that (i) all such Portfolio Investments were sold on the Effective Date at a purchase price equal to the value specified in the Price Notice, (ii) all cash, cash equivalents and any other short-term assets of the Company were liquidated on the Effective Date at their Market Value, (iii) all Publicly Traded Securities were liquidated at the closing price for such Publicly Traded Securities on the Effective Date and (iv) all Fixed Debts of the Company were paid on the Effective Date. The purchase price for the Membership Interest to be sold shall be the Capital Account balance of the selling Member as of the Effective Date after such allocations. Within ten (10) Business Days after the Effective Date, the Managing Member shall provide to the Members written estimates of the values of items required by (ii), (iii) and (iv) as of the Effective Date. The Managing Member's estimates shall be confirmed by the independent auditors for the Company in connection with the audit for the Company for the calendar year ending on the Effective Date. The auditors will then calculate the Members' Capital Account balances based on such values. Such confirmation and calculation by the auditors for the Company shall be completed at the time of, and shall be delivered with, the audit report for the Company. (c) For a period of 15 days following the Effective Date, the Recipient Member shall have the option to elect to either (i) purchase the Membership Interest of the Initiating Member or (ii) sell its own Membership Interest to the Initiating Member, in either case at a purchase price determined pursuant to the Price Notice and Section 6.05(b). Such option shall be exercised by the Recipient Member giving Notification to the Initiating Member within the 15-day period. The failure to provide such Notification shall be conclusively deemed an election to sell the Membership Interest of the Recipient Member to the Initiating Member. Upon the exercise or deemed exercise of the option contained in this subsection (c), the parties shall be deemed for all purposes to have reached an agreement for the sale and purchase of the Membership Interest without any further action by either party. (d) The closing of any purchase made pursuant to subsection (c) shall occur on the date which is five (5) Business Days following receipt by the Members of the audit for the Company for the calendar year concluding on the Effective Date. The sale shall be effective as of the Effective Date and the Member becoming obligated to purchase (the "Purchaser") shall be deemed to be the owner of the transferred Membership Interest for tax and accounting purposes as of the Effective Date. In addition to the purchase price, the Member obligated to sell (the "Seller") shall be entitled to interest on the purchase price determined pursuant to Section 6.05(b) at an annual rate equal to the Prime Rate as quoted in THE WALL STREET JOURNAL, MIDWEST EDITION (the "Prime Rate"), and in effect from time to time from the Effective Date to, but not including, the date of closing calculated based on a 360-day year and the actual number of days elapsed. Such interest shall not be considered a hypothetical distribution to such Member for purposes of calculating the Carried Fee for purposes of Section 6.05(b) or Section 5 of the Management Agreement. At the closing, (i) the Seller shall deliver title to its Membership Interest to the Purchaser free and clear of all liens and encumbrances and (ii) the Purchaser shall pay to the Seller the entire purchase price and accrued interest pursuant to this subsection (d) in immediately available funds. (d) It shall be an absolute condition to the closing of any purchase under this Section 6.05 that (i) the Purchaser shall cause the Seller to be released at closing from all guaranties, if any, of indebtedness or other obligations of the Company ("Guaranties") and (ii) on the closing date the Company is not subject to any material (in the judgment of the Purchaser) adverse liability or claim, whether or not contingent, which arose or became known to the Purchaser after the Effective Date. (e) If (A) the Purchaser fails to tender the purchase price plus interest to purchase the Membership Interest or fails to cause the Seller to be released from all Guaranties within the time period specified in subsection (d) above, and such failure continues unremedied for 15 days or (B) the closing does not occur because the condition set forth in Section 6.05(e)(ii) is not met, and such condition continues for 15 days, then the obligations of the parties to purchase and sell as described above shall be void; provided, however, that upon the events described in (A) above (i) the Purchaser shall instead be obligated to sell its Membership Interest to the Seller (at the election of the Seller to purchase as provided in the next sentence) at a purchase price equal to 80% of the purchase price that would have been payable if the Purchaser had been the selling Member and (ii) the Purchaser shall forfeit its right to give a Buy/Sell Notice pursuant to this Section 6.05 or Section 10.03(c). The Seller may elect to purchase the Membership Interest of the defaulting Purchaser by giving Notification to the defaulting Purchaser within 45 days of the original closing date, specifying a closing date within 75 days of the original closing date (and at least five days after delivery of such Notification). Notwithstanding the provisions of Section 6.05(d), in the event the purchase of a Membership Interest shall fail to close as a result of the failure to satisfy either of the conditions of Section 6.05(e) and the Seller does not purchase the Purchaser's Membership Interest as described above, then the sale of the Membership Interest shall be void AB INITIO. In such event, the allocations and distributions under Article V shall be determined (or, if allocations were made after the Effective Date based on the assumption that the purchase would occur, redetermined) recognizing that no transfer of the Membership Interest shall have occurred. (f) Whenever a Member has a right to purchase a Membership Interest pursuant to Section 6.05, the purchasing Member may designate one or more of its Affiliates to purchase all or any portion of such Membership Interest; provided, however, that such designation shall not release the purchasing Member from its liability under this Section 6.05. SECTION 6.06. TRANSFERS TO AFFILIATES. MGI may Transfer its entire Membership Interest to any of its wholly owned Affiliates. KFS may transfer its entire Membership Interest to any of its Affiliates. Each of KFS and MGI consents to the admission of any transferee pursuant to this Section 6.06 as a new Member. The transferee Member shall assume any obligations of the transferor Member under this Agreement whereupon the transferor Member shall be released from all liability under this Agreement. SECTION 6.07. COINVESTMENT POLICY. (a) Until the total amount of the Capital Contribution Commitments of the Members has been contributed, MGI agrees that MGI shall not invest, directly or indirectly through any Affiliate, in any Person other than (i) the Company, (ii) investments which are prohibited for the Company pursuant to the Investment Policy, (iii) investments in any Person in which MGI is invested as of the Formation Date (other than Acceptance Insurance Companies Inc.), (iv) MGI's consolidated and directly operated subsidiaries and (v) as permitted pursuant to Section 6.07(b). (b) If an investment by the Company is to be made at any time when MGI or its Affiliates has capital available to invest, MGI or its Affiliates may invest in the securities being acquired by the Company, on terms no more favorable than the Company's investment, so long as at least 80% of each class of securities being purchased (by the Company and MGI and its Affiliates) is purchased by the Company and only upon 30 days' prior notice to each other Member. This Section 6.07(b) shall not apply in any situation to which Section 6.07(c) or Section 6.07(d) applies. (c) If at any time both the Company and any other investment vehicle(s) whose investments are directed on a discretionary basis by MGI or any of its Affiliates have money to invest, MGI agrees that, to the extent it is reasonably able to do so, it will manage the investment of these monies in any new investment such that the investment of KFS through its Membership Interest and any comparable interest of KFS or any of its Affiliates in any such other investment vehicles is at least equal to (i) if MGI or its Affiliates has a membership interest in such investment vehicle(s), the combined investment interest of MGI and its Affiliates through its Membership Interest, the Carried Fee and any comparable membership interests and carried fees in such investment vehicle(s) and (ii) each third party through its investment interest in such investment vehicle(s). This Section 6.07(c) shall not apply in any situation to which Section 6.07(b) or Section 6.07(d) applies. (d) If at any time the Company has money to invest, MGI or any of its Affiliates has money to invest and any investment vehicle(s) whose investments are directed on a discretionary basis by MGI or any of its Affiliates has money to invest, MGI agrees that, to the extent it is reasonably able to do so, it will manage the investment of these monies in any new investments such that the investment of KFS through its Membership Interest and any comparable interest of KFS or any of its Affiliates in any such other investment vehicles is at least equal to (i) the combined investment interest of MGI and its Affiliates through its Membership Interest, the Carried Fee and, if applicable, any comparable membership interests and carried fees held in such investment vehicle(s) by MGI and its Affiliates and (ii) each third party through its investment interest in such investment vehicle(s). This Section 6.07(d) shall not apply in any situation to which Section 6.07(b) or Section 6.07(c) applies. (e) The limitations contained in Section 6.07(b), Section 6.07(c) and Section 6.07(d) apply only to the extent the Company has sufficient funds to make such investment and the investment would not be prohibited pursuant to the Investment Policy and shall not apply during a Buy/Sell Period or from and after an event requiring dissolution of the Company pursuant to Section 10.01. All investments governed by such limitations shall be on no more favorable terms than the terms of the Company's investment. The Managing Member shall give each other Member notice of any proposed or intended investment governed by such limitations as far in advance of the investment date as the Managing Member, acting reasonably, deems practicable. (f) For so long as MGI serves as the Managing Member, if MGI or any of its Affiliates owns, directs or controls through any discretionary investment vehicle, securities also held by the Company, (i) MGI shall exercise (or cause to be exercised) all rights with respect to such securities in the same manner as such rights are exercised by MGI, as the Managing Member, and (ii) MGI shall not dispose (or permit, recommend or direct the disposal) of such securities except on the same terms and conditions, in the same proportions and on the same date as MGI, as the Managing Member, disposes of such securities on behalf of the Company. SECTION 6.08. MCCARTHY. During the term of the Management Agreement, and so long as MGI continues to act as Managing Member, MGI shall cause its Chairman and CEO, Michael R. McCarthy, to devote his business time and effort to the management and operation of the Company to the extent required to grow and realize the value of the Portfolio Investments. SECTION 6.09. INVESTMENT BANKING FEES. The Members acknowledge and agree that the companies underlying the Portfolio Investments may, from time to time, engage investment banking firms, including Affiliates of MGI, to provide services on their behalf. Such investment banking firms, including Affiliates of MGI, will be compensated for such services by such companies on customary terms and conditions and none of the fees paid for such services will reduce the fees payable to MGAM as Advisor pursuant to its Management Agreement, provided, however, no Affiliates of MGI shall be entitled to fees in connection with services performed in connection with investments made by the Company in the Portfolio Investments or disposition or liquidation of any Portfolio Investment in which the Company has a 51% voting equity interest without the prior written consent of all the Members. SECTION 6.10. PUBLIC DISCLOSURE. Each of the Members hereby agrees that no press release or similar public announcement or communication will be made or caused to be made concerning the execution or performance of this Agreement, including the investment in any Portfolio Investment, unless specifically approved in writing in advance by all Members; provided, that nothing contained herein shall prevent a Member, after giving reasonable advance notice to the other Members, from making any announcement reasonably determined by it, upon advice of counsel, to be required by law or by any stock exchange or governmental entity. ARTICLE VII MEETINGS OF MEMBERS SECTION 7.01. PLACE OF MEETINGS. All meetings of Members shall be held at the principal office of the Company as provided in Section 2.05, or at such other place as may be designated by the Managing Member or by the Member(s) calling the meeting. SECTION 7.02. MEETINGS. (a) The Members will meet at least quarterly, as soon as is reasonably practicable following issuance of the reports and other information called for by Section 9.06, for the purpose of discussing the reports and information, investment and liquidation strategies and opportunities and other topics of interest. Other meetings of Members for the transaction of such business as may properly come before the meeting may be held at such place, on such date and at such time as the Managing Member shall determine. (b) Special meetings of Members for any proper purpose or purposes may be called at any time by any Member or Members holding 51% or more of the aggregate Membership Interest. SECTION 7.03. NOTICE. A Notification of all meetings, stating the place, day and hour of the meeting and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 60 days before the meeting to each Member entitled to vote. SECTION 7.04. WAIVER OF NOTICE. Attendance of a Member at a meeting shall constitute a waiver of Notification of the meeting, except where such Member attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Notification of a meeting may also be waived in writing. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required to be included in the Notification of the meeting but not so included, if the objection is expressly made at the meeting. SECTION 7.05. QUORUM. The presence of Members holding 100% of the Membership Interests is required to constitute a quorum at any meeting of the Members. Failure to obtain a quorum at a meeting shall not in any way restrict or prohibit the right of the Members to take action by written consent pursuant to Section 7.08. SECTION 7.06. VOTING. (a) All Members shall be entitled to vote on any matter submitted to a vote of the Members. Each Member shall be entitled to one vote for each full percentage of the Membership Interest held by such Member. (b) With respect to any matter other than a matter for which the affirmative vote of Members owning a specified percentage of the Membership Interests is required by the Act, the Certificate of Formation or this Agreement, the affirmative vote of the holders of at least 51% of the Membership Interests at a meeting at which a quorum is present or by written consent pursuant to Section 7.08 shall be the action of the Members. (c) No provision of this Agreement requiring that any action be taken only upon approval of Members holding a specified percentage of the Membership Interests may be modified, amended or repealed unless such modification, amendment or repeal is approved by Members holding at least such percentage of the Membership Interests. SECTION 7.07. CONDUCT OF MEETINGS. The Managing Member shall have full power and authority concerning the manner of conducting any meeting of the Members, including, without limitation, the determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the requirements of this Article VII, the conduct of voting, and the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting. The Managing Member shall designate a Person to serve as chairperson of any meeting and shall further designate a Person to take minutes of any meeting. SECTION 7.08. ACTION BY WRITTEN CONSENT. Any action that may be taken at a meeting of the Members may be taken without a meeting if a consent in writing, setting forth the action to be taken, shall be signed and dated by Members holding the percentage of Membership Interests required to approve such action under the Act, the Certificate of Formation or this Agreement. A facsimile, telegram, telex, cablegram or similar transmission by the Member or a photographic, photostatic, facsimile or similar reproduction of a writing executed by the Member shall be treated as an execution in writing for purposes of this Section 7.08. SECTION 7.09. CORPORATE MEMBER. Any officer of a corporate Member may: (i) represent the Member in person at a meeting of the members, and (ii) execute a consent pursuant to Section 7.08 (or any other document required under this Agreement) on behalf of such Member. The Managing Member and the chairperson of any meeting of Members shall not be required to verify the authority of any such officer, but may require a secretary's certificate from the corporate Member confirming such officer's incumbency and signature. ARTICLE VIII MANAGEMENT OF THE COMPANY SECTION 8.01. MANAGEMENT OF THE COMPANY. Except as otherwise expressly provided in this Agreement, the powers of the Company shall be exercised by, and the business and affairs of the Company shall be managed by, a managing member (the "Managing Member") designated from time to time by the Members. SECTION 8.02. MANAGING MEMBER. The initial Managing Member shall be MGI. SECTION 8.03. GENERAL POWERS OF MANAGING MEMBER. Except as may otherwise be expressly provided in this Agreement, the Managing Member shall have complete and exclusive discretion and authority in the management and control of the business and affairs of the Company. The Managing Member shall not have the right to exercise the Company's rights to amend or terminate the Management Agreement, which shall be exercisable only by a majority vote of the Members. The Managing Member shall invest the assets of the Company in accordance with the Investment Policy. The Managing Member may determine to retain such amount of cash as it determines to be appropriate for working capital and other purposes; provided, however, that at all times the Managing Member shall retain such amount of cash (or maintain committed credit facilities in such amounts) as may be necessary to fund any Distributions requested pursuant to Section 5.02(a). SECTION 8.04. LIMITATIONS ON POWERS OF MANAGING MEMBER. The enumeration of powers in this Agreement shall not limit the general or implied powers of the Managing Member or any additional powers provided by law. Notwithstanding the foregoing and any other provision contained in this Agreement to the contrary, no act shall be taken, sum expended, decision made, obligation incurred or power exercised by the Company, or the Managing Member on behalf of the Company, in each case without the unanimous approval of all of the Members (by vote or written consent) with respect to each of the following: (a) any merger or consolidation of the Company (other than a merger of any subsidiary of the Company into the Company); (b) any voluntary bankruptcy, liquidation, dissolution or termination of the Company; (c) any split, combination or reclassification of any Membership Interests; (d) the declaration, setting aside or the payment of any Distributions by the Company to any Member, except for any payments with respect to debt owed to a Member (and approved pursuant to this Section 8.04), Distributions pursuant to Section 5.02(a) or Section 10.03; (e) the incurrence by the Company of any indebtedness for borrowed money (other than as contemplated by Section 4.01(d)) or any capitalized lease obligation or the entry into any agreement, commitment, assumption or guarantee with respect thereto (i) in any amount during a Buy/Sell Period or (ii) at any time, in an amount, individually or in a series of related transactions, greater than (A) prior to the third anniversary of the Formation Date, an amount equal to 30% of the aggregate Capital Contributions, and (B) thereafter, an amount equal to 30% of the Fair Market Value of the assets of the Company as of the preceding December 31; (f) the issuance by the Company of any additional Membership Interests or other equity interests (including any interests convertible into equity interests) of the Company, or the admission of any Person as a Member of the Company other than pursuant to Section 6.06; (g) any change of the Company's name or any amendment or restatement of the Certificate of Formation or this Agreement, including the Investment Policy; (h) the entry into by the Company, or the waiver, amendment, consent to the assignment of or modification of the terms of, any contract or agreement with a Member or any Affiliate of a Member, including the Management Agreement provided that the foregoing shall not include termination of the Management Agreement; (i) the appointment of external auditors of the Company changing the initial appointment made pursuant to Section 9.10; (j) the payment of any fees to Members or Affiliates of Members, except as specified in the Management Agreement; or (k) the incurrence by the Company of any indebtedness to a Member other than as contemplated by Section 4.01(d); or (l) the investment in or initiation of the liquidation of any Portfolio Investment during a Buy/Sell Period. SECTION 8.05. COMPENSATION. The Managing Member shall serve without compensation. SECTION 8.06. RESIGNATION AND REMOVAL. The Managing Member may not resign. The Managing Member may be removed by the Members, either for or without cause. SECTION 8.07. STANDARD OF CARE; LIABILITY. The Managing Member shall discharge its duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner reasonably believed to be in the best interests of the Company. The Managing Member shall not be liable for any monetary damages to the Company for any breach of such duties except for receipt of a financial benefit to which the Managing Member is not entitled, making a distribution to Members in violation of this Agreement or the Act, or a knowing violation of the law. SECTION 8.09. MANAGEMENT AGREEMENT. The Company shall enter into a Management Agreement with McCarthy Group Asset Management, Inc. in the form attached as Exhibit B to this Agreement (the "Management Agreement"), and each Member hereby approves such agreement. The Managing Member agrees to monitor the performance of the Advisor pursuant to the Management Agreement and agrees to notify all the Members promptly of any material breach by the Advisor of any provisions of the Management Agreement. Upon termination of the Management Agreement, the Members by a majority vote, not the Managing Member, shall have the right to appoint a successor Advisor experienced in management and disposition of assets similar to those held by the Company and to enter into an agreement with such advisor on behalf of the Company on such terms and condition as the Members, by majority vote, may approve. ARTICLE IX FISCAL MATTERS; BOOKS AND RECORDS SECTION 9.01. BANK ACCOUNTS; INVESTMENTS. Capital Contributions, revenues, if any, and any other Company funds shall be deposited by the Managing Member in a bank account established in the name of the Company, or shall be invested by the Managing Member in furtherance of the purposes of the Company and in accordance with the Investment Policy. No other funds shall be deposited into Company bank accounts or commingled with Company investments. Funds deposited in the Company's bank accounts may be withdrawn only to be invested in furtherance of the Company's purposes, to pay Company debts or obligations or to be distributed to the Members pursuant to this Agreement. SECTION 9.02. RECORDS REQUIRED BY ACT. During the term of the Company's existence and for a period of four years thereafter, the Managing Member shall maintain in the Company's principal office specified pursuant to Section 2.05 all records required to be kept pursuant to the Act, including, without limitation, a current list of the names, addresses and Membership Interests held by each of the Members (including the dates on which each of the Members became a Member), copies of federal, state and local information or income tax returns for each of the Company's tax years, copies of this Agreement and the Certificate of Formation, including all amendments or restatements, and correct and complete books and records of account of the Company. SECTION 9.03. BOOKS AND RECORDS. The Company shall maintain adequate GAAP books and records of account on a basis consistent with appropriate provisions of the Code, containing, among other entries, a Capital Account for each Member. SECTION 9.04. ACCESS TO BOOKS AND RECORDS. The Members and their representative agents shall have access to the records of the Company and shall be entitled to perform internal reviews and audits of such records at their own expense. During a Buy/Sell Period, the Members and their representative agents shall have access to the records of the Persons in which the Company is invested, subject to the terms of the agreements between the Company and such Persons. SECTION 9.05. TAX RETURNS AND INFORMATION. The Members intend for the Company to be treated as a partnership for tax purposes. Within 60 days after the end of each calendar year, the Company shall send or deliver to each Person who was a Member at any time during such year such tax information as shall be reasonably necessary for the preparation by such Person of such Person's federal income tax return and state income and other tax returns. SECTION 9.06. DELIVERY OF FINANCIAL INFORMATION AND FAIR MARKET VALUE REPORTS TO MEMBERS. (a) As to each fiscal quarter of the Company and each fiscal year of the Company, the Managing Member shall send to each Member a copy of (i) the balance sheet of the Company as of the end of the fiscal quarter and, if applicable, year, (ii) an income statement of the Company for such quarter and, if applicable, year, (iii) a statement showing the revenues distributed by the Company to Members in respect of such quarter and, if applicable, year, (iv) a statement of sources, uses and availability of funds for such quarter and, if applicable, year, (v) a list of all investments that constitute Portfolio Investments, (vi) a year-to-date estimate of allocations to be made pursuant to Section 5.01 and (vii) such other information as may be agreed upon by the Members. (b) As to each fiscal quarter, the Managing Member shall send to each Member a certificate signed by the Managing Member certifying (i) whether or not each Member has paid all Additional Capital Contributions required to be made pursuant to Section 4.01, (ii) whether such Additional Capital Contributions have been fully invested and (iii) that, to the best of its knowledge, there has been no material breach by the Advisor of its obligations pursuant to the Management Agreement. (c) The financial statements and certificates referenced in (a) and (b) above shall be delivered no later than 45 days following the end of the fiscal quarter to which they relate and no later than 90 days following the end of the fiscal year to which they relate. (d) As promptly as possible the Managing Member shall distribute to all Members any Fair Market Value Report delivered to it pursuant to the Management Agreement. SECTION 9.07. FISCAL YEAR. The Company's fiscal year shall end on December 31 of each calendar year. SECTION 9.08. TAX ELECTIONS. The Company shall make the following elections on the appropriate tax returns: (a) to adopt the calendar year as the Company's fiscal year, if permitted by the Code; (b) to adopt the accrual method of accounting, if permitted by the Code; and (c) to elect to amortize the organizational expenses of the Company ratably over a period of 60 months as permitted by Section 709(b) of the Code. Neither the Company, the Managing Member nor any Member may make an election for the Company to be excluded from the application of the provisions of Subchapter K of Chapter 1 of Subtitle A of the Code or any similar provisions of applicable state law. SECTION 9.09. TAX MATTERS PARTNER; PREPARATION OF TAX RETURNS. The Managing Member shall be the "tax matters partner" of the Company pursuant to Section 6231(a)(7) of the Code. The Managing Member shall take such action as may be necessary to cause each other Member to become a "notice partner" within the meaning of Section 6223 of the Code. The Managing Member shall inform each other Member of all significant matters that may come to its attention in its capacity as "tax matters partner" by giving notice thereof on or before the fifth day after becoming aware thereof and, within that time, shall forward to each other Member copies of all significant written communications it may receive in that capacity. The Managing Member may not take any action contemplated by Sections 6222 through 6232 of the Code without the consent of all Members but this sentence does not authorize the Managing Member to take any action left to the determination of an individual Member under Sections 6222 through 6232 of the Code. The Managing Member or an Affiliate of the Managing Member shall prepare all tax returns, reports, and similar statements required to be prepared by the Company or with respect to its activities, operations or properties and in doing so shall use its reasonable judgment with respect to the timing and manner of preparing the same. The Company shall reimburse the Managing Member for its reasonable out-of-pocket expenses in connection with such obligations. SECTION 9.10. ACCOUNTANTS. The initial accountants for the Company shall be KPMG Peat Marwick LLC. ARTICLE X DISSOLUTION AND WINDING UP SECTION 10.01. EVENTS CAUSING DISSOLUTION. The Company shall be dissolved upon the first of the following events to occur: (a) Written notice given by any Member to each other Member at any time after the fifth anniversary of the Formation Date other than during the Buy/Sell Period or the termination by MGAM of the Management Agreement pursuant to Section 6(a) thereof; (b) Written notice given by KFS to each other Member at any time after Michael R. McCarthy ceases to act as Chairman and Chief Executive Officer of MGI or Michael R. McCarthy, his spouse, lineal descendants or any trust created for any of the foregoing no longer own in the aggregate at least 300,000 shares or options for shares of common stock (subject to appropriate adjustment in the event of stock splits, stock dividends or any other transaction resulting in a change in the issued and outstanding shares of common stock without consideration) in MGI; (c) Written notice given by MGI to each other Member at any time after removal of MGI as Managing Member; (d) Upon termination of the Management Agreement except for a termination by MGAM pursuant to Section 6(a) thereof; (e) Failure by either Member to contribute an Additional Capital Contribution called for pursuant to Section 4.01(b) on or before its due date; (f) Failure by the Purchaser (as defined in Section 6.05) to complete a purchase pursuant to and in accordance with Section 6.05 (other than a failure which occurs because the condition specified in Section 6.05(e)(ii) has not been met) unless the Seller (as defined in Section 6.05) elects to exercise its purchase option pursuant to Section 6.05(f); (g) The Bankruptcy or dissolution of a Member, or the immediate or ultimate parent of a Member, or the occurrence of any other event that terminates the continued membership of a Member in the Company unless the business of the Company is continued within 90 days following the occurrence of any such event by all other Members; (h) The expiration of the period fixed for the duration of the Company; or (i) The occurrence of any other event that causes the dissolution of a limited liability company under the Act. SECTION 10.02. WINDING UP. If the Company is dissolved pursuant to Section 10.01, the Company's affairs shall be wound up as soon as reasonably practicable under the supervision of the Managing Member and, in any case, within five years upon a dissolution pursuant to Section 10.01(a) and within two years upon any other dissolution. SECTION 10.03. DISTRIBUTION OF COMPANY PROPERTY AND PROCEEDS OF SALE THEREOF. (a) Upon completion of all desired sales of Company Property, and after payment of all selling costs and expenses, the Managing Member shall distribute the cash held by the Company in the following order of priority: (i) in payment of debts and obligations of the Company owed to parties other than the Members or Affiliates of the Members; (ii) in payment of debts and obligations of the Company owed to the Members or Affiliates of Members (other than the Carried Fee); (iii) to the Members in accordance with their respective Membership Interests until the aggregate of all Distributions to Members equals the Capital Contributions of the Members; (iv) to MGAM, as Advisor, in an amount equal to the unpaid Carried Fee in accordance with the terms of its Management Agreement; and (v) to the Members in accordance with their respective Membership Interests; provided, however, that Distributions to a Member pursuant to Section 10.03(a)(iii) shall be reduced by any amounts payable by such Member to the Company pursuant to the first sentence of Section 4.01(d) which amounts shall be deemed paid to such Member as a Distribution and paid by such Member to the Company in satisfaction of such obligation; (b) Dissolution of the Company shall be effective on the day on which the event occurs giving rise to the dissolution, but the Company shall not terminate until the assets of the Company are distributed as herein provided and a certificate of cancellation is filed by the Company as provided by the Act. Notwithstanding a dissolution of the Company, the business of the Company will continue to be governed by the terms of this Agreement at all times prior to the termination of the Company. (c) Every reasonable effort shall be made to liquidate the assets of the Company so that the distribution may be made to the Members in cash. If at the end of the applicable winding up period as set forth in Section 10.02, above, the Company owns any noncash assets, the Managing Member shall give Notification to each Member, identifying such assets. Upon receipt of such Notification, except as prohibited by Section 6.05(f), either Member may give a Buy/Sell Notice initiating the buy/sell provisions of Section 6.05 with the following modifications: (i) the Buy/Sell Notice must be given within 30 days of receipt by the Members of the Notification from the Managing Member and (ii) the Effective Date for such Buy/Sell Notice shall be 90 days after receipt of the Buy/Sell Notice. If a purchase does not occur pursuant to the buy/sell provisions, the remaining noncash assets shall be distributed in kind to the Members, in lieu of cash, proportionately to their right to receive the assets of the Company on an equitable basis reflecting the Fair Market Value of the assets so distributed (determined as of the date of such distribution) and, to the extent not otherwise satisfied, to MGAM, as Advisor for any unpaid Carried Fee. (d) The winding up of the Company shall be completed when all debts, liabilities and obligations of the Company have been paid and discharged or reasonably adequate provision therefor has been made and all of the remaining property and assets of the Company have been distributed to the Members. Upon the completion of the winding up of the Company, a certificate of cancellation shall be delivered to the Office of the Secretary of State of Delaware for filing pursuant to the provisions of the Act. ARTICLE XI DISPUTE RESOLUTION SECTION 11.01. INFORMAL DISPUTE RESOLUTION. Any controversy or claim between the Members arising from or in connection with this Agreement or the relationship of the parties under this Agreement whether based on contract, tort, common law, equity, statute, regulation, order or otherwise ("Dispute"), shall be resolved as follows: (a) Upon written request of either Member, each Member will appoint a designated representative whose task it will be to meet for the purpose of endeavoring to resolve such Dispute. (b) The designated representatives shall meet as often as the parties reasonably deem necessary to discuss the problem in an effort to resolve the Dispute without the necessity of any formal proceeding. (c) Formal proceeding for the resolution of a Dispute may not be commenced until the earlier of: (i) the designated representatives concluding in good faith that amicable resolution through continued negotiation of the matter does not appear likely; or (ii) expiration of the 30 day period immediately following the initial request to negotiate the Dispute; provided, however, that this Section 11.01 will not be construed to prevent a party from instituting formal proceedings earlier to avoid the expiration of any applicable limitations period or to preserve a superior position with respect to other creditors. SECTION 11.02. ARBITRATION. (a) If the Members are unable to resolve any Dispute as contemplated by Section 11.01, such Dispute shall be submitted to mandatory and binding arbitration at the election of either Member (the "Disputing Party"). Except as otherwise provided in this Section 11.02, the arbitration shall be pursuant to the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). (b) To initiate the arbitration, the Disputing Party shall provide Notification to the other Member (the "Arbitration Demand"), which shall (i) describe in reasonable detail the nature of the Dispute, (ii) state the amount of the claim, (iii) specify the requested relief and (iv) name an arbitrator who (A) has been licensed to practice law in the U.S. for at least ten years, (B) is not then an employee of either Member or an employee of an Affiliate of either Member, and (C) is experienced in representing clients in connection with commercial agreements (the "Basic Qualifications"). Within fifteen (15) days after the other Member's receipt of the Arbitration Demand, such other Member shall file, and serve on the Disputing Party, a written statement (i) answering the claims set forth in the Arbitration Demand and including any affirmative defenses of such party; (ii) asserting any counterclaim, which shall (A) describe in reasonable detail the nature of the Dispute relating to the counterclaim, (B) state the amount of the counterclaim, and, (C) specify the requested relief; and (iii) naming a second arbitrator satisfying the Basic Qualifications. Promptly, but in any event within fifteen (15) days thereafter, the two arbitrators so named will select a third neutral arbitrator from a list provided by the AAA of potential arbitrators who satisfy the Basic Qualifications and who have no past or present relationships with the parties or their counsel, except as otherwise disclosed in writing to and approved by the parties. The arbitration will be heard by a panel of the three arbitrators so chosen (the "Arbitration Panel"), with the third arbitrator so chosen serving as the chairperson of the Arbitration Panel. Decisions of a majority of the members of the Arbitration Panel shall be determinative. (c) The arbitration hearing shall be held in Omaha, Nebraska, or such other location as the parties may mutually agree. The Arbitration Panel is specifically authorized to render partial or full summary judgment as provided for in the Federal Rules of Civil Procedure. In the event summary judgment or partial summary judgment is granted, the non-prevailing party may not raise as a basis for a motion to vacate an award that the Arbitration Panel failed or refused to consider evidence bearing on the dismissed claim(s) or issue(s). The Federal Rules of Evidence shall apply to the arbitration hearing. The Member bringing a particular claim or asserting an affirmative defense will have the burden of proof with respect thereto. The Arbitration Panel will have no power or authority, under the Commercial Arbitration Rules of the AAA or otherwise, to relieve the Members from their agreement hereunder to arbitrate or otherwise to amend or disregard any provision of this Agreement, including, without limitation, the provisions of this Section 11.02. (d) Should an arbitrator refuse or be unable to proceed with arbitration proceedings as called for by this Section 11.02, the arbitrator shall be replaced by the Member who selected such arbitrator, or if such arbitrator was selected by the two Member-appointed arbitrators, by such two Member-appointed arbitrators selecting a new third arbitrator in accordance with Section 11.02(b). Each such replacement arbitrator shall satisfy the Basic Qualifications. If an arbitrator is replaced pursuant to this Section 11.02(d) after the arbitrator hearing has commenced, then a rehearing shall take place in accordance with the provisions of this Section 11.02 and the Commercial Arbitration Rules of the AAA. (e) At the time of granting or denying a motion for summary judgment as provided for in (c) and within fifteen (15) days after the closing of the arbitration hearing, the Arbitration Panel shall prepare and distribute to the Members a writing setting forth the Arbitration Panel's finding of facts and conclusions of law relating to the Dispute, including the reasons for the giving or denial of any award. The findings and conclusions and the award, if any, shall be deemed to be information subject to Section 6.10. (f) The Arbitration Panel is instructed to schedule promptly all discovery and other procedural steps and otherwise to assume case management initiative and control to effect an efficient and expeditious resolution of the Dispute. The Arbitration Panel is authorized to issue monetary sanctions against either Member if, upon a showing of good cause, such Member is unreasonably delaying the proceeding. (g) Any award rendered by the Arbitration Panel will be final, conclusive and binding upon the Members and any judgment hereon may be entered and enforced in any court of competent jurisdiction. (h) Each Member will bear a pro rata share of all fees, costs and expenses of the arbitrators, and notwithstanding any law to the contrary, each Member will bear all the fees, costs and expenses of its own attorneys, experts and witnesses; provided, however, that in connection with any judicial proceeding to compel arbitration pursuant to this Agreement or to confirm, vacate or enforce any award rendered by the Arbitration Panel, the prevailing party in such a proceeding will be entitled to recover reasonable attorney's fees and expenses incurred in connection with such proceeding, in addition to any other relief to which it may be entitled. (i) Nothing in Sections 11.01 or 11.02 shall be construed to prevent any party from seeking at any time from a court a temporary restraining order or other temporary or preliminary relief pending final resolution of a Dispute pursuant to Section 11.01 or 11.02. (j) The parties acknowledge and agree that performance of the obligations under this contract necessitates the use of instrumentalities of interstate commerce and, notwithstanding other general choice of law provisions in this Agreement, the parties agree that the Federal Arbitration Act shall govern and control with respect to relevant provisions of these Sections 11.01 and 11.02. ARTICLE XII MISCELLANEOUS PROVISIONS SECTION 12.01. CONFERENCE TELEPHONE MEETINGS. Meetings of the Members may be held by means of conference telephone or similar communications equipment so long as all Persons participating in the meeting can hear each other. Participation in a meeting by means of conference telephone shall constitute presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. SECTION 12.02. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. SECTION 12.03. ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules hereto constitute the entire agreement among the parties hereto and contain all of the agreements among such parties with respect to the subject matter hereof. This Agreement and the Exhibits and Schedules hereto supersede any and all other agreements, either oral or written, between such parties with respect to the subject matter hereof. SECTION 12.04. PARTIAL INVALIDITY. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable. SECTION 12.05. AMENDMENT. This Agreement may be amended only by a written agreement executed by all Members. SECTION 12.06. BINDING EFFECT. Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and shall inure to the benefit of the parties, and their respective successors and assigns. SECTION 12.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS CONFLICT OF LAWS DOCTRINE. IN PARTICULAR, THIS AGREEMENT IS INTENDED TO COMPLY WITH THE REQUIREMENTS OF THE ACT AND THE CERTIFICATE OF FORMATION. IN THE EVENT OF A DIRECT CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE MANDATORY PROVISIONS OF THE ACT OR ANY PROVISION OF THE CERTIFICATE OF FORMATION, THE ACT AND THE CERTIFICATE OF FORMATION, IN THAT ORDER OF PRIORITY, WILL CONTROL. SECTION 12.08. EXPENSES. Each Member shall pay its own legal, accounting and other expenses incident to its negotiation and preparation of this Agreement and the consummation of the transactions contemplated hereby. SECTION 12.09. INDEMNITY. (a) To the fullest extent permitted by law, the Company shall indemnify any Person who was or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action, suit or proceeding by or in the right of the Company to procure a judgment in its favor), by reason of the fact the Person is or was a Member or Managing Member of the Company, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if such Person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company and within the authority delegated to such Person by this Agreement or by the Members and, with respect to any criminal action or proceeding, had no reasonable cause to believe such Person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the Person did not meet such standards. (b) To the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member or Managing Member of the Company against expenses (including attorneys' fees) actually and reasonably incurred by such Person in connection with the defense or settlement of such action or suit if such Person acted in good faith and in a manner such Person reasonably believed to be in or not opposed to the best interests of the Company and within the authority delegated to such Person by this Agreement or by the Members and except that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. (c) Any indemnification under paragraphs (a) and (b) (unless ordered by a court) shall be made by the Company unless a determination is made that indemnification of the Person is improper in the circumstances because such Person has not met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made by unanimous vote of the Members. (d) Expenses (including attorney fees) incurred by an Indemnified Person in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the indemnified Person to repay such amount if indemnification is ultimately disallowed by court order or pursuant to subsection (c) above. (e) Notwithstanding anything in this Section to the contrary, the Company will not have the obligation of indemnifying any Person with respect to proceedings, claims or actions initiated or brought voluntarily by such Person and not by way of defense, other than successful suits for indemnity under this Section 12.09. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first above written. KFS CORPORATION By /s/ PETER N. LAHTI -------------------------------------- Peter N. Lahti President and Chief Executive Officer MCCARTHY GROUP, INC. By /s/ MICHAEL R. MCCARTHY -------------------------------------- Michael R. McCarthy Chairman EXHIBIT A DEFINITIONS "ACT" means the Delaware Limited Liability Company Act, Title 6, Chapter 18 of the Delaware Code, as it may be amended from time to time. "ADDITIONAL CAPITAL CONTRIBUTIONS" is defined in Section 4.01. "ADVISOR" means McCarthy Group Asset Management, Inc. or its successor appointed by the Members pursuant to Section 8.08. "AFFILIATE" means, with respect to any Person, a person that, directly or indirectly, owns or controls, is owned or controlled by, or is under common control with such Person. "AGREEMENT" means this Limited Liability Company Agreement. "BANKRUPTCY" means, with respect to any Member, the happening of any one or more of the following events: (a) a Member (or, in the case of any Member which is a partnership, any general partner thereof): (i) makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudged a bankrupt or insolvent, or there has been entered against such Member (or general partner) an order for relief, in any bankruptcy or insolvency proceeding; (iv) files a petition or answer seeking in respect of such Member (or general partner) any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Member (or such general partner) in any proceeding of a nature described above; or (vi) seeks, consents or acquiesces in the appointment of a trustee, receiver, conservator or liquidator of such Member (or such general partner) or of all or any substantial part of such Member's (or such general partner's) properties; or (b) 120 days after the commencement of any proceeding against any Member (or such general partner) seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, if such proceeding has not been dismissed, or within 90 days after the appointment without such Member's (or such general partner's) consent or acquiescence of a trustee, receiver or liquidator of the Member (or such general partner) or of all or any substantial part of such Member's (or such general partner's) properties, if such appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, if such appointment is not vacated. "BUSINESS DAY" means a day on which banks located in Omaha, Nebraska and New York, New York are neither required nor authorized to remain closed and on which the New York Stock Exchange is not closed. "BUY/SELL PERIOD" means the period from the giving of a Buy/Sell Notice pursuant to Section 6.05 to and including the date on which such buy/sell is concluded either by a purchase or a nullification. "CAPITAL ACCOUNT" means the Capital Account maintained for each Member pursuant to Section 4.03. "CAPITAL CONTRIBUTION" means the total amount of cash actually contributed to the Company by all the Members or any one Member, as the case may be. "CAPITAL CONTRIBUTION COMMITMENT" means, for each Member, the amount specified in Schedule I. "CARRIED FEE" shall have the meaning provided in the Management Agreement. "CERTIFICATE OF FORMATION" means the Certificate of Formation of the Company described in Section 2.01. "CODE" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. "COMPANY" means the limited liability company formed by the filing of the Certificate of Formation, as constituted from time to time. "COMPANY PROPERTY OR PROPERTIES" means all interests, properties, whether real or personal, tangible or intangible, and rights of any type owned or held by the Company, whether owned or held by the Company at the date of its formation or thereafter acquired. "DISTRIBUTION" means any money or other property distributed to a Member with respect to its Membership Interest, but shall not include (i) any payment to a Member for materials or services rendered (ii) any reimbursement to a Member for expenses permitted in accordance with this Agreement or (iii) any payment on a loan from a Member to the Company. "EFFECTIVE DATE" is defined in Section 6.05. "ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage, pledge, easement, conditional sale or title retention agreement, defect in title, covenant or other restriction of any kind. "FAIR MARKET VALUE" shall be determined in accordance with the Management Agreement. "FAIR MARKET VALUE REPORT" means an opinion of the Advisor delivered pursuant to Section 5 of the Management Agreement. "FIXED DEBT" means any indebtedness or accrued liability of the Company which is not contingent or undetermined. For purposes of Section 6.05(b), Fixed Debt shall include the Carried Fee which shall be determined based on the hypothetical liquidation of all assets of the Company and payment of all liabilities of the Company pursuant to Section 6.05(b) and distribution of amounts so obtained to the Members. "FORMATION DATE" is defined in Section 2.01. "FUNDING EVENT" means a determination by the Managing Member that the Company needs additional cash (i) to cover operating expenses or meet other obligations of the Company or (ii) to fund the acquisition of Portfolio Investments by the Company. "FUNDING RATE" means a rate equal to the Prime Rate plus 4% per annum. "GAAP" means United States generally accepted accounting principles. "INITIAL CAPITAL CONTRIBUTION" is defined in Section 4.01(a). "INVESTMENT POLICY" means the investment policy attached as Exhibit C to this Agreement, as it may be amended from time to time by the Members. "KFS" means KFS Corporation, a Nebraska corporation. "MANAGEMENT AGREEMENT" is defined in Section 8.08. "MANAGING MEMBER" is defined in Section 8.01. "MARKET VALUE" means the value as determined by the Managing Member based on prices set forth on Bloomberg Financial Markets Service Display or as reported by Reuters or any other publicly available source of similar market data. "MEMBERS" means at any time the Persons who own Membership Interests in the Company and "Member" means any one of them. "MEMBERSHIP INTEREST" means, with respect to any Member at any time, the ownership interest of such Member in the Company at such time, including all rights to allocations and Distributions pursuant to this Agreement and voting rights pursuant to this Agreement. The Membership Interest of any Member at any particular time shall be the Membership Interest as set forth in Schedule I, as such Schedule may be amended from time to time in accordance with this Agreement. "MGAM" means McCarthy Group Asset Management, Inc., a Nebraska corporation "MGI" means McCarthy Group, Inc., a Nebraska corporation. "NOTIFICATION" means all notices permitted or required to be given to any Person hereunder. Such Notifications must be given in writing and will be deemed to be duly given on the date of delivery if delivered in person, by courier or sent by facsimile transmission or on the earlier of actual receipt or three days after the date of mailing if mailed by registered or certified mail, first-class postage prepaid, return receipt requested, to such Person, at the address of such Person shown on Schedule I hereto as such Schedule may be amended from time to time, or to such other address as shall be specified by such Person by like notice. "PERSON" means any general partnership, limited partnership, corporation, limited liability company, joint venture, trust, business trust, governmental agency, cooperative, association, individual or other entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person as the context may require. "PORTFOLIO INVESTMENT(S)" means all investments made by the Company including any Publicly Traded Securities, as indicated from time to time by the Managing Member on the report required by Section 9.06(a). Portfolio Investment(s) shall exclude investments made on a short-term basis pending long-term investment in accordance with the Investment Policy. "PRIME RATE" is defined in Section 6.05(d). "PUBLICLY TRADED SECURITIES" means securities held by the Company which have a market value obtainable through any national securities exchange registered under the Securities Exchange Act of 1934, as amended. "SECURITIES ACT" means the Securities Act of 1933, as amended. "TRANSFER" means to directly or indirectly sell, assign, hypothecate, transfer, pledge, mortgage or in any other way encumber or dispose of a Membership Interest, whether voluntarily or involuntarily by operation of law. "TREASURY REGULATIONS" means the regulations promulgated by the U.S. Treasury Department pursuant to the Code.