Exhibit 10.1
 
 
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
M2 LEASE FUNDS LLC
 
THIS AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED OPERATING AGREEMENT (this
“Amendment”) of M2 Lease Funds LLC (the “Company”) dated and effective as of
August 26, 2012, by and between Quad City Bank and Trust Company (“QCBT”) and
John Engelbrecht (“Engelbrecht”) (collectively, the “Members,” and individually,
a “Member”), amends the Second Amended and Restated Operating Agreement of M2
Lease Funds LLC (as amended, modified, supplemented or restated, the “Second
Amended Agreement”).  Capitalized terms used herein without definition have the
meanings assigned to them in the Second Amended Agreement.
 
W I T N E S S E T H:
 
WHEREAS, certain current and former members of the Company and the Company are
parties to that certain Operating Agreement dated as of January 6, 1998 (the
“Original Agreement”);
 
WHEREAS, the Original Agreement was amended and restated in its entirety on
January 13, 2005 (the “First Amended Agreement”), when the Company sold and
issued certain units to State Financial Services Corporation (“SFSC”);
 
WHEREAS, pursuant to that certain Unit Purchase Agreement dated August 12, 2005,
by and between Engelbrecht and SFSC, Engelbrecht purchased all of SFSC’s
ownership interest in the Company;
 
WHEREAS, pursuant to that certain Unit Purchase Agreement, by and among QCBT and
Engelbrecht, QCBT purchased an eighty percent (80%) ownership interest in the
Company;
 
WHEREAS, as of the date hereof Engelbrecht has retained a twenty percent (20%)
ownership interest in the Company;
 
WHEREAS, the First Amended Agreement was amended and rested in its entirety on
August 26, 2005 by the Second Amended Agreement;
 
WHEREAS, Section 11.1 of the Second Amended Agreement permits amendments and
modifications to the Second Amended Agreement if made in writing and approved by
Unanimous Consent; and
 
WHEREAS, the Members now desire to amend the Second Amended Agreement to extend
the term of Engelbrecht’s ownership interest in the Company and provide for the
liquidation thereof.
 
NOW, THEREFORE, in consideration of the promises set forth herein, the parties
hereto do mutually promise and agree as follows:
 
 
 

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AGREEMENTS
 
Section 1.               Section 7.2 of the Second Amended Agreement is hereby
deleted and replaced in its entirety with the following:
 
“Section 7.2    [Reserved]”
 
Section 2.               Section 7.5 of the Second Amended Agreement is hereby
deleted and replaced in its entirety with the following:
 
“Section 7.5    Liquidation of Units Held by Engelbrecht. Upon the earlier of
August 31, 2015 and the termination of Engelbrecht’s employment, the Company
shall have the obligation to liquidate all, but not less than all, of
Engelbrecht’s Units in the Company.  The liquidating payments shall consist of
two separate distributions to Engelbrecht as set forth below:
 
(a) Initial Liquidating Payment. The Company shall pay the initial liquidating
payment (the “Initial Liquidating Payment”) to Engelbrecht in an amount equal to
50% of Book Value (as determined in accordance with Exhibit B) calculated as of
August 31, 2012.  The Initial Liquidating Payment shall be made in cash at the
closing thereof, which shall take place on Friday, September 14, 2012 at 10:00am
CST, or such other time as mutually agreed upon by the parties.
 
(b) Final Liquidating Payment.  Except as provided below in subsection (i) the
Company shall pay the final liquidating payment (the “Final Liquidating
Payment”) to Engelbrecht in an amount equal to the sum of (i) the Book Value (as
determined in accordance with Exhibit B and as adjusted, if necessary, as set
forth in Section 7.5(b)(ii)) calculated as of August 31, 2012; and (ii) 20% of
the Net Income from August 31, 2012 to August 31, 2015 less any distributions
made to Engelbrecht pursuant to Article IV, including Tax Distributions, if
any.  The Final Liquidating Payment shall be made in cash at the closing
thereof, which shall take place on Tuesday, September 15, 2015 at 10:00am CST,
or such other time as mutually agreed upon by the parties.
 
(i) Termination — For or Without Cause by the Company, Voluntarily by
Engelbrecht or by Death or Disability.  The Final Liquidating Payment for
Engelbrecht’s Units for termination by the Company for or without Cause,
voluntarily by Engelbrecht or by reason of death or Disability prior to
August 31, 2015 shall be an amount equal to the sum of (i) the Book Value (as
determined in accordance with Exhibit B) calculated as of August 31, 2012; and
(ii) 20% of the Net Income from August 31, 2012 to termination, less any
distributions made to Engelbrecht pursuant to Article IV, including Tax
Distributions, if any.  For the purposes of this Section 7.5(b)(i), the Final
Liquidating Payment shall be made in cash at the closing thereof, which shall
take place on a mutually agreed upon date no later than thirty (30) days from
the termination of Engelbrecht’s employment.
 
 
 

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(ii) Adjustment.  The Book Value computed as of August 31, 2012 shall be
adjusted for any liabilities discovered by the Members prior to the date of the
Final Liquidation Payment but which were incurred prior to August 31, 2012 and
which were not recorded in the original calculation of Book Value, with the
impact of this adjustment reflected in the computation of the Final Liquidation
Payment pursuant to Section 7.5(b).  For any unrecorded liabilities discovered
by the Members prior to the one (1) year anniversary of the date of the Final
Liquidation Payment where such unrecorded liabilities were incurred prior to the
date of the Final Liquidation Payment, Engelbrecht shall pay the Company in cash
the amount of such unrecorded liabilities multiplied by .20 (an “Adjustment
Payment”).  The Adjustment Payment shall be made to the Company within
thirty (30) days of a written claim for an Adjustment Payment, or such other
time as mutually agreed upon by the parties.
 
(c) Ownership of Units.  Engelbrecht will retain ownership in his Percentage
Interest of the Company Units until the Final Liquidating Payment is made.
 
(i) In the event the Company, for whatever reason, fails to redeem Engelbrecht’s
Units as provided in this Section 7.5, QCBT agrees to purchase the Units
pursuant to the terms in this Section 7.5.
 
(ii) If Engelbrecht would be due an Equalizing Distribution in the event an
Equalizing Distribution would be required to be paid pursuant to Section 4.1(c)
before a distribution could be made pursuant to Section 4.1(d), then the full
amount of such Equalizing Distribution (together with accrued interest) shall be
paid to Engelbrecht at closing in addition to the Final Liquidating Payment
above.
 
Section 3.                      Section 7.6 of the Second Amended Agreement is
hereby deleted and replaced in its entirety with the following:
 
“Section 7.6                      [Reserved]”
 
Section 4.                      Section 7.7 of the Second Amended Agreement is
hereby deleted and replaced in its entirety with the following:
 
“Section 7.7                      [Reserved]”
 
Section 5.                      ARTICLE VIII of the Second Amended Agreement is
hereby amended to insert the following at the beginning thereof:
 
“No transfer of any Units may be made by Engelbrecht without the unanimous
approval of the other Members.”
 
 
 

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Section 6.                      The following definitions shall be added to
Exhibit A of the Second Amended Agreement in alphabetical order, which such
definitions shall read in their entirety as follows:
 
“Initial Liquidating Payment shall have the meaning set forth in
Section 7.5(a).”
 
“Final Liquidating Payment shall have the meaning set forth in Section 7.5(b).”
 
“Net Income shall mean the Company’s net income as prepared in accordance with
generally accepted accounting principles, without regard to any Federal or state
income tax.”
 
Section 7.                      Exhibit B of the Second Amended Agreement is
hereby deleted and replaced in its entirety with the following:
 
“I.           Book Value shall mean an amount equal to the net book value of
assets minus liabilities of the Company as of the date called for in the
Agreement (the “Determination Date”) pursuant to which the Book Value is
established for either the Initial Liquidation Payment or the Final Liquidation
Payment (each, a “Liquidation Payment”) multiplied by Engelbrecht’s Percentage
Interest, using the following valuation methods:
 
1.           Except as set forth below in this Exhibit B, Book Value shall be
valued and computed in accordance with GAAP heretofore applied by the Company as
of the date of this Agreement, and shall not be computed for tax purposes.
 
2.           Regardless of accounting standard changes, modifications to the
Company’s accounting policies, modification to the Company’s lease agreements or
other like changes, all leases by the Company shall constitute capital or
financing leases, not operating leases, and as such be treated under the direct
financing method of accounting.
 
3.           Liabilities and assets shall include year-end adjustments as of the
Determination Date required by GAAP.
 
4.           Book Value shall include an adjustment for the amount by which
amounts paid to Affiliates of the Members in any transaction(s) exceeds the fair
market value of such transactions.
 
5.           The Book Value as of August 26, 2005, the date of this Agreement,
using the foregoing methods is $1,377,377.78, which reflects mark-up to Book
Value in connection with QCBT's acquisition of 80% of the equity interest from
Engelbrecht on the date of this Agreement.
 
6.           Book Value shall be reduced by the amount of any Equalizing
Distribution (plus related interest) which must be paid pursuant to Section
4.1(c) before a distribution could be made pursuant to Section 4.1(d).
 
 
 

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II.           Closing.  For purposes of determining a Liquidation Payment, by
September 5, 2012 or September 5, 2015, as the case may be, the Company shall
prepare and deliver to Engelbrecht a statement of Liquidation Payment
(a “Liquidation Payment Statement”) prepared in accordance with this Agreement
and Exhibit B, accompanied by sufficient detail to determine the calculation of
the Liquidation Payment, and a report by Company’s independent accountant
reflecting the Liquidation Payment.
 
Engelbrecht shall have five (5) days after the receipt of a Liquidation Payment
Statement or a written claim for an Adjustment Payment to make a written
objection to the calculation.  The parties shall attempt in good faith to reach
an agreement with respect to any matters in dispute.
 
If the parties are unable to resolve the disagreements with respect to the
determination of a Liquidation Payment or an Adjustment Payment within five (5)
days following an objection by Engelbrecht, then the parties shall refer such
differences to Ernst & Young or such other national accounting firm mutually
agreed upon by the parties (the “CPA Firm”), who shall, acting as experts and
not as arbitrators, determine in accordance with this Agreement and Exhibit B,
and only with respect to the differences so submitted, the Liquidation Payment
or an Adjustment Payment. The parties shall direct the CPA Firm to use its best
efforts to render its determination within five (5) days after such
submission.  The CPA Firm’s determination will be conclusive and binding upon
the parties, shall not be subject to further review or approval and judgment
therein may be entered in any circuit court or any court of competent
jurisdiction.  The fees and disbursements of the CPA Firm shall be paid by the
non-prevailing party, as determined by the CPA Firm.  The Company shall make
readily available to the CPA Firm all relevant books and records and workpapers
related to the Company’s operations and all other items reasonably requested by
the CPA Firm.
 
The closing of a Liquidation Payment or an Adjustment Payment, as the case may
be, shall take place with five (5) days of the CPA’s determination.”
 

 
[Remainder left intentionally blank]
 
 
 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
set forth above.
 
QUAD CITY BANK AND TRUST COMPANY
           
By:
/s/ John H. Anderson Address:   2118 Middle Road   John H. Anderson,
President/CEO    Bettendorf, IA 52722                   /s/ John Engelbrecht  
Address:   17500 Mariner Court   John Engelbrecht     Brookfield, WI 53045

 
 
Spousal Consent and Acknowledgment
 
I acknowledge that I have read the foregoing Amendment and that I understand its
contents. I am aware that by its provisions my spouse agrees to limit the
transferability of and the voting rights attendant upon his Units of M2 Lease
Funds LLC held by him on this date, or hereafter acquired, upon the occurrence
of certain events. I am further aware that included in such limitations shall be
any interest I have in the Units (including without limitation any right or
interest by operation of the Wisconsin Marital Property Law, chapter 766 of the
Wisconsin Statutes, or by operation of any other law) and the interest of any of
my heirs, legatees, or other transferees. I consent to and approve the
provisions of this Amendment, and agree that the Units and my interest in them
are subject to the provisions of this Amendment, and direct the personal
representative of my estate to promptly comply with all of the provisions of
this Amendment, including without limitation Article VII.  I further agree that
I will take no action at any time to hinder the operation of this Amendment as
to the Units or any interest that I or my transferees have in it.
 
 

Date:  August 31, 2012      Spouse:  
/s/ Janet Engelbrecht
     
Janet Engelbrecht