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Exhibit 3.146
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
OF
3100 GLENDALE JOINT VENTURE
an Ohio joint venture
Dated as of the 31st day of July, 1996
THE INTERESTS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR
QUALIFIED UNDER THE APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE SECURITIES ACT
AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED.
IN ADDITION, THE INTERESTS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH
HEREIN.
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TABLE OF CONTENTS
Page No.
ARTICLE 1
GENERAL PROVISIONS
1.1 Formation [2]
1.2 Name of Venture [2]
1.3 Compliance [2]
1.4 Purposes of Venture [2]
1.5 Interests in the Venture [3]
1.6 Other Qualifications [3]
1.7 Term of Venture [3]
1.8 Title to Venture Property [3]
1.9 Definitions [3]
1.10 Authorized Acts [11]
1.11 Authorized Representatives [12]
ARTICLE 2
CAPITAL CONTRIBUTIONS
AND ADDITIONAL CONTRIBUTIONS
2.1 Capital Contributions [12]
2.2 Third Party Loans and Additional Capital Contributions and
Capital Calls [13]
2.3 Venturer Loans [14]
ARTICLE 3
INCOME TAX ALLOCATIONS
3.1 Establishment and Maintenance of Capital Accounts; Venture
Status [15]
3.2 Profit and Loss Allocations [15]
3.3 Allocations of Gain or Loss on Disposition [16]
3.4 Minimum Gain Chargeback and Qualified Income Offset [17]
3.5 Other Tax Allocation Provisions [17]
3.6 Intent of Allocations [20]
3.7 Basis Elections [20]
3.8 General Allocation Rules [20]
3.9 Sharing of Venture Nonrecourse Debt [20]
3.10 Adjustment of Gross Asset Value [21]
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ARTICLE 4
INVESTMENT LOAN REPAYMENTS
AND DISTRIBUTIONS
4.1 Net Available Cash ............................................. [22]
4.2 Proceeds and Distributions in Liquidation ...................... [22]
4.3 General Distribution Rules ..................................... [22]
4.4 Source of Distributions ........................................ [23]
ARTICLE 5
MANAGEMENT; DUTIES AND POWERS OF THE VENTURERS;
RIGHTS AND DUTIES OF VENTURERS
5.1 Management of Business by Venturers; Execution Authority;
Venturer Obligations; Reimbursements; Major Decisions; Retained
Approvals ...................................................... [23]
5.2 Affiliate Transactions ......................................... [29]
5.3 Reporting Requirements; Financials; Meetings ................... [29]
5.4 Tax Matters Partner; Tax Returns ............................... [30]
5.5 Indemnification and Liability of Venturers and Venture
Employees ...................................................... [30]
5.6 Opportunity to Defend .......................................... [31]
5.7 Limitation of Liability ........................................ [31]
5.8 No Priorities .................................................. [32]
ARTICLE 6
BOOKS, RECORDS AND BANK ACCOUNTS
6.1 Books and Records; Accounting Method ........................... [32]
6.2 Bank Accounts .................................................. [32]
ARTICLE 7
TRANSFERS OF VENTURE INTERESTS
7.1 Restrictions on Transfer ....................................... [32]
7.2 Take-Along Rights .............................................. [33]
7.3 Bankruptcy or Dissolution of Venturers ......................... [33]
7.4 Substitution of Venturer ....................................... [33]
7.5 Additional Transfer Restrictions ............................... [34]
7.6 Transfer Indemnification and Contribution Provisions ........... [35]
7.7 Basis for Restrictions and Section 7.9 Remedies ................ [35]
7.8 Representations, Warranties and Covenants ...................... [35]
7.9 Terminated Venturer ............................................ [36]
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ARTICLE 8
TERM, DISSOLUTION AND TERMINATION ............................ [38]
8.1 Events of Dissolution ............................................ [38]
8.2 Limitation on Dissolution ........................................ [39]
8.3 Liquidation and Winding Up ....................................... [39]
8.4 Reconstitution After Bankruptcy or Dissolution of Venturers ...... [40]
8.5 Distribution Upon Dissolution and Capital Account Adjustments .... [40]
8.6 Compliance with Timing Requirements of Treasury Regulations ...... [40]
ARTICLE 9
MISCELLANEOUS ................................................ [41]
9.1 Other Interests .................................................. [41]
9.3 No Agency ........................................................ [42]
9.4 Governing Law .................................................... [42]
9.5 Notices .......................................................... [42]
9.6 Pronouns and Plurals ............................................. [43]
9.7 Waiver ........................................................... [43]
9.8 Severability ..................................................... [44]
9.9 Titles and Captions .............................................. [44]
9.10 Agreement in Counterparts ........................................ [44]
9.11 Binding Agreement ................................................ [44]
9.12 Further Assurances ............................................... [44]
9.13 Waiver of Partition .............................................. [44]
9.14 Entire Agreement ................................................. [44]
9.15 Amendments ....................................................... [45]
9.16 No Drafting Presumption .......................................... [45]
9.17 No Third Party Beneficiaries ..................................... [45]
Exhibit A - Description of the Investment
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AMENDED AND RESTATED JOINT VENTURE AGREEMENT
OF
3100 GLENDALE JOINT VENTURE
AN OHIO JOINT VENTURE
THIS AMENDED AND RESTATED JOINT VENTURE AGREEMENT ("Agreement") is made and
entered into as of the 31st day of July, 1996, by and among AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
("AGHOP"), as a joint venture general partner of the Venture, and AGH UPREIT
LLC, a Delaware limited liability company ("AGHLLC"), as a joint venture general
partner of the Venture (AGHOP and AGHLLC are collectively referred to as the
"Venturers"), with reference to the following:
RECITALS
--------------------
A. Pursuant to those certain Assignment, Contribution, Withdrawal and
Admission Agreements, dated as of even date herewith (each, an "Assignment
Agreement") among AGHOP, AGHLLC and the parties thereto who are the Assignors
thereunder (the "Assignors"), the Assignors withdrew as partners of the
Venture, AGHOP and AGHLLC acquired (by contribution or assignment) all of the
interests of the partners in the Venture (to the extent not already owned by
them), AGHOP was admitted a joint venture general partner of the Venture, and
AGHLLC was admitted as a joint venture general partner of the Venture.
B. Prior to the Agreement Date, the Venture was doing business pursuant to
the Project Entity Agreement (as defined in the Assignments), as the same was
amended by the Assignment Agreements (as so amended, the "Original Agreement").
The Venturers desire to reconstitute the Venture and to continue the business
of the Venture as an Ohio joint venture (i.e., a single purpose general
partnership), with the Venturers mutually agreeing to join together as joint
venturers (i.e., single-purpose general partnership partners) pursuant to the
provisions of Chapter 1775 of the Ohio Revised Code, as amended from time to
time (the "Act"), for the purposes set forth in Section 1.4 and 1.10, and on
the terms and conditions set forth in this Agreement.
C. Each of AGHLLC and AGHOP desires to confirm that it is a joint venture
general partner of the Venture and a Venturer under this Agreement, and
desires to amend and restate the Original Agreement in its entirety to read as
provided below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein (the receipt and sufficiency of which hereby are acknowledged
by each party hereto), the parties hereto, intending to be legally bound, do
hereby amend and restate the Original Agreement in its entirety to read as
follows:
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ARTICLE 1
GENERAL PROVISIONS
1.1 FORMATION. The Venturers hereby confirm the formation of the Venture
as a joint venture (i.e. a single-purpose general partnership) pursuant to the
Act, and hereby reconstitute the Venture and continue its business. This
Agreement shall constitute the partnership agreement among the Venturers under
the Act. All capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings set forth in Section 1.9 hereof. The Venturers
agree to take such other actions (a) as may from time to time be necessary or
appropriate under the laws of the State of Ohio with respect to the formation,
operation and continued good standing of the Venture as a joint venture (i.e., a
single-purpose general partnership) and (b) as may be necessary to comply with
Section 1.3 and 1.6.
1.2 NAME OF VENTURE. The name of the Venture shall continue to be "3100
Glendale Joint Venture," or such other name as may be reasonably Approved by the
Venturers from time to time.
1.3 COMPLIANCE.
1.3.1 ASSUMED NAME CERTIFICATE. The Venturers confirm that the
Venture's Certificate has been filed in the Office of the Secretary of State of
Ohio. The Certificate shall be amended whenever, and within the time periods,
required by the Act.
1.3.2 PRINCIPAL OFFICE, RESIDENT AGENT AND REGISTERED OFFICE; FOREIGN
REGISTRATION. The principal office of the Venture shall be located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other place or
places as the Venturers may from time to time reasonably Approve. The Venture's
office in Ohio shall be located at, and the name and address of the registered
agent for service of process on the Venture in the State of Ohio shall be, CT
Corporation System, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. Such
principal office, Ohio office, and/or registered agent may be changed by either
Venturer from time to time upon the reasonable Approval of the Venturers, so
long as in accordance with the Act; concurrently with any such change, written
notice thereof shall be given to each Venturer.
1.4 PURPOSES OF VENTURE. The purposes of the Venture shall be:
1.4.1 To own for investment purposes, and dispose of the hotel
property (and related property) that is more particularly described on Exhibit
A (the "Investment"), to enter into the Lease with the Lessee and to lease the
Investment to the Lessee under the Lease, and to take all actions permitted to
be taken by it as the Lessor under the Lease; and
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1.4.2 To engage in any and all other lawful general business
activities related to real estate investments and the hotel business that are
incidental or reasonably related to the foregoing, including, without
limitation, borrowing money from any source, whether secured or unsecured,
contracting for necessary or desirable services of professionals and others.
All of the foregoing shall be subject to the more specific terms and
conditions, including required Approvals by the Venturers, set forth in this
Agreement.
1.4.3 The Venture shall be a single purpose entity and shall not
engage in any activity that is not described in the foregoing purposes of the
Venture. The Venture shall not merge, consolidate, dissolve, enter into
Bankruptcy, or declare insolvency without the unanimous Approval of the
Venturers.
1.5 INTEREST IN THE VENTURE
Unless the context otherwise clearly indicates, a Venturer's
"interest" in the Venture shall mean and include its share of the capital of
the Venture, its share of the Profits and Losses (including its share of Gain
or Loss on Disposition) and other tax items of the Venture, its share of the
distributions of the Venture, its Capital Account and its other rights and
obligations, all as determined under this Agreement.
1.6 OTHER QUALIFICATIONS. At Venture expense, the Venturers shall cause
the Venture to be qualified to do business in each jurisdiction in which such
qualification becomes necessary, on or before the date on which such
qualification becomes necessary.
1.7 TERM OF VENTURE. The term of the Venture commenced as of the date of
filing the Certificate and shall continue until the Venture shall be dissolved,
liquidated and terminated pursuant to the provisions of Article 8.
1.8 TITLE TO VENTURE PROPERTY. Legal title to the Investment and other
assets of the Venture shall be held in such manner as the Venturers shall
Approve as being in the best interests of the Venture. It is expressly
understood and agreed that the manner of holding title to Venture property is
solely for the convenience of the Venture; accordingly, legal representatives,
beneficiaries, distributees, officers, employees, partners, members,
shareholders, successors or assigns of any Venturer shall have no right, title
or interest in or to any such Venture property by reason of the manner in which
title is held, but all such property shall be treated as Venture property
subject to the terms of this Agreement.
1.9 DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
1.9.1 "Act" is defined in Recital B hereto.
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1.9.2 "Adjusted Capital Account Deficit" shall mean with
respect to any Venturer, the deficit balance, if any, in such Venturer's
Capital Account as of the end of the relevant tax year, after giving effect to
the following adjustments:
1.9.2.1 Credit to such Capital Account any amounts
which such Venturer is obligated to restore or is deemed to be obligated to
restore to the Venture pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
1.9.2.2 Debit to such Capital Account the items
described in 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) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
1.9.3 "Affiliate," with respect to any Person, shall mean
any Person which (directly or indirectly) Controls or is Controlled or is under
common Control with such Person or such Person's Affiliates. For the purposes
of this Agreement, the term "Control," or any derivative thereof (including
"Controlled by" or "Controlling"), when used with respect to any specified
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through ownership of voting securities or partnership or other
ownership interests, or by contract.
1.9.4 "AGHC" is defined in Section 5.1.1.
1.9.5 "AGHC Prospectus" is defined in Section 5.1.1.
1.9.6 "AGHLLC" is defined in the Heading to this Agreement.
1.9.7 "AGHOP" is defined in the Heading to this Agreement.
1.9.8 "Agreement" shall mean and refer to this Amended and
Restated Joint Venture Agreement and all Exhibits referred to herein and
attached hereto, each of which is hereby made a part hereof, as amended and in
effect from time to time.
1.9.9 "Agreement Date" shall mean the date first written
above as of which this Agreement is effective.
1.9.10 "Approval" (and any variation thereof) of a Venturer
shall mean the prior written consent or approval of the Venturer, which may be
granted or withheld in its sole discretion unless otherwise expressly provided
to the contrary in this Agreement. Such Approval shall be valid for a Venturer
who is not a natural person only if given by an Authorized Representative of
such Venturer. Use of the term "reasonable" or
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"reasonably" in connection with the term "Approval" or any variation thereof or
with the term "satisfactory" means that such Approval shall not be withheld or
delayed unreasonably. Unless either of such terms is used in connection with
the term "Approval" (or any variation thereof), such Approval may be granted or
withheld in a Venturer's sole discretion. Except as provided in Section
5.1.6.1, the Approval of a Venturer shall not be required from and after the
date on which such Venturer has ceased to have Approval rights under Section
7.9 of this Agreement.
1.9.11 "Approved by the Venturers" is defined in Section 1.11.
1.9.12 "Assignment Agreement" is defined in Recital A hereto.
1.9.13 "Assignors" is defined in Recital A hereto.
1.9.14 "Authorized Representatives" is defined in Section
1.11 hereof.
1.9.15 "Bankrupt" shall mean, with respect to any Venturer,
if:
1.9.15.1 such Venturer, or a Person that Controls such
Venturer (the "Controlling Person"), shall (i) apply for or consent to the
appointment or, of the taking of possession by, a receiver, custodian, trustee,
administrator, liquidator or the like of itself or of all or of a substantial
portion of its assets, (ii) admit in writing its inability, or be generally
unable or deemed unable under any applicable law, to pay its debts as such
debts become due, (iii) convene a meeting of creditors for the purpose of
consummating an out-of-court arrangement, or entering into a composition,
extension or similar arrangement, with creditors in respect of all or a
substantial portion of its debts, (iv) make a general assignment for the
benefit of its creditors, (v) place itself or allow itself to be placed,
voluntarily or involuntarily, under the protection of the law of any
jurisdiction relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, or (vi) take any action for the purpose of
effecting any of the foregoing; or
1.9.15.2 a proceeding or case shall be commenced in any
court of competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding-up, or composition or readjustment of debts, of such
Venturer or a Controlling Person with respect thereto, (ii) the appointment of
a trustee, receiver, custodian, administrator, liquidator or the like of such
Venturer or of a Controlling Person with respect thereto or of all or a
substantial portion of such Venturer's or such Controlling Person's assets, or
(iii) similar relief in respect of such Venturer or such Controlling Person
under any law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, without the consent of the other
Venturers and such proceeding or case shall continue undismissed for a period
of ninety (90) days, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect for a
period of sixty (60) days, or an order for relief or other legal instrument of
similar effect against such Venturer or such Controlling Person shall be
entered in an involuntary case under such law and shall continue for a period
of sixty (60) days.
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1.9.16 "Bankruptcy" shall mean any condition described in the
definition of "Bankrupt" which renders a Venturer a Bankrupt.
1.9.17 "BFLLP" is defined in Section 7.8.5.
1.9.18 "Buy-Out Price" is defined in Section 7.9.
1.9.19 "Capital Account" shall mean, with respect to any Venturer,
the Capital Account maintained for such Venturer in accordance with the
provisions of Section 3.1.
1.9.20 "Capital Contribution" or "Capital Contributions" shall mean
the amount of cash and the net fair market value (as reasonably Approved by the
Venturers) of any property contributed to the capital of the Venture by the
Venturers pursuant to this Agreement. The term "Capital Contributions" with
respect to a Venturer shall include (i) the contributions of such Venturer made
pursuant to Sections 2.1 and 2.2 and (ii) such Venturer's payments made to third
party creditors of the Venture after the Agreement Date with respect to Venture
obligations unless and until reimbursed by the Venture, but only to the extent
reimbursable to such Venturer under this Agreement.
1.9.21 "Certificate" shall mean the assumed or fictitious name
certificate, doing business certificate, and/or certificate of partnership or
joint venture or the like, as appropriate under the Act, of the Venture, as
filed with the appropriate recording officials in Ohio and amended from time to
time.
1.9.22 "Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time (or any corresponding provision of
succeeding law).
1.9.23 "Control" or "Controlled by" or "Controlling" is defined in
the definition of "Affiliate."
1.9.24 "Controlling Person" is defined in the definition of the
term "Bankrupt."
1.9.25 "Defaulting Venturer" shall have the meaning set forth in
Section 2.2.1.
1.9.26 "Disposition" is defined in the definition of "Gain or Loss
on Disposition."
1.9.27 "Electing Venturer(s)" is defined in Section 7.9.
1.9.28 "Emergency" shall mean an event which reasonably requires
immediate action involving the expenditure of funds or other action in order to
avert or mitigate significant damage to Persons or property in connection with
the Venture, the
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Investment or any other assets of the Venture if it is not possible for a
Venturer after reasonable efforts to reach or obtain the Approval of the other
Venturer whose Approval to take such action otherwise would be required.
1.9.29 "Entity" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, joint-stock company, cooperative, association or other firm or
any governmental or political subdivision or agency, department or
instrumentality thereof.
1.9.30 "Erisa" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor statute.
1.9.31 "Force Majeure" shall mean any act of God (including
weather disturbance, earthquake, fire, mechanical failure of equipment, disease
and the like), labor strike or work stoppage or slowdown, sabotage, war, riot,
or any other act of any third party that reasonably prevents an action from
being taken through no fault of the party who is required to take such action.
1.9.32 "Funding Notice" is defined in Section 2.1.2.
1.9.33 "Funding Proportion" shall mean the following percentage
for each Venturer:
AGHOP 99%
AGHLLC 1%
1.9.34 "Gain" or "Loss" on "Disposition" shall mean the gain or
loss (as the case may be) of the Venture for federal income tax purposes,
arising from a sale, exchange or other taxable disposition (including casualty
or condemnation) of all or a portion of the Investment or other capital asset
of the Venture. Gain or loss resulting from any disposition of property for
which there is a difference between Gross Asset Value and adjusted tax basis
(as computed for tax as opposed to book purposes) shall be computed by
reference to the Gross Asset Value (as reasonably Approved by the Venturers) of
the property disposed of (as adjusted for book purposes from time to time).
1.9.35 "Gross Asset Value" shall mean, with respect to any asset,
the adjusted basis of the asset for federal income tax purposes, adjusted as
provided in Section 3.10.
1.9.36 "Including" or "including" shall mean "including, without
limitation."
1.9.37 "Independent Tax Counsel" shall mean a nationally
recognized tax counsel reasonably Approved by the Venturers that is capable of
advising the Venture with respect to specified tax matters.
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1.9.38 "Interest" or "interest" is defined in Section 1.5.
1.9.39 "Investment" is defined in Section 1.4.1.
1.9.40 "Lease" means that certain Lease Agreement among the
Venture and AGH Leasing, L.P., dated as of even date herewith, or any successor
lease agreement with any Lessee other than AGH Leasing, L.P., pursuant to which
the Investment is leased to such Lessee, as amended and in effect from time to
time.
1.9.41 "Lessee" shall mean AGH Leasing, L.P., a Delaware limited
partnership, for so long as the Investment is leased to it by the Venture, or
any other Person to whom the Investment is leased by the Venture from time to
time pursuant to this Agreement.
1.9.42 "Liabilities" is defined in Section 5.5.3.
1.9.43 "Liquidator" is defined in Section 8.3.
1.9.44 "Major Decisions" is defined in Section 5.1.5.
1.9.45 "Major Defaults" is defined in Section 5.5.3.
1.9.46 "Net Available Cash," with respect to any period, shall
mean (i) the sum of all cash receipts of the Venture during such period from
all sources (including Capital Contributions, cash on hand at the beginning of
such period to the extent not held in reserves, rents received under the Lease,
proceeds from the sale or other disposition of the Investment or any other
asset of the Venture, proceeds from borrowings, and any funds released during
such period from cash reserves previously established), minus (ii) the
Operating Costs for such period.
1.9.47 "Non-Defaulting Venturer" is defined in Section 2.2.1.
1.9.48 "Nonrecourse Deductions" is defined in Section 3.5.6.
1.9.49 "Nonrecourse Liability" is defined in Section 3.5.6.
1.9.50 "Operating Costs" for a period shall mean the sum of (i)
all cash expenditures of the Venture made during such period for costs and
expenses including payments of interest and principal or other monetary
obligations due under any loan made to the Venture; capital improvements to the
Investment; accounting, legal and auditing fees; taxes paid by the Venture;
public or private utility charges; sales, use, payroll taxes and withholding
taxes related thereto; and all other operating costs, expenses and other
capital expenditures actually paid during such period with respect to the
Venture's business or reimbursed to Venturers, plus (ii) such reserves
established from time to time during such period upon the reasonable Approval
of the Venturers.
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1.9.51 "Original Agreement" is defined in Recital B
hereto.
1.9.52 "Person" shall mean any individual or Entity.
1.9.53 "Prime Rate" shall mean the so-called "Reference
Rate" announced by Citibank, N.A., in New York, New York, from time to time.
1.9.54 "Profit" or "Loss" shall mean, for each Venture
Accounting Year, an amount equal to the Venture's net taxable income or loss
for such Accounting Year (including any items of income, gain or deduction
taken into account in computing the Venture's Gain or Loss on Disposition for
such Accounting Year), determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
computing such taxable income or loss), with the following adjustments:
1.9.54.1 Any income of the Venture that is
exempt from federal income tax and is not otherwise taken into account in
computing Profit or Loss shall be added to such taxable income or loss;
1.9.54.2 In the event the agreed fair market
value of any Venture asset is adjusted pursuant to Regulations Section
1.704-1(b)(2)(iv)(f) or other pertinent sections of such Regulations, the
amount of such adjustment shall be taken into account as Gain or Loss on
Disposition of such asset for purposes of computing Profit or Loss; and 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, amortization or other cost recovery deduction computed
with reference to the value of Venture property reasonably Approved by the
Venturers (if different from its adjusted tax basis) pursuant to Regulations
Section 1.704-1(b)(2)(iv)(g) for such Venture Accounting Year; and
1.9.54.3 Notwithstanding any other provisions,
any items which are specially allocated pursuant to Sections 3.4, 3.5 and
3.6 shall not be taken into account in computing Profit and Loss.
1.9.55 "Purchase Notice" is defined in Section 7.9.1.
1.9.56 "Regulations" shall mean the final or temporary
regulations promulgated from time to time under the Code or, if no final or
temporary regulations with respect to a tax issue then are in effect, proposed
regulations then in effect if reasonably Approved by the Venturers, and
administrative and judicial interpretations thereof.
1.9.57 "Residual Percentage" of a Venturer as of any
relevant time shall mean the following percentage for each Venturer:
AGHOP 99%
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AGHLLC 1%
1.9.58 "Revalued Property" is defined in Section 3.5.3.2.
1.9.59 "Shortfall Disbursement" is defined in Section 2.2.1.
1.9.60 "Tax Matters Partner" is defined in Section 5.4 (which references
the Code).
1.9.61 "Tax Termination" is defined in Section 7.5.1.3.
1.9.62 "Terminated Partner" shall mean (i) any Venturer that becomes
Bankrupt, (ii) any Venturer which has been dissolved (and which has not been
reconstituted within sixty (60) days thereafter) or (iii) any Venturer which has
committed a Major Default.
1.9.63 "Termination Date" Shall mean the date upon which a Venturer became
a Terminated Venturer.
1.9.64 "Transfer" shall mean (i) the issuance, transfer, sale, gift, grant,
conveyance, assignment, or redemption of any equity ownership interest (whether
stock, membership interest, partnership interest or otherwise) in the Venture;
and (ii) the execution and delivery by the Venture or any Person holding a
direct (or indirect through tiered Entities) interest in the Venture of a
contract of sale, option or other agreement providing for any of the foregoing.
1.9.65 "Transfer Restriction Termination Date" is defined in Section
5.1.6.1.
1.9.66 "Unrepaid Capital" with respect to each Venturer shall mean the
Capital Contributions made from time to time to the Venture by such Venturer,
reduced by any distributions previously made to such Venturer pursuant to
Section 4.1.1.
1.9.67 "Venture" shall mean the joint venture formed under the Act and
operated pursuant to this Agreement.
1.9.68 "Venture Accounting Year" shall mean and refer to the accounting
year of the Venture ending December 31 of each calendar year or such shorter
fiscal period during such year for which a relevant determination is being made
under this Agreement.
1.9.69 "Venture Minimum Gain" is defined in Section 3.5.6 hereof.
1.9.70 "Venturer Assignee" is defined in Section 7.4.
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1.9.71 "Venturer Nonrecourse Debt" is defined in Section 3.5.6 hereof.
1.9.72 "Venturer Nonrecourse Debt Minimum Gain" is defined in Section
3.5.6 hereof.
1.9.73 "Venturer Nonrecourse Deductions" is defined in Section 3.5.6
hereof.
1.9.74 "Venturer(s)" shall mean AGHLLC and AGHOP (each a "Venturer"),
in their respective capacities as Venturers, and any of their successors in
their respective capacities as Venturers admitted to the Venture as
Venturers hereunder, and any other Person admitted as a Venturer under this
Agreement, for so long as any such Person is a Venturer under the terms of
this Agreement.
1.10 AUTHORIZED ACTS. In furtherance of its purposes, but subject to all
the other provisions of this Agreement including required Approvals of the
Venturers under Article 5, the Venture, the Venturers and the Venture's
employees appointed on its behalf under Section 5.5 are hereby authorized:
1.10.1 To pursue any rights of the Venture with respect to the
Investment pursuant to any agreement to which it is a party and to own
Investment and to own and operate any other asset acquired by the Venture
pursuant to the provisions of this Agreement;
1.10.2 To own the Investment for investment purposes and to finance,
sell, convey, assign, transfer or mortgage the Investment, as well as any
other property necessary, convenient or incidental to the accomplishment of
the purposes of the Venture, all on terms as shall be Approved by the
Venturers;
1.10.3 To borrow money (whether secured or unsecured), and issue
evidences of indebtedness in furtherance of any or all of the purposes of
the Venture, and to secure the same by mortgage, deed of trust, pledge or
other lien on any assets of the Venture, including the Investment;
1.10.4 To borrow money on the general credit of the Venture for use in
the Venture business;
1.10.5 To enter into, perform and carry out contracts of any kind,
including the Lease with the Lessee and contracts with Affiliates of any of
the Venturers or other Persons, necessary to, in connection with or
incidental to the Venturers or other Persons, necessary to, in connection
with or incidental to the accomplishment of the purposes of the Venture,
including contracts to obtain services and supplies with respect to the
Investment and/or the Venture;
1.10.6 To issue Funding Notices calling for additional Capital
Contributions in accordance with the provisions of this Agreement;
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1.10.7 To enter into any kind of lawful activity and to
perform and carry out contracts of any kind necessary to or in connection with
or incidental to the accomplishment of the purposes of the Venture, so long as
said activities and contracts may lawfully be carried on or performed by a
foreign limited liability company under the laws of the state in which the
Venture is qualified to do business; and
1.10.8 To enter into and to perform the Venture's obligations
under any agreement to which it becomes a party, as Approved by the Venturers.
1.11 AUTHORIZED REPRESENTATIVES. The "Authorized Representatives" of a
Venturer that is not a natural person shall be those representatives designated
by notice to all other Venturers by such Venturer from time to time to represent
such Venturer in connection with the Venture, unless and until replaced or
removed by notice from such Venturer to all Venturers. The written statements
and representations of an Authorized Representative for a Venturer that is not a
natural Person shall be the only authorized statements and representations of
such Venturer with respect to the matters covered by this Agreement. The written
statement or representation of any one Authorized Representative of such
Venturer shall be sufficient to bind such Venturer with respect to all matters
pertaining to the Venture. The term "Approved by" or "Consented to by" or
"Consent of" or "satisfactory to" with respect to a Venturer that is not a
natural Person means a decision or action which has been consented to in writing
by any Authorized Representative of such Venturers. In order for a decision or
action to be "Approved by the Venturers" (or any variation thereof), the
decision or action must be Approved by at least one Authorized Representative of
each Venturer who then continues to have Approval rights with respect to such
action or decision under this Agreement.
ARTICLE 2
CAPITAL CONTRIBUTIONS
AND ADDITIONAL CONTRIBUTIONS
2.1 CAPITAL CONTRIBUTIONS.
2.1.1 INITIAL CAPITAL CONTRIBUTIONS. Concurrently with
execution and delivery of this Agreement, the Venturers shall be deemed to have
contributed to the capital of the Venture and the capital contributed to the
Venture by their predecessors in interest in the Venture, to the extent
remaining undistributed as of the Agreement Date.
2.1.2 ADDITIONAL CAPITAL CONTRIBUTIONS. If notice is given to
all Venturers by either Venturer (unless it is then a Terminated Venturer under
Section 7.9 of this Agreement) stating that the Venture requires additional
Capital Contributions, and such notice is made on a form that has been Approved
by the Venturers for such purpose (a "Funding Notice"), the Venturers shall
contribute to the capital of the Venture in cash the amounts required under
Section 2.2.1 (such amounts to be specified in such Funding Notice) on or before
the Due Date therefor under Section 2.2.1, provided, however, that no Funding
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Notice may be issued by either Venturer unless the issuance of such notice has
been Approved by the Venturers or otherwise is permitted to be issued without
Approval of the Venturers under this Agreement, and provided, further, that no
Venturer shall be required to issue a Funding Notice under any circumstances
without such Venturer's Approval.
2.2 THIRD PARTY LOANS AND ADDITIONAL CAPITAL CONTRIBUTIONS AND
CAPITAL CALLS.
2.2.1 If a Funding Notice is properly given by either
Venturer pursuant to Section 2.1.2, each Venturer shall have the obligation to
contribute additional cash to the capital of the Venture, in an amount equal to
the product of (a) the aggregate amount of required funds that is set forth in
such Funding Notice ("Shortfall Disbursement") multiplied by (b) such Venturer's
Funding Proportion, which amount shall be used to satisfy the items described in
such Funding Notice. Such Capital Contributions shall be made by the Venturers
pro rata in proportion to their respective Funding Proportions. The Funding
Notice shall specify the amount of each Venturer's share, as so determined, of
any Shortfall Disbursement required under this Section 2.2.1. Each Venturer
shall contribute its share of any Shortfall Disbursement within five (5) days
after the later to occur of (i) the date on which the Funding Notice has been
received (or is deemed to have been received under Section 9.5) or (ii) the
required funding date that is set forth in the Funding Notice (the expiration of
such five-day period is referred to as the "Due Date"). There shall be a cure
period of five (5) days after the Due Date for each Venturer to contribute its
share of such Shortfall Disbursement, as provided in Section 2.2.2.
2.2.2 If any Venturer fails to contribute the full amount of
its Capital Contributions required to be made pursuant to Section 2.1.2 and
Section 2.2.1 within five (5) days after the Due Date thereunder ("Defaulting
Venturer"), then, as the exclusive remedies of the Venture and the other
Venturer (the "Non-Defaulting Venturer"), the Non-Defaulting Venturer shall have
the following remedies, exercisable by notice from the Non-Defaulting Venturer
to the Defaulting Venturer: (i) to cause the Venture to ▇▇▇ the Defaulting
Venturer for actual (and not consequential) damages that shall be limited to the
portion of the Defaulting Venturer's share of the Shortfall Disbursement that
was not received timely, plus interest at the Prime Rate and the costs of
collection, and (ii) either: (a) to elect to lend (or to cause the
Non-Defaulting Venturer's Affiliates to lend), to the Defaulting Venturer or to
the Venture, as Approved by the Non-Defaulting Venturer, the amount of such
Capital Contribution that was not made timely by the Defaulting Venturer, or (b)
to elect to contribute the amount of such Capital Contribution that was not made
timely by the Defaulting Venturer, in which case the amount so contributed shall
be treated as Capital Contributions of the Non-Defaulting Venturer for all
purposes. Upon the failure of the Non-Defaulting Venturer to elect which of the
remedies specified in clause (a) or (b) of this Section 2.2.2 has been selected,
by written notice to the Venture and the Defaulting Venturer given within thirty
(30) days after funding the share of the Capital Contribution not made by the
Defaulting Venturer, the remedy described in such clause (b) shall be deemed to
have been selected. The remedies described in clauses (i) and (ii) of this
Section 2.2.2 shall be cumulative, and all or any of them may be elected and
apply simultaneously, except that the
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remedies described in clauses (a) and (b) of this Section 2.2.2 shall be
mutually exclusive with respect to each Funding Notice.
2.2.2.1 If the Non-Defaulting Venturer chooses to lend (or to
cause its Affiliates to lend) the amount of the Capital Contribution not made by
the Defaulting Venturer, the loan shall be a recourse loan to the Venture or to
the Defaulting Venturer, as the case may be, and shall bear interest, compounded
monthly, at the rate equal to the lesser of (i) the Prime Rate or (ii) the
maximum interest rate permitted by law, from the date such loan is made until
the date of repayment. Such loan shall be deemed to have been made to the
Defaulting Venturer (and not to the Venture) only if the Non-Defaulting Venturer
(or the Non-Defaulting Venturer's Affiliate) has paid such amount directly to
the Venture and specifies, by notice to the Venturers given within five (5) days
after such funding, that the loan is being made to the Defaulting Venturer, in
which case said amount shall be deemed to have been contributed to the Venture
by the Defaulting Venturer for all purposes. Repayment of any such loan to the
Defaulting Venturer shall be effected by the Venturers causing the Venture to
pay directly to the Non-Defaulting Venturer all distributions otherwise payable
to the Defaulting Venturer under this Agreement as and when payable, instead of
making such distributions to the Defaulting Venturer (with such distributions
being deemed for all purposes to have been made to the Defaulting Venturer and
then paid by the Defaulting Venturer to the Non-Defaulting Venturer or its
Affiliates, as the case may be). Repayment of any such loan to the Venture shall
be made as provided in Section 4.1 and Section 4.2.2. Any payments made with
respect to loans described in this Section 2.2.2.1 shall first be deemed to pay
accrued but unpaid interest, and then be deemed to repay principal.
2.2.3 Except as otherwise specifically set forth in this Agreement,
no Venturer shall have the right (i) to withdraw such Venturer's Capital
Contribution or to demand or receive the return of a Capital Contribution or to
make any claim to any portion of Venture capital or (ii) to demand or receive
property other than cash in return for a Capital Contribution or to receive any
cash in return for a Capital Contribution.
2.2.4 Except as expressly provided in this Agreement, no Venturer
shall have personal liability to make any Capital Contribution.
2.2.5 A deficit Capital Account of a Venturer (or of a partner or
member of a Venturer) shall not be deemed to be a liability of such Venturer (or
of such partner or member) or an asset or property of the Venture (or any
Venturer). Furthermore, no Venturer shall have any obligation to the Venture or
any other Venturer for any deficit balance in such Venturer's Capital Account,
except as expressly required by law.
2.3 VENTURER LOANS. The Venturers may lend money to the Venture for any
Venture purposes on terms that are Approved by the Venturers from time to time.
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ARTICLE 3
INCOME TAX ALLOCATIONS
3.1 Establishment and Maintenance of Capital Accounts; Venture Status. The
Venturers shall establish and cause the Venture to maintain a single Capital
Account for each Venturer which reflects such Venturer's Capital Contributions
to the Venture. Each Venturer's Capital Account shall also reflect the
allocations and distributions made to such Venturer pursuant to Articles 3 and 4
and otherwise be adjusted in accordance with Code Section 704 and the
principles set forth in Regulations Sections 1.704-1(b) and 1.704-2. In applying
such principles, any expenditures of the Venture described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i) shall be allocated among the Venturers
in proportion to their respective Funding Proportions. The Venturers intend
that the Venture be treated as a partnership for tax purposes.
3.2 Profit and Loss Allocations. For purposes of determining Capital
Account balances under this Section 3.2, Profit and Loss with respect to any
Venture Accounting Year shall be allocated prior to reducing Capital Accounts
by any distributions with respect to such Venture Accounting Year.
3.2.1 Loss Allocations. For each Venture Accounting Year from the
Agreement Date until the termination of the Venture, Loss from Venture
operations shall be allocated among the Venturers in the following order of
priority:
3.2.1.2 First, among the Venturers as necessary to cause the
portion of each Venturer's Capital Account balance exceeding such Venturer's
Unrepaid Capital, if any, to be in proportion to the Venturer's respective
Residual Percentages;
3.2.1.3 Third, as necessary to cause each Venturer's Capital
Account balance, determined after adjusting the Venturers' Capital Accounts for
the allocations made pursuant to Sections 3.2.1.1 and 3.2.1.2 for the Venture
Accounting Year to equal zero; and
3.2.1.4 Fourth, after giving effect to the allocations made
pursuant to Sections 3.3.1.1, 3.3.1.2 and 3.3.1.3, among the Venturers in
proportion to their respective Residual Percentages.
3.2.2 Profit Allocations. For each Venture Accounting Year, Profit
from Venture operations shall be allocated in the following order of priority:
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3.2.2.1 First, among the Venturers as necessary to cause the
Capital Account balance of each Venturer to equal such Venturer's Unrepaid
Capital;
3.2.2.2 Second, after giving effect to the allocations made
pursuant to Section 3.2.2.1, among the Venturers as necessary to cause the
portion of each Venturer's Capital Account balance exceeding such Venturer's
Unrepaid Capital to be in proportion to the Venturer's respective Residual
Percentages; and
3.2.2.3 Third, among the Venturers in proportion to their then
respective Residual Percentages.
3.3 ALLOCATIONS OF GAIN OR LOSS ON DISPOSITION.
3.3.1 GAIN OR LOSS ON DISPOSITION. Gain or Loss on Disposition shall
be a part of Profit or Loss for the period in which such Gain or Loss on
Disposition is recognized by the Venture for tax purposes, and shall be
allocated as a part of Profit or Loss pursuant to Section 3.2.
3.3.2 RULES OF CONSTRUCTION.
3.3.2.1 For purposes of applying Section 3.2 for a Venture
Accounting Year, a Venturer's Capital Account balance shall be deemed to be
increased by such Venturer's share of Venture Minimum Gain and Venturer
Nonrecourse Debt Minimum Gain remaining at the close of such Venture Accounting
Year as determined under the Regulations under Section 704(b).
3.3.2.2 If there is insufficient Profit or Loss (including
Gain or Loss on Disposition) to allocate to the Venturers pursuant to any
subsection of Section 3.2 to cause every Venturer's Capital Account balance to
equal the entire Capital Account balance described in such subsection with
respect to such Venturer, such Profit or Loss (including Gain or Loss on
Disposition) available to be allocated among the Venturers pursuant to said
subsection shall be allocated in proportion to the amounts thereof that would
have been allocated to each Venturer pursuant to such subsection if there had
been sufficient amounts thereof to fully satisfy the requirements of such
subsection with respect to every Venturer.
3.3.2.3 Except as is otherwise provided in this Article 3, an
allocation of Venture taxable income or taxable loss to a Venturer shall be
treated as an allocation to such Venturer of the same share of each item of
income, gain, loss and deduction that has been taken into account in computing
such taxable income or taxable loss.
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3.4 MINIMUM GAIN CHARGEBACK AND QUALIFIED INCOME OFFSET.
3.4.1 NO IMPERMISSIBLE DEFICITS. Notwithstanding any other
provision of this Agreement, taxable loss (or items of deduction) shall not be
allocated to a Venturer to the extent that the Venturer has or would have, as a
result of such allocations, an Adjusted Capital Account Deficit. Any taxable
loss (or items of deduction) which otherwise would be allocated to a Venturer,
but which cannot be allocated to such Venturer because of the application of the
immediately preceding sentence, shall instead be allocated to the other
Venturers.
3.4.2 QUALIFIED INCOME OFFSET. In order to comply with the
"qualified income offset" requirement of the Regulations under Code Section
704(b), and notwithstanding any other provision of this Agreement to the
contrary except Section 3.4.3 below, in the event a Venturer for any reason
(whether or not expected) has an Adjusted Capital Account Deficit, items of
Profits, including Gain on Disposition (consisting of a pro rata portion of each
item of income comprising the Venture's Profits, including Gain on Disposition,
and both gross income and gain for the taxable year) shall be allocated to such
Venturer in an amount and manner sufficient to eliminate as quickly as possible
the Adjusted Capital Account Deficit.
3.4.3 MINIMUM GAIN CHARGEBACK. In order to comply with the
"minimum gain chargeback" requirements of Treasury Regulations Sections
1.704-2(f)(1) and 1.704-2(i)(4), and notwithstanding any other provision of this
Agreement to the contrary, in the event there is a net decrease in a Venturer's
share of Venture Minimum Gain and/or Venturer Nonrecourse Debt Minimum Gain
during a Venture taxable year, such Venturer shall be allocated items of income
and gain for that year (and if necessary, other years) as required by and in
accordance with Regulations Sections 1.704-2(f)(1) and 1.704-2(i)(4) before any
other allocation is made.
3.5 OTHER TAX ALLOCATION PROVISIONS.
3.5.1 INCOME CHARACTERIZATION. For purposes of determining the
character (as ordinary income or capital gain) of any Gain on Disposition
allocated to the Venturers pursuant to Section 3.2, 3.3 or 3.4, such portion of
the taxable income of the Venture allocated pursuant to any such Section which
is treated as ordinary income attributable to the recapture of depreciation
shall, to the extent possible, be allocated among the Venturers in the
proportion which (i) the amount of depreciation previously allocated to each
Venturer bears to (ii) the total of such depreciation allocated to all
Venturers. This Section 3.5.1 shall not alter the amount of allocations among
the Venturers pursuant to Sections 3.2, 3.3 and 3.4, but merely the character of
income so allocated.
3.5.2 CHANGE IN PERCENTAGE INTERESTS. Notwithstanding the
foregoing, in the event any Venturer's Residual Percentage changes during a
fiscal year for any reason, the allocations of taxable income or loss under this
Article 3, and distributions, shall be adjusted as necessary to reflect the
varying interests of the Venturers during such
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year using an interim closing of the books method as of the date of such
change, or such other method as is reasonably Approved by the Venturers.
3.5.3 MANDATORY ALLOCATIONS -- SECTION 704(c) AND VENTURER
NONRECOURSE DEBT.
3.5.3.1 Notwithstanding the foregoing, (i) in the event Code
Section 704(c) or Code Section 704(c) principles applicable under Regulations
Section 1.704-1(b)(2)(iv) require allocations of income or loss of the Venture
in a manner different than that set forth above, the provisions of Section
704(c) and the Regulations thereunder shall control such allocations among the
Venturers; and (ii) all tax deductions and taxable losses of the Venture that,
pursuant to Regulations Section 1.704-2(i), are attributable to a Venturer
Nonrecourse Debt for which a Venturer (or a Person related to such Venturer
under Treasury Regulations Section 1.752-4(b)) bears the economic risk of loss
(within the meaning of Regulations Section 1.752-2) shall be allocated to such
Venturer as required by Regulations Section 1.704-2(c).
3.5.3.2 Any item of income, gain, loss and deduction with
respect to any property (other than cash) that has been contributed by a
Venturer to the capital of the Venture or which has been revalued for Capital
Account purposes pursuant to Regulations Section 1.704-1(b)(2)(iv) and which is
required or permitted to be allocated to such Venturer for income tax purposes
under Section 704(c) of the Code so as to take into account the variation
between the tax basis of such property and its fair market value at the time of
its contribution or at the time of its revaluation for Capital Account purposes
pursuant to Regulations Section 1.704-1(b)(2)(iv) (such contributed or revalued
property is referred to as "Revalued Property") shall be allocated solely for
income tax purposes in the manner so required or permitted under Code Section
704(c) using any reasonable method of allocation permitted under the
Regulations, such allocations to be made as shall be reasonably Approved by the
Venturers. Allocations under this Section 3.5.3.2 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be taken
into account in computing, any Venturer's Capital Account or share of Profit or
Loss (including Gain or Loss on Disposition) or other items or distributions
under any provision of this Agreement.
3.5.4 GUARANTEE OF VENTURE INDEBTEDNESS. Except for arrangements
expressly described in this Agreement (including loans described in Section
2.2.2.1 and/or 2.3), no Venturer shall enter into (or permit any Person related
to the Venturer to enter into) any arrangement with respect to any liability of
the Venture that would result in such Venturer (or a Person related to such
Venturer under Regulations Section 1.752-4(b)) bearing the economic risk of
loss (within the meaning of Regulations Section 1.752-2) with respect to such
liability unless such arrangement has been Approved by the Venturers or such
liability consists of trade payables incurred in the ordinary course of
business for which either of the Venturers is contingently liable by reason of
being a joint venture general partner of the Venture. To the extent a Venturer
is permitted to guarantee the repayment of any Venture indebtedness under this
Agreement by reason of receiving the Approval of the Venturers (other than
liabilities consisting of trade payables incurred in the
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ordinary course of business for which the General Venturer is contingently
liable by reason of being a general partner of the Venture), each of the other
Venturers shall be afforded the opportunity to guarantee such Venturer's pro
rata share of such indebtedness, determined in accordance with the Venturers'
respective Funding Proportions. If (a) a loan is to be made to the Venture and
such loan is to be guaranteed by any Venturers (which guaranty by a Venturer
shall occur only upon the Approval of such Venturer), then, as between such
Approving and guaranteeing Venturers, or (b) either Venturer is required to
fund a liability by reason of being a joint venture general partner of the
Venture, such liability shall be shared in proportion to the Venturers'
respective Funding Proportions (and, if joint and several liability of such
Venturers shall be required by the lender under a Venture borrowing that has
been Approved by the Venturers, or if either Venturer is required to fund a
liability by reason of being a joint venture general partner of the Venture,
each Venturer shall make contributions to the Venture when requested by any
Venturer to do so, which amounts shall immediately be distributed to the other
Venturers, as necessary for the Venturers to bear the economic risk of loss
with respect to any such borrowing or liability in proportion to their
respective Funding Proportions).
3.5.5 REFERENCES TO REGULATIONS. Any reference in this Agreement to a
provision of final, proposed and/or temporary Regulations shall, in the event
such provision is modified or renumbered, be deemed to refer to the successor
provision as so modified or renumbered, but only to the extent such successor
provision applies to the Venture under the effective date rules applicable to
such successor provision or the Venturers otherwise so reasonably Approve under
applicable elections contained in such Regulations.
3.5.6 TAX DEFINITIONS.
3.5.6.1 "Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(c).
3.5.6.2 "Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.704-2(b)(3).
3.5.6.3. "Venturer Nonrecourse Debt Minimum Gain" means an amount,
with respect to each Venturer Nonrecourse Debt, equal to the Venture Minimum
Gain that would result if such Venturer Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(2).
3.5.6.4 "Venturer Nonrecourse Debt" has the meaning ascribed to the
term "Partner Nonrecourse Debt" set forth in Regulations Section 1.704-2(b)(4).
3.5.6.5 "Venturer Nonrecourse Deductions" has the meaning ascribed to
the term "Partner Nonrecourse Deductions" set forth in Regulations Section
1.704-2(i).
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3.5.6.6 "Venture Minimum Gain" has the meaning
ascribed to the term "Partnership Minimum Gain" set forth in Regulations
Section 1.704-2(d)(1).
3.6 INTENT OF ALLOCATIONS. The parties intend that the foregoing
tax allocation provisions of this Article 3 shall produce final Capital Account
balances of the Venturers that will permit liquidating distributions made in
accordance with final Capital Account balances under Section 4.2.3 to be made
(after unpaid loans and interest thereon, including those owed to Venturers
have been paid) in a manner identical to the order of priorities set forth in
Sections 4.1.1 and 4.1.2. To the extent that the tax allocation provisions of
this Article 3 would fail to produce such final Capital Account balances, (i)
such provisions shall be amended by the Venturers if and to the extent necessary
to produce such result and (ii) taxable income and taxable loss of the
Venture for prior open years (or items of gross income and deduction of the
Venture for such years) shall be reallocated among the Venturers to the extent
it is not possible to achieve such result with allocations of items of income
(including gross income) and deduction for the current year and future years,
as reasonably Approved by the Venturers. This Section 3.6 shall control
notwithstanding any reallocation or adjustment of taxable income, taxable loss,
or items thereof by the Internal Revenue Service or any other taxing authority.
3.7 BASIS ELECTIONS. In the event of a transfer of all or any
part of a Venturer's interest in the Venture, the Venture shall elect to adjust
the basis of the Venture's assets under Code Section 754 if Approved by the
Venturers. The transferor or transferee of a Venture interest shall pay all
costs of preparing and filing all instruments or documents necessary to
effectuate such election if made, unless otherwise Approved by the Venturers.
3.8 GENERAL ALLOCATION RULES. The Venturers shall use their
reasonable efforts to cause all Profit and Loss of the Venture (including Gain
or Loss Disposition) to be allocated with respect to each Venture Accounting
Year as of the end of, and within ninety (90) days after the end of, such year,
or as soon thereafter as is practically possible. All Profit and Loss
(including Gain or Loss on Disposition) shall be allocated to the Venturers
shown on the records of the Venture to have been Venturers as of the last day
of the Venture Accounting Year for which such allocation is to be made, except
that, if a Venturer sells or exchanges its interest in the Venture or otherwise
is admitted as a substituted Venturer, the Profit or Loss and Gain on
Disposition shall be allocated between the transferor and the transferee by
taking into account their varying interests during the Venture Accounting Year
in accordance with Code Section 706(d), using the interim closing of the books
method or such other method as shall be reasonably Approved by the Venturers.
3.9 SHARING OF VENTURE NONRECOURSE DEBT. Throughout the term of
the Venture, the nonrecourse debt of the Venture (other than Venturer
Nonrecourse Debt) shall be allocated for tax purposes among the Venturers in
accordance with their then respective Residual Percentages.
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3.10 ADJUSTMENT OF GROSS ASSET VALUE. Gross Asset Value, with respect to
any asset, shall be the adjusted basis for federal income tax purposes of that
asset, except as follows:
3.10.1 The initial Gross Asset Value of any asset contributed (or
deemed contributed under Regulations Section 1.708-1(b)(1)(iv)) by a Venturer
to the Venture shall be the fair market value of the asset on the date of the
contribution, as reasonably Approved by the Venturers.
3.10.2 The Gross Asset Values of all Venture assets shall be
adjusted to equal the respective fair market values of the assets, as
reasonably Approved by the Venturers:
3.10.2.1 If the Venturers reasonably Approve that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Venturers in the Venture, as a result of (i) the acquisition
of an additional interest in the Venture by any new or existing Venturer in
exchange for more than a de minimis capital contribution; or (ii) the
distribution by the Venture to a Venturer of more than a de minimis amount of
Venture property as consideration for an interest in the Venture; and
3.10.2.2 As of the liquidation of the Venture within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g).
3.10.3 The Gross Asset Value of any Venture asset distributed to
any Venturer shall be the gross fair market value of the asset on the date of
distribution as reasonably Approved by the Venturers (less any liabilities
assumed by the distributee Venturer or to which such asset is subject as of
the time of distribution).
3.10.4 The Gross Asset Values of Venture assets shall be increased
or decreased to reflect any adjustment to the adjusted basis of the assets
under Code Section 734(b) or 743(b), but only to the extent that the adjustment
is taken into account in determining Capital Accounts under Regulations Section
1.704-1(b)(2)(iv)(m), provided that Gross Asset Values shall not be adjusted
under this Section 3.10.4 to the extent that the Venturers reasonably Approve
that an adjustment under Section 3.10.2 is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
under this Section 3.10.4.
After the Gross Asset Value of any asset has been determined or adjusted under
Section 3.10.1, 3.10.2 or 3.10.4, Gross Asset Value shall be adjusted by the
depreciation taken into account with respect to the asset for purposes of
computing Profits or Losses.
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ARTICLE 4
INVESTMENT LOAN REPAYMENTS
AND DISTRIBUTIONS
4.1 NET AVAILABLE CASH. The Venturers shall, at the end of each
quarter, determine the amount of Net Available Cash for such quarter (or more
frequently, if Approved by the Venturers). All Net Available Cash for any period
shall be distributed as follows, within thirty (30) days after the end of each
calendar quarter (or at such other times as shall be Approved by the Venturers)
after first repaying any loans to the Venture from the Venturers under Section
2.2.2.1 and/or 2.3 (loans which have been outstanding the longest shall be
repaid first and if two or more Venturers have loans which have been outstanding
for equal periods, repayment of such loans shall be made pro rata, in proportion
to such Venturers' then respective loan balances, with payments first repaying
accrued but unpaid interest and then repaying principal).
4.1.1 First, distributions shall be made to the Venturers until
each Venturer has received distributions pursuant to this Section 4.1.1. in an
amount equal to such Venturer's Unrepaid Capital; such distributions to be made
pro rata, in proportion to the then respective aggregate Unrepaid Capital of
each Venturer; and
4.1.2 Next, the balance shall be distributed to the Venturers,
pro rata, in proportion to the Venturers' then respective Residual Percentages.
4.2 PROCEEDS AND DISTRIBUTIONS IN LIQUIDATION. The proceeds received
by the Venture in connection with the liquidation and winding up of the Venture
shall be applied in the following order of priority:
4.2.1 First, to the payment of the expenses incurred in
dissolution and termination;
4.2.2 Next, to the payment of creditors of the Venture
(including making the repayments of any unpaid Venturer loans in the same
priority as is described in Section 4.1) except secured creditors whose
obligations will be assumed or otherwise transferred on a liquidation of the
Venture property or assets; and
4.2.3 The balance, if any, shall be distributed to the Venturers
in accordance with their respective positive Capital Account balances
(determined after applying Article 3 for all periods, including the liquidation
period) as provided in Section 8.6.
4.3 GENERAL DISTRIBUTION RULES.
The timing and amount of all distributions shall be in accordance
with Sections 4.1, 4.2, 8.5 and 8.6. All distributions of cash shall be made by
the Venturers to the Venturers shown on the records of the Venture to have been
Venturers on the date of the
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distribution. All distributions, upon request by a Venturer, shall be made by
wire transfer in immediately available funds to such Venturer's account
specified in such request. Distributions of Net Available Cash made to a
Venturer shall be deemed to be advances on account of such Venturer's share of
the distributable amounts thereof. For purposes of this Agreement, the term
"distributable" with respect to such distributions shall mean the amount of
such distributions as finally determined pursuant to the provisions of this
Agreement by the Venturers for the Venture Accounting Year in respect of which
they were made and for the term of the Venture.
4.4 SOURCE OF DISTRIBUTIONS. Each Venturer shall look solely to the
assets of the Venture for the return of its Capital Contributions and its share
of distributions and shall have no recourse upon dissolution or otherwise
against the Venture, the Venturers or the Liquidator. No holder of an interest
in the Venture shall have any right to receive any distributions except as
provided in this Agreement or any right to demand or receive property other
than cash upon dissolution and termination of the Venture.
ARTICLE 5
MANAGEMENT; DUTIES AND POWERS OF THE VENTURERS;
RIGHTS AND DUTIES OF VENTURERS
5.1 MANAGEMENT OF BUSINESS BY VENTURERS; EXECUTION AUTHORITY; VENTURER
OBLIGATIONS; REIMBURSEMENTS; MAJOR DECISIONS; RETAINED APPROVALS.
5.1.1 MANAGEMENT.
5.1.1.1 VENTURER MANAGEMENT. The Venture's business shall be
managed by the Venturers. Except as otherwise provided in this Agreement
(including the right of both the Venturers to Approve Major Decisions under
Section 5.1.5), either Venturer may supervise and undertake the business of the
Venture and make decisions affecting the day-to-day operations of the Venture
and the Investment, including the acts to be taken by the Venture as the Lessor
under the Lease, and either Venturer shall have full authority to do so. Except
to the extent the Approval of Venturers is expressly required under this
Agreement, no consent or Approval of a Venturer shall be required with respect
to any action or decision of the other Venturer with respect to Venture matters.
No Venturer shall receive any compensation for serving as a Venturer or
undertaking any action on behalf of the Venture. Each Venturer shall cause each
of its Authorized Representatives to devote as much time as is reasonably
necessary to fulfill the Venturer's obligations under this Agreement.
5.1.1.2 EXECUTION AUTHORITY. The signature of either Venturer,
or any other Person appointed in writing by either Venturer to do so under
Section 5.1.4.1, shall be required on all contracts of the Venture. The
execution and delivery by either Venturer, or any other Person so appointed in
writing by either Venturer to do so, of any document shall be sufficient to
bind and shall be binding upon the Venture for all
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purposes, and third parties shall be entitled to rely on the authority of any
Venturer, or any other Person so appointed in writing by either Venturer to do
so, to take any action on behalf of the Venture. Notwithstanding the foregoing,
(i) neither Venturer nor any other Person shall take any action requiring
Approval of the Venturers under this Agreement unless the provisions of this
Agreement concerning such Approval have been fully satisfied, and (ii) no
employee of the Venture shall take any action on behalf of the Venture unless
such action either has been Approved by the Venturers or is both (a) permitted
to be taken by either Venturer without the Approval of the other Venturer under
this Agreement and (b) is directed to be taken by such employee by either
Venturer. Each Venturer shall have the authority and responsibility, at Venture
expense, of supervising the Venture's employees, if any.
5.1.1.3 AGHC PROSPECTUS COMPLIANCE. The Venturers shall
use their reasonable efforts, at Venture expense, to cause the Venture to comply
with all applicable laws and regulations and to operate the business of the
Venture and the Investment in a manner that is reasonably consistent in all
material respects with the description contained in the prospectus of American
General Hospitality Corporation, a Maryland corporation ("AGHC") pursuant to
which shares in AGHC were offered (the "AGHC Prospectus").
5.1.2 COMPENSATION; REIMBURSEMENT. No compensation shall be
payable by the Venture to any Venturer or to an Affiliate of any Venturer unless
permitted pursuant to the AGHC Prospectus and Section 5.2. Unless reimbursement
is prohibited under Section 5.5 or another provision of this Agreement, the
Venture shall reimburse each Venturer for its actual and reasonable
out-of-pocket expenses incurred in connection with Venture business to the
extent such Venturer is authorized to take the action resulting in such
expenses, including those expenses that are described in this Section 5.1 or
that are otherwise specifically authorized by this Agreement.
5.1.3 BUDGETS AND RESERVES.
5.1.3.1 OPERATING BUDGET; INVESTMENT BUDGETS; RESERVES.
The Venturers shall cause to be prepared, at Venture Expense, such budgets with
respect to the Venture or the Investments as shall be Approved by the Venturers
or as shall be required by Persons making loans to the Venture, either Venturer
or their Affiliates. Reserves shall be established for the Venture only to the
extent reasonably Approved by the Venturers, taking into account the
requirements of lenders to the Venture, either Venturer or their Affiliates
under loan documents that are binding on the Venture.
5.1.4 POWERS OF THE VENTURERS. Each Venturer, if it is not a
Terminated Venturer, shall have full power, at the expense of the Venture, to
take all actions required to conduct the day-to-day operations of the Venture
and accomplish the purposes stated in this Agreement, and, subject to the
availability of Venture funds, to implement the Major Decisions that have been
Approved by the Venturers, and to pay the expenses of the Venture (or cause them
to be paid) when due. Neither Venturer (nor any employee) shall
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have the power to implement any Major Decision unless such Major Decision has
been Approved by the Venturers, as set forth in Section 5.1.6.2 hereof.
5.1.4.1 EMPLOYEES; DELEGATION OF AUTHORITY;
BONDING/O&D INSURANCE. The Venture shall have its own offices and
administrative and operating employees, and shall bear the cost thereof, to the
extent Approved by the Venturers from time to time. At Venture expense, either
Venturer, if it is not then a Terminated Venturer, shall have the authority to
hire and discharge such Venture employees as the Venturers shall reasonably
Approve. The compensation arrangements for all employees shall be as Approved by
the Venturers from time to time. Each Venturer, and Persons appointed in writing
by either Venturer to do so, shall have the authority described in Section
5.1.1.2. Fidelity bonds, in amounts and on terms Approved by the Venturers, may
be obtained at Venture expense for Venture employees, and the Venture may obtain
officer and director (or comparable) insurance for the Venture's employees on
such terms, and in such amounts, as shall be reasonably Approved by the
Venturers from time to time. The Venturers may delegate the authority to take
any action permitted under this Agreement to any Venture employee or agent, in
each case to the extent Approved by the Venturers, as evidenced by a written
document that has been executed by either Venturer.
5.1.4.2 NON-EXCLUSIVITY. Neither Venturer
shall be required to conduct the Venture's day-to-day operations and implement
Major Decisions as its sole and exclusive function. Each Venturer and its
Affiliates may have other business interests and may engage in other activities
in addition to those relating to the Venture, without having or incurring any
obligation to offer any interest in such activities to the Venture or any
Venturer, except as provided in the AGHC Prospectus, and the Venturers shall be
obligated to devote, and cause controlling persons to devote, only so much of
their time to the Venture's business as shall be reasonably required to meet the
Venturers' respective obligations hereunder.
5.1.5 MAJOR DECISIONS. The following are major
decisions (the "Major Decisions") requiring the prior Approval (or unanimous
reasonable Approval, if so indicated) of the Venturers (except as otherwise
required in case of Emergency or Force Majeure); provided, however, that a
Venturer's Approval shall not be required after such Venturer has lost its
Approval rights under Section 7.9 or another provision of this Agreement except
to the extent provided in Section ▇.▇.▇.▇:
5.1.5.1 Any act in contravention of this
Agreement (including the requirements concerning compliance with the AGHC
Prospectus contained in Sections 5.1.1., 5.1.2 and 5.1.4.2) or extending the
term of the Venture;
5.1.5.2 Any act which would make it impossible to
carry on the ordinary business of the Venture, except the liquidation of the
Venture under the circumstances permitted in Article 8, or the sale, exchange or
other disposition of the Investment or any other Venture assets by the Venture
that has been Approved by the Venturers or otherwise is permitted under this
Agreement;
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5.1.5.3 Any action which would cause the Venture to
become an entity other than an Ohio joint venture (i.e., a single-purpose
general partnership);
5.1.5.4 Changing the purposes of the Venture;
5.1.5.5 Amending this Agreement except as permitted
herein (including Section 3.6);
5.1.5.6 Making in-kind distributions;
5.1.5.7 Establishing or adjusting Gross Asset Value under
Section 3.10 for any contributed or distributed asset (reasonable Approval
only);
5.1.5.8 Indemnification of any Person other than a
Venturer;
5.1.5.9 Except as provided in Section 3.5.4, entering into
any agreement which would cause the either Venturer to become personally liable
on or in respect of or to guarantee any indebtedness of the Venture (other than
liabilities consisting of trade payables incurred in the ordinary course of
business for which either Venturer is contingently liable by reason of being a
joint venture general partner of the Venture);
5.1.5.10 Causing the Venture to redeem or repurchase all
or any portion of the interest of a Venturer expect as provided in Section 7.9;
5.1.5.11 Acceptance of additional Capital Contributions
other than those expressly provided for in this Agreement;
5.1.5.12 Causing or permitting the Venture to be merged
with any other entity;
5.1.5.13 Causing or permitting the Venture to make loans
to, or enter into any contract with any Venturer or any Affiliate of a
Venturer, other than contracts permitted under Section 5.2;
5.1.5.14 Dissolving, terminating or liquidating of the
Venture, except as provided in Article 8 of this Agreement;
5.1.5.15 Modifying or terminating the Lease, entering
into a new lease with respect to the Investment, Approving a capital
improvement program with respect to the Investment or selling or otherwise
disposing of the Investment; unless such action has been Approved by the
Venturers or is authorized to be taken without further Approval under this
Agreement (upon the liquidation of the Venture, the terms of all dispositions
shall require only the reasonable Approval of each Venturer);
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5.1.5.16 Engaging a manager with respect to the
Investment;
5.1.5.17 Issuing Funding Notices pursuant to Section
2.1.2 with respect to Shortfall Disbursements addressed in Section 2.2.1;
5.1.5.18 Obtain any third party loans (whether secured or
unsecured), or, in connection with any third party loan, execute or deliver on
behalf of the Venture any guarantee or other agreement whereby the Venture is
or may become liable for any obligations of any other Entity; or borrow money
from a Venturer or its Affiliates except pursuant to Sections 2.2.2 or 2.3;
5.1.5.19 Acquire any real property other than the
Investment;
5.1.5.20 Except as provided in Sections 5.1.4.1 and 5.2,
pay any salary, fees or other compensation to, or enter into any contract with,
any Affiliate of any Venturer;
5.1.5.21 Modify or refinance any indebtedness of the
Venture or select a lender to make loans to the Venture;
5.1.5.22 Make any distribution except as permitted under
Article 4 or Section 7.9.1 except in connection with the liquidation of the
Venture under Article 8, or make any Venture expenditure for extraordinary
items other than as Approved by the Venturers except as otherwise permitted or
authorized by this Agreement (including a budget that has been Approved under
Section 5.1.3 or in an Emergency expenditure);
5.1.5.23 Commence, dismiss, terminate or settle any
material litigation matter or material condemnation claim, or any other matter
or claim in connection with which the amount in controversy is reasonably
expected to exceed One Hundred Thousand Dollars ($100,000);
5.1.5.24 Substantially modify the terms of any contract
that required the Approval of the Venturers to enter into (reasonable Approval
only);
5.1.5.25 Determine the terms of any participation (e.g.,
distribution and control issues) of third party investors;
5.1.5.26 Admit additional or transferee Venturers to the
Venture as substituted Venturers or enter into financing that participates in
profits; or permit any Transfer of any interest in the Venture or of ownership
interests in a Venturer, to the extent Approval of the Venturers for such
Transfer is required under this Agreement;
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5.1.5.27 Confess any judgment against the Venture or cause the
Venture to file for Bankruptcy or other relief from creditors;
5.1.5.28 Establish insurance requirements for the Venture;
5.1.5.29 Make tax elections on behalf of the Venture or
file tax returns for the Venture (reasonable Approval only);
5.1.5.30 Establish or release reserves for use by the
Venture except pursuant to a budget Approved by the Venturers or as otherwise
provided in this Agreement (reasonable Approval only);
5.1.5.31 Voluntarily deviate materially from the terms of
ownership, disposition or other course of action with respect to the Investment
that required the Approval of the Venturers, except in case of Emergency or
Force Majeure; or
5.1.5.32 Take any other action that is required to be
Approved by the Venturers under this Agreement.
5.1.6 RETAINED APPROVALS; PROCEDURE FOR VENTURER REVIEW AND APPROVAL.
5.1.6.1 RETAINED APPROVALS. Notwithstanding anything to
the contrary contained in this Agreement, after the loss of Approval rights by
a Terminated Venturer under Section 7.9, the Terminated Venturer shall still
retain Approval rights with respect to the matters described in (a) Sections
5.1.5.1 through (and including) 5.1.5.13, (b) Section 5.1.5.20, (c) Section
5.1.5.26 with respect to the substitution of a transferee or additional
Venturer as a Venturer, provided, however, that the provisions of this clause
(c) shall terminate if and when the Venture has received an opinion of
Independent Tax Counsel that the termination of such Approval rights would not
cause the Venture to lose its status as a partnership for federal income tax
purposes under the Code and Regulations as in effect as of the date the
Approval of such substitution is required under this Agreement (the "Transfer
Restriction Termination Date"); and (d) Sections 5.1.5.25 and 5.1.5.26, except
that the Terminated Venturer shall not have the right to Approve the Actions
described in: (i) Section 5.1.5.25 or 5.1.5.26 (1) to the extent provided in
(c) of this Section 5.1.6.1 (2) otherwise except to the extent that the
Terminated Venturer's interest is diluted by the admission of the third party
investors, any new Venturer or any Transfer described therein, and (3) with
respect to participating financing, if Venturers' interests are diluted pro rata
by such participating financing, (ii) Section 5.1.5.5 to the extent amendment of
this Agreement is permitted under Section 3.6 or is necessary or appropriate (as
reasonably Approved by the non-Terminated Venturer) to admit a new Venturer if
the Admission is permitted under preceding clause (i) without the Terminated
Venturer's Approval, and (iii) Section 5.1.5.9 except to the extent the
Terminated Venturer would be personally liable for the repayment of all or a
portion of the indebtedness or under the agreement described in such Section
5.1.5.9.
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5.1.6.2 APPROVAL PROCEDURE. Notice of the request for a Venturer's
Approval of any matter for which such Approval is required pursuant to this
Agreement shall be delivered by the requesting Venturer to each of the then
Authorized Representatives, together with the requesting Venturer's summary and
analysis of any other matter for which such Approval is requested and the
requesting Venturer's recommendations with respect to any matter for which
Approval is requested. Each Authorized Representative shall approve or
disapprove such matter by notice to the other Venturer given within ten (10)
days following delivery of such notice. Failure of any Authorized Representative
to timely respond by written notice to the requesting Venturer, indicating
Approval or disapproval of such matter and, if disapproved, the reason for such
disapproval, shall be deemed withholding of the Approval by such Authorized
Representative of such matter for which Approval is requested. Notwithstanding
anything in this Agreement to the contrary, no Authorized Representative of a
Venturer shall have the right to Approve any action if such Venturer no longer
has Approval rights with respect to such issue under Sections 7.9 and 5.1.6.1.
5.2 AFFILIATE TRANSACTIONS. If Approved by the Venturers, Affiliates of
any Venturer may provide property management services, accounting services,
construction services, office administration, and/or document control services
to the Venture, subject to the following conditions: (i) the fees for such
services must be no greater than the fees charged generally by qualified,
unaffiliated third-parties performing similar services in the geographical area
in which the services are to be performed; and (ii) the other terms of the
agreement pursuant to which such services will be performed shall generally be
no more onerous than the terms of agreements used by qualified, unaffiliated
third-parties performing similar services in the geographical area in which the
particular services are to be rendered.
5.3 REPORTING REQUIREMENTS; FINANCIALS; MEETINGS.
5.3.1 GOVERNMENTAL REPORTS; MEETINGS. The Venturers shall, at
Venture expense, use reasonable efforts to cause to be prepared and timely filed
with appropriate federal, state and foreign regulatory and administrative
bodies, all reports required to be filed with such entities under then current
applicable laws, rules and regulations, subject to the reasonable Approval of
the Venturers. Such reports shall be prepared on the accounting or reporting
basis required by such regulatory bodies. Each Venturer shall be provided with a
copy of any such report. No meeting of the Venturers shall be required unless
requested by any Venturer upon notice to all Venturers, which notice may be
given by any Venturer at any time. All Venturers shall be given written notice
of any meeting of the Venture at least twenty (20) days prior to any such
meeting by the Venturer calling such meeting. Any meetings shall be held at the
record-keeping office of the Venture or at any other reasonably convenient
location within the United States as the Venturers may reasonably Approve and
specify in such notice.
5.3.2 ACCESS; AUDIT. Each Venturer shall be permitted to review
and copy, during normal business hours at the office of the Venture, all Venture
financial records and information. The records and information of the Venture
shall be audited at Venture expense by auditors to be selected upon the
reasonable Approval of the
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Venturers. The Venturers shall maintain (at the office of the Venture) reports
required or otherwise prepared and delivered hereunder, or by law or any
contract to which the Venture is a party, copies of which shall be furnished to
all Venturers when available, at the Venture's expense.
5.3.3 FINANCIALS AND STATUS REPORTS. At Venture expense, the
Venturers shall use reasonable efforts to cause the following to be issued to
all Venturers:
(i) annual financials shall be prepared by the Venture's independent
certified public accountants at Venture expense, within ninety (90) days after
the close of each year (including sources and uses of funds, cash on hand,
distributions, changes in financial position, tax information, Unrepaid Capital
and unrepaid Venturer loans); and
(ii) such other reports as are contemplated by the AGHC Prospectus.
5.4 TAX MATTERS PARTNER; TAX RETURNS. AGHOP is hereby designated as the
"Tax Matters Partner", as such term is defined in Section 6231(a)(7) of the
Code, and it shall serve as such at Venture expense with all powers granted to
a tax matters partner under the Code. Each Venturer shall give prompt notice to
each other Venturer of any and all notices it receives from the Internal
Revenue Service (or any other taxing authority) concerning the Venture,
including any notice of audit, any notice of action with respect to a revenue
agent's report, any notice of a 30-day appeal letter and any notice of a
deficiency in tax concerning the Venture's federal, state or local income tax
returns. At Venture expense, the Tax Matters Partner shall furnish each
Venturer with status reports regarding any negotiation between the Internal
Revenue Service (or other taxing authority) and the Venture promptly after any
material new development. The Tax Matters Partner shall use its reasonable
efforts to cause the Venture's accountants to prepare and file on a timely
basis, with due regard to extensions (if such extensions are reasonably
Approved by the Venturers) all tax and information returns which the Venture
may be required to file. No tax or information return shall be filed unless
reasonably Approved by the Venturers. The Venturers shall cause the Venture's
accountants to prepare and deliver, at Venture expense, to each Venturer on a
timely basis an information reporting return (K-1) reflecting such Venturer's
distributive share of all income, gain, loss, deductions, allowances or credits
of the Venture for each Venture Accounting Year, as computed pursuant to
Article 3.
5.5 INDEMNIFICATION AND LIABILITY OF VENTURERS AND VENTURE EMPLOYEES.
5.5.1 No Venturer or Venture employee shall be liable,
responsible or accountable in damages or otherwise to any of the Venturers or
the Venture for any act or omission performed or omitted by it in good faith on
behalf of the Venture and in a manner reasonably believed by it to be (i)
within the scope of the authority granted to it by this Agreement or, in the
case of an employee, the scope of the authority granted to the employee by the
Venturers and (ii) in the best interests of the Venture, the Venturers or their
Affiliates, except for Major Defaults (as defined in Section 5.5.3) and damages
for a breach
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of this Agreement as provided in Section 9.2 and, in the case of an employee,
damages for the employee's breach of any employment agreement with the Venture.
5.5.2 Except with respect to a Venturer's Major Defaults
described in Section 5.5.3 and a Venturer's breach of this Agreement as provided
in Section 9.2 (or, in the case of an employee, such employee's acting outside
the scope of the employee's authority granted to him by the Venturers, the
employee's Major Default, or the employee's breach of any employment agreement
with the Venture), the Venture shall indemnify and hold harmless each Venturer
and employee from and against any obligations, actual damages, penalties,
actions, judgments, suits, expenses, disbursements, losses, costs or liabilities
of any kind or nature whatsoever which may be imposed upon, incurred or asserted
against such Venturer or employee (including reasonable attorneys' and
paralegals' fees and court costs) in connection with, due to or arising out of
(i) such Venturer's (or a partner or a member of such Venturer) serving as a
Venturer of the Venture, (ii) such Venturer's serving as an employee of an
Affiliate of a Venturer or (iii) such employee serving as an employee of the
Venture, in each case so long as such Venturer (or such partner or member) and
its Affiliates, or employee, acted in good faith, with reasonable belief that
such actions were within the scope of authority granted to such Venturer under
this Agreement, or granted to such employee by the Venturers, as the case may
be, and such actions did not constitute a Major Default or a breach of this
Agreement under Section 9.2 or, in the case of an employee, a breach of any
employment agreement with the Venture.
5.5.3 Each Venturer shall (and each employee shall be required to)
indemnify and hold harmless each other Venturer, employee and the Venture from
and against any direct (and not consequential or incidental) obligations, actual
damages, penalties, actions, judgments, suits, expenses, disbursements, losses,
costs or liabilities (collectively, the "Liabilities") incurred or paid by such
employees, other Venturers or the Venture (to the extent such Liabilities are
not reimbursed by insurance proceeds or indemnities from third parties), to the
extent such Liabilities are caused by, and such Venturer or employee is finally
adjudicated to have engaged in, actual fraud or intentional misappropriation of
funds ("Major Defaults") or is determined to have committed a breach of this
Agreement as provided in Section 9.2 or any employment agreement with the
Venture.
5.6 OPPORTUNITY TO DEFEND. In any case where indemnity is sought by a
Venturer (or an employee pursuant to the principles set forth in this Section
5.5), such Venturer shall (and such employee shall be required to) give notice
of the request for indemnification to the Venture and the other Venturers from
whom the indemnity is required and give them the opportunity to the extent
reasonably possible, to participate in the defense of the claim giving rise to
the claim for indemnity, all at Venture expense and subject to the reasonable
Approval of the Venturers.
5.7 LIMITATION OF LIABILITY. Each Venturer's liability shall be limited as
set forth in this Agreement, the Act and other applicable law. No partner,
officer, director, shareholder, manager or member of a Venturer shall be liable
for the obligations of such Venturer to the Venture or the other Venturers
under any circumstances other than a Major
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Default that has actually been committed by such partner, officer, director,
shareholder, manager or member.
5.8 NO PRIORITIES. Except as specifically provided in this Agreement, no
Venturer shall have any priority over any other Venturer as to the return of its
Capital Contributions or as to distributions or allocations of Profits or Losses
or other tax items.
ARTICLE 6
BOOKS, RECORDS AND BANK ACCOUNTS
6.1 BOOKS AND RECORDS; ACCOUNTING METHOD. At Venture expense, the
Venturers shall cause to be kept (at the office of the Venture referred to in
Section 1.3.2) accurate, just and true books of account, in which shall be
entered fully and accurately each and every transaction of the Venture. Such
records shall be maintained for the period, in the manner, and at the locations
required by applicable law. The books shall be kept in accordance with the
Venture's method of reporting for federal income tax purposes (which shall be
the accrual method of accounting). Tax accounting elections, including methods
of depreciation and deduction or capitalization of interest, taxes and insurance
premiums during any construction period, shall be made as the Venturers shall
reasonably Approve. The Venture's financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied.
6.2 BANK ACCOUNTS. The funds of the Venture shall be deposited in the
name of the Venture, in such bank account or accounts as the Venturers shall
reasonably Approve. Such funds shall be invested by the Venturers in such high
quality, short term instruments as shall be reasonably Approved by the Venturers
(which may or may not bear interest as the Venturers shall Approve). The
individual signatories on all Venture accounts shall be appointed and Approved
by the Venturers from time to time. The signature of any such appointee shall be
sufficient to effect withdrawals if so Approved by the Venturers.
ARTICLE 7
TRANSFERS OF VENTURE INTERESTS
7.1 RESTRICTIONS ON TRANSFER. No Venturer shall be permitted to Transfer
all or any part of its interest in the Venture under any circumstances until the
Transfer Restriction Termination Date. Any such attempted or actual Transfer
shall be null and void ab initio and of no force and effect. Notwithstanding the
foregoing, from and after the Transfer Restriction Termination Date, a Venturer
may Transfer all or part of its interest in the Venture, as follows:
7.1.1 To the Venture or another Venture or a partner, member or
shareholder or Affiliate of a Venturer; and
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7.1.2 Any other Transfer which is Approved by the
Venturers (excluding any Venturer that is a Terminated Venturer).
The following shall be conditions precedent to the effectiveness of any
Transfer of any interest in the Venture pursuant to this Article 7 (no such
Transfer shall occur or be effective for any purpose until the Transfer
Restriction Termination Date): (i) the transferee shall assume in writing each
of the obligations of the transferor to the Venture; (ii) such transferee shall
agree in writing to be bound by each of the terms and conditions of this
Agreement; (iii) the transferee shall deliver to the Venture instruments of
assumption and security reasonably Approved by the Venturers, for the payment
and performance of all obligations of or attendant to the interest so
transferred and assumed; and (iv) the requirements of Sections 7.4 and 7.5
shall be satisfied.
7.2 TAKE-ALONG RIGHTS. There shall be no right of any other Venturer
to participate in any Transfer permitted by a Venturer under this Agreement.
7.3 BANKRUPTCY OR DISSOLUTION OF VENTURERS. The Bankruptcy or
dissolution (without reconstitution within sixty (60) days thereafter) of the
any Venturer shall dissolve the Venture and cause its liquidation, except as
otherwise provided in Section 8.4. Upon the occurrence of a Bankruptcy or the
dissolution (without reconstitution within sixty (60) days thereafter) of any
Venturer, such Venturer shall become a Terminated Venturer under Section 7.9,
and the trustee in Bankruptcy, receiver or other legal representative of the
Bankrupt Venturer or other legal representatives of the dissolved Venturer,
shall have all the rights of an assignee of the Venturer, including the same
right (subject to the same limitations) as the Bankrupt or dissolved Venturer
would have had under the provisions of Section 7.1 to Transfer its interest in
the Venture, subject to the substitution rules of Section 7.4 and the
provisions of Section 7.9.
7.4 SUBSTITUTION OF VENTURER. Subject to the restrictions on
Transfers and Approval rights of the Venturers as set forth in Section 7.1 and
the provisions of Section 7.5, the assignee of any Transfer by a Venturer (a
"Venturer Assignee") shall become a substitute Venturer only if (i) the assignor
Venturer so provides in an instrument of assignment, (ii) the Venturer Assignee
agrees in writing to be bound by the provisions of this Agreement and of the
Articles and any amendments hereto and thereto, and (iii) each Venturer Approves
such substitution, which Approval may be given or withheld in its sole and
absolute discretion (this clause (iii) shall cease to have any force and effect
if and when the Transfer Restriction Termination Date occurs). If the assignor
Venturer so provides, the Venturer Assignee agrees to be bound as aforesaid,
and, if applicable under preceding clause (iii), the Venturers so Approve such
substitution, the Venturer Assignee shall become a substitute Venturer upon
payment to the Venture of all costs and expenses of reviewing the instrument of
assignment, if appropriate, and, if required by law, an amendment to the
Certificate to reflect such substitution. In such event, if and as required by
law, the Venturers shall prepare or cause to be prepared an amendment to the
Certificate to be signed, to the extent required, by the Venturers and by the
Venturer Assignee. The Venturers shall attend to the due execution and filing of
such amendment to the Certificate, if such amendment is required. Unless named
in this Agreement, or unless admitted to the Venture
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as provided in this Agreement, no Person shall be considered a Venturer, and the
Venture, each Venturer and any other Persons having business with the Venture
need deal only with Venturers so named or so admitted and shall not be required
to deal with any other Person by reason of a Transfer. A Venturer Assignee of an
interest in the Venture who is not admitted as a substitute Venturer as provided
in this Section 7.4 shall be entitled to receive the economic benefits of the
interest purported to be Transferred but shall not be considered a Venturer for
any purposes and shall have none of the rights of a Venturer under this
Agreement or under the Act.
7.5 ADDITIONAL TRANSFER RESTRICTIONS.
7.5.1 Notwithstanding any provision of this Agreement to the
contrary, and subject to the limitations in Sections 7.1 through 7.4, a
Venturer's ability to Transfer all or any portion of its interest as a Venturer
in the Venture shall be subject to the following additional restrictions:
7.5.1.1 No Transfer of all or any portion of such interest
shall be effective unless (i) such Transfer complies with the Transfer
restrictions in all agreements to which the Venture, or such Venturer is a
party, and (ii) such interest is registered under the Securities Act and any
applicable state securities laws, or an exemption from registration is
available, and, for any direct Transfer of an interest in the Venture, the
Venture shall have received an opinion of counsel, reasonably Approved by the
non-Transferring Venturer, to such effect (unless the requirement that the
Venture receive such legal opinion is waived by the Approval of the
non-Transferring Venturer);
7.5.1.2 No Venturer shall be permitted to Transfer any
portion of its Venture interest or take any other action which would cause the
Venture to be (i) treated as a "publicly traded partnership" within the meaning
of Code Section 7704 or (ii) classified as a corporation (or as an association
taxable as a corporation) within the meaning of Code Section 7701(a);
7.5.1.3 No Venturer shall be permitted to Transfer all or
any portion of its Venture interest or to take any other action (including, in
the case of any Venturer which is a corporation, limited liability company or
partnership or a partner or member of a partnership or limited liability company
which is a Venturer, a Transfer of any interest in such partnership, limited
liability company or corporation or in the partners, members or shareholders
thereof) which would result in a termination of the Venture as a partnership
within the meaning of Code Section 708(b)(1)(B) (a "Tax Termination"), without
the Approval of the other Venturer;
7.5.1.4 Unless arrangements concerning withholding are
reasonably Approved by the Venturers (if such withholding is required of the
Venture), no Venturer shall be permitted to Transfer all or any portion of its
interest in the Venture to any Person, unless such Person is a United States
Person as defined in Code Section 7701(a)(30) and is not subject to withholding
of any federal tax; and
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7.5.1.5 No Venturer shall be permitted to Transfer all
or any portion of its Venture interest if such Transfer will (i) cause the
assets of the Venture to be deemed to be "plan assets" under ERISA or its
accompanying regulations or the Code or (ii) result in any "prohibited
transaction" under ERISA or its accompanying regulations affecting the Venture.
7.5.2 Any purported transfer or any other action taken in
violation of this Section 7.5 shall be void ab initio.
7.6 TRANSFER INDEMNIFICATION AND CONTRIBUTION PROVISIONS.
Each Venturer shall indemnify, defend and hold the Venture and each
other Venturer, and the shareholders, partners, employees, agents, members and
Affiliates thereof, harmless from any Liabilities in any way arising from the
failure of a Transfer of any interest in the Venture (including any Transfer of
an interest in any partners, members or shareholders of the indemnifying
Venturer, or the partners, members or shareholders therein, and regardless of
whether occurring before or after the date of this Agreement) to comply with all
applicable federal and state securities laws, including all registration or
qualification requirements and anti-fraud requirements, or the impact of such
Transfer upon compliance of the Venture and its Venturers with those securities
laws in connection with any previous Transfer of an interest in the Venture.
Should the preceding indemnity be unenforceable to any extent, then, to such
extent the Venturer otherwise required to so indemnify the Venture and the other
Venturer shall be obligated to contribute to any loss, liability, cost or
expense resulting from the actions, omissions or events set forth in the above
indemnification to the extent of its responsibility therefor, as determined by
the trier of fact.
7.7 BASIS FOR RESTRICTIONS AND SECTION 7.9 REMEDIES. The Venturers
acknowledge that the relationship of each Venturer to the other Venturers is a
personal relationship and that the restrictions on the power of each Venturer to
withdraw or Transfer its interest in the Venture, and the provisions of Section
7.9 (including the purchase and redemption rights contained therein) (i) are
necessary to preserve such personal relationship and safeguard the investment of
the other Venturers in the Venture and (ii) were a material inducement to the
other Venturers entering into this Agreement, and shall be enforceable
notwithstanding the Bankruptcy of any Venturer or any applicable restrictions on
alienation.
7.8 REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each Venturer hereby represents and warrants to each of the other
Venturers as follows:
7.8.1 Such Venturer, if not a natural Person, is duly formed and
validly existing under the laws of the jurisdiction of its organization with
full power and authority to enter into this Agreement and to conduct its
business to the extent contemplated in this Agreement;
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7.8.2 This Agreement has been duly authorized, executed and delivered
by such Venturer and constitutes the valid and legally binding agreement of
such Venturer, enforceable in accordance with its terms against such Venturer,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium and other similar laws relating to creditors' rights generally, by
general equitable principles and by any implied covenant of good faith and fair
dealing;
7.8.3 The execution and delivery of this Agreement by such Venturer
and the performance of its duties and obligations hereunder do not result in a
breach of any of the terms, conditions or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, credit agreement, note
or other evidence of indebtedness, or any lease or other agreement, or any
license, permit, franchise or certificate to which such Venturer is a party or
by which it is bound or to which its properties are subject or require any
authorization or approval under or pursuant to any of the foregoing, or violate
any statute, regulation, law, order, writ, injunction, judgment or decree to
which such Venturer is subject;
7.8.4 Such Venturer is acquiring its interest in the Venture for
investment purposes and without a view toward its resale or distribution;
7.8.5 Such Venturer recognizes that Battle ▇▇▇▇▇▇ LLP ("BFLLP") serves
as special counsel to Affiliates of both of the Venturers, and each Venturer
hereby waives all potential conflicts of interest resulting from BFLLP's
representation of the Venturers and the Venture hereunder, of Affiliates of
AGHLLC, AGHC and AGHOP in other transactions, and of the Venture in the future
on matters for which BFLLP is retained as counsel by the Venture;
7.8.6 Such Venturer is aware that transfers of interests in the
Venture and within such Venturer are not permitted except in the limited
circumstances expressly as provided in Article 7 hereof and that an investment
in the Venture is a long-term investment, without liquidity;
7.8.7 None of the other Venturers is acting as the representative or
agent or in any other capacity, fiduciary or otherwise, on behalf of such
Venturer in connection with the Venture, or the other matters referred to in
this Agreement;
7.8.8 Such Venturer understands that it may lose its Approval rights
(and be subject to having such Venturer's interest purchased by the Venture for
its appraised fair market value in certain circumstances) under Section 7.9 if
the Venturer becomes a Terminated Venturer, and that it has waived its rights
to a trial by jury in any dispute concerning this Agreement or the Venture
under Section 9.4; and
7.8.9 Such Venturer understands that the Venture and its Venturers are
relying on the accuracy of the representations set forth in this Section 7.8 in
entering into this Agreement without requiring that the interests in the
Venture be registered under federal or state securities laws.
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7.9 TERMINATED VENTURER.
7.9.1 If and when a Venturer becomes a Terminated
Venturer, (i) such Venturer shall automatically cease to have any Approval or
voting rights under this Agreement or with respect to the Venture, except as
provided in Section 5.1.6.1, (ii) upon the election of the Venturer who is not
the Terminated Venturer (the "Electing Venturer"), given by notice from the
Electing Venturer to the Terminated Venturer (a "Purchase Notice") at any time
after a Venturer becomes a Terminated Venturer, sell the Terminated Venturer's
interest in the Venture to the Venture (or to the other Venturer or its designee
as set forth in Section 7.9.4), at a price (the "Buy-Out Price") to be
determined as hereinafter provided. The Electing Venturer shall notify the
Terminated Venturer in writing of its election (exercisable at any time after a
Venturer becomes a Terminated Venturer) under clause (ii), above, and (iii) the
other provisions applicable by reason of becoming a Defaulting Venturer
(including Sections 7.9.5 and 8.1.1) shall apply.
If a Purchase Notice has been given under clause (ii) above, the Electing
Venturer and the Terminated Venturer shall attempt to agree upon the Buy-Out
Price of the Terminated Venturer's interest in the Venture. If such agreement is
not reached within thirty (30) days after the notice of election is given, the
Terminated Venturer, on the one hand, and the Electing Venturer, on the other
hand, shall each, within ten (10) additional days, appoint an M.A.I. accredited
appraiser by notice to the others. The two appraisers so appointed shall, within
five (5) additional days, appoint a third M.A.I. accredited appraiser and the
three appraisers shall meet to determine the gross proceeds that would have been
received by the Venture if the Venture sold, on the Termination Date, all of its
assets (including the Investment) for cash at their then fair market value, less
all costs and expenses of sale, including closing costs, real estate brokerage
commissions and fees, title insurance premiums and escrow fees, appropriate
reserves and legal and other expenses incident to such sale (the "Appraised
Value"). The Appraised Value shall equal the average of the appraised values
determined by each of the two appraisers whose appraisals are closest to each
other. The cost of such appraisal shall be borne 50% by the Venture and 50% by
the Terminated Venturer. The Buy-Out Price shall equal the amount the Terminated
Venturer would receive under Section 4.2.3, if all of the assets of the Venture
were sold to a third party for the Appraised Value and the Venture were
liquidated, after withholding therefrom any damages determined to be payable by
the Terminated Venturer under Section 5.5.3 by reason of the Terminated
Venturer's Major Default for all periods. If the Venture redeems the Terminated
Venturer, there shall be no discount in the Buy-Out Price for any encumbrances
to which such redeemed interest is subject, but the Venture shall apply the
proceeds of such redemption to satisfy such encumbrances instead of making
distributions thereof to the Terminated Venturer to the extent required by law
(such distributions being deemed for all purposes to have been made to the
Terminated Venturer by the Venture and then paid by the Terminated Venturer to
satisfy such encumbrances). If the interest of the Terminated Venturer is
purchased by the other Venturer (or its designee), and not by the Venture,
pursuant to Section 7.9.4, the Buy-Out Price for the Terminated Venturer's
interest as determined above shall be reduced to the extent the other Venturer
or its designee acquires the Terminated Venturer's interest subject to ( or
assumes) the encumbrances on such interest at the closing. Within ten (10) days
following the determination of the Buy-Out Price, the
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Electing Venturer may elect, in its sole and absolute discretion, by notice to
the Terminated Venturer, to rescind any notice pursuant to this Section 7.9.1,
in which event the right to elect to cause the Terminated Venturer to sell its
interest to the Venture or to the other Venturer (or its designee) pursuant to
this Section 7.9.1 as a result of the event(s) which led to the Purchase Notice
(but not any future event which would authorize any such notice) shall no longer
be of any force or effect.
7.9.2 The purchase and sale of the Terminated Venturer's
interest in the Venture pursuant to this Section 7.9 shall be consummated on or
before the thirtieth (30th) day following the date upon which the Buy-Out Price
was determined (whether by agreement of the Terminated Venturer and the Electing
Venturer or by appraisal), at the offices of the Venture, or at such other time
and place as may be agreed upon by the Terminated Venturer and the Electing
Venturer. At the closing, the Terminated Venturer shall execute and deliver to
the Venture (or the Electing Venturer or its designee, as appropriate) such
instruments of assignment, conveyance and transfer as the Electing Venturer(s)
may reasonably deem necessary or appropriate to consummate the purchase and
sale, and the purchaser shall issue its recourse promissory note payable to the
Terminated Venturer in the amount of the Buy-Out Price (adjusted for
encumbrances to the extent provided in Section 7.9.1), bearing interest at an
annual rate equal to the Prime Rate, with interest compounded quarterly, and all
principal and accrued interest being payable on the date which is twenty-four
(24) months after the closing (and with prepayment being allowed at any time
without penalty).
7.9.3 Following the closing date, the Venture shall
indemnify and hold the Terminated Venturer harmless from and against all
liabilities of the Venture arising from acts taken or omitted to be taken by the
Venture after the date on which the closing occurs of the sale of the
Terminating Venturer's interest to the Venture (or to the Electing Venturer or
its designee, as appropriate).
7.9.4 The Venture shall fund the purchase of the
Terminated Venturer's interest pursuant to this Section 7.9 by borrowings or, if
the remaining Venturer so Approves, by additional Capital Contributions from the
remaining Venturer, such borrowings or Capital Contributions to occur when
needed to make the required payments of the Buy-Out Price. If the remaining
Venturer so Approves, the interest of the Terminated Venturer shall be purchased
by such remaining Venturer or its designee, which designee may be admitted as a
Venturer hereunder upon the date of the closing of the purchase of the
Terminated Venturer's interest in order to avoid a termination of the Venture.
7.9.5 The provisions of this Section 7.9 have been
agreed to by the Venturers for the reasons set forth in Section 7.7.
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ARTICLE 8
TERM, DISSOLUTION AND TERMINATION
8.1 EVENTS OF DISSOLUTION. The Venture shall continue until
December 31, 2046, or such later date as is Approved by the Venturers;
provided, however, that dissolution and liquidation shall occur prior to that
date upon the occurrence of any one of the following events:
8.1.1 An election to dissolve the Venture being made in
writing upon the Approval of the Venturers other than any Terminated Venturer;
8.1.2 The sale for cash, exchange or other disposition
of all or substantially all of the assets of the Venture; or
8.1.3 The Bankruptcy or dissolution (without
reconstitution within sixty (60) days thereafter) of either Venturer, unless
the Venture is reconstituted and continued as provided in Section 8.4.
8.2 LIMITATION ON DISSOLUTION. Until the dissolution of the
Venture otherwise occurs, neither Venturer shall voluntarily retire, resign or
withdraw from the Venture, take any step voluntarily to dissolve itself or
voluntarily cause a dissolution of the Venture, except as provided in Section
8.1.1.
8.3 LIQUIDATION AND WINDING UP.
8.3.1 If the Venture is dissolved for any reason and is
not reconstituted pursuant to Section 8.4.1, the Venturers who are not
Terminated Venturers (they, collectively, or any other Person empowered to
liquidate the Venture under this Section 8.3, the "Liquidator") shall commence
to wind up the affairs of the Venture and to liquidate and sell its assets as
reasonably Approved by the Venturers other than Terminated Venturers as soon as
is practicable thereafter. A third-party liquidator may be appointed as the
Liquidator if Approved by the Venturers other than Terminated Venturers. Any
Liquidator other than the Venturers shall have sufficient business expertise
and competence to conduct the winding up and termination of the business of the
Venture as it has theretofore been conducted or (subject to the limitations
hereinafter set forth) which the Venture may thereafter enter into. No
Liquidator who is a Venturer shall be paid any compensation or fee for
conducting the liquidation of the Venture.
8.3.2 The Liquidator shall proceed with such liquidation
in as expeditious a manner as is reasonably practicable. The holders of
interests in the Venture shall continue to share income and losses during the
period of liquidation in accordance with Article 4.
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8.3.3 If a Venturer or an Affiliate of a Venturer
desires to purchase any of the Venture's remaining assets, the price, terms and
conditions of such purchase shall be subject to the Approval of the Venturers.
8.3.4 Except as expressly provided in this Article 8,
any Liquidator which is not a Venturer shall have and may exercise all of the
powers conferred upon a Venturer under the terms of this Agreement (but subject
to all of the applicable limitations, contractual and otherwise, upon the
exercise of such powers, including Approval of the Venturers to the extent
required), to the extent necessary or desirable in the good faith judgment of
the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during the liquidation period.
8.3.5 If (i) the Venture is dissolved for any reason
and is not reconstituted and continued pursuant to Section 8.4.1, (ii) both
Venturers have become Bankrupt or been dissolved, and (iii) within ninety (90)
days following the date of dissolution a Liquidator or successor Liquidator has
not been appointed by remaining Venturers pursuant to Section 8.3.1, any
interested party shall have the right to seek judicial supervision of the
winding up of the Venture pursuant to the Act.
8.3.6 After making payment or provision for payment of
all debts and liabilities of the Venture and all expenses of liquidation, the
Liquidator may establish, for a period Approved by the Venturers not to exceed
eighteen (18) months after the date the liquidation is complete, such cash
reserves as the Liquidator may reasonably deem necessary for any contingent or
unforeseen liabilities or obligations of the Venture.
8.4 RECONSTITUTION AFTER BANKRUPTCY OR DISSOLUTION OF VENTURERS.
8.4.1 Upon the Bankruptcy or dissolution (without
reconstitution within sixty (60) days thereafter) of either Venturer, the
Venture shall be dissolved and liquidated unless within ninety (90) days
subsequent to such event, the remaining Venturer elects, by giving notice to
all Venturers, to reconstitute the Venture and to continue the business of the
Venture. If such election is made, then (i) the Venture shall not be dissolved
and liquidated; (ii) the Venture and the business of the Venture may be
continued, under and pursuant to the provisions of this Agreement; (iii) the
Bankrupt or dissolved Venturer's interest in the Venture may be purchased as
set forth in Section 7.9, and upon such Bankruptcy or dissolution, the other
rights against a Terminated Venturer under Section 7.9 shall also apply to the
extent applicable; and (iv) the Certificate shall be amended to reflect such
continuation, if so required.
8.5 DISTRIBUTION UPON DISSOLUTION AND CAPITAL ACCOUNT ADJUSTMENTS.
Upon dissolution of the Venture without reconstitution as permitted by this
Article 8, the Venture's assets shall be sold or otherwise disposed of to third
parties as directed by the Liquidator upon the reasonable Approval of the
Venturers, and, after paying or providing for liabilities owing to creditors
(including Venturers) and the establishment of such reserves as the Liquidator
reasonably deems necessary for contingent or unforeseen liabilities or
obligations of the Venture for a period Approved by the Venturers of up to
eighteen (18)
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months after the liquidation has been completed, the remaining liquidation
proceeds (and the reserves, after the expiration of a period of time deemed
reasonable by the Liquidator for a period of up to eighteen (18) months after
the liquidation has been completed) shall be distributed pursuant to Section
4.2.
8.6 COMPLIANCE WITH TIMING REQUIREMENTS OF TREASURY REGULATIONS.
Notwithstanding anything in this Article 8 to the contrary, in the event the
Venture is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made to the Venturers who have
positive Capital Account balances pursuant to Section 4.2 in a manner that
complies with Regulations Section 1.704-1(b)(2)(ii)(b)(2). However, a
liquidation occurring as a result of a Tax Termination shall not require an
actual distribution of Venture assets, but shall instead be treated as a
constructive liquidation and reformation in the manner in Regulations Section
1.708-1(b)(1)(iv), or otherwise required by successor Regulations, if any.
ARTICLE 9
MISCELLANEOUS
9.1 OTHER INTERESTS. Except as provided in the AGHC Prospectus, no
Venturer and no Affiliate of a Venturer shall have any right, by virtue of this
Agreement or otherwise, to share or participate in or to Approve any other
investments or activities of any other Venturer or the income or proceeds
derived therefrom, no Venturer and no Affiliate of any Venturer shall be
obligated to offer or to bring to the attention of the Venture or the Venturers
any property or other business investment or opportunity, whether or not within
the scope of the Venture's purposes, and any Venturer and any Affiliate of any
Venturer may at any time during the term of the Venture own, invest in, develop
or manage, directly or indirectly, any property or other business investment or
opportunity, whether or not competitive with the Venture or its assets or
otherwise within the scope of the Venture purposes. Each of the Venturers
acknowledges and agrees that, except as provided in the AGHC Prospectus, each
Venturer and its Affiliates may have engaged or invested in, may now be engaged
and investing in and may in the future be offered, consider, engage and/or
invest in other business or real property ventures of every kind and nature,
including the ownership, acquisition, financing, leasing, operating, management,
syndication, brokerage and development of hotels, motels and/or other real
property and other investments and opportunities to make or purchase loans which
may be competitive with the Investment and/or other assets of the Venture and,
except as provided in the AGHC Prospectus, none of the Venturers or their
Affiliates shall have any obligation or responsibility to disclose, account for
or offer any of such real properties, investments or opportunities to the
Venture or any Venturer or their Affiliates, and the Venture, the Venturers and
their Affiliates shall have no rights or interest therein.
9.2 DAMAGES; CERTAIN CURE RIGHTS; OFFSET. Each Venturer shall be liable
(and each Venture employee shall be required to agree to be liable) to the
Venture and the other Venturers for any actual (but not consequential or
incidental) damages arising from
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any breach hereof (or, in the case of an employee, acting outside the scope of
the employee's authority granted by the Venturers or breaching any employment
agreement with the Venture). Upon any alleged breach or default of this
Agreement by any Venturer, it shall be a condition to any action against such
Venturer that such Venturer have received notice of such alleged breach or
default (which may be any notice otherwise required by this Agreement) and that
such Venturer shall have failed to cure or commence to cure such alleged breach
or default within thirty (30) days following such notice and failed, at all
times thereafter, to use diligent efforts to pursue such cure to completions,
but in no event beyond ninety (90) days. Notwithstanding anything in this
Agreement to the contrary, (a) there shall be no cure period for a Major
Default, and (b) the only cure period for failure timely to make a Capital
Contribution under Article 2 is set forth in Sections 2.2.1 and 2.2.2.
Notwithstanding anything in this Agreement to the contrary, all amounts payable
to a Venturer under this Agreement shall be subject to offset for amounts owed
to the Venture or the other Venturer under this Agreement and shall be withheld
and either retained by the Venture or reallocated to the other Venturer in a
reasonable manner, as the case may be.
9.3 NO AGENCY. Except as provided herein, nothing herein contained
shall be construed to constitute any Venturer hereof the agent of any other
Venturer hereof or to limit in any manner the carrying on of each Venturer's
respective businesses or activities.
9.4 GOVERNING LAW. It is the intent of the parties hereto that all
questions with respect to the construction of this Agreement and the rights and
liabilities of the parties hereto shall be determined in accordance with the
provisions of the laws of the State of Ohio as applicable to a joint venture
formed under the Act. Each of the parties hereto hereby waives any and all
rights to a trial by jury with respect to any dispute among the Venturers or
their Affiliates or among a Venturer (or its Affiliates) and the Venture
concerning this Agreement, the Venture or its assets. In any dispute among the
Venturers concerning the Venture or this Agreement, the prevailing Venturer(s)
shall be entitled to recover its reasonable attorneys' fees and costs
(including litigation and collection costs) from the non-prevailing Venturer(s).
9.5 NOTICES. Any notices or solicitations of Approval required or
permitted to be given under the terms of this Agreement shall be in writing and
shall be deemed to have been given when (i) personally delivered with signed
delivery receipt obtained, (ii) when transmitted by facsimile machine, if
followed by a mailing thereof pursuant to this Section 9.5 before the end of
the first business day thereafter, with printed confirmation of successful
transmission to the facsimile number set forth in the appropriate address
listed below being obtained by the sender from the sender's facsimile machine,
or (iii) when deposited in the United States first class mail if sent postage
prepaid by registered or certified mail, return receipt requested, in each case
addressed as follows:
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IF TO AGHOP, to it in care of:
American General Hospitality Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
IF TO AGHLLC, to it in care of:
American General Hospitality Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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The time to respond to any notice shall commence to run on the date of delivery
at the appropriate addresses (or attempted delivery if delivery is refused
during normal business hours). A Venturer may change the address to which
notices shall be sent to it, or any of its Authorized Representatives, by
written notice to all Venturers (said change of address or of Authorized
Representatives to be effective upon receipt by all Venturers).
9.6 PRONOUNS AND PLURALS. References herein to the singular shall include
the plural and to the plural shall include the singular, and references to the
masculine gender shall include the feminine and neuter genders (and vice versa),
except where the same shall not be appropriate.
9.7 WAIVER. No consent or waiver, express or implied, by any Venturer to
or of any breach or default by any other Venturer in the performance by the
other of its obligations hereunder shall be deemed or construed to be a consent
or waiver to or of any other breach or default by the other in the performance
by such other party of the same or any other obligations of such Venturer
hereunder. Failure on the part of any Venturer to object to or complain of any
act or failure to act of any other Venturer or to declare any other Venturer in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such Venturer of its rights hereunder.
9.8 SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
9.9 TITLES AND CAPTIONS. All Article or Section titles or captions
contained in this Agreement are for convenience only and shall not be deemed a
part of the content of this Agreement.
9.10 AGREEMENT IN COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. In addition, this Agreement may contain
more than one counterpart of the signature page and the Agreement may be
executed by the affixing of the signatures of each of the Venturers to one of
such counterpart signature pages; all of such signature pages shall be read as
though one, and shall have the same force and effect as though all of the
signers had signed a single signature page.
9.11 BINDING AGREEMENT. Subject to the restrictions on Transfers set forth
herein, this Agreement shall inure to the benefit of and be binding upon the
undersigned Venturers and their respective successors and assigns. Whenever in
this instrument a reference to any party or Venturer is made, such reference
shall be deemed to include a reference to the successors and assigns of such
party or Venturer.
9.12 FURTHER ASSURANCES. The Venturers shall execute and deliver such
further instruments and do such further acts and things as may reasonably be
required to
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49
carry out the intent and purposes of this Agreement promptly upon request from
either Venturer.
9.13 WAIVER OF PARTITION. Unless otherwise specifically provided in this
Agreement (including Article 8), no Venturer shall, and each Venturer hereby
irrevocably waives the right to, either directly or indirectly, take any action
to require partition or appraisement of the Venture, the Investment, or any part
thereof, and, notwithstanding any provision of applicable law to the contrary
(including Chapter 1777 of the Ohio Revised Code), each Venturer hereby
irrevocably waives any and all right to maintain any action for partition or to
compel any sale with respect to its interest in the Venture or with respect to
the assets of the Venture, or any part thereof.
9.14 ENTIRE AGREEMENT. This Agreement contains the final and entire
agreement among the parties hereto with respect to the subject matter hereof,
and they shall not be bound by any terms, conditions, statements or
representations, oral or written, not contained herein.
9.15 AMENDMENTS. Except as expressly provided in this Agreement (including
Section 3.6 and Section 5.1.6.1), this Agreement may be modified or amended only
upon the Approval of the Venturers.
9.16 NO DRAFTING PRESUMPTION. In interpreting the provisions of this
Agreement, no presumption shall apply against any Venturer that otherwise would
operate against such Venturer by reason of such document having been drafted by
such Venturer or at the direction of such Venturer or an Affiliate of such
Venturer.
9.17 NO THIRD PARTY BENEFICIARIES. Except for the representations
concerning conflict waivers pertaining to BFLLP in Section 7.8.5 (which shall
inure to the benefit of BFLLP), the provisions of this Agreement are not
intended to be for the benefit of any creditor or other Person (other than the
Venturers in their capacities as such) to whom any debts, liabilities or
obligations are owed by (or who otherwise have a claim against or dealings with)
the Venture or the Venturers, and no such creditor or other Person shall obtain
any rights under any such provisions (whether as a third party beneficiary or
otherwise) or shall by reason of any such provisions make any claim in respect
to any debt, liability or obligation (or otherwise) including any debt,
liability or obligation with respect to Capital Contributors, against the
Venture or the Venturers. In addition, no deficit balance in any Venturer's
Capital Account or in the capital account of any partner or member of a Venturer
shall be an asset of the Venture, and no Venturer shall be obligated to restore
any such deficit balance.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement is executed, and is effective for all
purposes, as of the date first set forth above.
Joint Venture
General Partners:
AGH UPREIT LLC, a Delaware limited liability
company, a joint venture general partner
BY: American General Hospitality Corporation,
its member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
BY: American General Hospitality Operating
Partnership, L.P.,
Delaware limited partnership, its member
By: AGH GP, Inc., a Nevada
corporation, its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
AMERICAN GENERAL HOSPITALITY OPERATING
PARTNERSHIP, L.P., a
Delaware limited partnership,
a joint venture general partner
By: AGH GP, Inc., a Nevada
corporation, its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board,
Chief Executive Officer and
President
51
EXHIBIT A
DESCRIPTION OF THE INVESTMENT
The Hilton-Hotel Toledo located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ and all of the real and personal property, including the furniture
and fixtures and equipment located therein and thereon and the real estate on
which it is situated.
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