Exhibit 10.1
LIMITED LIABILITY COMPANY AGREEMENT
OF
STRATEGIC HOTEL FUNDING, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT, dated as of [__________],
2004 of Strategic Hotel Funding, L.L.C. (the "Company") is entered into by and
among Strategic Hotel Capital, Inc., as Managing Member (the "Managing Member"),
and the Persons identified on the signature pages hereto (the "Non-Managing
Members"), together with any other Persons who become Members (as defined
herein) in the Company as provided herein;
WHEREAS, the Company was formed by the filing of a certificate of
formation with the Secretary of State of the State of Delaware on December 16,
1997 by an authorized person of the Company;
WHEREAS, immediately prior to the execution hereof, Strategic Hotel
Capital, L.L.C., a Delaware limited liability company ("SHCLLC"), was the sole
member of the Company;
WHEREAS, as part of the Formation and Structuring Transactions (as
defined below), the Company will issue Non-Managing Membership Interests (as
defined below) to SHCLLC as set forth on Exhibit A hereto;
WHEREAS, as part of the Formation and Structuring Transactions, the
Company will issue Non-Managing Membership Interests to Strategic Hotel Capital
Limited Partnership ("SHCLP") as set forth on Exhibit A hereto;
WHEREAS, the Members desire to admit the Managing Member as the sole
Managing Member of the Company upon the completion of the Managing Member's
initial public offering of its common stock and the contribution by the Managing
Member of the net proceeds from its initial public offering as set forth on
Exhibit A hereto; and
WHEREAS, the Members desire to continue the Company under the Act (as
defined below) and to set forth their respective rights and duties relating to
the Company on the terms as provided herein;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein made, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Members hereby agree as
follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Limited Liability Company Act, as it may be
amended from time to time, and any successor to such statute.
"Additional Non-Managing Member" means a Person admitted to the Company
as a Non-Managing Member pursuant to Section 4.2 and who is shown as such on the
books and records of the Company.
"Adjusted Capital Account" means the Capital Account maintained for
each Member as of the end of each Membership Year (a) increased by any amounts
which such Member is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (b)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Adjusted Capital Account as of the
end of the relevant Membership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.4.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreed Value" means (a) in the case of any Contributed Property set
forth on Exhibit B and as of the time of its contribution to the Company, the
Agreed Value of such property as set forth on Exhibit B; (b) in the case of any
Contributed Property not set forth on Exhibit B and as of the time of its
contribution to the Company, the 704(c) Value of such property or other
consideration, reduced by any liabilities either assumed by the Company upon
such contribution or to which such property is subject when contributed, and (c)
in the case of any property distributed to a Member by the Company, the
Company's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Member upon such
distribution or to which such property is subject at the time of distribution as
determined under Section 752 of the Code and the Regulations thereunder.
"Agreement" means this Limited Liability Company Agreement and all
Exhibits attached hereto, as the same may be amended, supplemented or restated
from time to time.
"Assignee" means a Person to whom one or more Membership Units have
been transferred but who has not been admitted as a Substituted Non-Managing
Member, and who has the rights set forth in Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (a) all cash revenues and funds received by the
Company from whatever source (excluding the proceeds of any Capital Contribution
to the Company pursuant to Section 4.1) plus the amount of any reduction
(including, without limitation, a reduction resulting because the Managing
Member determines such amounts are no longer necessary) in reserves of the
Company, which reserves are referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with the
proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Company,
(ii) all cash expenditures (including capital expenditures)
made by the Company during such period,
(iii) investments in any entity (including loans made thereto)
to the extent that such investments are not otherwise described in
clauses (b)(i) or (ii), and
(iv) the amount of any reserve created or increase in reserves
established during such period which the Managing Member determines are
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Company.
"Bankruptcy" as to any Person, shall be deemed to have occurred when
(i) such Person commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect, (ii) such Person is adjudged as bankrupt or
insolvent, or a final and nonappealable order for relief under any bankruptcy,
insolvency or similar law now or hereafter in effect has been entered against
such Person, (iii) such Person executes and delivers a general assignment for
the benefit of such Person's creditors, (iv) such Person files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in any proceeding of the nature described in
clause (ii) above, (v) such Person seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for such Person or for all or
any substantial part of such Person's properties, (vi) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within 120
days after the commencement thereof, (vii) the appointment without such Person's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within 90 days of such appointment, or (viii) an appointment
referred to in clause (vii) is not vacated within 90 days after the expiration
of any such stay.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for Federal income tax purposes as of
such date. A Member's share of the Company's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Member's Capital Account balance as maintained pursuant to Section
4.4 and the hypothetical balance of such Member's Capital Account computed as if
it had been maintained strictly in accordance with Federal income tax accounting
principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Capital Account" means the capital account maintained by the Company
for each Member pursuant to Section 4.4.
"Capital Contribution" means, with respect to each Member, the total
amount of cash, cash equivalents and the Agreed Value of Contributed Property
which such Member contributes or is deemed to contribute to the Company pursuant
to Section 4.1 or 4.2 and which are intended to be treated as a contribution to
the Company pursuant to Section 721(a) of the Code.
"Carrying Value" means (a) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property (or in the case of an
Adjusted Property, the fair market value of such property at the time of its
latest adjustment under Section 4.4(d)) reduced (but not below zero) by all
Depreciation with respect to such Contributed Property or Adjusted Property
charged to the Members' Capital Accounts and (b) with respect to any other
Company property, the adjusted basis of such property for Federal income tax
purposes, all as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with Section 4.4(d),
and to reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Company Properties, as deemed appropriate by
the Managing Member.
"Cash Amount" means an amount of cash per Unit equal to the number of
Units offered for redemption by the Redeeming Member (multiplied by the Unit
Adjustment Factor) multiplied by the Value of a Common Share on the Valuation
Date.
"Certificate" means the Certificate of Formation relating to the
Company filed in the office of the Secretary of State of the State of Delaware,
as amended from time to time in accordance with the terms hereof and the Act.
"Charter" means the Articles of Incorporation of the Managing Member
filed in the office of the Maryland State Department of Assessments and Taxation
on January 27, 2003, as amended from time to time in accordance with the terms
thereof and the Maryland General Corporation Law, and any successor to such
statute.
"Code" means the Internal Revenue Code of 1986, as amended. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Common Share Rights" has the meaning set forth in Section 4.2(e).
"Common Shares" means the shares of common stock, $0.01 par value per
share, of the Managing Member.
"Company" means Strategic Hotel Capital, L.L.C., the limited liability
company formed under the Act and any successor thereto.
"Company Property" means such interests in real property and personal
property including without limitation, fee interests, interests in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Company may hold from time to time.
"Consent" means the consent or approval of a proposed action by a
Member given in accordance with Section 14.1.
"Contributed Property" means each property or other asset (but
excluding cash and cash equivalents), in such form as may be permitted by the
Act contributed or deemed contributed to the Company. Once the Carrying Value of
a Contributed Property is adjusted pursuant to Section 4.4, such property shall
no longer constitute a Contributed Property, but shall be deemed an Adjusted
Property for purposes of Section 4.4.
"Debt" means, as to any Person, as of any date of determination, (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (b) all amounts owed by such Person
to banks or other Persons in respect of reimbursement obligations under letters
of credit, surety bonds and other similar instruments guaranteeing payment or
other performance of obligations by such Person, (c) all indebtedness for
borrowed money or for the deferred purchase price of property or services
secured by any lien on any property owned by such Person, to the extent
attributable to such Person's interest in such property, even though such Person
has not assumed or become liable for the payment thereof, (d) lease obligations
of such Person which, in accordance with generally accepted accounting
principles, should be capitalized and (e) all guarantees and other contingent
obligations of such Person with respect to Debt of others.
"Depreciation" means for each fiscal year or other period, an amount
equal to the Federal income tax depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period, except that if the Carrying Value of an asset differs from its adjusted
basis for Federal income tax purposes at the beginning of such year or other
period, Depreciation shall be an amount which bears the same ratio to such
beginning Carrying Value as the Federal income tax depreciation, amortization,
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Carrying
Value using any reasonable method selected by the Managing Member.
"Effective Date" means the date of closing of the initial public
offering of the Common Shares upon which date the contributions set forth on
Exhibit A shall become effective.
"Events of Dissolution" has the meaning set forth in Section 13.1.
"Exchange Act" has the meaning set forth in Section 7.1(a)(2).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Formation and Structuring Transactions" means the transactions
outlined in Exhibit A to the Structuring and Contribution Agreement.
"IRS" means the Internal Revenue Service, which is charged with
administering the internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, grandparents, descendants (including adopted
children and step-children), nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (a) as to any individual Member,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his Person or his estate, (b) as to any
corporation that is a Member, the filing of a certificate of dissolution, or its
equivalent, for the corporation or the revocation of its charter, (c) as to any
partnership that is a Member, the dissolution and commencement of winding up of
the partnership, (d) as to any estate that is a Member, the distribution by the
fiduciary of the estate's entire interest in the Company, (e) as to trust that
is a Member, the termination of the trust (but not the substitution of a new
trustee), or (f) as to any Member, the Bankruptcy of such Member.
"Indemnitee" means (a) any Person made a party to a proceeding by
reason of his status as (i) the Managing Member (including as a guarantor of any
Membership Debt) or (ii) an officer of the Company or a director or officer of
the Managing Member, and (b) such other Persons (including Affiliates of the
Managing Member or the Company) as the Managing Member may designate from time
to time, in its sole and absolute discretion.
"Liquidating Transaction" means any sale or other disposition of all or
substantially all of the assets of the Company or a related series of
transactions that, taken together, results in the sale or other disposition of
all or substantially all of the assets of the Company.
"Liquidator" has the meaning set forth in Section 13.2.
"Managing Member" means Strategic Hotel Capital, Inc., a Maryland
corporation, and its successors as a Managing Member of the Company in
accordance with the terms of this Agreement.
"Managing Membership Interest" means a Membership Interest held by the
Managing Member (including any Membership Interest acquired by the Managing
Member pursuant to Section 4.2 hereof) that is a Managing Membership interest
and includes any and all benefits to which the Managing Member may be entitled
and all obligations of the Managing Member hereunder. A Managing Membership
Interest may be expressed as a number of Membership Units. All Membership Units
held by the Managing Member shall be deemed to be the Managing Member Interest.
"Member" means individually, the Managing Member or a Non-Managing
Member, and "Members" means collectively, the Managing Member and the
Non-Managing Members.
"Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).
"Member Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Member Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Member Nonrecourse
Deductions with respect to a Member Nonrecourse Debt for a Membership Year shall
be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Membership Interest" means an ownership interest in the Company
representing a Capital Contribution by either a Non-Managing Member or the
Managing Member and includes any and all benefits to which the holder of such a
Membership Interest may be entitled as provided in this Agreement, together with
all obligations of such Person to comply with the terms and provisions of this
Agreement. A Membership Interest may be expressed as a number of Membership
Units.
"Membership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Membership Minimum Gain, as well as any
net increase or decrease in Membership Minimum Gain, for a Membership Year shall
be determined in accordance with the rules of Regulations Section 1.704-2(d).
"Membership Record Date" means the record date established by the
Managing Member for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the Managing Member for a distribution to its shareholders of some or all of its
portion of such distribution, and also means any record date established by the
Managing Member in connection with any vote or consent of the Non-Managing
Members pursuant to this Agreement.
"Membership Unit" or "Unit" means a fractional, undivided share of the
Membership Interests of all Members issued pursuant to Sections 4.1 and 4.2, in
such number as set forth on Exhibit A, as such Exhibit may be amended from time
to time. Any rights and preferences or other obligations with respect to Units
as may be authorized hereunder shall be set forth in Exhibit C hereto.
"Membership Year" means the fiscal year of the Company, which shall be
the calendar year.
"Minimum Tax Distribution" means an amount per Membership Unit (other
than Preferred Units) for each calendar quarter for each taxable year of the
Company equal to the product of (i) the sum of (a) the greater of the highest
marginal Federal income tax rate for such taxable year applicable to (x)
individuals or (y) large, widely-held corporations and (b) the highest combined
marginal state and local income tax rates for such taxable year for the state
and city with the highest marginal income tax rates and (ii) the taxable income
allocable to each Membership Unit for such calendar quarter as reasonably
estimated by the Company.
"Net Income" means for any taxable period, the excess, if any, of the
Company's items of income and gain for such taxable period over the Company's
items of loss and deduction for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Section 4.4.
Once an item of income, gain, loss or deduction that has been included in the
initial computation of Net Income is subjected to the special allocation rules
in Sections 6.3 and 6.4, Net Income or the resulting Net Loss, whichever the
case may be, shall be recomputed without regard to such item.
"Net Loss" means for any taxable period, the excess, if any, of the
Company's items of loss and deduction for such taxable period over the Company's
items of income and gain for such taxable period. The items included in the
calculation of Net Loss shall be determined in accordance with Section 4.4. Once
an item of income, gain, loss or deduction that has been included in the initial
computation of Net Loss is subjected to the special allocation rules in Sections
6.3 and 6.4, Net Loss or the resulting Net Income, whichever the case may be,
shall be recomputed without regard to such item.
"New Securities" has the meaning set forth in Section 4.2(c).
"Non-Managing Member" means any Person named as a Non-Managing Member
on Exhibit A, as such Exhibit may be amended from time to time, including any
Substituted Non-Managing Member or Additional Non-Managing Member, in such
Person's capacity as a Non-Managing Member in the Company.
"Non-Managing Membership Interest" means a Membership Interest held by
a Non-Managing Member representing a fractional part of the Membership Interests
of all Non-Managing Members and includes any and all benefits to which such
Non-Managing Member may be entitled and all obligations of such Non-Managing
Member hereunder. A Non-Managing Membership Interest may be expressed as a
number of Membership Units.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Members pursuant to Section 6.4(b) if such properties
were disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Membership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in
the form of Exhibit D.
"Option Plans" means the option plans for Common Shares or Units, as
the case may be, restricted share plans or employee benefit plans established
by, or for the benefit of the employees of, the Managing Member, the Company or
any Subsidiary.
"Percentage Interest" means, as to any Member, its interest in the
Company as determined by dividing the Membership Units owned by such Member by
the total number of Membership Units then outstanding and as specified on
Exhibit A, as such Exhibit may be amended from time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company, estate or
other entity.
"Plan Asset Regulation" means the regulations promulgated by the United
States Department of Labor in Title 29, Code of Federal Regulations, Part 2510,
Section 101.3, and any successor regulations thereto.
"Preferred Shares" has the meaning set forth in Section 4.2(c).
"Qualified REIT Subsidiary" means any Subsidiary of the Managing Member
that is a "qualified REIT subsidiary" within the meaning of Section 856(i) of
the Code.
"Recapture Income" means any gain recognized by the Company (computed
without regard to any adjustment required by Section 734 or Section 743 of the
Code) upon the disposition of any property or asset of the Company, which gain
is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Recourse Liabilities" has the meaning set forth in Regulations Section
1.752-1(a)(1).
"Redeeming Member" shall have the meaning as set forth in Section
4.2(e)(1).
"Redemption Right" shall have the meaning as set forth in Section
4.2(e)(1).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Requirements" shall have the meaning set forth in Section 5.1.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Company recognized for Federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.4(b)(1)(i) or 6.4(b)(2)(i) to eliminate Book-Tax
Disparities.
"704(c) Value" of any Contributed Property means the value of such
property as set forth on Exhibit B, or if no value is set forth on Exhibit B,
the fair market value of such property or other consideration at the time of
contribution as determined by the Managing Member using such reasonable method
of valuation as it may adopt. Subject to Section 4.4, the Managing Member shall
use such method as it deems reasonable and appropriate to allocate the aggregate
of the 704(c) Value of Contributed Properties among each separate property on a
basis proportional to its fair market value.
"Shares" means any Common Shares, of any class, and Preferred Shares
issued to a Non-Managing Member pursuant to Section 4.2(e).
"Shares Amount" shall mean a number of Common Shares equal to the
number of Units offered for redemption by a Redeeming Member, multiplied by the
Unit Adjustment Factor.
"Specified Redemption Date" means the tenth Business Day after receipt
by the Managing Member of a Notice of Redemption.
"Structuring and Contribution Agreement" means the Structuring and
Contribution Agreement, dated as of February 13, 2004, by and among the Company,
Strategic Hotel Capital, L.L.C. and the other parties thereto.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (a) the voting power of the voting equity
securities or (b) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Non-Managing Member" means a Person who is admitted as a
Non-Managing Member to the Company pursuant to Section 11.4.
"Tendered Units" shall have the meaning set forth in Section 4.2(e)(1).
"Transaction" has the meaning set forth in Section 11.2(c).
"Unit Adjustment Factor" means initially 1.0, unless provided otherwise
in Exhibit C with respect to any specific class or series of Membership Units
issued after the date hereof; provided, however, that in the event that the
Managing Member (a) declares or pays a dividend on its outstanding Common Shares
in Common Shares or makes a distribution to all holders of its outstanding
Common Shares in Common Shares, (b) subdivides its outstanding Common Shares, or
(c) combines its outstanding Common Shares into a smaller number of Common
Shares, the Unit Adjustment Factor, as applicable, shall be adjusted by
multiplying the Unit Adjustment Factor by a fraction, the numerator of which
shall be the number of Common Shares issued and outstanding on the record date
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of Common Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Unit Adjustment Factor shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event. Any adjustment to the Unit
Adjustment Factor shall be carried forward to successive adjustments.
"Unrealized Gain" attributable to any item of Company Property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property (as determined under Section 4.4) as of such date, over
(b) the Carrying Value of such property (prior to any adjustment to be made
pursuant to Section 4.4) as of such date.
"Unrealized Loss" attributable to any item of Company Property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Section 4.4) as
of such date, over (b) the fair market value of such property (as determined
under Section 4.4) as of such date.
"Valuation Date" means the date of receipt by the Managing Member of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a Common Share, of any class, the
average of the daily market price for the twenty (20) consecutive trading days
immediately preceding the Valuation Date. The market price for each such trading
day shall be: (a) if the Common Shares are listed or admitted to trading on any
securities exchange or the NASDAQ-National Market System, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day; (b) if the Common
Shares are not listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the last reported sale price on such day or, if
no sale takes place on such day, the average of the closing bid and asked prices
on such day, as reported by a reliable quotation source designated by the
Managing Member; or (c) if the Common Shares are not listed or admitted to
trading on any securities exchange or the NASDAQ-National Market System and no
such last reported sale price or closing bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reliable quotation source designated by the Managing Member, or if there
shall be no bid and asked prices on such day, the average of the high bid and
low asked prices, as so reported, on the most recent day (not more than 20 days
prior to the date in question) for which prices have been so reported; provided,
however, that if there are no bid and asked prices reported during the 20 days
prior to the date in question, the Value of the Common Shares shall be
determined by the Managing Member acting in good faith on the basis of such
quotations and other information as it considers, in its judgment, appropriate.
In the event a holder of Common Shares, of any class, would be entitled to
receive Common Share Rights, then the Value of such Common Share Rights shall be
determined by the Managing Member acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization and Continuation; Application of Act.
(a) Organization and Continuation of Company. The Managing
Member and the Non-Managing Members do hereby continue the Company as a
limited liability company according to all of the terms and provisions
of this Agreement and otherwise in accordance with the Act. The
Managing Member is the sole Managing Member and the Non-Managing
Members are the sole Non-Managing Members of the Company.
(b) Application of Act. The Company is a limited liability
company subject to the provisions of the Act and the terms and
conditions set forth in this Agreement. Except as expressly provided
herein to the contrary, the rights and obligations of the Members and
the administration and termination of the Company shall be governed by
the Act. No Member has any interest in any Company Property and the
Membership Interests of each Member shall be personal property for all
purposes.
Section 2.2 Name. The name of the Company is Strategic Hotel Funding,
L.L.C. The Company's business may be conducted under any other name or names
deemed advisable by the Managing Member, including the name of the Managing
Member or any Affiliate thereof. The words "limited liability company," or
"L.L.C." or similar words or letters shall be included in the Company's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The Managing Member in its sole and absolute discretion may
change the name of the Company at any time and from time to time and shall
notify the Non-Managing Members of such change in the next regular communication
to the Non-Managing Members; provided, however, that the name of the Company may
not be changed to include the name of any Non-Managing Member, or any variant
thereof, without the written consent of that Non-Managing Member.
Section 2.3 Registered Office and Agent; Principal Office. The address
of the registered office of the Company in the State of Delaware is located c/o
Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County of New Castle and the registered agent for service of
process on the Company in the State of Delaware at such registered office is the
Corporation Service Company. The principal office of the Company is located at
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place
as the Managing Member may from time to time designate by notice to the
Non-Managing Members. The Company may maintain offices at such other place or
places within or outside the State of Delaware as the Managing Member deems
advisable.
Section 2.4 Term. The term of the Company shall continue until
dissolved pursuant to the provisions of Article XIII or as otherwise provided by
law.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the
business to be conducted by the Company is (a) to conduct any business that may
be lawfully conducted by a limited liability company organized pursuant to the
Act, provided, however, that as long as the Managing Member has determined to
continue to qualify as a REIT, such business shall be limited to and conducted
in such a manner as to permit the Managing Member at all times to be classified
as a REIT for federal income tax purposes, unless the Managing Member ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Company, (b) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged in any of the foregoing and (c) to do anything necessary or
incidental to the foregoing which, in each case, is not in breach of this
Agreement.
Section 3.2 Powers. The Company is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Company including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that as long as the Managing Member has determined to
continue to qualify as a REIT, the Company shall not take, or refrain from
taking, any action which, in the judgment of the Managing Member, in its sole
and absolute discretion, (i) could adversely affect the ability of the Managing
Member to continue to qualify as a REIT, (ii) could subject Managing Member to
any taxes under Section 857 or Section 4981 of the Code, or (iii) could violate
any law or regulation of any governmental body or agency having jurisdiction
over the Managing Member or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented to by the
Managing Member in writing.
Section 3.3 Certain ERISA Matters. Each Member acknowledges that the
Company is intended to qualify as a "real estate operating company" (as such
term is defined in the Plan Asset Regulation). The Managing Member may structure
the investments in, relationships with and conduct with respect to Company
Properties and any other assets of the Company so that the Company will be a
"real estate operating company" (as such term is defined in the Plan Asset
Regulation).
ARTICLE IV
CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS;
CAPITAL ACCOUNTS
Section 4.1 Capital Contributions of the Members.
(a) Initial Capital Contributions. At the time of the
execution of this Agreement, the Members shall make or shall have made
the Capital Contributions set forth in Exhibit A to this Agreement. The
Members shall own Membership Units in the amounts set forth on Exhibit
A and shall have a Percentage Interest in the Company as set forth on
Exhibit A, which Percentage Interest shall be adjusted on Exhibit A
from time to time by the Managing Member to the extent necessary to
reflect accurately redemptions, conversions, Capital Contributions, the
issuance of additional Membership Units, or similar events having an
effect on a Member's Percentage Interest. The ownership of Membership
Units may be evidenced by the form of certificates for units
substantially in the form of Exhibit E; provided, however, that the
Managing Member may provide that some or all of any or all classes or
series of the Membership Units shall be uncertificated. Each
certificate for Membership Units shall be consecutively numbered or
otherwise identified. Certificates of Membership Units shall be signed
by or in the name of the Company by the Chief Executive Officer, the
President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company.
Where a certificate is countersigned by a transfer agent, other than
the Company or an employee of the Company, or by a registrar, the
signatures of one or more officers of the Company may be facsimiles. In
case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, the certificate may be issued by the Company
with the same effect as if such officer, transfer agent or registrar
were such officer, transfer agent or registrar at the date of its
issue.
(b) Additional Capital Contributions.
(1) No Member shall be assessed or, except as
provided for in Section 4.1(b)(2) and except for any such
amounts which a Non-Managing Member may be obligated to repay
under Section 10.5, be required to contribute additional funds
or other property to the Company. Any additional funds or
other property required by the Company, as determined by the
Managing Member in its sole discretion, may, at the option of
the Managing Member and without an obligation to do so (except
as provided for in Section 4.1(b)(2)), be contributed by the
Managing Member as additional Capital Contributions. If and as
the Managing Member or any other Member makes additional
Capital Contributions to the Company, each such Member shall
receive additional Membership Units as provided for in Section
4.2.
(2) Except to the extent provided in Section 7.5
below relating to interests in Company Properties held
directly by the Company or through Subsidiaries, the net
proceeds of any and all funds raised by or through the
Managing Member through the issuance of additional Shares of
the Managing Member shall be contributed to the Company as
additional Capital Contributions, and in such event the
Managing Member shall be issued additional Membership Units
pursuant to Section 4.2 below.
(c) Return of Capital Contributions. Except as otherwise
expressly provided herein, the Capital Contribution of each Member will
be returned to that Member only in the manner and to the extent
provided in Article V and Article XIII hereof, and no Member may
withdraw from the Company or otherwise have any right to demand or
receive the return of its Capital Contribution to the Company (as
such), except as specifically provided herein. Under circumstances
requiring a return of any Capital Contribution, no Member shall have
the right to receive property other than cash, except as specifically
provided herein. No Member shall be entitled to interest on any Capital
Contribution or Capital Account notwithstanding any disproportion
therein as between the Members. Except as specifically provided herein,
the Managing Member shall not be liable for the return of any portion
of the Capital Contribution of any Non-Managing Member, and the return
of such Capital Contributions shall be made solely from Company assets.
(d) Liability of Members. No Member shall have any further
personal liability to contribute money to, or in respect of, the
liabilities or the obligations of the Company, nor shall any Member be
personally liable for any obligations of the Company, except as
otherwise provided in this Article IV or in the Act.
Section 4.2 Issuances of Additional Membership Interests.
(a) Issuance to Other Than the Managing Member. The Managing
Member is hereby authorized to cause the Company to issue such
additional Membership Interests in the form of Membership Units for any
Company purpose at any time or from time to time, to the Members (other
than issuances to the Managing Member, which issuances are governed by
Section 4.2(b) and Section 4.2(c)) or to other Persons for such
consideration and on such terms and conditions as shall be established
by the Managing Member in its sole and absolute discretion, all without
the approval of any Non-Managing Members except to the extent provided
herein; provided, however, that the Company also may from time to time
issue to third parties additional Membership Interests (other than any
such issuance to the Managing Member which is governed by Sections
4.2(b) and 4.2(c)) in one or more classes, or one or more series of any
of such classes, with such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, including voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions senior to
Non-Managing Membership Interests, as may be set forth in Exhibit C
attached hereto from time to time, subject to Delaware law, including,
without limitation, with respect to (i) the allocations of items of
income, gain, loss, deduction and credit to each such class or series
of Membership Interests, (ii) the right of each such class or series of
Membership Interests to share in distributions, and (iii) the rights of
each such class or series of Membership Interests upon dissolution and
liquidation of the Company. To the extent more than one class of
Membership Units is outstanding, the Membership Units in this Agreement
shall be referred to as Class A Units. To the extent more than one
class of Common Shares is outstanding, the Common Shares in this
Agreement shall be referred to as Class A Common Shares.
(b) Issuance to the Managing Member. The Company also may from
time to time issue to the Managing Member additional Membership Units
or other Membership Interests in one or more classes, or one or more
series of any of such classes, with such voting powers, full or
limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including voting
powers, designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or
restrictions senior to Non-Managing Membership Interests, as may be set
forth in Exhibit C attached hereto from time to time, all as shall be
determined by the Managing Member, subject to Delaware law, including,
without limitation, with respect to (i) the allocations of items of
income, gain, loss, deduction and credit to each such class or series
of Membership Interests, (ii) the right of each such class or series of
Interests to share in distributions, and (iii) the rights of each such
class or series of Membership Interests upon dissolution and
liquidation of the Company; provided, however, that (x) the additional
Membership Interests are issued in connection with an issuance of
shares of the Managing Member, which shares have designations,
preferences and other rights, all such that the economic interests are
substantially similar to the designations, preferences and other rights
of the additional Membership Interests issued to the Managing Member in
accordance with this Section 4.2(b), and (y) the Managing Member shall
make a Capital Contribution to the Company (1) in an amount equal to
the net proceeds raised in connection with the issuance of such shares
of the Managing Member in the event such shares are sold for cash or
cash equivalents or (2) in the form of the property received in
consideration for such shares, in the event such shares are issued in
consideration for other property.
(c) Issuance of Additional Common Shares or Preferred Shares.
The Managing Member is explicitly authorized to issue additional Common
Shares, of any class, or preferred shares of beneficial interest of the
Managing Member ("Preferred Shares"), or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase Common Shares, of any class, or Preferred
Shares ("New Securities") and in connection therewith, as further
provided in Section 4.2(b), (i) the Managing Member shall cause the
Company to issue to the Managing Member Membership Interests or rights,
options, warrants or convertible or exchangeable securities of the
Company having designations, preferences and other rights, as may be
set forth on Exhibit C attached hereto from time to time, all such that
the economic interests are substantially similar to those of the New
Securities, and (ii) the Managing Member shall contribute the net
proceeds from, or the property received in consideration for, the
issuance of such New Securities and from the exercise of rights
contained in such New Securities to the Company. In connection with the
issuance of Membership Interests which are substantially similar to New
Securities, the Managing Member is authorized to modify or amend the
distributions or allocations hereunder solely to the extent necessary
to give effect to the designations, preferences and other rights
pertaining to such Membership Interests.
(d) Issuance Pursuant to Option Plans.
(1) Upon the exercise of an option granted by the
Managing Member for Common Shares, of any class, the Managing
Member shall cause the Company to issue to the Managing Member
one Membership Unit for each such Common Share acquired upon
such exercise pursuant to the Option Plans (or such other
number of Membership Units based on the relationship a
different class of Common Shares bears to Common Shares), and
the Managing Member shall contribute to the Company the net
proceeds received upon such exercise (it being understood that
the Managing Member may issue Common Shares in connection with
the Option Plans without receiving a specified amount of
proceeds and that the issuance of such Common Shares shall
nonetheless entitle the Managing Member to additional
Membership Units).
(2) The Managing Member shall cause the Company to
issue Membership Units to employees of the Company upon the
exercise by any such employees of an option to acquire
Membership Units granted by the Company pursuant to the Option
Plans in accordance with the terms of the Option Plans.
Membership Units so issued shall represent Non-Managing
Membership Interests.
(3) The Managing Member shall cause the Company to
issue Membership Units to any Subsidiary upon the exercise by
an employee of such Subsidiary of an option to acquire
Membership Units granted by such Subsidiary pursuant to the
Option Plans, and such Subsidiary shall transfer to the
Company the price per Membership Unit required by the Option
Plans to be paid by Subsidiaries. Membership Units issued to
any such Subsidiary shall represent Non-Managing Membership
Interests.
(e) Redemption of Units.
(1) Subject to the further provisions of this Section
4.2(e), and except as otherwise set forth in Exhibit C with
respect to any particular class or series of Membership Units
issued after the date hereof, each Non-Managing Member shall
have the right (i) on or after the date twelve (12) months
after the Effective Date, with respect to the Membership Units
acquired on or contemporaneously with the Effective Date, or
(ii) on or after such other date as expressly provided in
any agreement entered into between the Company and any
Non-Managing Member, including the Structuring and
Contribution Agreement, (the "Redemption Right") to require
the Company to redeem on a Specified Redemption Date all or a
portion of the Membership Units held by such Non-Managing
Member at a redemption price equal to and in the form of the
Cash Amount to be paid by the Company. The Redemption Right
shall be exercised pursuant to a Notice of Redemption
delivered to the Company (with a copy to the Managing Member)
by the Non-Managing Member who is exercising the Redemption
Right (the "Redeeming Member"); provided, however, that the
Company shall not be obligated to satisfy such Redemption
Right if the Managing Member elects to purchase the Membership
Units subject to the Notice of Redemption (the "Tendered
Units"); provided, further, that in the event the Managing
Member issues to all holders of Common Shares rights, options,
warrants or convertible or exchangeable securities entitling
the shareholders to subscribe for or purchase Common Shares,
or any other securities or property (collectively, the "Common
Share Rights") then (except to the extent such rights have
already been reflected in an adjustment to the Unit Adjustment
Factor as provided in Section 4.2(e)(2) below) the Redeeming
Member shall also be entitled to receive such Common Share
Rights that a holder of that number of Common Shares would be
entitled to receive. A Non-Managing Member may not exercise
the Redemption Right for less than ten thousand (10,000)
Membership Units or, if such Non-Managing Member holds less
than ten thousand (10,000) Membership Units, all of the
Membership Units held by such Non-Managing Member.
(2) Notwithstanding the provisions of Section
4.2(e)(1), a Non-Managing Member that exercises the Redemption
Right shall be deemed to have offered to sell the Membership
Units described in the Notice of Redemption to the Managing
Member, and the Managing Member may, in its sole and absolute
discretion, elect to assume directly and satisfy a Redemption
Right, and acquire some or all of such Membership Units by
paying to the Redeeming Member either the Cash Amount, or the
Shares Amount, as elected by the Managing Member (in its sole
and absolute discretion), on the Specified Redemption Date,
whereupon the Managing Member shall acquire the Membership
Units offered for redemption by the Redeeming Member. If the
Managing Member shall elect to exercise its right to purchase
Membership Units under this Section 4.2(e)(2) with respect to
a Notice of Redemption, it shall so notify the Redeeming
Member promptly after the receipt by the Company of such
Notice of Redemption. In the event the Managing Member shall
exercise its right to purchase Membership Units with respect
to the exercise of a Redemption Right in the manner described
in the first sentence of this Section 4.2(e)(2), the Company
shall have no obligation to pay any amount to the Redeeming
Member with respect to Redeeming Member's exercise of the
Redemption Right, and each of the Redeeming Member, the
Company and the Managing Member shall treat the transaction
between the Managing Member and the Redeeming Member for
federal income tax purposes as a sale of the Redeeming
Member's Membership Units to the Managing Member.
(3) In the event of any change in the Unit Adjustment
Factor, the number of Membership Units held by each Member
shall be proportionately adjusted by multiplying the number of
Membership Units held by such Member immediately prior to the
change in the Unit Adjustment Factor by the new Unit
Adjustment Factor; the intent of this provision is that one
Membership Unit remains equivalent in value to one Common
Share without dilution (including any securities for which
Shares are exchanged in a transaction contemplated by Section
11.2(c)). In the event the Managing Member issues any Common
Shares in exchange for Membership Units pursuant to this
Section 4.2(e), any such Membership Units so acquired by the
Managing Member shall immediately thereafter be canceled by
the Company and the Company shall issue to the Managing Member
new Membership Units pursuant to Section 4.2(c) hereof. Each
Redeeming Member agrees to execute such documents as the
Managing Member may reasonably require in connection with the
issuance of Common Shares upon exercise of the Redemption
Right.
(4) The Shares Amount, if applicable, shall be
delivered as duly authorized, validly issued, fully paid and
nonassessable Common Shares and, if applicable, free of any
pledge, lien, encumbrance or restriction, other than those
provided in the Charter, the Bylaws of the Managing Member,
the Securities Act, relevant state securities or blue sky laws
and any applicable registration rights agreement with respect
to such Common Shares entered into by the Redeeming Member.
Notwithstanding any delay in such delivery (but subject to
Section 4.2(e)(6)), the Redeeming Member shall be deemed the
owner of such Common Shares for all purposes, including
without limitation, rights to vote or consent, and receive
dividends, as of the Specified Redemption Date. In addition,
the Common Shares for which the Membership Units might be
exchanged shall also bear a legend which generally provides
the following:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE
OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG OTHERS, OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS
AND EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION'S CHARTER,
(I) NO INDIVIDUAL MAY BENEFICIALLY OR CONSTRUCTIVELY OWN
SHARES OF THE CORPORATION'S COMMON STOCK IN EXCESS OF 9.8
PERCENT (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING
SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH
INDIVIDUAL IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED
HOLDER LIMIT SHALL BE APPLICABLE); (II) NO INDIVIDUAL MAY
BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF
THE CORPORATION IN EXCESS OF 9.8 PERCENT OF THE VALUE OF THE
TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION,
UNLESS SUCH INDIVIDUAL IS AN EXCEPTED HOLDER (IN WHICH CASE
THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO
PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK
THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD"
UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE
CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON
MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD
RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY
FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR
CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR
CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR
WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN
SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE
LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF
THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE
SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE
AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE
BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION,
THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND
CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE
DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP
OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS
DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN
EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS
DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL CAPITALIZED TERMS
IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE
CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A
COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND
OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF CAPITAL STOCK
OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR
SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL OFFICE.
(5) Each Non-Managing Member covenants and agrees
with the Managing Member that all Tendered Units shall be
delivered to the Managing Member free and clear of all liens,
claims and encumbrances whatsoever and should any such liens,
claims and/or encumbrances exist or arise with respect to such
Tendered Units, the Managing Member shall be under no
obligation to acquire the same. Each Non-Managing Member
further agrees that, in the event any state or local property
transfer tax is payable solely with respect to its Tendered
Units transferred to the Managing Member (or its designee),
such Non-Managing Member shall assume and pay such transfer
tax.
(6) Notwithstanding the provisions of Section 4.2(e)
or any other provision of this Agreement, a Member (i) shall
not be entitled to effect a Redemption for cash or an exchange
for Common Shares to the extent the ownership or right to
acquire Common Shares pursuant to such exchange by such Member
on the Specified Redemption Date could cause such Member or
any other Person to violate the restrictions on ownership and
transfer of Common Shares set forth in the Charter and (ii)
shall have no rights under this Agreement to acquire Common
Shares which would otherwise be prohibited under the Charter.
To the extent any attempted redemption or exchange for Common
Shares would be in violation of this Section 4.2(e)(6), it
shall be null and void ab initio and such Member shall not
acquire any rights or economic interest in the cash otherwise
payable upon such redemption or the Common Shares otherwise
issuable upon such exchange.
(7) Notwithstanding anything herein to the contrary
(but subject to Section 4.2(e)(6)), with respect to any
redemption or exchange for Common Shares pursuant to this
Section 4.2(e):
(i) All Membership Units acquired by the
Managing Member pursuant thereto shall automatically, and
without further action required, be converted into and deemed
to be Managing Member Interests comprised of the same number
and class of Membership Units.
(ii) The consummation of any redemption or
exchange for Common Shares shall be subject to the expiration
or termination of the applicable waiting period, if any, under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
(iii) Each Redeeming Member shall continue
to own all Membership Units subject to any redemption or
exchange for Common Shares, and be treated as a Non-Managing
Member with respect to such Membership Units for all purposes
of this Agreement, until the Specified Redemption Date. Until
a Specified Redemption Date, the Redeeming Member shall have
no rights as a stockholder of the Managing Member with respect
to such Redeeming Member's Membership Units.
Section 4.3 No Preemptive Rights. Except as specifically provided in
this Agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (a) additional Capital Contributions or loans to
the Company, or (b) issuance or sale of any Membership Units.
Section 4.4 Capital Accounts of the Members.
(a) General. The Company shall maintain for each Member a
separate Capital Account in accordance with the rules of Regulations
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by
(a) the amount of all Capital Contributions made by such Member to the
Company pursuant to this Agreement and (b) all items of income and gain
(including income and gain exempt from tax) computed in accordance with
Section 4.4(b) hereof and allocated to such Member pursuant to Sections
6.1 through Section 6.3 of the Agreement, and decreased by (i) the
amount of cash or Agreed Value of all actual and deemed distributions
of cash or property made to such Member pursuant to this Agreement and
(ii) all items of deduction and loss computed in accordance with
Section 4.4(b) hereof and allocated to such Member pursuant to Sections
6.1 through Section 6.3 of the Agreement.
(b) Income, Gains, Deductions and Losses. For purposes of
computing the amount of any item of income, gain, loss or deduction to
be reflected in the Members' Capital Accounts, unless otherwise
specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for Federal income tax purposes
determined in accordance with Section 703(a) of the Code (for this
purpose all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be
included in taxable income or loss), with the following adjustments:
(1) Except as otherwise provided in Regulations
Section 1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made without regard
to any election under Section 754 of the Code which may be
made by the Company.
(2) The computation of all items of income, gain,
loss and deduction shall be made without regard to the fact
that items described in Sections 705(a)(1)(B) or 705(a)(2)(B)
of the Code are not includable in gross income or are neither
currently deductible nor capitalized for Federal income tax
purposes.
(3) Any income, gain or loss attributable to the
taxable disposition of any Company Property shall be
determined as if the adjusted basis of such property as of
such date of disposition were equal in amount to the Company's
Carrying Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account
Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Company
asset is adjusted pursuant to Section 4.4(d) hereof, the
amount of any such adjustment shall be taken into account as
gain or loss from the disposition of such asset.
(6) Any items specially allocated under Section 6.4
hereof shall not be taken into account.
(c) Transfers of Membership Units. A transferee of a
Membership Unit shall succeed to a pro rata portion of the Capital
Account of the transferor.
(d) Unrealized Gains and Losses.
(1) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in Section
4.4(d)(2), the Carrying Values of all Company assets shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Company Property, as of
the times of the adjustments provided in Section 4.4(d)(2)
hereof, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property and
allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the
following times: (i) immediately prior to the acquisition of
an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital
Contribution; (ii) immediately prior to the distribution by
the Company to a Member of more than a de minimis amount of
Property as consideration for an interest in the Company; and
(iii) immediately prior to the liquidation of the Company or
the Managing Member's interest in the Company within the
meaning of Regulations Section 1.704-l(b)(2)(ii)(g); provided,
however, that adjustments pursuant to clauses (i) and (ii)
above shall be made only if the Managing Member reasonably
determines that such adjustments are necessary or appropriate
to reflect the relative economic interests of the Members in
the Company.
(3) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e), the Carrying Values of Company assets
distributed in kind shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to
such Company Property, as of the time any such asset is
distributed.
(4) In determining such Unrealized Gain or Unrealized
Loss the aggregate cash amount and fair market value of all
Company assets (including cash or cash equivalents) shall be
determined by the Managing Member using such reasonable method
of valuation as it may adopt, or in the case of a liquidating
distribution pursuant to Article XIII of this Agreement, be
determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The Managing
Member, or the Liquidator, as the case may be, shall allocate
such aggregate value among the assets of the Company (in such
manner as it determines in its sole and absolute discretion to
arrive at a fair market value for individual properties).
(e) Modification by Managing Member. The provisions of this
Agreement relating to the maintenance of Capital Accounts are intended
to comply with Regulations issued under Sections 704(b) and 514 (c)(9)
of the Code, and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing Member
shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured
by contributed or distributed property or which are assumed by the
Company, the Managing Member, or any Non-Managing Members) are computed
in order to comply with such Regulations, the Managing Member may make
such modification; provided, however, that it will not have a material
effect on the amounts distributable to any Person pursuant to Article
XIII of this Agreement upon the liquidation of the Company. The
Managing Member also shall (a) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the
Members and the amount of Company capital reflected on the Company's
balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (b) make any appropriate
modifications in the event unanticipated events might otherwise cause
this Agreement not to comply with Regulations Section 1.704-1(b).
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions. The
Managing Member shall cause the Company to distribute quarterly all, or such
portion as the Managing Member may in its discretion determine, of Available
Cash among the Members (i) first, with respect to any class of Membership
Interests issued pursuant to Section 4.2(a) or 4.2(b) which are entitled to a
preference over Membership Units on the distribution of Available Cash and are
specially allocated items under Section 6.1 prior to allocated items with
respect to amounts distributed pursuant to clause (ii) below (and within and
among such classes, in order of the preferences designated therein and pro rata
among any such classes), and (ii) thereafter, pro rata in accordance with their
respective Percentage Interests from time to time as determined by the Managing
Member; provided that Available Cash for each calendar quarter shall be
distributed on the last Business Day of March, June, September and December of
each year in an amount with respect to each Membership Unit equal to the Minimum
Tax Distribution; provided, however, that in no event may a Member receive a
distribution of Available Cash with respect to a Unit if such Member is entitled
to receive a dividend from the Managing Member which is derived from a
distribution of Available Cash to the Managing Member with respect to a Common
Share for which such Unit has been redeemed or exchanged. In the event the
Company is subject to any tax or other obligation that is attributable to the
interest of one or more Members in the Company, but fewer than all the Members,
such tax or other obligation shall be specially allocated to, and charged
against the Capital Account of, such Member or Members, and the amounts
otherwise distributable to such Member or Members pursuant to this Agreement
shall be reduced by such amount. The Managing Member shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and consistent
with its qualification as a REIT, to cause the Company to distribute sufficient
amounts to enable the Managing Member, for so long as the Managing Member has
determined to qualify as a REIT, to pay stockholder dividends that will (a)
satisfy the requirements for qualifying as a REIT under the Code and Regulations
("REIT Requirements"), and (b) except to the extent otherwise determined by the
Managing Member, avoid any federal income or excise tax liability of the
Managing Member.
Section 5.2 Amounts Withheld. All amounts withheld pursuant to the Code
or any provisions of any state or local tax law and Section 10.5 hereof with
respect to any allocation, payment or distribution to the Managing Member, or
any Non-Managing Members or Assignees shall be treated as amounts distributed to
the Managing Member or such Non-Managing Members, or Assignees pursuant to
Section 5.1 for all purposes under this Agreement.
Section 5.3 Distributions Upon Liquidation. Proceeds from a Liquidating
Transaction shall be distributed to the Members in accordance with Section 13.2.
Section 5.4 Initial Structuring Distributions. Notwithstanding any
provisions to the contrary contained elsewhere in this Agreement, the following
distributions by the Company to Strategic Hotel Capital, L.L.C. are hereby
authorized, approved and ratified: (i) the Company's general partnership
interests in SHCLP and Strategic Hotel Capital Limited Partnership II, (ii)
$[_______] million of available cash and (iii) the Company's interests in the
Private Pool Properties (as such term is defined in the Structuring and
Contribution Agreement).
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes Other than the
Taxable Year of Liquidation. Subject to a preferential allocation of gain or net
income to any class of Membership Interests issued pursuant to Section 4.2(a) or
4.2(b) which are entitled to a preference over Membership Units on the
distribution of Available Cash, for purposes of maintaining the Capital Accounts
and in determining the rights of the Members among themselves, the Company's
items of income, gain, loss and deduction (computed in accordance with Section
4.4 hereof) shall be allocated among the Members for each taxable year (or
portion thereof) as provided herein below:
(a) Net Income. After giving effect to the special allocations
set forth in Sections 6.2 and 6.3 below, Net Income shall be allocated
to the Members in accordance with their respective Percentage
Interests.
(b) Net Losses. After giving effect to the special allocations
set forth in Sections 6.2 and 6.3 below, Net Losses shall be allocated
to the Members in accordance with their respective Percentage
Interests.
(c) Nonrecourse Liabilities. For purposes of Regulations
Section 1.752-3(a), the Members agree that Nonrecourse Liabilities of
the Company in excess of the sum of (i) the amount of Membership
Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain
shall be allocated among the Members in the manner determined by the
Managing Member, provided that such allocation shall be permissible
under Regulations Section 1.752-3.
(d) Gains. Any gain allocated to the Members upon the sale or
other taxable disposition of any Company asset shall to the extent
possible, after taking into account other required allocations of gain
pursuant to Section 6.3 below, be characterized as Recapture Income in
the same proportions and to the same extent as such Members have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income, all in such a manner
consistent with Regulation Section 1.1245-1.
Section 6.2 Allocations for Capital Account Purposes in the Taxable
Year of Liquidation. Subject to Section 6.3, the Net Income and Net Loss of the
Company for the taxable year of liquidation of the Company shall be allocated
prior to the final liquidating distributions of the Company and shall be
allocated first to eliminate any Member's Adjusted Capital Account Deficit and
then, to the extent permissible under Sections 704(b) and 514(c)(9) of the Code,
in a manner such that the Capital Accounts of the Members immediately prior to
such final liquidating distributions are equal to the amount which would have
been distributable to the Members under Section 5.1 if such distributions were
to be governed by Section 5.1. Notwithstanding the preceding sentence, actual
distributions made subsequent to the allocations under this Section 6.2 shall be
made pursuant to Section 5.3.
Section 6.3 Special Allocation Rules. Notwithstanding any other
provision of this Agreement, the following special allocations shall be made in
the following order:
(a) Minimum Gain Chargeback. Notwithstanding any other
provisions of Article VI, if there is a net decrease in Membership
Minimum Gain during any Membership Year, each Member shall be specially
allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member's share
of the net decrease in Membership Minimum Gain, as determined under
Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required
to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Section
1.704-2(f)(6). This Section 6.3(a) is intended to comply with the
minimum gain chargeback requirements in Regulations Section 1.704-2(f)
and for purposes of this Section 6.3(a) only, each Member's Adjusted
Capital Account Deficit shall be determined prior to any other
allocations pursuant to Section 6.1 of the Agreement with respect to
such fiscal year and without regard to any decrease in Member Minimum
Gain during such fiscal year.
(b) Member Minimum Gain Chargeback. Notwithstanding any other
provision of Article VI (except Section 6.3(a) hereof), if there is a
net decrease in Member Minimum Gain attributable to a Member
Nonrecourse Debt during any Membership Year, each Member who has a
share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such year (and, if necessary, subsequent years) in an amount
equal to such Member's share of the net decrease in Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i)(5). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations
Section 1.704-2(i)(4). This Section 6.3(b) is intended to comply with
the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith. Solely for
purposes of this Section 6.3(b), each Member's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to
Article VI of this Agreement with respect to such fiscal year, other
than allocations pursuant to Section 6.3(a) hereof.
(c) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or distributions
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after giving
effect to the allocations required under Sections 6.3(a) and 6.3(b)
hereof, such Member has an Adjusted Capital Account Deficit, items of
Company income and gain shall be specially allocated to such Member in
an amount and manner sufficient to eliminate, to the extent required by
the Regulations, its Adjusted Capital Account Deficit created by such
adjustments, allocations or distributions as quickly as possible. It is
intended that this Section 6.3(c) qualify and be construed as a
"qualified income offset" within the meaning of Regulations
1.704-1(b)(2)(ii)(d), which shall be controlling in the event of a
conflict between such Regulations and this Section 6.3(c).
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Members in the manner
determined by the Managing Member, provided that such allocation shall
be permissible under Section 704(b) of the Code.
(e) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any fiscal year shall be specially allocated to the
Member who bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Sections 1.704-2(b)(4) and
1.704-2(i)(2).
(f) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Company asset pursuant to Section
734(b) or 743(b) of the Code is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts
shall be specially allocated to the Members in a manner consistent with
the manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Regulations.
Section 6.4 Allocations for Tax Purposes.
(a) General. Except as otherwise provided in this Section 6.4,
for Federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Members in the same manner as
its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.1 and 6.3 of this Agreement.
(b) To Eliminate Book-Tax Disparities. In an attempt to
eliminate Book-Tax Disparities attributable to a Contributed Property
or Adjusted Property, items of income, gain, loss, and deduction shall
be allocated for Federal income tax purposes among the Members as
follows:
(1) (i) In the case of a Contributed Property, such
items attributable thereto shall be allocated among the
Members consistent with the principles of Section 704(c) of
the Code in a manner that takes into account the variation
between the 704(c) Value of such property and its adjusted
basis at the time of contribution, and (ii) any item of
Residual Gain or Residual Loss attributable to a Contributed
Property shall be allocated among the Members in the same
manner as its correlative item of "book" gain or loss is
allocated pursuant to Sections 6.1 and 6.3 of this Agreement.
(2) (i) In the case of an Adjusted Property, such
items shall (A) first, be allocated among the Members in a
manner consistent with the principles of Section 704(c) of the
Code in a manner to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 4.4 and (B) second, in
the event such property was originally a Contributed Property,
be allocated among the Members in a manner consistent with
Section 6.4(b)(1)(i), and (ii) any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be
allocated among the Members in the same manner as its
correlative item of "book" gain or loss is allocated pursuant
to Sections 6.1 and 6.4 of this Agreement.
(3) All other items of income, gain, loss and
deduction shall be allocated among the Members in the same
manner as their correlative item of "book" gain or loss is
allocated pursuant to Sections 6.1 and 6.3 of this Agreement.
(c) Power of Managing Member to Elect Method. To the extent
Treasury Regulations promulgated pursuant to Section 704(c) of the Code
permit a partnership to utilize alternative methods to eliminate the
disparities between the agreed value of property and its adjusted
basis, and subject to any agreements existing between the Company and
any Member or Members prior to the date hereof, the Managing Member
shall have the authority to elect the method to be used by the Company
and such election shall be binding on all Members.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 Management.
(a) Powers of Managing Member. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Company are exclusively vested in the Managing Member,
and no Non-Managing Member shall have any right to participate in or
exercise control or management power over the business and affairs of
the Company. Notwithstanding anything to the contrary in this
Agreement, the Managing Member may not be removed by the Non-Managing
Members with or without cause. In addition to the powers now or
hereafter granted a Managing Member of a limited liability company
under applicable law or which are granted to the Managing Member under
any other provision of this Agreement, the Managing Member, subject to
Section 7.3 hereof, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of
the Company, to exercise all powers set forth in Section 3.2 hereof and
to effectuate the purposes set forth in Section 3.1 hereof including,
without limitation:
(1) the making of any expenditures (including,
without limitation, making prepayments on loans and borrowing
money to permit the Company to make distributions to its
Members in such amounts as will permit the Managing Member (so
long as the Managing Member has determined to qualify as a
REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its
stockholders sufficient to permit the Managing Member to
maintain REIT status), the lending or borrowing of money, the
assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences
of indebtedness (including the securing of same by mortgage,
deed of trust or other lien or encumbrance on the Company's
assets) and the incurring of any obligations it deems
necessary for the conduct of the activities of the Company;
(2) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to the New York
Stock Exchange, governmental or other agencies having
jurisdiction over the business or assets of the Company, the
registration of any class of securities of the Company under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the listing of any debt securities of the Company
on any exchange;
(3) subject to Section 7.12, the acquisition,
disposition, sale, conveyance, mortgage, pledge, encumbrance,
hypothecation, contribution or exchange of any assets of the
Company or the merger or other combination of the Company with
or into another entity on such terms as the Managing Member
deems proper;
(4) the use of the assets of the Company (including,
without limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms it sees fit
including, without limitation, the financing of the conduct of
the operations of the Managing Member, the Company or any of
the Company's Subsidiaries, the lending of funds to other
Persons (including, the Managing Member or any of the
Company's Subsidiaries) and the repayment of obligations of
the Company and its Subsidiaries and any other Person in which
it has an equity investment and the making of capital
contributions to its Subsidiaries, the holding of any real,
personal and mixed property of the Company in the name of the
Company or in the name of a nominee or trustee (subject to
Section 7.10), the creation, by grant or otherwise, of
easements or servitudes, and the performance of any and all
acts necessary or appropriate to the operation of the Company
assets including, but not limited to, applications for
rezoning, objections to rezoning, constructing, altering,
improving, repairing, renovating, rehabilitating, razing,
demolishing or condemning any improvements or property of the
Company or any Subsidiary of the Company;
(5) the negotiation, execution, and performance of
any contracts, conveyances or other instruments (including
with Affiliates of the Company to the extent provided in
Section 7.6) that the Managing Member considers useful or
necessary to the conduct of the Company's operations or the
implementation of the Managing Member's powers under this
Agreement including, without limitation, the execution and
delivery of leases on behalf of or in the name of the Company
(including the lease of Company Property for any purpose and
without limit as to the term thereof, whether or not such term
(including renewal terms) shall extend beyond the date of
termination of the Company and whether or not the portion so
leased is to be occupied by the lessee or, in turn, subleased
in whole or in part to others);
(6) the opening and closing of bank accounts, the
investment of Company funds in securities, certificates of
deposit and other instruments, and the distribution of Company
cash or other Company assets in accordance with this
Agreement;
(7) the selection and dismissal of employees of the
Company or the Managing Member (including, without limitation,
employees having titles such as "president", "vice president",
"secretary" and "treasurer"), and the engagement and dismissal
of agents, outside attorneys, accountants, engineers,
appraisers, consultants, contractors and other professionals
on behalf of the Managing Member or the Company and the
determination of their compensation and other terms of
employment or hiring;
(8) the maintenance of such insurance for the benefit
of the Company and the Members and the directors and officers
of the Company as it deems necessary or appropriate;
(9) the formation of, or acquisition of an interest
in, and the contribution of property to, any further limited
or general partnerships, joint ventures or other relationships
that it deems desirable (including, without limitation, the
acquisition of interests in, and the contribution of property
to, its Subsidiaries and any other Person in which it has an
equity investment from time to time); provided, that, as long
as the Managing Member has determined to continue to qualify
as a REIT, the Company may not engage in any such formation,
acquisition or contribution that could cause the Managing
Member to fail to qualify as a REIT;
(10) the control of any matters affecting the rights
and obligations of the Company, including the conduct of
litigation and the incurring of legal expense and the
settlement of claims and litigation, and the indemnification
of any Person against liabilities and contingencies to the
extent permitted by law;
(11) the undertaking of any action in connection with
the Company's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds to, incurring
indebtedness on behalf of, or guaranteeing the obligations of
any such Persons);
(12) the determination of the fair market value of
any Company property distributed in kind using such reasonable
method of valuation as it may adopt;
(13) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any real
property or improvements owned by the Company or any
Subsidiary of the Company or any Person in which the Company
has made a direct or indirect equity investment;
(14) holding, managing, investing and reinvesting
cash and other assets of the Company;
(15) the collection and receipt of revenues and
income of the Company;
(16) the exercise, directly or indirectly through any
attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote,
appurtenant to any asset or investment held by the Company;
(17) the exercise of any of the powers of the
Managing Member enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the Company or any other
Person in which the Company has a direct or indirect interest,
or jointly with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the
Managing Member enumerated in this Agreement on behalf of any
Person in which the Company does not have an interest pursuant
to contractual or other arrangements with such Person;
(19) the making, execution and delivery of any and
all deeds, leases, notes, deeds to secure debt, mortgages,
deeds of trust, security agreements, conveyances, contracts,
guarantees, warranties, indemnities, waivers, releases or
legal instruments or agreements in writing necessary or
appropriate in the judgment of the Managing Member for the
accomplishment of any of the powers of the Managing Member
enumerated in this Agreement;
(20) the issuance of Membership Interests, as
appropriate, pursuant to Section 4.2 of this Agreement; and
(21) the consummation of the Formation and
Structuring Transactions.
(b) No Approval Required for Above Powers. Except as expressly
provided in this Agreement (including, without limitation, the last
sentence of this Section 7.1(b)), each of the Members agrees that the
Managing Member is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the Company
without any further act, approval or vote of the Members,
notwithstanding any other provision of this Agreement, the Act or any
applicable law, rule or regulation to the fullest extent permitted
under the Act or other applicable law, rule or regulation. The
execution, delivery or performance by the Managing Member or the
Company of any agreement authorized or permitted under this Agreement
shall not constitute a breach by the Managing Member of any duty that
the Managing Member may owe the Company or the Non-Managing Members or
any other Persons under this Agreement or of any duty stated or implied
by law or equity.
(c) Insurance. At all times from and after the date hereof,
the Managing Member may cause the Company to obtain and maintain
casualty, liability and other insurance on Company Properties and
liability insurance for the Indemnitees hereunder. The right to procure
such insurance on behalf of the Indemnitees shall in no way mitigate or
otherwise affect the right of any such Indemnitee to indemnification
under Section 7.7.
(d) Working Capital Reserves. At all times from and after the
date hereof, the Managing Member may cause the Company to establish and
maintain working capital reserves in such amounts as the Managing
Member, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
(e) No Obligation to Consider Tax Consequences to Non-Managing
Members. In exercising its authority under this Agreement, the Managing
Member may, but shall be under no obligation to, take into account the
tax consequences to any Member of any action taken by it. The Managing
Member and the Company shall not have liability to a Non-Managing
Member under any circumstances as a result of an income tax liability
incurred by such Non-Managing Member as a result of an action (or
inaction) by the Managing Member pursuant to its authority under this
Agreement.
(f) No Obligation To Expend Individual Funds, etc. Except as
otherwise provided herein, to the extent the duties of the Managing
Member require expenditures of funds to be paid to third parties, the
Managing Member shall not have any obligations hereunder except to the
extent that Company funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be
deemed to authorize or require the Managing Member, in its capacity as
such, to expend its individual funds for payment to third parties or to
undertake any individual liability or obligation on behalf of the
Company.
Section 7.2 Certificate of Formation. To the extent that such action is
determined by the Managing Member to be reasonable and necessary or appropriate,
the Managing Member shall file amendments to and restatements of the Certificate
and do all the things to maintain the Company as a limited liability company (or
an entity in which the Non-Managing Members have limited liability) under the
laws of the State of Delaware and each other jurisdiction in which the Company
may elect to do business or own property. Subject to the terms of Section
8.5(a)(4) hereof, the Managing Member shall not be required, before or after
filing, to deliver or mail a copy of the Certificate, as it may be amended or
restated from time to time, to any Non-Managing Member. The Managing Member
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited liability company (or an
entity in which the Non-Managing Members have limited liability) in the State of
Delaware and any other jurisdiction in which the Company may elect to do
business or own property.
Section 7.3 Restrictions on Managing Member's Authority. The Managing
Member may not, without the written Consent of all of the Non-Managing Members,
take any action in contravention of this Agreement including, without
limitation:
(a) take any action that would make it impossible to carry on
the ordinary business of the Company, except as otherwise provided in
this Agreement (provided that this restriction shall not be deemed to
restrict the sale, lease, transfer or disposition of all or
substantially all of the Company's assets as may otherwise be provided
herein);
(b) possess Company property, or assign any rights in specific
Company property, for other than a Company purpose except as otherwise
provided in this Agreement (other than this Section 7.3);
(c) admit a Person as a Member, except as otherwise provided
in this Agreement; or
(d) perform any act that would subject a Member to personal
liability for the debts, obligations and liabilities of the Company
except as provided herein or under the Act.
Section 7.4 Responsibility for Expenses.
(a) No Compensation. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V
and VI regarding distributions, payments and allocations to which it
may be entitled), the Managing Member shall not be compensated for its
services as Managing Member of the Company.
(b) Responsibility for Ownership and Operation Expenses. The
Company shall be responsible for and shall pay all expenses relating to
the Company's ownership of its assets, and the operation of, or for the
benefit of, the Company. The Managing Member is hereby authorized to
pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Company. The Managing
Member shall be reimbursed on a monthly basis, or such other basis as
the Managing Member may determine in its sole and absolute discretion,
for all expenses it incurs relating to the Company's ownership of its
assets and the operation of, or for the benefit of, the Company;
provided, however, that the amount of any such reimbursement shall be
reduced by any interest or other amounts earned by the Managing Member
with respect to bank accounts or other instruments held by it as
permitted in Section 7.5(a). The Non-Managing Members acknowledge that
all such expenses of the Managing Member are deemed to be for the
benefit of the Company. Such reimbursements shall be in addition to any
reimbursement to the Managing Member as a result of indemnification
pursuant to Section 7.7 hereof. In the event that certain expenses are
incurred for the benefit of the Company and other entities (including
the Managing Member), such expenses shall be allocated to the Company
and such other entities in such a manner as the Managing Member in its
sole and absolute discretion deems fair and reasonable. All payments
and reimbursements hereunder shall be characterized for federal income
tax purposes as expenses of the Company incurred on its behalf, and not
as expenses of the Managing Member.
(c) Responsibility for Organization Expenses. The Company
shall be responsible for and shall pay all expenses incurred relating
to the admission of the Managing Member to the Company.
(d) Common Share Repurchases. If the Managing Member shall
elect to purchase from its stockholders Common Shares for the purpose
of delivering such Common Shares to satisfy an obligation under any
dividend reinvestment program adopted by the Managing Member, any
employee stock purchase plan adopted by the Managing Member, or any
similar obligation or arrangement undertaken by the Managing Member in
the future or for the purpose of retiring such Common Shares, the
purchase price paid by the Managing Member for such Common Shares and
any other expenses incurred by the Managing Member in connection with
such purchase shall be considered expenses of the Company and shall be
advanced to the Managing Member or reimbursed to the Managing Member,
subject to the condition that: (i) if such Common Shares subsequently
are sold by the Managing Member, the Managing Member shall pay to the
Company any proceeds received by the Managing Member for such Common
Shares (which sales proceeds shall include the amount of dividends
reinvested under any dividend reinvestment or similar program;
provided, that a transfer of Common Shares for Membership Units
pursuant to Section 4.2(e) would not be considered a sale for such
purposes); and (ii) if such Common Shares are not retransferred by the
Managing Member within thirty (30) days after the purchase thereof, or
the Managing Member otherwise determines not to retransfer such Common
Shares, the Managing Member, shall cause the Company to redeem a number
of Membership Units held by the Managing Member equal to the number of
such Common Shares, as adjusted (x) pursuant to Section 7.5 (in the
event the Managing Member acquires material assets, other than on
behalf of the Company) and (y) for stock dividends and distributions,
stock splits and subdivisions, reverse stock splits and combinations,
distributions of rights, warrants or options, and distributions of
evidences of indebtedness or assets relating to assets not received by
the Managing Member pursuant to a pro rata distribution by the Company
(in which case such advancement or reimbursement of expenses shall be
treated as having been made as a distribution in redemption of such
number of Membership Units held by the Managing Member).
(e) If and to the extent any reimbursements to the Managing
Member pursuant to this Section 7.4 constitute gross income of the
Managing Member (as opposed to the repayment of advances made by the
Managing Member on behalf of the Company), such amounts shall
constitute guaranteed payments within the meaning of Section 707(c) of
the Code, shall be treated consistently therewith by the Company and
all Members, and shall not be treated as distributions for purposes of
computing the Members' Capital Accounts.
Section 7.5 Outside Activities of the Managing Member.
(a) The Managing Member shall not directly or indirectly enter
into or conduct any business, other than in connection with the
ownership, acquisition and disposition of Membership Interests as a
Managing Member or Non-Managing Member and the management of the
business of the Company, its operation as a public reporting company
with a class (or classes) of securities registered under the Exchange
Act and listed on the New York Stock Exchange, its operation as a REIT
and such activities as are incidental thereto. The Managing Member
shall not own any assets other than Membership Interests (except for
certain interests in Company Properties held directly by the Managing
Member or which have been caused by the Managing Member to be
contributed to or purchased by Subsidiaries, which interests shall not
exceed 1% of the aggregate economic interests of any property) and
other than such bank accounts or similar instruments as it deems
necessary to carry out its responsibilities contemplated under this
Agreement and the Charter. The Managing Member and Affiliates of the
Managing Member may acquire Non-Managing Membership Interests and shall
be entitled to exercise all rights of a Non-Managing Member relating to
such Non-Managing Membership Interests.
(b) Purchases of Shares. In the event the Managing Member
purchases Shares, then the Managing Member shall cause the Company to
purchase from it an equal number of Membership Units (after application
of the Unit Adjustment Factor) on the same terms that the Managing
Member purchased such Shares.
Section 7.6 Contracts with Affiliates.
(a) Loans. The Managing Member may cause the Company to lend
or contribute to its Subsidiaries or other Persons in which the Company
has an equity investment, and such Persons may borrow funds from the
Company, on terms and conditions established in the sole and absolute
discretion of the Managing Member. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other
Person.
(b) Transfers of Assets. Except as provided in Section 7.5(a),
the Managing Member may cause the Company to transfer assets to joint
ventures, other partnerships, corporations or other business entities
in which the Company is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the Managing Member in its sole discretion deems
advisable.
(c) Employee Benefit Plans. The Managing Member, in its sole
and absolute discretion and without the approval of the Non-Managing
Members, may propose and adopt on behalf of the Managing Member and the
Company employee benefit plans funded by the Company for the benefit of
employees of the Managing Member, the Company, Subsidiaries of the
Company or any Affiliate of any of them in respect of services
performed, directly or indirectly, for the benefit of the Company, the
Managing Member, or any of the Company's Subsidiaries, including any
such plan which requires the Company, the Managing Member or any of the
Company's Subsidiaries to issue or transfer Membership Units to
employees. The Managing Member also is expressly authorized to cause
the Company to issue to it Membership Units corresponding to Common
Shares issued by the Managing Member pursuant to any such plan or any
similar or successor plan and to repurchase such Membership Units to
the extent necessary to permit the Managing Member to repurchase such
Common Shares in accordance with such plan.
(d) Other Agreements. The Managing Member is expressly
authorized to enter into, on its own behalf or in the name and on
behalf of the Company, asset management agreements, cross-indemnity
agreements, registration rights agreements with respect to the Common
Shares, right of first opportunity arrangements or other conflict
avoidance agreements with various Affiliates of the Company and the
Managing Member, including Strategic Hotel Capital, L.L.C., on such
terms as the Managing Member, in its sole and absolute discretion,
believes are advisable. Any indemnification pursuant to this Section
7.7 shall be made only out of the assets of the Company, and any
insurance proceeds from any liability policy covering the Managing
Member and any Indemnitee, and neither the Managing Member nor any
Non-Managing Member shall have any obligation to contribute to the
capital of the Company or otherwise provide funds to enable the Company
to fund its obligations under this Section 7.7, except to the extent
otherwise expressly agreed to by such Member and the Company.
Section 7.7 Indemnification.
(a) General. The Company shall indemnify, in accordance with
and to the fullest extent now or hereafter permitted by law, any Person
who was or is a party 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
by or in the right of the corporation) by reason of the fact that the
Person is or was a Member, director, officer, employee or agent of the
Company or the Managing Member, or is or was serving at the request of
the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the
Person in connection with such action, suit or proceeding if the Person
acted in good faith and in a manner the Person reasonably believed to
be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe the Person's conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Person did not act in good faith
and in a manner which the Person reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the
Person's conduct was unlawful.
(b) Actions in the Right of the Company. 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 the Person is or was a Member, director, officer,
employee or agent of the Company or the Managing Member, or is or was
serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by the Person in connection with the defense or
settlement of such action or suit if the Person acted in good faith and
in a manner the Person reasonably believed to be in or not opposed to
the best interests of the Company 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 or such expenses
which such court shall deem proper.
(c) Authorization. Any indemnification under subsections (a)
and (b) of this section (unless ordered by a court) shall be made by
the Company only as authorized in the specific case upon a
determination that indemnification of the present or former Member,
director, officer, employee or agent is proper in the circumstances
because the Person has met the applicable standard of conduct set forth
in subsections (a) and (b) of this section. Such determination shall be
made in the sole and absolute discretion of the Managing Member.
(d) In Advance of Final Disposition. Expenses (including
attorneys' fees) incurred by a Person entitled to indemnification
hereunder in defending any civil, criminal, administrative or
investigative action, suit or proceeding may 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 such Person to repay
such amount if it shall ultimately be determined that such Person is
not entitled to be indemnified by the Company as authorized in this
section. Such expenses (including attorneys' fees) incurred by such
Persons may be so paid upon such terms and conditions, if any, as the
Managing Member deems appropriate.
(e) Non-Exclusive Section. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Agreement shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
agreement, or otherwise, both as to action in such Person's official
capacity and as to action in another capacity while holding such
office.
(f) Insurance. The Company shall have power to purchase and
maintain insurance on behalf of any Person who is or was a Member,
director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such Person and
incurred by such Person in any such capacity, or arising out of such
Person's status as such, whether or not the Company would have the
power to indemnify such Person against such liability under this
section.
(g) Merger and Consolidation; Other Enterprises. For purposes
of this section, references to "the Company" shall include, in addition
to the resulting entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power
and authority to indemnify its members, directors, officers, and
employees or agents, so that any person who is or was a Member,
director, officer, employee, or agent of such constituent entity, or is
or was serving at the request of such constituent entity as a director,
officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise, shall stand in the same position
under this section with respect to the resulting or surviving
corporation as such Person would have with respect to such constituent
entity if its separate existence had continued. For purposes of this
section, references to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes
assessed on a Person with respect to any employee benefit plan; and
references to "serving at the request of the Company" shall include any
service as a Member, director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such Member,
director, officer, employee, or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a Person who acted
in good faith and in a manner such Person reasonably believed to be in
the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the Company" as referred to in this section.
(h) Continuation. The indemnification and advancement of
expenses provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified, continue as to a
Person who has ceased to be a Member, director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
(i) Interested Transactions. A Person entitled to
indemnification hereunder shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of this
Agreement.
(j) Binding Effect. The provisions of this Section 7.7 are for
the benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the
benefit of any other Persons. Any amendment, modification or repeal of
this Section 7.7 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the Company's liability
to any Indemnitee under this Section 7.7 as in effect immediately prior
to such amendment, modification or repeal with respect to claims
arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
(k) Reimbursements to Managing Member Shall Not Be Treated As
Distributions. If and to the extent any reimbursements to the Managing
Member pursuant to this Section 7.7 constitute gross income of the
Managing Member (as opposed to the repayment of advances made by the
Managing Member on behalf of the Company) such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code,
shall be treated consistently therewith by the Company and all Members,
and shall not be treated as distributions for purposes of computing the
Members' Capital Accounts.
Section 7.8 Liability of the Managing Member.
(a) General. Notwithstanding anything to the contrary set
forth in this Agreement, the Managing Member shall not be liable for
monetary damages to the Company, any Members or any Assignees for
losses sustained or liabilities incurred as a result of errors in
judgment or of any act or omission, unless (i) the Managing Member
actually received an improper benefit in money, property or services
(in which case, such liability shall be for the amount of the benefit
in money, property or services actually received), or (ii) the Managing
Member's action or failure to act was the result of active and
deliberate dishonesty, gross negligence or bad faith and was material
to the cause of action being adjudicated; provided, however, that the
Managing Member shall owe the same duty of care to the Non-Managing
Members as its directors owe to the Shareholders of the Managing
Member.
(b) No Obligation to Consider Interests of Non-Managing
Members. The Non-Managing Members expressly acknowledge that the
Managing Member is acting on behalf of the Company and the Managing
Member's shareholders collectively, that, except as otherwise provided
in Section 7.8(a), the Managing Member is under no obligation to
consider the separate interests of the Non-Managing Members (including,
without limitation, the tax consequences to Non-Managing Members or
Assignees) in deciding whether to cause the Company to take (or decline
to take) any actions which the Managing Member has undertaken in good
faith on behalf of the Company, and that the Managing Member shall not
be liable for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Non-Managing Members in connection
with such decisions, unless (i) the Managing Member actually received
an improper benefit in money, property or services (in which case, such
liability shall be for the amount of the benefit in money, property or
services actually received), or (ii) the Managing Member's action or
failure to act was the result of active and deliberate dishonesty,
gross negligence or bad faith and was material to the cause of action
being adjudicated.
(c) Acts of Agents. Subject to its obligations and duties as
Managing Member set forth in Section 7.1(a) hereof, the Managing Member
may exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either directly or
by or through its agents. The Managing Member shall not be responsible
for any misconduct or negligence on the part of any such agent
appointed by it in good faith.
(d) Effect of Amendment. Any amendment, modification or repeal
of this Section 7.8 or any provision hereof shall be prospective only
and shall not in any way affect the limitations on the Managing
Member's liability to the Company and the Non-Managing Members under
this Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Section 7.9 Other Matters Concerning the Managing Member.
(a) Reliance on Documents. The Managing Member may rely and
shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) Reliance on Consultants and Advisers. The Managing Member
may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers
selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such Managing
Member reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or
omitted in good faith and in accordance with such opinion.
(c) Action Through Officers and Attorneys. The Managing Member
shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers and a
duly appointed attorney or attorneys-in-fact. Each such attorney shall,
to the extent provided by the Managing Member in the power of attorney,
have full power and authority to do and perform all and every act and
duty which is permitted or required to be done by the Managing Member
hereunder.
(d) Action Related to Maintaining REIT Status. Notwithstanding
any other provisions of this Agreement or any non-mandatory provision
of the Act, any action of the Managing Member on behalf of the Company
or any decision of the Managing Member to refrain from acting on behalf
of the Company, undertaken in the good faith belief that such action or
omission is necessary or advisable in order (i) to protect the ability
of the Managing Member, for so long as the Managing Member has
determined to qualify as a REIT, to continue to qualify as a REIT or
(ii) to avoid the Managing Member incurring any taxes under Section 857
or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Members.
Section 7.10 Title to Company Assets. Title to Company assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Company as an entity, and no Member, individually or
collectively, shall have any ownership interest in such Company assets or any
portion thereof. Title to any or all of the Company assets may be held in the
name of the Company, the Managing Member or one or more nominees, as the
Managing Member may determine, including Affiliates of the Managing Member. The
Managing Member hereby covenants, declares and warrants that any Company assets
as to which legal title is held in the name of the Managing Member or any
nominee or Affiliate of the Managing Member shall be held by the Managing Member
or such nominee or Affiliate for the exclusive use and benefit of the Company in
accordance with the provisions of this Agreement; provided, however, that the
Managing Member shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Company as soon as reasonably practicable.
All Company assets shall be recorded as the property of the Company in its books
and records, irrespective of the name in which legal title to such Company
assets is held.
Section 7.11 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Company shall be
entitled to assume that the Managing Member has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the Company
and to enter into any contracts on behalf of the Company, and such Person shall
be entitled to deal with the Managing Member as if it were the Company's sole
party in interest, both legally and beneficially. Each Non-Managing Member
hereby waives any and all defenses or other remedies which may be available
against such Person to contest, negate or disaffirm any action of the Managing
Member in connection with any such dealing. In no event shall any Person dealing
with the Managing Member or its representatives be obligated to ascertain that
the terms of this Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the Managing Member or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Company by the Managing Member or its representatives
shall be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (a) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (b) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Company and (c) such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this Agreement and is
binding upon the Company.
Section 7.12 Limitation on Transfers of Certain Properties. Until
September 30, 2007, the Managing Member shall not dispose of any interest in the
property commonly referred to as the New Orleans Hyatt other than in a
transaction (including any transaction with the Managing Member and its
Affiliates) that qualifies based on an opinion (in form and substance reasonably
satisfactory to The Prudential Insurance Company of America (for so long as it
or one of its Affiliates remains a Member) of Mayer, Brown, ▇▇▇▇ & Maw, counsel
to the Company (or other counsel reasonably satisfactory to The Prudential
Insurance Company of America (for so long as it or one of its Affiliates remains
a Member)) that such transaction will qualify as a tax deferred exchange under
Section 1031 of the Code (with no gain or recognition to any Non-Managing
Member) and other than a pledge of any or all of the assets of the Company to
secure a loan or other financing of the Managing Member. From and after
September 30, 2007, the Managing Member shall use its commercially reasonable
efforts to effect any disposition of an interest in the New Orleans Hyatt (other
than a pledge of any or all of the assets of the Company to secure a loan or
other financing of the Managing Member) in a transaction qualifying as a tax
deferred exchange under Section 1031 of the Code.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF NON-MANAGING MEMBERS
Section 8.1 Limitation of Liability. The Non-Managing Members shall
have no liability under this Agreement except as expressly provided in this
Agreement, including Section 10.5 hereof, or under the Act.
Section 8.2 Management of Business. No Non-Managing Member or Assignee
(other than the Managing Member, any of its Affiliates or any officer, director,
employee, member or agent of the Managing Member, the Company or any of their
Affiliates, in their capacity as such) shall take part in the operation,
management or control (within the meaning of the Act) of the Company's business,
transact any business in the Company's name or have the power to sign documents
for or otherwise bind the Company. The transaction of any such business by the
Managing Member, any of its Affiliates or any officer, director, employee,
member or agent or trustee of the Managing Member, the Company or any of their
Affiliates, in their capacity as such, shall not affect, impair or eliminate the
limitations on the liability of the Non-Managing Members or Assignees under this
Agreement.
Section 8.3 Outside Activities of Non-Managing Members. Subject to any
agreements entered into pursuant to Section 7.6 hereof and subject to any other
agreements entered into by a Non-Managing Member or its Affiliates with the
Managing Member, the Company or a Subsidiary, the following rights shall govern
outside activities of Non-Managing Members: (a) any Non-Managing Member (other
than the Managing Member) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Non-Managing Member shall be entitled to and may
have business interests and engage in business activities in addition to those
relating to the Company, including business interests and activities in direct
competition with the Company; (b) neither the Company nor any Members shall have
any rights by virtue of this Agreement in any business ventures of any
Non-Managing Member or Assignee; (c) none of the Non-Managing Members (in their
capacities as Non-Managing Members) nor any other Person shall have any rights
by virtue of this Agreement or the Company relationship established hereby in
any business ventures of any other Person, other than the Managing Member, and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Company, any Non-Managing Member
or any such other Person, even if such opportunity is of a character which, if
presented to the Company, any Non-Managing Member or such other Person, could be
taken by such Person; (d) the fact that a Non-Managing Member may encounter
opportunities to purchase, otherwise acquire, lease, sell or otherwise dispose
of real or personal property and may take advantage of such opportunities
himself or introduce such opportunities to entities in which it has or has not
any interest, shall not subject such Member to liability to the Company or any
of the other Members on account of the lost opportunity; and (e) except as
otherwise specifically provided herein, nothing contained in this Agreement
shall be deemed to prohibit a Non-Managing Member or any Affiliate of a
Non-Managing Member from dealing, or otherwise engaging in business, with
Persons transacting business with the Company or from providing services
relating to the purchase, sale, rental, management or operation of real or
personal property (including real estate brokerage services) and receiving
compensation therefor, from any Persons who have transacted business with the
Company or other third parties. Nothing in this Section 8.3 is intended to alter
any fiduciary obligations of any Person under applicable Delaware law.
Section 8.4 Return of Capital and Priority Among Members. Except
pursuant to the Redemption Rights set forth in Section 4.2(e) hereof, no Member
shall be entitled to the withdrawal or return of his or her Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Company as provided herein. No Member or
Assignee shall have priority over any other Member or Assignee either as to the
return of Capital Contributions or otherwise unless expressly provided in this
Agreement, as to profits, losses, distributions or credits.
Section 8.5 Rights of Non-Managing Members Relating to the Company.
(a) Copies of Business Records. In addition to other rights
provided by this Agreement or by the Act, and except as limited by
Section 8.5(c) hereof, each Non-Managing Member shall have the right,
for a purpose reasonably related to such Non-Managing Member's interest
as a Non-Managing Member in the Company, upon written demand with a
statement of the purpose of such demand and at such Non-Managing
Member's own expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange
Commission by the Managing Member pursuant to the Exchange
Act, and each communication sent to all of the stockholders of
the Managing Member;
(2) to obtain a copy of the Company's Federal, state
and local income tax returns for each Membership Year;
(3) to obtain a current list of the name and last
known business, residence or mailing address of each Member;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments thereto have
been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any other
property or services contributed by each Member and which each
Member has agreed to contribute in the future, and the date on
which each became a Member.
(b) Notification of Changes in Unit Adjustment Factor. The
Company shall notify each Non-Managing Member in writing of any change
made to the Unit Adjustment Factor within 10 Business Days of the date
such change becomes effective.
(c) Confidential Information. Notwithstanding any other
provision of this Section 8.5, the Managing Member may keep
confidential from the Non-Managing Members, for such period of time as
the Managing Member determines in its sole and absolute discretion to
be reasonable, any Company information that (i) the Managing Member
believes to be in the nature of trade secrets or other information the
disclosure of which the Managing Member in good faith believes is not
in the best interests of the Company or (ii) the Company is required by
law or by agreements with unaffiliated third parties to keep
confidential.
(d) Debt Allocation. The Managing Member may allow (but shall
not be required to allow) any Non-Managing Member to guarantee on a
"bottom dollar basis," an amount of indebtedness of the Company or any
successor thereto, as is necessary from time to time to provide an
allocation of debt to such Non-Managing Member equal to the amount of
debt then required to be allocated to such Non-Managing Member to
enable such Non-Managing Member to avoid recognizing gain pursuant to
Section 731(a)(1) of the Code as a result of a deemed distribution of
money to such Non-Managing Member pursuant to Section 752(b) of the
Code. The Managing Member may, in its discretion, permit other
Non-Managing Members to provide similar guarantees from time to time or
as a result of minimum gain chargebacks.
(e) Notice for Certain Transactions. In the event of (a) a
dissolution or liquidation of the Company or the Managing Member, (b) a
merger, consolidation or combination of the Company or the Managing
Member with or into another Person (including the events set forth in
Sections 11.2(c) and 11.2(d)), (c) the sale of all or substantially all
of the assets of the Company or the Managing Member, or (d) the
transfer by the Managing Member of all or any part of its interest in
the Company, the Managing Member shall give written notice thereof to
each Non-Managing Member at least twenty (20) Business Days prior to
the effective date or, to the extent applicable, record date of such
transaction, whichever comes first.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting. The Managing Member shall keep or
cause to be kept at the principal office of the Company appropriate books and
records with respect to the Company's business, including, without limitation,
all books and records necessary to provide to the Non-Managing Members any
information, lists and copies of documents required to be provided pursuant to
Section 9.3 hereof or required by the Act. Any records maintained by or on
behalf of the Company in the regular course of its business may be kept on, or
be in the form of, punch cards, magnetic tape, photographs, micrographics or any
other information storage device; provided, however, that the records so
maintained are convertible into clearly legible written form within a reasonable
period of time. The books of the Company shall be maintained for financial
purposes on an accrual basis in accordance with generally accepted accounting
principles and for tax reporting purposes on the accrual basis.
Section 9.2 Fiscal Year. The fiscal year of the Company shall be
the calendar year.
Section 9.3 Reports.
(a) Annual Reports. As soon as practicable, but in no event
later than 120 days after the close of each Membership Year, or such
earlier date that they are filed with the Securities and Exchange
Commission, the Managing Member shall cause to be mailed to each
Non-Managing Member as of the close of the Company Year, an annual
report containing financial statements of the Company, or of the
Managing Member if such statements are prepared solely on a
consolidated basis with the Managing Member, for such Membership Year,
presented in accordance with generally accepted accounting principles,
such statements to be audited by a nationally recognized firm of
independent public accountants selected by the Managing Member.
(b) Quarterly Reports. As soon as practicable, but in no event
later than 60 days after the close of each calendar quarter (except the
last calendar quarter of each year), or such earlier date that they are
filed with the Securities and Exchange Commission, the Managing Member
shall cause to be mailed to each Non-Managing Member as of the last day
of the calendar quarter, a report containing unaudited financial
statements of the Company, or of the Managing Member, if such
statements are prepared solely on a consolidated basis with the
Managing Member, and such other information as may be required by
applicable law or regulation, or as the Managing Member determines to
be appropriate.
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The Managing Member shall
arrange for the preparation and timely filing of all returns of Company income,
gains, deductions, losses and other items required of the Company for Federal
and state income tax purposes and shall use all reasonable efforts to furnish
the tax information reasonably required by the Managing Member and the
Non-Managing Members for Federal and state income tax reporting purposes within
60 days after the close of such taxable year. Each Non-Managing Member shall
promptly provide the Managing Member with any information reasonably requested
by the Managing Member relating to any Contributed Property contributed
(directly or indirectly) by such Non-Managing Member to the Company.
Section 10.2 Tax Elections. Except as otherwise provided herein, the
Managing Member shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code, except that the election under
Section 754 of the Code in accordance with applicable regulations thereunder
shall be made at the request of any Member. The Managing Member shall have the
right to seek to revoke any such election (including without limitation, any
election under Section 754 of the Code) upon the Managing Member's determination
in its sole and absolute discretion that such revocation is the best interests
of the Members.
Section 10.3 Tax Matters Member.
(a) General. The Managing Member shall be the "tax matters
Member" of the Company for Federal income tax purposes. Pursuant to
Section 6223(c) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Company,
the tax matters Member shall provide the Members notice of such receipt
and shall furnish the IRS with the name, address and profit interest of
each of the Non-Managing Members; provided, however, that such
information is provided to the Company by the Non-Managing Members. The
Non-Managing Members shall provide such information to the Company as
the Managing Member shall reasonably request.
(b) Powers. The tax matters Member is authorized, but not
required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings for the
adjustment of Company items required to be taken into account
by a Member for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters Member may
expressly state that such agreement shall bind all Members,
except that such settlement agreement shall not bind any
Member (a) who (within the time prescribed pursuant to the
Code and Regulations) files a statement with the IRS providing
that the tax matters Member shall not have the authority to
enter into a settlement agreement on behalf of such Member or
(b) who is a "notice Member" (as defined in Section 6231 of
the Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final
administrative adjustment at the Company level of any item
required to be taken into account by a Member for tax purposes
(a "final adjustment") is mailed or otherwise given to the tax
matters Member, to seek judicial review of such final
adjustment, including the filing of a petition for
readjustment with the Tax Court or the United States Claims
Court, or the filing of a complaint for refund with the
District Court of the United States for the district in which
the Company's principal place of business is located;
(3) to intervene in any action brought by any other
Member for judicial review of a final adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an appropriate
pleading (petition, complaint or other document) for judicial
review with respect to such request;
(5) to enter into an agreement with the IRS to extend
the period for assessing any tax which is attributable to any
item required to be taken into account by a Member for tax
purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Members
of the Company in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by
the tax matters Member in connection with any such proceeding, except
to the extent required by law, is a matter in the sole and absolute
discretion of the tax matters Member, and the provisions relating to
indemnification of the Managing Member set forth in Section 7.7 of this
Agreement shall be fully applicable to the tax matters Member in its
capacity as such.
(c) The tax matters Member shall, upon the request of any
Member, provide such Member with copies of any tax returns, elections
or any returns or documents to be filed with the IRS at least ten
Business Days prior to the date such filing is required.
(d) Reimbursement. The tax matters Member shall receive no
compensation for its services. All third-party costs and expenses
incurred by the tax matters Member in performing its duties as such
(including legal and accounting fees) shall be borne by the Company.
Nothing herein shall be construed to restrict the Company from engaging
an accounting firm and a law firm to assist the tax matters Member in
discharging its duties hereunder, so long as the compensation paid by
the Company for such services is reasonable.
Section 10.4 Organizational Expenses. The Company shall elect to deduct
expenses, if any, incurred by it in organizing the Company ratably over a
60-month period as provided in Section 709 of the Code.
Section 10.5 Withholding. Each Non-Managing Member hereby authorizes
the Company to withhold from or pay on behalf of or with respect to such
Non-Managing Member any amount of Federal, state, local, or foreign taxes that
the Managing Member determines that the Company is required to withhold or pay
with respect to any amount distributable or allocable to such Non-Managing
Member pursuant to this Agreement, including, without limitation, any taxes
required to be withheld or paid by the Company pursuant to Section 1441, 1442,
1445 or 1446 of the Code. Any amount paid on behalf of or with respect to a
Non-Managing Member shall constitute a loan by the Company to such Non-Managing
Member, which loan shall be repaid by such Non-Managing Member within 15 days
after notice from the Managing Member that such payment must be made unless (a)
the Company withholds such payment from a distribution which would otherwise be
made to the Non-Managing Member or (b) the Managing Member determines, in its
sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Company which would, but for such payment, be distributed
to the Non-Managing Member. Any amounts withheld pursuant to the foregoing
clauses (a) or (b) shall be treated as having been distributed to such
Non-Managing Member. Each Non-Managing Member hereby unconditionally and
irrevocably grants to the Company a security interest in such Non-Managing
Member's Membership Interest to secure such Non-Managing Member's obligation to
pay to the Company any amounts required to be paid pursuant to this Section
10.5. In the event that a Non-Managing Member fails to pay any amounts owed to
the Company pursuant to this Section 10.5 when due, the Managing Member may, in
its sole and absolute discretion, elect to make the payment to the Company on
behalf of such defaulting Non-Managing Member, and in such event shall be deemed
to have loaned such amount to such defaulting Non-Managing Member and shall
succeed to all rights and remedies of the Company as against such defaulting
Non-Managing Member (including, without limitation, the right to receive
distributions). Any amounts payable by a Non-Managing Member hereunder shall
bear interest at the base rate on corporate loans at large United States money
center commercial banks, as published from time to time in the Wall Street
Journal, plus four percentage points (but not higher than the maximum lawful
rate) from the date such amount is due (i.e., 15 days after demand) until such
amount is paid in full. Each Non-Managing Member shall take such actions as the
Company or the Managing Member shall request in order to perfect or enforce the
security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
(a) Definition. The term "transfer," when used in this Article
XI with respect to a Membership Unit, shall be deemed to refer to a
transaction by which the Managing Member purports to assign its
Managing Membership Interest to another Person or by which a
Non-Managing Member purports to assign its Non-Managing Membership
Interest to another Person, and includes a sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. The term "transfer" when used in this
Article XI does not include any exchange or redemption of Membership
Units by a Non-Managing Member pursuant to Section 4.2(e).
(b) Requirements. No Membership Interest shall be transferred,
in whole or in part, except in accordance with the terms and conditions
set forth in this Article XI. Any transfer or purported transfer of a
Membership Interest not made in accordance with this Article XI shall
be null and void.
Section 11.2 Transfer of Managing Member's Membership Interest.
(a) General. The Managing Member may not transfer any of its
Managing Membership Interest or withdraw as Managing Member except as
provided in Section 11.2(b) or in connection with a transaction
described in Section 11.2(c).
(b) Transfer to Company. The Managing Member may transfer
Membership Interests held by it to the Company in accordance with
Section 7.5(b) hereof.
(c) Transfer in Connection With Reclassification,
Recapitalization, or Business Combination Involving Managing Member.
Except as otherwise provided in Section 11.2(d), the Managing Member
shall not engage in any merger, consolidation or other business
combination with or into another Person or sale of all or substantially
all of its assets, or any reclassification, or recapitalization or
change of outstanding Common Shares (other than a change in par value,
or from par value to no par value, or as a result of a subdivision or
combination as described in the definition of "Unit Adjustment Factor")
("Transaction"), unless as a result of the Transaction each
Non-Managing Member thereafter remains entitled to redeem each
Membership Unit owned by such Non-Managing Member (after application of
the Unit Adjustment Factor) for an amount of cash, securities, or other
property equal to the greatest amount of cash, securities or other
property which such Non-Managing Member would have received from such
Transaction, if such Non-Managing Member had exercised its Redemption
Right immediately prior to the Transaction, provided that if, in
connection with the Transaction, a purchase, tender or exchange offer
shall have been made to and accepted by the holders of more than 50
percent of the outstanding Common Shares, the holders of Membership
Units shall receive the greatest amount of cash, securities, or other
property which a Non-Managing Member would have received had it
exercised the Redemption Right and received Common Shares in exchange
for its Membership Units immediately prior to the expiration of such
purchase, tender or exchange offer. In connection with any merger,
consolidation or business combination described in this Section 11.2(c)
in which Common Shares were exchanged for securities of the acquiring
Person, the Non-Managing Members shall (unless Non-Managing Members
Consent is obtained) remain entitled to exercise their Redemption Right
with respect to such Person and the Unit Adjustment Factor shall
continue to apply.
(d) Merger Involving Managing Member Where Surviving Entity's
Assets Contributed to Company. Notwithstanding Section 11.2(c), the
Managing Member may merge with another entity if, under the terms of
the transaction, Non-Managing Members will not engage in a sale or
exchange for Federal income tax purposes and immediately after such
merger substantially all of the assets of the surviving entity, other
than Membership Units held by the Managing Member, are contributed to
the Company as a Capital Contribution in exchange for Membership Units
with a fair market value equal to the 704(c) Value of the assets so
contributed.
Section 11.3 Non-Managing Members' Rights to Transfer.
(a) General. Prior to twelve (12) months after the closing of
the initial public offering of Common Shares, no Non-Managing Member
shall transfer all or any portion of its Membership Interests to any
transferee without the consent of the Managing Member, which consent
may be withheld in its sole and absolute discretion; provided, however,
that Strategic Hotel Capital, L.L.C. may transfer its Membership
Interests to its security holders as set forth in the Structuring and
Contribution Agreement. After such twelve (12) month anniversary and
subject to the remaining provisions of this Section 11.3 as well as
Section 11.4, a Non-Managing Member may transfer all or any portion of
his Membership Interest, or any of such Non-Managing Member's rights as
a Non-Managing Member, without the prior written consent of the
Managing Member. In order to effect such transfer, the Non-Managing
Member must deliver to the Managing Member a duly executed copy of the
instrument making such transfer and such instrument must evidence the
written acceptance by the assignee of all of the terms and conditions
of this Agreement and represent that such assignment was made in
accordance with all applicable laws and regulations. Notwithstanding
the foregoing, any transferee of any transferred Membership Interest
shall be subject to any and all ownership limitations contained in the
Charter. Unless admitted as a Non-Managing Member, no transferee,
whether by a voluntary transfer, by operation of law or otherwise,
shall have any rights hereunder, other than the rights of an Assignee
as provided in Section 11.5.
(b) Incapacitated Non-Managing Members. If a Non-Managing
Member is subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator or receiver of such Non-Managing
Member's estate shall have all the rights of a Non-Managing Member, but
not more rights than those enjoyed by other Non-Managing Members for
the purpose of settling or managing the estate and such power as the
Incapacitated Non-Managing Member possessed to transfer all or any part
of his or its interest in the Company. The Incapacity of a Non-Managing
Member, in and of itself, shall not dissolve or terminate the Company.
(c) Transfers Contrary to Securities Laws. The Managing Member
may prohibit any transfer otherwise permitted under this Section 11.3
by a Non-Managing Member of its Membership Units if, in the opinion of
legal counsel to the Company, such transfer would require filing of a
registration statement under the Securities Act or would otherwise
violate any Federal or state securities laws or regulations applicable
to the Company or the Company Units.
(d) Publicly Traded Partnership Restrictions. No Member may
assign or transfer any Membership Unit (or any portion thereof or
interest therein) if such assignment or transfer would result in the
sum of the percentage interests in Membership Units transferred during
the Company's taxable year exceeding two percent (2%) of the total
Membership Units of the Company. Notwithstanding the foregoing, the
following transfers shall be disregarded in determining whether
Membership Units in excess of two percent (2%) of the Membership Units
have been transferred during the Company's taxable year:
(1) transfers in which the tax basis of the
Membership Unit in the hands of the transferee is determined,
in whole or in part, by reference to the basis of the
Membership Unit in the hands of the transferor or is
determined under Section 732 of the Code;
(2) transfers at death, including transfers from an
estate or testamentary trust;
(3) transfers between members of a family (for this
purpose, including only brothers and sisters (whether by the
whole or half blood), spouses, ancestors and lineal
descendants);
(4) transfers involving the issuance of interests by
(or on behalf of) the Company in exchange for cash, property
or services;
(5) transfers involving distributions from a
retirement plan qualified under Section 401(a) of the Code or
an individual retirement account;
(6) transfers by a Member and any related persons
(within the meaning of Section 267(b) or 707(b)(1) of the
Code) in one or more transactions during any 30 calendar day
period of Membership Units representing in the aggregate more
than two percent (2%) of the total Membership Units; and
(7) transfers by one or more Members of Membership
Units representing in the aggregate 50 percent or more of the
total Membership Units in one transaction or a series of
related transactions.
Any Member seeking to transfer or assign Membership Units pursuant to any of the
foregoing disregarded transfers shall, prior to such transfer or assignment,
deliver to the Company a certificate of a duly authorized officer of such Member
setting forth the facts relating to such transfer or assignment and the basis
for disregarding such transfer for these purposes. The Company shall, in the
sole and absolute discretion of the Managing Member, determine whether to permit
such transfer or assignment; provided, that any transfer that complies with any
exception in Section 11.3(d)(1) through (d)(7) shall be permitted. Any attempted
transfer or assignment in contravention of the provisions of this Section
11.3(d) or that is not permitted by the Managing Member pursuant to the
preceding sentence shall be null and void ab initio, the purported transferor
shall continue to be the Member for all purposes and the purported transferee
shall not become a Member as a result of such purported transfer, and the
Company shall in no event admit such purported transferee as a Member or
otherwise recognize any rights of such purported transferee (including, without
limitation, any right to receive distributions (directly or indirectly) or to
acquire any interest in the capital or profits of the Company). Any Member
seeking to transfer or assign Membership Units may request confirmation from the
Company that such transfer or assignment is permissible under Section 11.3(a) or
the first sentence of this Section 11.3(d).
Section 11.4 Substituted Non-Managing Members.
(a) Consent of Managing Member Required. A Non-Managing Member
shall have the right in its discretion to substitute a transferee as a
Non-Managing Member in his place, in which event such substitution
shall occur if the Non-Managing Member so provides; provided, however,
that any transferee desiring to become a Substituted Non-Managing
Member must furnish to the Managing Member (i) evidence of acceptance
in form satisfactory to the Managing Member of all of the terms and
conditions of this Agreement, including, without limitation, the power
of attorney granted in Article XVI and (ii) such other documents or
instruments as may be required in the reasonable discretion of the
Managing Member in order to effect such Person's admission as a
Substituted Non-Managing Member.
(b) Rights and Duties of Substituted Non-Managing Members. A
transferee who has been admitted as a Substituted Non-Managing Member
in accordance with this Article XI shall have all the rights and powers
and be subject to all the restrictions and liabilities of a
Non-Managing Member under this Agreement.
(c) Amendment of Exhibit A. Upon the admission of a
Substituted Non-Managing Member, the Managing Member shall amend
Exhibit A to reflect the name, address, number of Membership Units, and
Percentage Interest of such Substituted Non-Managing Member and to
eliminate or adjust, if necessary, the name, address and interest of
the predecessor of such Substituted Non-Managing Member.
Section 11.5 Assignees. If a Non-Managing Member, in its sole and
absolute discretion, does not provide for the admission of any permitted
transferee under Section 11.4(a) as a Substituted Non-Managing Member, as
described in Section 11.4, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be entitled to all the rights of
an assignee of a Non-Managing Membership Interest under the Act, including the
right to receive distributions from the Company and the share of Net Income, Net
Losses, gain, loss and Recapture Income attributable to the Company Units
assigned to such transferee, but shall not be deemed to be a holder of
Membership Units for any other purpose under this Agreement, and shall not be
entitled to vote such Membership Units in any matter presented to the
Non-Managing Members for a vote (such Membership Units being deemed to have been
voted on such matter in the same proportion as all Membership Units held by
Non-Managing Members are voted). In the event any such transferee desires to
make a further assignment of any such Membership Units, such transferee shall be
subject to all the provisions of this Article XI to the same extent and in the
same manner as any Non-Managing Member desiring to make an assignment of
Membership Units.
Section 11.6 General Provisions.
(a) Withdrawal of Non-Managing Member. No Non-Managing Member
may withdraw from the Company other than as a result of (i) a permitted
transfer of all of such Non-Managing Member's Membership Units in
accordance with this Article XI and the transferee of such Membership
Units being admitted to the Company as a Substituted Non-Managing
Member or (ii) pursuant to redemption or exchange of all of its
Membership Units under Section 4.2(e).
(b) Transfer of All Membership Units by Non-Managing Member.
Any Non-Managing Member who shall transfer all of his Membership Units
in a transfer permitted pursuant to this Article XI where the
transferee was admitted as a Substituted Non-Managing Member or
pursuant to the redemption or exchange of all of its Membership Units
under Section 4.2(e) shall cease to be a Non-Managing Member.
(c) Timing of Transfers. Transfers pursuant to this Article XI
may only be made on the first day of a calendar month of the Company,
unless the Managing Member otherwise agrees.
(d) Allocation When Transfer Occurs. If any Membership
Interest is transferred during any quarterly segment of the Company's
fiscal year in compliance with the provisions of this Article XI or
redeemed or converted pursuant to Section 4.2(e), Net Income, Net
Losses, each item thereof and all other items attributable to such
interest for such fiscal year shall be divided and allocated between
the transferor Member and the transferee Member by taking into account
their varying interests during the fiscal year in accordance with
Section 706(d) of the Code, based upon the interim closing of the books
method. Solely for purposes of making such allocations, each of such
items for the calendar month in which the transfer or redemption occurs
shall be allocated to the Person who is a Member as of midnight on the
last day of said month. All distributions of Available Cash with
respect to which the Membership Record Date is before the date of such
transfer or redemption shall be made to the transferor Member, and all
distributions of Available Cash with Membership Record Dates thereafter
shall be made to the transferee Member.
ARTICLE XII
ADMISSION OF MEMBERS
Section 12.1 Admission of Successor Managing Member. A successor to all
of the Managing Member's Managing Membership Interest pursuant to Section 11.2
hereof who is proposed to be admitted as a successor Managing Member shall be
admitted to the Company as the Managing Member, effective upon such transfer.
Any such transferee shall carry on the business of the Company without
dissolution. In each case, the admission shall be subject to the successor
Managing Member executing and delivering to the Company an acceptance of all of
the terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
Section 12.2 Admission of Additional Non-Managing Members.
(a) General. A Person who makes a Capital Contribution to the
Company in accordance with this Agreement or who exercises an option to
receive Membership Units shall be admitted to the Company as an
Additional Non-Managing Member only upon furnishing to the Managing
Member (i) evidence of acceptance in form reasonably satisfactory to
the Managing Member of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted
in Article XVI hereof and (ii) such other documents or instruments as
may be required in the reasonable discretion of the Managing Member in
order to effect such Person's admission as an Additional Non-Managing
Member.
(b) Consent of Managing Member Required. Notwithstanding
anything to the contrary in this Section 12.2, no Person shall be
admitted as an Additional Non-Managing Member without the consent of
the Managing Member, which consent may be given or withheld in the
Managing Member's sole and absolute discretion. The admission of any
Person as an Additional Non-Managing Member shall become effective on
the date upon which the name of such Person is recorded on the books
and records of the Company, following the consent of the Managing
Member to such admission.
Section 12.3 Amendment of Agreement and Certificate. For the admission
to the Company of any Member, the Managing Member shall take all steps necessary
and appropriate under the Act to amend the records of the Company and, if
necessary, to prepare as soon as practical an amendment of this Agreement
(including an amendment of Exhibit A) and, if required by law, shall prepare and
file an amendment to the Certificate and may for this purpose exercise the power
of attorney granted pursuant to Article XVI hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution. The Company shall not be dissolved by the
admission of Substituted Non-Managing Members or Additional Non-Managing Members
or by the admission of a successor Managing Member in accordance with the terms
of this Agreement. The Company shall dissolve, and its affairs shall be wound
up, upon the first to occur of any of the following ("Events of Dissolution"):
(a) Withdrawal of Managing Member--an event of withdrawal of
the Managing Member, as defined in the Act, unless, within 90 days
after the withdrawal all the remaining Members agree in writing to
continue the business of the Company and to the appointment, effective
as of the date of withdrawal, of a substitute Managing Member;
(b) Voluntary Dissolution--from and after the date of this
Agreement, with the Consent of a majority of the Percentage Interests
of the Non-Managing Members, an election to dissolve the Company made
by the Managing Member, in its sole and absolute discretion;
(c) Judicial Dissolution Decree--entry of a decree of judicial
dissolution of the Company pursuant to the provisions of the Act;
(d) Sale of Company's Assets--the sale or disposition of all
or substantially all of the assets and properties of the Company or a
related series of transactions that, taken together, result in the sale
or other disposition of all or substantially all of the assets of the
Company;
(e) Bankruptcy or Insolvency of Managing Member--the Managing
Member
(1) makes an assignment for the benefit of creditors;
(2) files a voluntary petition in bankruptcy;
(3) is adjudged a bankrupt or insolvent, or has
entered against it an order for relief in any bankruptcy or
insolvency proceeding;
(4) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute,
law or regulation;
(5) files an answer or other pleading admitting or
failing to contest the material allegations of a petition
filed against it in any proceeding of this nature; or
(6) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the
Managing Member or of all or any substantial part of its
properties; or
(f) Readjustment, etc. One hundred and twenty (120) days after
the commencement of any proceeding against the Managing Member seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, the
proceeding has not been dismissed, or if within 90 days after the
appointment without the Managing Member's consent or acquiescence of a
trustee, receiver or liquidator of the Managing Member or of all or any
substantial part of its properties, the appointment is not vacated or
stayed, or within 90 days after the expiration of any such stay, the
appointment is not vacated.
Section 13.2 Winding Up.
(a) General. Upon the occurrence of an Event of Dissolution,
the Company shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying
the claims of its creditors and Members. No Member shall take any
action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Company's business and affairs. The Managing
Member (or, in the event there is no remaining Managing Member, any
Person elected by a majority in interest of the Non-Managing Members
(the "Liquidator")) shall be responsible for overseeing the winding up
and dissolution of the Company and shall take full account of the
Company's liabilities and property and the Company property shall be
liquidated as promptly as is consistent with obtaining the fair value
thereof, and the proceeds therefrom (which may, to the extent
determined by the Managing Member, include shares of stock in the
Managing Member) shall be applied and distributed in the following
order:
(1) First, to the payment and discharge of all of the
Company's debts and liabilities to creditors other than the
Members;
(2) Second, to the payment and discharge of all of
the Company's debts and liabilities to the Members, pro rata
in accordance with amounts owed to each such Member; and
(3) The balance, if any, to the Managing Member and
Non-Managing Members in accordance with their Capital
Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
The Managing Member shall not receive any additional
compensation for any services performed pursuant to this Article XIII
other than reimbursement of its expenses as provided for in Section
7.4.
(b) Where Immediate Sale of Company's Assets Impractical.
Notwithstanding the provisions of Section 13.2(a) hereof which require
liquidation of the assets of the Company, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the
Company the Liquidator determines that an immediate sale of part or all
of the Company's assets would be impractical or would cause undue loss
to the Members, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Company (including
to those Members as creditors) or, with the Consent of the Non-Managing
Members holding a majority of the Non-Managing Membership Units,
distribute to the Members, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2(a) hereof, undivided
interests in such Company assets as the Liquidator deems not suitable
for liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in
kind are in the best interest of the Members, and shall be subject to
such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may
adopt.
Section 13.3 Capital Contribution Obligation. If any Member has a
deficit balance in his or her Capital Account (after giving effect to all
contributions, distributions and allocations for the taxable years, including
the year during which such liquidation occurs), such Member shall have no
obligation to make any contribution to the capital of the Company with respect
to such deficit, and such deficit at any time shall not be considered a debt
owed to the Company or to any other Person for any purpose whatsoever, except to
the extent otherwise expressly agreed to by such Member and the Company.
Section 13.4 Compliance with Timing Requirements of Regulations;
Allowance for Contingent or Unforeseen Liabilities or Obligations.
Notwithstanding anything to the contrary in this Agreement, in the event the
Company is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article XIII
to the Managing Member and Non-Managing Members who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2)
(including any timing requirements therein). In the discretion of the Managing
Member, a pro rata portion of the distributions that would otherwise be made to
the Managing Member and Non-Managing Members pursuant to this Article XIII may
be: (i) distributed to a liquidating trust established for the benefit of the
Managing Member and Non-Managing Members for the purposes of liquidating Company
assets, collecting amounts owed to the Company, and paying any contingent or
unforeseen liabilities or obligations of the Company or of the Managing Member
arising out of or in connection with the Company (the assets of any such trust
shall be distributed to the Managing Member and Non-Managing Members from time
to time, in the reasonable discretion of the Managing Member, in the same
proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Managing Member and Non-Managing Members
pursuant to this Agreement); or (ii) withheld or escrowed to provide a
reasonable reserve for Company liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Company, provided that such withheld or escrowed amounts shall be distributed to
the Managing Member and Non-Managing Members in the manner and priority set
forth in Section 13.2(a) as soon as practicable.
Section 13.5 Other Events. Notwithstanding any other provision of this
Article XIII, in the event the Company is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Event of Dissolution has
occurred, the Company's property shall not be liquidated, the Company's
liabilities shall not be paid or discharged, and the Company's affairs shall not
be wound up. Instead, for federal income tax purposes the Company shall be
deemed to have contributed all of its assets and liabilities to a new limited
liability company in exchange for an interest in the new limited liability
company and, immediately thereafter, the terminated Company shall be deemed to
distribute interests in the new Company to the Managing Member and Non-Managing
Members in proportion to their respective Membership Interests in liquidation of
the terminated Company.
Section 13.6 Rights of Non-Managing Members. Except as specifically
provided in this Agreement, each Non-Managing Member shall look solely to the
assets of the Company for the return of his Capital Contribution and shall have
no right or power to demand or receive property other than cash from the
Company. Except as specifically provided in this Agreement, no Non-Managing
Member shall have priority over any other Non-Managing Member as to the return
of his Capital Contributions, distributions, or allocations.
Section 13.7 Notice of Dissolution. In the event an Event of
Dissolution or an event occurs that would, but for provisions of Section 13.1,
result in a dissolution of the Company, the Managing Member shall, within 30
days thereafter, provide written notice thereof to each of the Members and to
all other parties with whom the Company regularly conducts business (as
determined in the discretion of the Managing Member) and shall publish notice
thereof in a newspaper of general circulation in each place in which the Company
regularly conducts business (as determined in the discretion of the Managing
Member).
Section 13.8 Cancellation of Certificate. Upon the completion of the
liquidation of the Company as provided in Section 13.2 hereof, the Company shall
be terminated and the Certificate and all qualifications of the Company as a
foreign limited liability company in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to
terminate the Company shall be taken.
Section 13.9 Reasonable Time for Winding-Up. A reasonable time shall be
allowed for the orderly winding-up of the business and affairs of the Company
and the liquidation of its assets pursuant to Section 13.2 hereof, in order to
minimize any losses otherwise attendant upon such winding-up, and the provisions
of this Agreement shall remain in effect between the Members during the period
of liquidation.
ARTICLE XIV
AMENDMENT OF AGREEMENT; MEETINGS
Section 14.1 Amendments.
(a) General. Amendments to this Agreement may be proposed by
the Managing Member or by any Non-Managing Members holding 25 percent
or more in the aggregate of the Membership Interests held by all
Non-Managing Members. Following such proposal, the Managing Member
shall submit any proposed amendment to the Non-Managing Members. The
Managing Member shall seek the written vote of the Members on the
proposed amendment or shall call a meeting to vote thereon and to
transact any other business that it may deem appropriate. For purposes
of obtaining a written consent, the Managing Member may require a
response within a reasonable specified time, but not less than 15 days,
and failure to respond in such time period shall constitute a consent
which is consistent with the Managing Member's recommendation (if so
recommended) with respect to the proposal; provided, that, an action
shall become effective at such time as requisite consents are received
even if prior to such specified time. Except as provided in Section
14.1(b), 14.1(c) or 14.1(d), a proposed amendment shall be adopted and
be effective as an amendment hereto if it is approved by the Managing
Member and it receives the Consent of Non-Managing Members holding a
majority of the Percentage Interests of the Non-Managing Members.
(b) Managing Member's Power to Amend. Notwithstanding Section
14.1(a), the Managing Member shall have the power, without the consent
of the Non-Managing Members, to amend this Agreement as may be required
to facilitate or implement any of the following purposes:
(1) to add to the obligations of the Managing Member
or surrender for the benefit of the Non-Managing Members any
right or power granted to the Managing Member or any Affiliate
of the Managing Member;
(2) to reflect the issuance of additional Membership
Interests or the admission, substitution, termination, or
withdrawal of Members in accordance with this Agreement;
(3) to set forth the rights, powers, duties, and
preferences of the holders of any additional Membership
Interests issued pursuant to Section 4.2(b) hereof;
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Non-Managing Members
in any material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent
with law or with other provisions;
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling
or regulation of a Federal or state agency or contained in
Federal or state law;
(6) to reflect such changes as are reasonably
necessary for the Managing Member to maintain its status as a
REIT, including changes which may be necessitated due to a
change in applicable law (or an authoritative interpretation
thereof) or a ruling of the IRS; and
(7) to modify the manner in which Capital Accounts
are computed as set forth in Section 4.4(e).
The Managing Member will provide notice to the Non-Managing
Members when any action under this Section 14.1(b) is taken.
(c) Consent of Adversely Affected Member Required.
Notwithstanding Section 14.1(a) and Section 14.1(b) hereof, this
Agreement shall not be amended without the Consent of each Member
adversely affected if such amendment would (i) convert a Non-Managing
Member's interest in the Company into a Managing Member's interest
(except as a result of the Managing Member acquiring such interest),
(ii) modify the limited liability of a Non-Managing Member, (iii) alter
rights of the Member to receive distributions pursuant to Article V, or
the allocations specified in Article VI (except as permitted pursuant
to Section 4.2 and Section 14.1(b)(3) hereof), (iv) alter or modify the
Redemption Right as set forth in Sections 4.2(e) and 11.2(b), and
related definitions hereof, (v) cause the termination of the Company
prior to the time set forth in Sections 2.5 or 13.1 or (vi) amend this
Section 14.1(c). Further, no amendment may alter the restrictions on
the Managing Member's authority set forth in Section 7.3 without the
Consent specified in that section. This Section 14.1(c) does not
require unanimous consent of all Members adversely affected unless the
amendment is to be effective against all Members adversely affected.
(d) When Consent of Majority of Non-Managing Membership
Interests Required. Notwithstanding Section 14.1(a) hereof, the
Managing Member shall not amend Section 4.2(b), the second sentence of
Section 7.1(a), Sections 7.5, 7.6, 7.8, 11.2, and 14.1(c), this Section
14.1(d) or Section 14.2 without the Consent of two-thirds of the
Percentage Interests of the Non-Managing Members.
Section 14.2 Meetings of the Members.
(a) General. Meetings of the Members may be called by the
Managing Member and shall be called upon the receipt by the Managing
Member of a written request by Non-Managing Members holding 25 percent
or more of the Membership Interests. The call shall state the nature of
the business to be transacted. Notice of any such meeting shall be
given to all Members not less than seven days nor more than 30 days
prior to the date of such meeting. Members may vote in person or by
proxy at such meeting. Whenever the vote or Consent of Members is
permitted or required under this Agreement, such vote or Consent may be
given at a meeting of Members or may be given in accordance with the
procedure prescribed in Section 14.1 hereof. Except as otherwise
expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests shall control.
(b) Informal Action. Any action required or permitted to be
taken at a meeting of the Members may be taken without a meeting if a
written Consent setting forth the action so taken is signed by a
majority of the Percentage Interests of the Members (or such other
percentage as is expressly required by this Agreement). Such Consent
may be in one instrument or in several instruments, and shall have the
same force and effect as a vote of a majority of the Percentage
Interests of the Members (or such other percentage as is expressly
required by this Agreement). Such Consent shall be filed with the
Managing Member. An action so taken shall be deemed to have been taken
at a meeting held on the effective date so certified.
(c) Proxies. Each Non-Managing Member may authorize any Person
or Persons to act for him by proxy on all matters in which a
Non-Managing Member is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Non-Managing Member or his
attorney-in-fact. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Non-Managing
Member executing it.
(d) Conduct of Meeting. Each meeting of Members shall be
conducted by the Managing Member or such other Person as the Managing
Member may appoint pursuant to such rules for the conduct of the
meeting as the Managing Member or such other Person deems appropriate.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice. All notices and demands under this
Agreement shall be in writing, and may be either delivered personally (which
shall include deliveries by courier), by telefax, telex or other wire
transmission (with request for assurance of receipt in a manner appropriate with
respect to communications of that type, provided that a confirmation copy is
concurrently sent by a nationally recognized express courier for overnight
delivery) or mailed, postage prepaid, by certified or registered mail, return
receipt requested, directed to the parties at their respective addresses set
forth on Exhibit A, as it may be amended from time to time, and, if to the
Company, such notices and demands sent in the aforesaid manner must be delivered
at its principal place of business set forth above. Unless delivered personally
or by telefax, telex or other wire transmission as above (which shall be
effective on the date of such delivery or transmission), any notice shall be
deemed to have been made three (3) days following the date so mailed. Any party
hereto may designate a different address to which notices and demands shall
thereafter be directed by written notice given in the same manner and directed
to the Company at its office hereinabove set forth.
Section 15.2 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
Section 15.3 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 15.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 15.6 Waiver of Partition. The Members hereby agree that the
Company Properties are not and will not be suitable for partition. Accordingly,
each of the Members hereby irrevocably waives any and all rights (if any) that
it may have to maintain any action for partition of any of the Company
Properties.
Section 15.7 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters contained herein; it
supersedes any prior agreements or understandings among them and it may not be
modified or amended in any manner other than pursuant to Article XIV.
Section 15.8 Securities Law Provisions. The Membership Units have not
been registered under the Federal or state securities laws of any state and,
therefore, may not be resold unless appropriate Federal and state securities
laws, as well as the provisions of Article XI hereof, have been complied with.
Section 15.9 Remedies Not Exclusive. Any remedies herein contained for
breaches of obligations hereunder shall not be deemed to be exclusive and shall
not impair the right of any party to exercise any other right or remedy, whether
for damages, injunction or otherwise.
Section 15.10 Time. Time is of the essence of this Agreement.
Section 15.11 Creditors. None of the provisions of this Agreement shall
be for the benefit of, or shall be enforceable by, any creditor of the Company.
Section 15.12 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 15.13 Execution Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.
Section 15.14 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
Section 15.15 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.16 No Rights as Stockholders. Nothing contained in this
Agreement shall be construed as conferring upon the holders of Membership Units
any rights whatsoever as stockholders of the Managing Member, including without
limitation any right to receive dividends or other distributions made to
stockholders of the Managing Member or to vote or to consent or to receive
notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Managing Member or any other matter.
ARTICLE XVI
POWER OF ATTORNEY
Section 16.1 Power of Attorney.
(a) Scope. Each Non-Managing Member and each Assignee
constitutes and appoints the Managing Member, any Liquidator, and
authorized officers and attorneys-in-fact of each, and each of those
acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, publish,
file and record in the appropriate public offices (a) all
certificates, documents and other instruments (including,
without limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the Managing Member
or the Liquidator deems appropriate or necessary to form,
qualify or continue the existence or qualification of the
Company as a limited liability company (or an entity in which
the Non-Managing Members have limited liability) in the State
of Delaware and in all other jurisdictions in which the
Company may conduct business or own property; (b) all
instruments that the Managing Member or any Liquidator deems
appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance
with its terms; (c) all conveyances and other instruments or
documents that the Managing Member or any Liquidator deems
appropriate or necessary to reflect the dissolution and
liquidation of the Company pursuant to the terms of this
Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Member pursuant to,
or other events described in, Article XI, XII or XIII hereof
or the Capital Contribution of any Member; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Membership Interests; and
(2) execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute
discretion of the Managing Member, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or
other action which is made or given by the Members hereunder
or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the
Managing Member, to effectuate the terms or intent of this
Agreement.
Nothing contained herein shall be construed as authorizing the
Managing Member to amend this Agreement except in accordance with
Article XIV hereof or as may be otherwise expressly provided for in
this Agreement.
(b) Irrevocability. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Members will be relying upon
the power of the Managing Member to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Company,
and it shall survive and not be affected by the subsequent Incapacity
of any Non-Managing Member or Assignee and the transfer of all or any
portion of such Non-Managing Member's or Assignee's Membership Units
and shall extend to such Non-Managing Member's or Assignee's heirs,
successors, assigns and personal representatives. Each such
Non-Managing Member or Assignee hereby agrees to be bound by any
representation made by the Managing Member, acting in good faith
pursuant to such power of attorney; and each such Non-Managing Member
or Assignee hereby waives any and all defenses which may be available
to contest, negate or disaffirm the action of the Managing Member,
taken in good faith under such power of attorney. Each Non-Managing
Member or Assignee shall execute and deliver to the Managing Member or
the Liquidator, within 15 days after receipt of the Managing Member's
request therefor, such further designation, powers of attorney and
other instruments as the Managing Member or the Liquidator, as the case
may be, deems necessary to effectuate this Agreement and the purposes
of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Limited
Liability Company Agreement of Strategic Hotel Funding, L.L.C. as of the date
first written above.
Managing Member:
Strategic Hotel Capital, Inc.
By:____________________________________
Name:
Title:
Non-Managing Members:
Strategic Hotel Capital, L.L.C.
By:____________________________________
Name:
Title:
Strategic Hotel Capital Limited Partnership
By: Strategic Hotel Capital, L.L.C., its
General Partner
By:____________________________________
Name:
Title:
EXHIBIT A
MEMBERS, CONTRIBUTIONS AND
MEMBERSHIP INTERESTS
Agreed Value of
Cash Contributed Membership Percentage
Name and Address of Member Contribution Property Units Interest
Managing Member:
Strategic Hotel Capital, Inc......................
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Non-Managing Members:
Strategic Hotel Capital, L.L.C. ..................
c/o ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Strategic Hotel Capital Limited Partnership
c/o ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ................................
[Names and Addresses]...............................
TOTAL............................................
EXHIBIT B
VALUE OF CONTRIBUTED PROPERTY
Underlying Property Basis Agreed Value
------------------- ----- ------------
EXHIBIT C
RIGHTS AND PREFERENCES OF UNITS
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (a) elects to exercise its
Redemption Right set forth in the Limited Liability Company Agreement of
Strategic Hotel Funding, L.L.C. (the "Agreement"; capitalized terms used and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement), with respect to an aggregate of __________ Membership Units, (b)
surrenders such Membership Units and all right, title and interest therein, and
(c) directs that the Cash Amount or Shares Amount (as determined by the Managing
Member) deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if Common Shares are to be delivered, such Common
Shares be registered or placed in the name(s) and at the address(es) specified
below.
Dated: ____________
Name of Non-Managing Member: ___________________________________
(Signature of Non-Managing Member)
(Street Address)
(City) (State) (Zip Code)
Signature Guaranteed by:
If Common Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
EXHIBIT E
FORM OF UNIT CERTIFICATE