1
Exhibit 3.129
AMENDED AND RESTATED OPERATING AGREEMENT
OF
BCHI ACQUISITIONS, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF THE 20 DAY OF JUNE, 1997
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 ...................................................................... [2]
1.1 Formation ......................................................................... [2]
1.2 Name of Company ................................................................... [2]
1.3 Compliance ........................................................................ [2]
1.4 Purposes of Company ............................................................... [3]
1.5 Interests in the Company .......................................................... [3]
1.6 Other Qualifications .............................................................. [3]
1.7 Term of Company ................................................................... [3]
1.8 Title to Company Property ......................................................... [3]
1.9 Definitions ....................................................................... [4]
1.10 Authorized Acts ................................................................... [11]
1.11 Authorized Representatives ........................................................ [12]
ARTICLE 2
CAPITAL CONTRIBUTIONS
AND ADDITIONAL CONTRIBUTIONS ............................................................ [13]
2.1 Capital Contributions ............................................................. [13]
2.2 Third Party Loans and Additional Capital Contributions and Capital Calls .......... [13]
2.3 Member Loans ...................................................................... [15]
ARTICLE 3
INCOME TAX ALLOCATIONS .................................................................. [15]
3.1 Establishment and Maintenance of Capital Accounts; Partnership 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 ................................................... [18]
3.6 Intent of Allocations ............................................................. [20]
3.7 Basis Elections ................................................................... [20]
3.8 General Allocation Rules .......................................................... [20]
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3.9 Sharing of Company Nonrecourse Debt ............................................... [21]
3.10 Adjustment of Gross Asset Value ................................................... [21]
ARTICLE 4
INVESTMENT LOAN REPAYMENTS AND DISTRIBUTIONS ............................................ [22]
4.1 Net Available Cash ................................................................ [22]
4.2 Proceeds and Distributions in Liquidation ......................................... [22]
4.3 General Distribution Rules ........................................................ [23]
4.4 Source of Distributions ........................................................... [23]
ARTICLE 5
MANAGEMENT, DUTIES AND POWERS OF MEMBERS;
RIGHTS AND DUTIES OF MEMBERS ............................................................ [23]
5.1 Management of Business; Execution Authority; Officers; Member
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 Members and Company Employees .................... [31]
5.6 Opportunity to Defend ............................................................. [32]
5.7 Limitation of Liability ........................................................... [32]
5.8 No Priorities ..................................................................... [32]
ARTICLE 6
BOOKS, RECORDS AND BANK ACCOUNTS ........................................................ [32]
6.1 Books and Records; Accounting Method .............................................. [32]
6.2 Bank Accounts ..................................................................... [32]
ARTICLE 7
TRANSFERS OF COMPANY INTERESTS .......................................................... [33]
7.1 Restrictions on Transfer .......................................................... [33]
7.2 Take-Along Rights ................................................................. [33]
7.3 Bankruptcy or Dissolution of Members .............................................. [33]
7.4 Substitution of Member ............................................................ [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 ......................................... [36]
7.9 Terminated Member ................................................................. [37]
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ARTICLE 8
TERM, DISSOLUTION AND TERMINATION ....................................................... [39]
8.1 Events of Dissolution ............................................................. [39]
8.2 Limitation on Dissolution ......................................................... [39]
8.3 Liquidation and Winding Up ........................................................ [39]
8.4 Reconstitution After Bankruptcy or Dissolution of Members ......................... [40]
8.5 Distribution Upon Dissolution and Capital Account Adjustments ..................... [41]
8.6 Compliance with Timing Requirements of Treasury Regulations ....................... [41]
ARTICLE 9
MISCELLANEOUS ........................................................................... [41]
9.1 Other Interests ................................................................... [41]
9.3 No Agency ......................................................................... [42]
9.4 Governing Law ..................................................................... [42]
9.5 Notices ........................................................................... [43]
9.6 Pronouns and Plurals .............................................................. [44]
9.7 Waiver ............................................................................ [44]
9.8 Severability ...................................................................... [44]
9.9 Titles and Captions ............................................................... [44]
9.10 Agreement in Counterparts .......................................................... [44]
9.11 Binding Agreement .................................................................. [45]
9.12 Further Assurances ................................................................. [45]
9.13 Waiver of Partition ................................................................ [45]
9.14 Entire Agreement ................................................................... [45]
9.15 Amendments ......................................................................... [45]
9.16 No Drafting Presumption ............................................................ [45]
9.17 No Third Party Beneficiaries ....................................................... [45]
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AMENDED AND RESTATED OPERATING AGREEMENT
OF
BCHI ACQUISITIONS, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
THIS AMENDED AND RESTATED OPERATING AGREEMENT ("Agreement") is made and
entered into as of the day of June, 1997, by and among AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
("AGHOP"), and AGH UPREIT LLC, a Delaware limited liability company ("AGHLLC"),
(AGHOP and AGHLLC are collectively referred to as the "Members"), with reference
to the following:
RECITALS
A. Pursuant to that certain Assignment of Membership Interest
Agreement, dated as of even date herewith (the "Assignment Agreement") among
AGHOP, AGHLLC and SEDKO Investment Services Corp. who is the Assignor thereunder
(the "Assignor"), the Assignor withdrew as a member of the Company, AGHOP and
AGHLLC acquired (by contribution or assignment) all of the interests of the
member in the Company (to the extent not already owned by them), and AGHOP and
AGHLLC were admitted as members of the Company.
B. Prior to the Agreement Date, the Company was doing business pursuant
to the Operating Agreement (as defined in the Assignment), (as amended, the
"Original Agreement"). The Members desire to reconstitute the Company and to
continue the business of the Company as a limited liability company pursuant to
the provisions of the Delaware Limited Liability Company Act, Delaware Code,
Title 6, Sections 18-101, et seq, as amended from time to time (the "Act"),
for the purposes set forth m 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 Member of
the Company 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 Members hereby confirm the formation of the Company
as a limited liability company pursuant to the Act, and hereby reconstitute the
Company and continue its business. This Agreement shall constitute the operating
agreement among the Members. All capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings set forth in Section 1.9
hereof. The Members agree to take such other actions (a) as may from time to
time be necessary or appropriate under the laws of the State of Delaware with
respect to the formation, operation and continued good standing of the Company
as a limited liability company and (b) as may be necessary to comply with
Sections 1.3 and 1.6.
1.2 NAME OF COMPANY. The name of the Company shall continue to be "BCHI
Acquisitions, L.L.C.," or such other name as may be reasonably Approved by the
Members from time to time.
1.3 COMPLIANCE.
1.3.1 CERTIFICATE OF FORMATION. The Members confirm that the
Company's Certificate of Formation (the "Articles") has been filed in the Office
of the Secretary of State of Delaware. The Articles 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 Company shall be located at
the Holiday Inn ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
place or places as the Members may from time to time reasonably Approve,
provided, however, that the Company shall at all times maintain a registered
agent and an office in the State of Delaware. The name and address of the
registered agent for service of process on the Company in the State of Delaware
is The Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The address of the registered office of the Company
in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Such principal office,
registered agent or registered office may be changed by the Members from time to
time upon the reasonable Approval of the Members, so long as in accordance with
the Act; concurrently with any such change, written notice thereof shall be
given to each Member. The Members have caused the Company to register as a
foreign limited liability company in the appropriate official recording office
of the appropriate and necessary states. Such registration shall be amended
whenever required by the laws of any such State.
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1.4 PURPOSES OF COMPANY. The purposes of the Company 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
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 Members, set forth in this Agreement.
1.4.3 The Company shall be a single purpose entity and shall
not engage in any activity that is not described in the foregoing purposes of
the Company. The Company shall not merge, consolidate, dissolve, enter into
Bankruptcy, or declare insolvency without the unanimous Approval of the Members.
1.5 INTERESTS IN THE COMPANY
Unless the context otherwise clearly indicates, a Member's
"interest" in the Company shall mean and include its share of the capital of the
Company, its share of the Profits and Losses (including its share of Gain or
Loss on Disposition) and other tax items of the Company, its share of the
distributions of the Company, its Capital Account, and its other rights and
obligations, all as determined under this Agreement.
1.6 OTHER QUALIFICATIONS. At Company expense, the Members shall cause
the Company 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 COMPANY. The term of the Company commenced as of the date
of filing the Articles and shall continue until the Company shall be dissolved,
liquidated and terminated pursuant to the provisions of Article 8.
1.8 TITLE TO COMPANY PROPERTY. Legal title to the Investment and other
assets of the Company shall be held in such manner as the Members shall Approve
as being in the best interests of the Company It is expressly understood and
agreed that the manner of holding title to Company property is solely for the
convenience of the Company; accordingly, legal representatives, beneficiaries,
distributees, officers, employees, partners, members, shareholders, successors
or assigns of any Member shall have no right, title or interest m or to any such
Company property by reason of the manner in which title is held, but all such
property shall be treated as Company property subject to the terms of this
Agreement.
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1.9 DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
1.9.1 "Act" shall mean the Delaware Limited Liability Company
Act, as amended from time to time (Delaware Code, Title 6, Sections 18-101, et
seq.).
1.9.2 "Adjusted Capital Account Deficit" shall mean with
respect to any Member, the deficit balance, if any, in such Member'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 Member is obligated to restore or is deemed to be obligated to
restore to the Company 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.
[4]
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1.9.8 "Agreement" shall mean and refer to this Amended and
Restated Operating 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 Member
shall mean the prior written consent or approval of the Member, 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 Member who
is not a natural person only if given by an Authorized Representative of such
Member. Use of the term "reasonable" or "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 Member's sole
discretion. Except as provided in Section 5.1.6.1, the Approval of a Member
shall not be required from and after the date on which such Member has ceased to
have Approval rights under Section 7.9 of this Agreement.
1.9.11 "Approved by the Members" is defined in Section 1.11
1.9.12 "Articles" shall mean the Certificate of Formation of
the Company, as filed with the Office of the Secretary of State of Delaware.
1.9.13 "Assignment Agreement" is defined in Recital A hereto.
1.9.14 "Assignors" is defined in Recital A hereto.
1.9.15 "Authorized Representatives" is defined in Section 1.11
hereof.
1.9.16 "Bankrupt" shall mean, with respect to any Member, if:
1.9.16.1 such Member, or a Person that Controls such
Member (the "Controlling Person"), shall (i) apply for or consent to the
appointment of, or 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
[5]
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1.9.16.2 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 Member or a Controlling Person with respect thereto, (ii) the
appointment of a trustee, receiver, custodian, administrator, liquidator or the
like of such Member or of a Controlling Person with respect thereto or of all or
a substantial portion of such Member's or such Controlling Person's assets, or
(iii) similar relief in respect of such Member 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 Members 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 Member or such Controlling Person shall be entered in an involuntary case
under such law and shall continue for a period of sixty (60) days.
1.9.17 "Bankruptcy" shall mean any condition described in the
definition of "Bankrupt" which renders a Member a Bankrupt.
1.9.18 "BFLLP" is defined in Section 7.8.5.
1.9.19 "Buy-Out Price" is defined in Section 7.9.
1.9.20 "Capital Account" shall mean, with respect to any
Member, the Capital Account maintained for such Member in accordance with the
provisions of Section 3.1.
1.9.21 "Capital Contribution" or "Capital Contributions" shall
mean the amount of cash and the net fair market value (as reasonably Approved by
the Members) of any property contributed to the capital of the Company by the
Members pursuant to this Agreement. The term "Capital Contributions" with
respect to a Member shall include (i) the contributions of such Member made
pursuant to Sections 2.1 and 2.2 and (ii) such Member's payments made to third
party creditors of the Company after the Agreement Date with respect to Company
obligations unless and until reimbursed by the Company, but only to the extent
reimbursable to such Member under this Agreement.
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 "Company" shall mean the limited liability company
formed under the Act and operated pursuant to this Agreement.
1.9.24 "Company Accounting Year" shall mean and refer to the
accounting year of the Company 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.
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1.9.25 "Company Minimum Gain" is defined in Section 3.5.6
hereof.
1.9.26 "Control" or "Controlled by" or "Controlling" is
defined in the definition of "Affiliate."
1.9.27 "Controlling Person" is defined in the definition of
the term "Bankrupt".
1.9.28 "Defaulting Member" shall have the meaning set forth in
Section 2.2.1.
1.9.29 "Disposition" is defined in the definition of "Gain or
Loss on Disposition."
1.9.30 "Electing Member(s)" is defined in Section 7.9.
1.9.31 "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 Company, the Investment or any other assets of the Company
if it is not possible for a Member after reasonable efforts to reach or obtain
the Approval of the other Member whose Approval to take such action otherwise
would be required.
1.9.32 "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.
1.9.33 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor statute.
1.9.34 "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.
1.9.35 "Funding Notice" is defined in Section 2.1.2.
1.9.36 "Funding Proportion" shall mean the following
percentage for each Member:
AGHOP 99%
AGHLLC 1%
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1.9.37 "Gain" or "Loss" on "Disposition" shall mean the gain
or loss (as the case may be) of the Company 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 Company. 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 Members) of the property
disposed of (as adjusted for book purposes from time to time).
1.9.38 "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.
1.9.39 "Including" or "including" shall mean "including,
without limitation."
1.9.40 "Independent Tax Counsel" shall mean a nationally
recognized tax counsel Approved by the Members that is capable of advising the
Company with respect to specified tax matters.
1.9.41 "Interest" or "interest" is defined in Section 1.5.
1.9.42 "Investment" is defined in Section 1.4.1.
1.9.43 "Lease" means that certain Lease Agreement among the
Company 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.
1.9.44 "Lessee" shall mean AGH Leasing, L.P., a Delaware
limited partnership, for so long as the Investment is leased to it by the
Company, or any other Person to whom the Investment is leased by the Company
from time to time pursuant to this Agreement.
1.9.45 "Liabilities" is defined in Section 5.5.3.
1.9.46 "Liquidator" is defined in Section 8.3.
1.9.47 "Major Decisions" is defined in Section 5.1.5.
1.9.48 "Major Defaults" is defined in Section 5.5.3.
1.9.49 "Member Assignee" is defined in Section 7.4.
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1.9.50 "Member Nonrecourse Debt" is defined in Section 3.5.6
hereof.
1.9.51 "Member Nonrecourse Debt Minimum Gain" is defined in
Section 3.5.6 hereof.
1.9.52 "Member Nonrecourse Deductions" is defined in Section
3.5.6 hereof.
1.9.53 "Members" shall mean AGHLLC AND AGHOP (each a
"Member"), in their respective capacities as Members, and any of their
successors in their respective capacities as Members admitted to the Company as
Members hereunder, and any other Person admitted as a Member under this
Agreement, for so long as any such Person is a Member under the terms of this
Agreement.
1.9.54 "Net Available Cash," with respect to any period, shall
mean (i) the sum of all cash receipts of the Company 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 Company, proceeds from borrowings, and any funds released during such
period from cash reserves previously established), minus (ii) the Operating
Costs for such period.
1.9.55 "Non-Defaulting Member" is defined in Section 2.2.1.
1.9.56 "Nonrecourse Deductions" is defined in Section 3.5.6.
1.9.57 "Nonrecourse Liability" is defined in Section 3.5.6.
1.9.58 "Operating Costs" for a period shall mean the sum of
(i) all cash expenditures of the Company 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 Company; capital improvements to the
Investment; accounting, legal and auditing fees; taxes paid by the Company;
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 Company's
business or reimbursed to Members, plus (ii) such reserves established from time
to time during such period upon the reasonable Approval of the Members.
1.9.59 "Original Agreement" is defined in Recital B hereto.
1.9.60 "Person" shall mean any individual or Entity.
1.9.61 "Prime Rate" shall mean the so-called "Reference Rate"
announced by Citibank, N.A., in New York, New York, from time to time.
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1.9.62 "Profit" or "Loss" shall mean, for each Company
Accounting Year, an amount equal to the Company's net taxable income or loss for
such Accounting Year (including any items of income, gain or deduction taken
into account in computing the Company'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:
1.9.62.1 Any income of the Company 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;
1.9.62.2 In the event the agreed fair market value of
any Company 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 Company property reasonably Approved by the Members
(if different from its adjusted tax basis) pursuant to Regulations Section
1.704-1(b)(2)(iv)(g) for such Company Accounting Year; and
1.9.62.3 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 or Loss.
1.9.63 "Purchase Notice" is defined in Section 7.9.1.
1.9.64 "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 Members, and
administrative and judicial interpretations thereof.
1.9.65 "Residual Percentage" of a Member as of any relevant
time shall mean the following percentage for each Member:
AGHOP 99
AGHLLC 1%
1.9.66 "Revalued Property" is defined in Section 3.5.3.2.
1.9.67 "Shortfall Disbursement" is defined in Section 2.2.1.
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1.9.68 "Tax Matters Partner" is defined in Section 5.4 (which
references the Code).
1.9.69 "Tax Termination" is defined in Section 7.5.1.3.
1.9.70 "Terminated Member" shall mean (i) any Member that
becomes Bankrupt, (ii) any Member which has been dissolved (and which has not
been reconstituted within sixty (60) days thereafter) or (iii) any Member which
has committed a Major Default.
1.9.71 "Termination Date" shall mean the date upon which a
Member became a Terminated Member.
1.9.72 "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 Company; and (ii) the execution and delivery by the Company or any Person
holding a direct (or indirect through tiered Entities) interest in the Company
of a contract of sale, option or other agreement providing for any of the
foregoing.
1.9.73 "Transfer Restriction Termination Date" is defined in
Section 5.1.6.1.
1.9.74 "Unrepaid Capital" with respect to each Member shall
mean the Capital Contributions made from time to time to the Company by such
Member, reduced by any distributions previously made to such Member pursuant to
Section 4.1.1.
1.10 AUTHORIZED ACTS. In furtherance of its purposes, but subject to
all the other provisions of this Agreement including required Approvals of the
Members under Article 5, the Company, the Members and the Company's officers
appointed on its behalf under Section 5.5 are hereby authorized:
1.10.1 To pursue any rights of the Company 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 Company
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 Company, all on terms as shall be Approved by the Members;
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 Company,
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and to secure the same by mortgage, deed of trust, pledge or other lien on any
assets of the Company, including the Investment;
1.10.4 To borrow money on the general credit of the Company
for use in the Company 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 Members or other Persons, necessary to, in connection with or incidental
to the accomplishment of the purposes of the Company, including contracts to
obtain services and supplies with respect to the Investment and/or the Company,
and including that certain Services Agreement with AGHOP pursuant to which AGHOP
shall perform the administrative functions on behalf of the Company that
otherwise would constitute the Company's "doing business" in Texas for Texas
franchise tax purposes;
1.10.6 To issue Funding Notices calling for additional Capital
Contributions in accordance with the provisions of this Agreement;
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 Company, 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 states in which the
Company is qualified to do business; and
1.10.8 To enter into and to perform the Company's obligations
under any agreement to which it becomes a party, as Approved by the Members.
1.11 AUTHORIZED REPRESENTATIVES. The "Authorized Representatives" of a
Member that is not a natural person shall be those representatives designated by
notice to all other Members by such Member from time to time to represent such
Member in connection with the Company, unless and until replaced or removed by
notice from such Member to all Members. The written statements and
representations of an Authorized Representative for a Member that is not a
natural Person shall be the only authorized statements and representations of
such Member with respect to the matters covered by this Agreement. The written
statement or representation of any one Authorized Representative of such Member
shall be sufficient to bind such Member with respect to all matters pertaining
to the Company. The term "Approved by" or "Consented to by" or "Consent of" or
"satisfactory to" with respect to a Member that is not a natural Person means a
decision or action which has been consented to in writing by any Authorized
Representative of such Member. In order for a decision or action to be "Approved
by the Members" (or any variation thereof), the decision or action must be
Approved by at least one Authorized Representative of each Member who then
continues to have Approval rights with respect to such action or decision under
this Agreement.
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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 Members shall be deemed to have
contributed to the capital of the Company the capital contributed to the Company
by their predecessors in interest in the Company, to the extent remaining
undistributed as of the Agreement Date and shall have contributed the following
amounts in cash to the capital of the Company:
Member Capital Contribution
------ --------------------
AGHOP $20,943,450
AGHLLC 211,550
-----------
TOTAL $21,155,000
-----------
2.1.2 ADDITIONAL CAPITAL CONTRIBUTIONS. If notice is given to
all Members by any Member who is not a Terminated Member (under Section 7.9 of
this Agreement) stating that the Company requires additional Capital
Contributions, and such notice is made on a form that has been Approved by the
Members for such purpose (a "Funding Notice"), the Members shall contribute to
the capital of the Company 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 Notice may be
issued by either Member under any circumstances unless the issuance of such
notice has been Approved by the Members or otherwise is permitted to be issued
without Approval of the Members under this Agreement, and provided, further,
that no Member shall be required to issue a Funding Notice under any
circumstances without such Member'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 Member
pursuant to Section 2.1.2, each Member shall have the obligation to contribute
additional cash to the capital of the Company, 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 Member'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 Members pro rata
in proportion to their respective Funding Proportions. The Funding Notice shall
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specify the amount of each Member's share, as so determined, of any Shortfall
Disbursement required under this Section 2.2.1 Each Member 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 Member to contribute its share of such
Shortfall Disbursement, as provided in Section 2.2.2.
2.2.2 If any Member 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 Member"),
then, as the exclusive remedies of the Company and the other Member (the
"Non-Defaulting Member"), the Non-Defaulting Member shall have the following
remedies, exercisable by notice from the Non-Defaulting Member to the Defaulting
Member (i) to cause the Company to ▇▇▇ the Defaulting Member for actual (and not
consequential) damages that shall be limited to the portion of the Defaulting
Member'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 Member's Affiliates to lend), to
the Defaulting Member or to the Company, as Approved by the Non-Defaulting
Member, the amount of such Capital Contribution that was not made timely by the
Defaulting Member, or (b) to elect to contribute the amount of such Capital
Contribution that was not made timely by the Defaulting Member, in which case
the amount so contributed shall be treated as Capital Contributions of the
Non-Defaulting Member for all purposes. Upon the failure of the Non-Defaulting
Member 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 Company and the
Defaulting Member given within thirty (30) days after funding the share of the
Capital Contribution not made by the Defaulting Member, 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 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 Member chooses to lend
(or to cause its Affiliates to lend) the amount of the Capital Contribution not
made by the Defaulting Member, the loan shall be a recourse loan to the Company
or to the Defaulting Member, 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 Member (and not to the Company) only if the Non-Defaulting Member (or
the Non-Defaulting Member's Affiliate) has paid such amount directly to the
Company and specifies, by notice to the Members given within five (5) days after
such funding, that the loan is being made to the Defaulting Member, in which
case said amount shall be deemed to have been contributed to the Company by the
Defaulting Member for all purposes. Repayment of any such loan to the Defaulting
Member shall be effected by the Members causing the Company to pay directly to
the Non-Defaulting Member all distributions otherwise payable to
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the Defaulting Member under this Agreement as and when payable, instead of
making such distributions to the Defaulting Member (with such distributions
being deemed for all purposes to have been made to the Defaulting Member and
then paid by the Defaulting Member to the Non-Defaulting Member or its
Affiliates, as the case may be). Repayment of any such loan to the Company 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 Member shall have the right (i) to withdraw such Member's Capital
Contribution or to demand or receive the return of a Capital Contribution or to
make any claim to any portion of Company 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
Member shall have personal liability to make any Capital Contribution.
2.2.5 A deficit Capital Account of a Member (or of a partner
or member of a Member) shall not be deemed to be a liability of such Member (or
of such partner or member) or an asset or property of the Company (or any
Member). Furthermore, no Member shall have any obligation to the Company or any
other Member for any deficit balance in such Member's Capital Account.
2.3 MEMBER LOANS. The Members may lend money to the Company
for any Company purposes on terms that are Approved by the Members from time to
time.
ARTICLE 3
INCOME TAX ALLOCATIONS
3.1 ESTABLISHMENT AND MAINTENANCE OF CAPITAL ACCOUNTS; PARTNERSHIP
STATUS. The Members shall establish and cause the Company to maintain a single
Capital Account for each Member which reflects such Member's Capital
Contributions to the Company. Each Member's Capital Account shall also reflect
the allocations and distributions made to such Member 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 Company 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 Members in
proportion to their respective Funding Proportions. The Members intend that the
Company 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
Company
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Accounting Year shall be allocated prior to reducing Capital Accounts by any
distributions with respect to such Company Accounting Year.
3.2.1 LOSS ALLOCATIONS. For each Company Accounting Year from
the Agreement Date until the termination of the Company, Loss from Company
operations shall be allocated among the Members in the following order of
priority:
3.2.1.1 First, among the Members as necessary to
cause the portion of each Member's Capital Account balance exceeding such
Member's Unrepaid Capital, if any, to be in proportion to the Members'
respective Residual Percentages;
3.2.1.2 Second, as necessary to cause each Member's
Capital Account balance, determined after adjusting the Members' Capital
Accounts for the allocations made pursuant to Section 3.2.1.1 for the Company
Accounting Year, to equal such Member's Unrepaid Capital;
3.2.1.3 Third, as necessary to cause each Member's
Capital Account balance, determined after adjusting the Members' Capital
Accounts for the allocations made pursuant to Sections 3.2.1.1 and 3.2.1.2 for
the Company 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 Members in proportion to their respective Residual Percentages.
3.2.2 PROFIT ALLOCATIONS. For each Company Accounting Year,
Profit from Company operations shall be allocated in the following order of
priority:
3.2.2.1 First, among the Members as necessary to
cause the Capital Account balance of each Member to equal such Member's Unrepaid
Capital;
3.2.2.2 Second, after giving effect to the
allocations made pursuant to Section 3.2.2.1, among the Members as necessary to
cause the portion of each Member's Capital Account balance exceeding such
Member's Unrepaid Capital to be in proportion to the Members' respective
Residual Percentages; and
3.2.2.3 Third, among the Members 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 Company for tax purposes, and shall be
allocated as a part of Profit or Loss pursuant to Section 3.2.
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3.3.2 RULES OF CONSTRUCTION.
3.3.2.1 For purposes of applying Section 3.2 for a
Company Accounting Year, a Member's Capital Account balance shall be deemed to
be increased by such Member's share of Company Minimum Gain and Member
Nonrecourse Debt Minimum Gain remaining at the close of such Company 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 Members pursuant to
any subsection of Section 3.2 to cause every Member's Capital Account balance to
equal the entire Capital Account balance described in such subsection with
respect to such Member, such Profit or Loss (including Gain or Loss on
Disposition) available to be allocated among the Members pursuant to said
subsection shall be allocated in proportion to the amounts thereof that would
have been allocated to each Member pursuant to such subsection if there had been
sufficient amounts thereof to fully satisfy the requirements of such subsection
with respect to every Member.
3.3.2.3 Except as is otherwise provided in this
Article 3, an allocation of Company taxable income or taxable loss to a Member
shall be treated as an allocation to such Member 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.
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 Member to the extent that the Member 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 Member, but
which cannot be allocated to such Member because of the application of the
immediately preceding sentence, shall instead be allocated to the other Members.
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 Member 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 Company's Profits, including Gain on Disposition,
and both gross income and gain for the taxable year) shall be allocated to such
Member in an amount and manner sufficient to eliminate as quickly as possible
the Adjusted Capital Account Deficit.
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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 Member's
share of Company Minimum Gain and/or Member Nonrecourse Debt Minimum Gain during
a Company taxable year, such Member 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 Members pursuant to Section 3.2, 3.3 or 3.4, such portion of
the taxable income of the Company 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 Members in the proportion
which (i) the amount of depreciation previously allocated to each Member bears
to (ii) the total of such depreciation allocated to all Members. This Section
3.5.1 shall not alter the amount of allocations among the Members 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 Member'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 Members during such 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 Members.
3.5.3 MANDATORY ALLOCATIONS -- SECTION 704(c) AND MEMBER
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 Company 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 Members; and (ii) all tax deductions and taxable losses of the Company
that, pursuant to Regulations Section 1.704-2(i), are attributable to a Member
Nonrecourse Debt for which a Member (or a Person related to such Member 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 Member 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
Member to the capital of the Company or which has been revalued for Capital
Account
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purposes pursuant to Regulations Section 1.704-1(b)(2)(iv) and which is required
or permitted to be allocated to such Member 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
Members. 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 Member'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 COMPANY INDEBTEDNESS. Except for
arrangements expressly described in this Agreement (including loans described in
Section 2.2.2.1 and/or 2.3), no Member shall enter into (or permit any Person
related to the Member to enter into) any arrangement with respect to any
liability of the Company that would result in such Member (or a Person related
to such Member 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 Members. To the
extent a Member is permitted to guarantee the repayment of any Company
indebtedness under this Agreement, each of the other Members shall be afforded
the opportunity to guarantee such Member's pro rata share of such indebtedness,
determined in accordance with the Members' respective Funding Proportions. If a
loan is to be made to the Company and such loan is to be guaranteed by any
Members (which guaranty by a Member shall occur only upon the Approval of such
Member), then, as between such Approving Members, such liability shall be shared
in proportion to their respective Funding Proportions (and, if joint and several
liability of such Members shall be required by the lender under a Company
borrowing that has been Approved by the Members, each such Approving Member
shall make contributions to the Company when requested by any Member to do so,
which amounts shall immediately be distributed to such other Approving Members,
as necessary for such Approving Members to bear the economic risk of loss with
respect to any such borrowing 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 Company under the effective date rules
applicable to such successor provision or the Members otherwise so reasonably
Approve under applicable elections contained in such Regulations.
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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 "Member Nonrecourse Debt Minimum Gain" means
an amount, with respect to each Member Nonrecourse Debt, equal to the Company
Minimum Gain that would result if such Member Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(2).
3.5.6.4 "Member 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 "Member Nonrecourse Deductions" has the
meaning ascribed to the term "Partner Nonrecourse Deductions" set forth in
Regulations Section 1.704-2(i).
3.5.6.6 "Company Minimum Gain" has the meaning
ascribed to the term "Partnership Minimum Gain" 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 Members 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 Members 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 Members if and to the extent necessary
to produce such result and (ii) taxable income and taxable loss of the Company
for prior open years (or items of gross income and deduction of the Company for
such years) shall be reallocated among the Members 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 Members. 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
Member's interest in the Company, the Company shall elect to adjust the basis of
the Company's assets under Code Section 754 if Approved by the Members. The
transferor or transferee of a Company interest shall pay all costs of preparing
and filing all instruments or
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documents necessary to effectuate such election if made, unless otherwise
Approved by the Members.
3.8 GENERAL ALLOCATION RULES. All Profit and Loss of the Company
(including Gain or Loss on Disposition) shall be allocated with respect to each
Company 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
Members shown on the records of the Company to have been Members as of the last
day of the Company Accounting Year for which such allocation is to be made,
except that, if a Member sells or exchanges its interest in the Company or
otherwise is admitted as a substituted Member, the Profit or Loss and Gain or
Loss on Disposition shall be allocated between the transferor and the transferee
by taking into account their varying interests during the Company 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
Members.
3.9 SHARING OF COMPANY NONRECOURSE DEBT. Throughout the term of the
Company, the nonrecourse debt of the Company (other than Member Nonrecourse
Debt) shall be allocated for tax purposes among the Members in accordance with
their then respective Residual Percentages.
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 Member
to the Company shall be the fair market value of the asset on the date of the
contribution, as reasonably Approved by the Members.
3.10.2 The Gross Asset Values of all Company assets shall be
adjusted to equal the respective fair market values of the assets, as reasonably
Approved by the Members:
3.10.2.1 If the Members reasonably Approve that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Members in the Company, as a result of (i) the acquisition of
an additional interest in the Company by any new or existing Member in exchange
for more than a de minimis capital contribution; or (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company property as
consideration for an interest in the Company; and
3.10.2.2 As of the liquidation of the Company within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g).
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3.10.3 The Gross Asset Value of any Company asset distributed
to any Member shall be the gross fair market value of the asset on the date of
distribution as reasonably Approved by the Members (less any liabilities assumed
by the distributee Member or to which such asset is subject as of the time of
distribution).
3.10.4 The Gross Asset Values of Company 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 Members
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.
ARTICLE 4
INVESTMENT LOAN REPAYMENTS
AND DISTRIBUTIONS
4.1 NET AVAILABLE CASH. The Members shall, at the end of each quarter,
determine the amount of Net Available Cash for such quarter (or more frequently,
if Approved by the Members). 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 Members) after first
repaying any loans to the Company from the Members 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 Members have loans which have been outstanding for equal periods,
repayment of such loans shall be made pro rata, in proportion to such Members'
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 Members until
each Member has received distributions pursuant to this Section 4.1.1 in an
amount equal to such Member's Unrepaid Capital; such distributions to be made
pro rata, in proportion to the then respective aggregate Unrepaid Capital of
each Member; and
4.1.2 Next, the balance shall be distributed to the Members,
pro rata, in proportion to the Members' then respective Residual Percentages.
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4.2 PROCEEDS AND DISTRIBUTIONS IN LIQUIDATION. The proceeds received by
the Company in connection with the liquidation and winding up of the Company
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 Company
(including making the repayments of any unpaid Member 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 Company property or
assets; and
4.2.3 The balance, if any, shall be distributed to the Members
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 to the Members shown on the records of the Company to have been Members
on the date of the distribution. All distributions, upon request by a Member,
shall be made by wire transfer in immediately available funds to such Member's
account specified in such request. Distributions of Net Available Cash made to a
Member shall be deemed to be advances on account of such Member'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 Members for the Company Accounting Year in respect of which they were
made and for the term of the Company.
4.4 SOURCE OF DISTRIBUTIONS. Each Member shall look solely to the
assets of the Company for the return of its Capital Contributions and its share
of distributions and shall have no recourse upon dissolution or otherwise
against the Company, the Members or the Liquidator. No holder of an interest in
the Company 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 Company.
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ARTICLE 5
MANAGEMENT; DUTIES AND POWERS OF MEMBERS;
RIGHTS AND DUTIES OF MEMBERS
5.1 MANAGEMENT OF BUSINESS; EXECUTION AUTHORITY; OFFICERS; MEMBER
OBLIGATIONS; REIMBURSEMENTS; MAJOR DECISIONS; RETAINED APPROVALS.
5.1.1 MANAGEMENT.
5.1.1.1 MEMBER MANAGEMENT. The Company shall be
Member managed and shall have no managers. Except as otherwise provided in this
Agreement (including the right of the Members to Approve Major Decisions under
Section 5.1.5), any Member who is not a Terminated Member may supervise and/or
undertake the business of the Company and make decisions affecting the
day-to-day operations of the Company and the Investment, including the acts to
be taken by the Company as the Lessor under the Lease. Except to the extent the
Approval of a Member is expressly required under this Agreement, no consent or
Approval of the other Member shall be required with respect to any action or
decision of such Member with respect to Company matters. No Member shall receive
any compensation for serving as a Member or undertaking any action on behalf of
the Company. Each Member shall cause each of its Authorized Representatives to
devote as much time as is reasonably necessary to fulfill the Member's
obligations under this Agreement.
5.1.1.2 EXECUTION AUTHORITY. The signature of either
Member, the President of the Company or any Vice-President of the Company
appointed under Section 5.1.4.1 shall be required on all contracts of the
Company. The execution and delivery by any Member, the President of the Company
or any Vice President of the Company of any document shall be sufficient to bind
and shall be binding upon the Company for all purposes, and third parties shall
be entitled to rely on the authority of any Member, the President or any Vice
President of the Company to take any action on behalf of the Company.
Notwithstanding the foregoing, (i) neither Member nor any officer of the Company
shall take any action requiring Approval of the Members under this Agreement
unless the provisions of this Agreement concerning such Approval have been fully
satisfied, and (ii) no officer or employee of the Company shall take any action
on behalf of the Company unless such action either has been Approved by the
Members or is both (a) permitted to be taken by any Member without the Approval
of the other Member under this Agreement and (b) is directed to be taken by such
officer or employee by a Member who is not a Terminated Member under Section
7.9. Either Member shall have the authority and responsibility, at Company
expense, of supervising the Company's employees, if any.
5.1.1.3 [INTENTIONALLY LEFT BLANK]
5.1.2 COMPENSATION; REIMBURSEMENT. No compensation shall be
payable by the Company to any Member or to an Affiliate of any Member unless
permitted pursuant to the AGHC Prospectus and Section 5.2. Unless reimbursement
is prohibited under
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Section 5.5 or another provision of this Agreement, the Company shall reimburse
the Members for their actual and reasonable out-of-pocket expenses incurred in
connection with Company business to the extent such Member 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 Members shall cause to be prepared, at Company Expense, such
budgets with respect to the Company or the Investments as shall be Approved by
the Members or as shall be required by Persons making loans to the Company,
either Member or their Affiliates. Reserves shall be established for the Company
only to the extent reasonably Approved by the Members, taking into account the
requirements of lenders to the Company, either Member or their Affiliates under
loan documents that are binding on the Company.
5.1.4 POWERS OF THE MEMBERS. Each Member who is not a
Terminated Member shall have full power and shall have the obligation without
the necessity of obtaining the Approval of any other Member (except as otherwise
set forth in this Agreement), and at the expense of the Company, to take all
actions required to conduct the day-to-day operations of the Company and
accomplish the purposes stated in this Agreement, and, subject to the
availability of Company funds, to implement the Major Decisions and other
decisions that have been Approved by the Members, and to pay the expenses of the
Company (or cause them to be paid) when due. Neither Member (nor any officer)
shall have the power to implement any Major Decision unless such Major Decision
has been Approved by the Members, as set forth in Section 5.1.6.2 hereof.
5.1.4.1 OFFICERS AND EMPLOYEES; DELEGATION OF
AUTHORITY; BONDING/O&D INSURANCE. The Company shall have its own offices and
administrative and operating employees, and shall bear the cost thereof, to the
extent Approved by the Members from time to time. The Company shall have such
officers (including a President and one or more Vice Presidents) if and to the
extent Approved by the Members from time to time. At Company expense, each
Member who is not a Terminated Member shall have the authority to hire and
discharge Company employees (including Company officers) as the Members shall
reasonably Approve. The compensation arrangements for all employees shall be as
Approved by the Members from time to time. The President and any Vice President
of the Company shall have the authority described in Section 5.1.1.2. Fidelity
bonds, in amounts and on terms Approved by the Members, may be obtained at
Company expense for Company employees, and the Company may obtain officer and
director (or comparable) insurance for the Company's officers and other
employees on such terms, and in such amounts, as shall be Approved by the
Members from time to time. The Members may delegate the authority to take any
action permitted under this Agreement to either of the Members or to any Company
officer, employee or agent, in each case to the extent Approved by the Members,
as evidenced by a written document that has been executed by all Members who are
not Terminated Members.
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5.1.4.2 NON-EXCLUSIVITY. No Member shall be required
to conduct the Company's day-to-day operations and implement Major Decisions as
its sole and exclusive function, and it and its Affiliates may have other
business interests and may engage in other activities in addition to those
relating to the Company, without having or incurring any obligation to offer any
interest in such activities to the Company or any Member, except as provided in
the AGHC Prospectus, and the Members shall be obligated to devote, and cause
controlling persons to devote, only so much of their time to the Company's
business as shall be reasonably required to meet the Members' 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 Members (except as otherwise required in case
of Emergency or Force Majeure); provided, however, that a Member's Approval
shall not be required after such Member 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
Company;
5.1.5.2 Any act which would make it impossible to
carry on the ordinary business of the Company, except the liquidation of the
Company under the circumstances permitted in Article 8, or the sale, exchange or
other disposition of the Investment or any other Company assets by the Company
that has been Approved by the Members or otherwise is permitted under this
Agreement;
5.1.5.3 Any action which would cause the Company to
become an entity other than a Delaware limited liability company;
5.1.5.4 Changing the purposes of the Company;
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
Member;
5.1.5.9 Except as provided in Section 3.5.4, entering
into any agreement (i) which would cause any Member to become personally liable
on
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or in respect of or to guarantee any indebtedness of the Company or (ii) which
is not nonrecourse to the Members;
5.1.5.10 Causing the Company to redeem or repurchase
all or any portion of the interest of a Member except 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 Company to be
merged with any other entity;
5.1.5.13 Causing or permitting the Company to make
loans to, or enter into any contract with any Member or any Affiliate of a
Member, other than contracts permitted under Section 5.2,
5.1.5.14 Dissolving, terminating or liquidating of
the Company, 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 Members or is authorized
to be taken without further Approval under this Agreement (upon the liquidation
of the Company, the terms of all dispositions shall require only the reasonable
Approval of each Member);
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 Company any guarantee or other agreement whereby the
Company is or may become liable for any obligations of any other Entity; or
borrow money from a Member 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 Member;
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5.1.5.21 Modify or refinance any indebtedness of the
Company or select a lender to make loans to the Company;
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 Company under Article 8, or make any Company expenditure other than as
Approved by the Members except as otherwise permitted or authorized by this
Agreement (including a budget that has been Approved under Section 5.1.3 or 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 Members 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 Members to
the Company as substituted Members or enter into financing that participates in
profits; or permit any Transfer of any interest in the Company or of ownership
interests in a Member, to the extent Approval of the Members for such Transfer
is required under this Agreement;
5.1.5.27 Confess any judgment against the Company or
cause the Company to file for Bankruptcy or other relief from creditors;
5.1.5.28 Establish insurance requirements for the
Company;
5.1.5.29 Make tax elections on behalf of the Company
and file tax returns for the Company (reasonable Approval only);
5.1.5.30 Establish or release reserves for use by the
Company except pursuant to a budget Approved by the Members 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 Members, 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 Members under this Agreement.
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5.1.6 RETAINED APPROVALS: PROCEDURE FOR MEMBER 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 Member under Section 7.9, the Terminated Member 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 Member
as a Member, provided, however, that the provisions of this clause (c) shall
terminate if and when the Company has received an opinion of Independent Tax
Counsel that the termination of such Approval rights would not cause the Company
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 Member 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 Member's
interest is diluted by the admission of the third party investors, any new
Member or any Transfer described therein, and (3) with respect to participating
financing, if Members' 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 Member) to admit a new Member if the Admission is
permitted under preceding clause (i) without the Terminated Member's Approval,
and (iii) Section 5.1.5.9 except to the extent the Terminated Member 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
5.1.6.2 APPROVAL PROCEDURE. Notice of the request for
a Member's Approval of any matter for which such Approval is required pursuant
to this Agreement shall be delivered by the requesting Member to each of the
then Authorized Representatives, together with the requesting Member's summary
and analysis of any other matter for which such Approval is requested and the
requesting Member'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 Member given within ten (10) days
following delivery of such notice. Failure of any Authorized Representative to
timely respond by written notice to the requesting Member, 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
Member shall have the right to Approve any action if such Member 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 Members, Affiliates of
any Member may provide property management services, accounting services
construction services, office administration, and/or document control services
to the Company, subject to the following conditions: (i) the fees for such
services must be no greater than the fees charged
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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; MEETING.
5.3.1 GOVERNMENTAL REPORTS; MEETING. The Members shall, at
Company 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 Members. Such reports shall be prepared on the accounting or reporting basis
required by such regulatory bodies. The Members shall be provided with a copy of
any such report. No meeting of the Members shall be required unless requested by
any Member upon notice to all Members, which notice may be given by any Member
at any time. All Members shall be given written notice of any meeting of the
Company at least twenty (20) days prior to any such meeting by the Member
requesting such meeting. Any meetings shall be held at the record-keeping office
of the Company or at any other reasonably convenient location within the United
States as the Members may reasonably Approve and specify in such notice.
5.3.2 ACCESS; AUDIT. The Members shall permit any Member to
review and copy, during normal business hours at the office of the Company, all
Company financial records and information. The records and information of the
Company shall be audited at Company expense by auditors to be selected upon the
Approval of the Members. The Members shall maintain (at the office of the
Company) reports required or otherwise prepared and delivered hereunder, or by
law or any contract to which the Company is a party, copies of which shall be
furnished to each Member when available, at the Company's expense.
5.3.3 FINANCIALS AND STATUS REPORTS. At Company expense, the
Members shall use reasonable efforts to cause the following to be issued to the
Members:
(i) annual financials shall be prepared by the Partnership's
independent certified public accountants at Company 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 Member 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 Company expense with all powers granted to a
tax matters partner under the Code. Each Member shall give prompt notice to each
other Member of any and all notices it receives from the Internal Revenue
Service (or any other taxing authority) concerning the
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Company, 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 Company's federal, state or local income tax
returns. At Company expense, the Tax Matters Partner shall furnish each Member
with status reports regarding any negotiation between the Internal Revenue
Service (or other taxing authority) and the Company promptly after any material
new development. The Tax Matters Partner shall use its reasonable efforts to
cause the Company's accountants to prepare and file on a timely basis, with due
regard to extensions (if such extensions are reasonably Approved by the Members)
all tax and information returns which the Company may be required to file. No
tax or information return shall be filed unless reasonably Approved by the
Members. The Members shall cause the Company's accountants to prepare and
deliver, at Company expense, to each Member on a timely basis an information
reporting return (K-1) reflecting such Member's distributive share of all
income, gain, loss, deductions, allowances or credits of the Company for each
Company Accounting Year, as computed pursuant to Article 3.
5.5 INDEMNIFICATION AND LIABILITY OF MEMBERS AND COMPANY EMPLOYEES.
5.5.1 No Member or Company officer or other employee shall be
liable, responsible or accountable in damages or otherwise to any of the Members
or the Company for any act or omission performed or omitted by it in good faith
on behalf of the Company 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
Members and (ii) in the best interests of the Company, the Members or their
Affiliates, except for Major Defaults (as defined in Section 5.5.3) and damages
for a breach 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
Company.
5.5.2 Except with respect to a Member's Major Defaults
described in Section 5.5.3 and a Member'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 Members, the
employee's Major Default, or the employee's breach of any employment agreement
with the Company), the Company shall indemnify and hold harmless each Member 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 Member or employee (including reasonable attorneys' and paralegals'
fees and court costs) in connection with, due to or arising out of (i) such
Member's (or a partner or a member of such Member) serving as a Member of the
Company, (ii) such Member's serving as an employee of an Affiliate of a Member
or (iii) such employee serving as an employee of the Company, in each case so
long as such Member (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 Member under this Agreement, or to such
employee by the Members, as the case may be, and such actions did not constitute
a Major Default or a breach
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of this Agreement under Section 9.2 or, in the case of an employee, a breach of
any employment agreement with the Company.
5.5.3 Each Member shall (and each employee shall be required
to) indemnify and hold harmless each other Member, employee and the Company 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 Members or the Company (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 Member 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
Company.
5.6 OPPORTUNITY TO DEFEND. In any case where indemnity is sought by a
Member (or an employee pursuant to the principles set forth in this Section
5.5), such Member shall (and such employee shall be required to) give notice of
the request for indemnification to the Company and the other Members 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 Company expense and subject to the reasonable Approval of
the Members.
5.7 LIMITATION OF LIABILITY. Each Member'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 Member shall be liable
for the obligations of such Member to the Company or the other Members under any
circumstances other than a Major 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 Member shall have any priority over any other Member as to the return of its
Capital Contributions or as to distributions or allocations of Profits or Losses
or other tax items.
5.9 SECTION 754 ELECTION. The Members shall have the right to determine
when to make appropriate tax elections under the Code except with respect to a
Section 754 election under the Code which shall be made by the Company.
ARTICLE 6
BOOKS, RECORDS AND BANK ACCOUNTS
6.1 BOOKS AND RECORDS; ACCOUNTING METHOD. At Company expense, the
Members shall cause to be kept (at the office of the Company referred to in
Section 1.3.2) accurate, just and true books of account, in which shall be
entered fully and accurately each
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and every transaction of the Company. 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 Company'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 Members shall reasonably Approve. The Company's
financial statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied.
6.2 BANK ACCOUNTS. The funds of the Company shall be deposited in the
name of the Company, in such bank account or accounts as the Members shall
reasonably Approve. Such funds shall be invested by the Members in such high
quality, short term instruments as shall be reasonably Approved by the Members
(which may or may not bear interest as the Members shall Approve). The
individual signatories on all Company accounts shall be appointed and Approved
by the Members from time to time. The signature of any such appointee shall be
sufficient to effect withdrawals if so Approved by the Members.
ARTICLE 7
TRANSFERS OF COMPANY INTERESTS
7.1 RESTRICTIONS ON TRANSFER. No Member shall be permitted to Transfer
all or any part of its interest in the Company 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 Member
may Transfer all or part of its interest in the Company, as follows:
7.1.1 To the Company or another Member or a partner, member or
shareholder or Affiliate of a Member; and
7.1.2 Any other Transfer which is Approved by the Members
(excluding any Member that is a Terminated Member).
The following shall be conditions precedent to the effectiveness of any Transfer
of any interest in the Company 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 Company; (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 Company instruments of assumption and
security reasonably Approved by the Members, 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.
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7.2 TAKE-ALONG RIGHTS. There shall be no right of any other Member to
participate in any Transfer permitted by a Member under this Agreement.
7.3 BANKRUPTCY OR DISSOLUTION OF MEMBERS. The Bankruptcy or dissolution
(without reconstitution within sixty (60) days thereafter) of any Member shall
dissolve the Company 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 Member, such Member
shall become a Terminated Member under Section 7.9, and the trustee in
Bankruptcy, receiver or other legal representative of the Bankrupt Member or
other legal representatives of the dissolved Member, shall have all the rights
of an assignee of the Member, including the same right (subject to the same
limitations) as the Bankrupt or dissolved Member would have had under the
provisions of Section 7.1 to Transfer its interest in the Company, subject to
the substitution rules of Section 7.4 and the provisions of Section 7.9.
7.4 SUBSTITUTION OF MEMBER. Subject to the restrictions on Transfers
and Approval rights of the Members as set forth in Section 7.1 and the
provisions of Section 7.5, the assignee of any Transfer by a Member (a "Member
Assignee") shall become a substitute Member only if (i) the assignor Member so
provides in an instrument of assignment, (ii) the Member 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 Member 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 Member
so provides, the Member Assignee agrees to be bound as aforesaid, and, if
applicable under preceding clause (iii), the Members so Approve such
substitution, the Member Assignee shall become a substitute Member upon payment
to the Company of all costs and expenses of reviewing the instrument of
assignment, if appropriate, and, if required by law, an amendment to the
Articles to reflect such substitution. In such event, if and as required by law,
the Members shall prepare or cause to be prepared an amendment to the Articles
to be signed by the Members and, to the extent required, by the Member Assignee.
The Members shall attend to the due execution and filing of such amendment to
the Articles, if such amendment is required. Unless named in this Agreement, or
unless admitted to the Company as provided in this Agreement, no Person shall be
considered a Member, and the Company, each Member and any other Persons having
business with the Company need deal only with Members so named or so admitted
and shall not be required to deal with any other Person by reason of a Transfer.
A Member Assignee of an interest in the Company who is not admitted as a
substitute Member 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 Member for any purposes and shall have none of the rights of a
Member 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 Member's
ability to
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Transfer all or any portion of its interest as a Member in the Company 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 Company, or such Member 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 Company, the Company shall have
received an opinion of counsel, reasonably Approved by the Members, to such
effect (unless the requirement that the Company receive such legal opinion is
waived by the Approval of the Members);
7.5.1.2 No Member shall be permitted to Transfer any
portion of its Company interest or take any other action which would cause the
Company 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 Member shall be permitted to Transfer all
or any portion of its Company interest or to take any other action (including,
in the case of any Member which is a corporation, limited liability company or
partnership or a partner or member of a partnership or limited liability company
which is a Member, 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 Company as a partnership
within the meaning of Code Section 708(b)(1)(B) (a "Tax Termination"), without
the Approval of the Members;
7.5.1.4 Unless arrangements concerning withholding
are reasonably Approved by the Members (if such withholding is required of the
Company), no Member shall be permitted to Transfer all or any portion of its
interest in the Company 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
7.5.1.5 No Member shall be permitted to Transfer all
or any portion of its Company interest if such Transfer will (i) cause the
assets of the Company 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 Company.
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.
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Each Member shall indemnify, defend and hold the Company and
each other Member, 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 Company (including any Transfer
of an interest in any partners, members or shareholders of the indemnifying
Member, 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 Company and its Members with those securities
laws in connection with any previous Transfer of an interest in the Company.
Should the preceding indemnity be unenforceable to any extent, then, to such
extent the Member otherwise required to so indemnify the Company and the other
Member 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 Members
acknowledge that the relationship of each Member to the other Members is a
personal relationship and that the restrictions on the power of each Member to
withdraw or Transfer its interest in the Company, 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 Members in the Company and, under current law, the Transfer
restrictions help preserve the Company's status as a partnership for tax
purposes, and (ii) were a material inducement to the other Members entering into
this Agreement, and shall be enforceable notwithstanding the Bankruptcy of any
Member or any applicable restrictions on alienation.
7.8 REPRESENTATIONS. WARRANTIES AND COVENANTS.
Each Member hereby represents and warrants to each of the
other Members as follows:
7.8.1 Such Member, 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;
7.8.2 This Agreement has been duly authorized, executed and
delivered by such Member and constitutes the valid and legally binding agreement
of such Member, enforceable in accordance with its terms against such Member,
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
Member and the performance of its duties and obligations hereunder do not result
in a breach
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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 Member 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 Member is
subject;
7.8.4 Such Member is acquiring its interest in the Company for
investment purposes and without a view toward its resale or distribution;
7.8.5 Such Member recognizes that Battle ▇▇▇▇▇▇ LLP ("BFLLP")
serves as special counsel to Affiliates of both of the Members, and each Member
hereby waives all potential conflicts of interest resulting from BFLLP's
representation of the Members and the Company hereunder, of Affiliates of
AGHLLC, AGHC and AGHOP in other transactions, and of the Company in the future
on matters for which BFLLP is retained as counsel by the Company;
7.8.6 Such Member is aware that transfers of interests in the
Company and within such Member are not permitted except in the limited
circumstances expressly as provided in Article 7 hereof and that an investment
in the Company is a long-term investment, without liquidity;
7.8.7 None of the other Members is acting as the
representative or agent or in any other capacity, fiduciary or otherwise, on
behalf of such Member in connection with the Company, or the other matters
referred to in this Agreement;
7.8.8 Such Member understands that it may lose its Approval
rights (and be subject to having such Member's interest purchased by the Company
for its appraised fair market value in certain circumstances) under Section 7.9
if the Member becomes a Terminated Member, and that it has waived its rights to
a trial by jury in any dispute concerning this Agreement or the Company under
Section 9.4; and
7.8.9 Such Member understands that the Company and its Members
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
Company be registered under federal or state securities laws.
7.9 TERMINATED MEMBER
7.9.1 When a Member becomes a Terminated Member, (i) such
Member shall automatically cease to have any Approval or voting rights under
this Agreement or with respect to the Company, except as provided in Section
5.1.6.1, (ii) upon the election of the Member who is not the Terminated Member
(the "Electing Member"), given by notice from the Electing Member to the
Terminated Member (a "Purchase Notice") at any time after a Member becomes a
Terminated Member, sell the Terminated Member's interest in the
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Company to the Company (or to the other Member 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 Member shall notify the Terminated Member in writing of
its election (exercisable at any tune after a Member becomes a Terminated
Member) under clause (ii), above, and (iii) the other provisions applicable by
reason of becoming a Defaulting Member (including Sections 7.9.5 and 8.1.1)
shall apply.
If a Purchase Notice has been given under clause (ii) above, the
Electing Member and the Terminated Member shall attempt to agree upon the
Buy-Out Price of the Terminated Member's interest in the Company If such
agreement is not reached within thirty (30) days after the notice of election is
given, the Terminated Member, on the one hand, and the Electing Member, 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 Company if the Company 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
Company and 50 % by the Terminated Member. The Buy-Out Price shall equal the
amount the Terminated Member would receive under Section 4.2.3, if all of the
assets of the Company were sold to a third party for the Appraised Value and the
Company were liquidated, after withholding therefrom any damages determined to
be payable by the Terminated Member under Section 5.5.3 by reason of the
Terminated Member's Major Default for all periods. If the Company redeems the
Terminated Member, there shall be no discount in the Buy-Out Price for any
encumbrances to which such redeemed interest is subject, but the Company shall
apply the proceeds of such redemption to satisfy such encumbrances instead of
making distributions thereof to the Terminated Member to the extent required by
law (such distributions being deemed for all purposes to have been made to the
Terminated Member by the Company and then paid by the Terminated Member to
satisfy such encumbrances) If the interest of the Terminated Member is purchased
by the other Member (or its designee), and not by the Company, pursuant to
Section 7.9 4, the Buy-Out Price for the Terminated Member's interest as
determined above shall be reduced to the extent the other Member or its designee
acquires the Terminated Member'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 Electing Member may elect, in its sole
and absolute discretion, by notice to the Terminated Member, to rescind any
notice pursuant to this Section 7.9.1, in which event the right to elect to
cause the Terminated Member to sell its interest to the Company or to the other
Member (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.
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7.9.2 The purchase and sale of the Terminated Member's
interest in the Company 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 Member and the Electing
Member or by appraisal), at the offices of the Company, or at such other time
and place as may be agreed upon by the Terminated Member and the Electing Member
At the closing, the Terminated Member shall execute and deliver to the Company
(or the Electing Member or its designee, as appropriate) such instruments of
assignment, conveyance and transfer as the Electing Member(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
Member 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 Company shall indemnify
and hold the Terminated Member harmless from and against all liabilities of the
Company arising from acts taken or omitted to be taken by the Company after the
date on which the closing occurs of the sale of the Terminating Member's
interest to the Company (or to the Electing Member or its designee, as
appropriate).
7.9 4 The Company shall fund the purchase of the Terminated
Member's interest pursuant to this Section 7.9 by borrowings or, if the
remaining Member so Approves, by additional Capital Contributions from the
remaining Member, such borrowings or Capital Contributions to occur when needed
to make the required payments of the Buy-Out Price. If the remaining Member so
Approves, the interest of the Terminated Member shall be purchased by such
remaining Member (or its designee, which designee may be admitted as a Member
hereunder upon the date of the closing of the purchase of the Terminated
Member's interest in order to avoid a termination of the Company).
7.9.5 The provisions of this Section 7.9 have been agreed to
by the Members for the reasons set forth in Section 7.7.
ARTICLE 8
TERM, DISSOLUTION AND TERMINATION
8.1 EVENTS OF DISSOLUTION. The Company shall continue until December
31, 2046, or such later date as is Approved by the Members; 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 Company being made in
writing upon the Approval of the Members other than any Terminated Member;
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44
8.1.2 The sale for cash, exchange or other disposition of all
or substantially all of the assets of the Company; or
8.1.3 The Bankruptcy or dissolution (without reconstitution
within sixty (60) days thereafter) of any Member, unless the Company is
reconstituted and continued as provided in Section 8.4.
8.2 LIMITATION ON DISSOLUTION. Until the dissolution of the Company
otherwise occurs, neither Member shall voluntarily retire, resign or withdraw
from the Company, take any step voluntarily to dissolve itself or voluntarily
cause a dissolution of the Company, except as provided in Section 8.1.1.
8.3 LIQUIDATION AND WINDING UP.
8.3.1 If the Company is dissolved for any reason and is not
reconstituted pursuant to Section 8.4.1, the Members who are not Terminated
Members (they, collectively, or any other Person empowered to liquidate the
Company under this Section 8.3, the "Liquidator") shall commence to wind up the
affairs of the Company and to liquidate and sell its assets as reasonably
Approved by the Members as soon as is practicable thereafter A third-party
liquidator may be appointed as the Liquidator if Approved by the Members. Any
Liquidator other than the Members shall have sufficient business expertise and
competence to conduct the winding up and termination of the business of the
Company as it has theretofore been conducted or (subject to the limitations
hereinafter set forth) which the Company may thereafter enter into. No
Liquidator who is a Member shall be paid any compensation or fee for conducting
the liquidation of the Company.
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 Company shall continue to share income and losses during the period of
liquidation in accordance with Article 4
8.3.3 If a Member or an Affiliate of a Member desires to
purchase any of the Company's remaining assets, the price, terms and conditions
of such purchase shall be subject to the Approval of the Members.
8.3.4 Except as expressly provided in this Article 8, any
Liquidator which is not the Members shall have and may exercise all of the
powers conferred upon the Members under the terms of this Agreement (but subject
to all of the applicable limitations, contractual and otherwise, upon the
exercise of such powers), 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 Company is dissolved for any reason and is
not reconstituted and continued pursuant to Section 8.4.1, (ii) both Members
have become Bankrupt or been dissolved, and (iii) within ninety (90) days
following the date of dissolution a
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Liquidator or successor Liquidator has not been appointed by remaining
Members pursuant to Section 8.3.1, any interested party shall have the right to
seek judicial supervision of the winding up of the Company pursuant to the Act.
8.3.6 After making payment or provision for payment of all
debts and liabilities of the Company and all expenses of liquidation, the
Liquidator may establish, for a period Approved by the Members 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 Company.
8.4 RECONSTITUTION AFTER BANKRUPTCY OR DISSOLUTION OF MEMBERS.
8.4.1 Upon the Bankruptcy or dissolution (without
reconstitution within sixty (60) days thereafter) of any Member, the Company
shall be dissolved and liquidated unless within ninety (90) days subsequent to
such event the remaining Member elects, by giving notice to all Members, to
reconstitute the Company and to continue the business of the Company If such
election is made, then (i) the Company shall not be dissolved and liquidated;
(ii) the Company and the business of the Company may be continued, under and
pursuant to the provisions of this Agreement; (iii) the Bankrupt or dissolved
Members' interest in the Company may be purchased as set forth in Section 7.9,
and upon such Bankruptcy or dissolution, the other rights against a Terminated
Member under Section 7.9 shall also apply to the extent applicable; and (iv) the
Articles shall be amended to reflect such continuation, if so required.
8.5 DISTRIBUTION UPON DISSOLUTION AND CAPITAL ACCOUNT ADJUSTMENTS. Upon
dissolution of the Company without reconstitution as permitted by this Article
8, the Company's assets shall be sold or otherwise disposed of to third parties
as directed by the Liquidator upon the reasonable Approval of the Members, and,
after paying or providing for liabilities owing to creditors (including Members)
and the establishment of such reserves as the Liquidator reasonably deems
necessary for contingent or unforeseen liabilities or obligations of the Company
for a period Approved by the Members of up to eighteen (18) 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
Company is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made to the Members 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 Company 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 as required by successor Regulations, if any
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ARTICLE 9
MISCELLANEOUS
9.1 OTHER INTERESTS. Except as provided in the AGHC
Prospectus, no Member and no Affiliate of a Member 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 Member or the income or
proceeds derived therefrom, no Member and no Affiliate of any Member shall be
obligated to offer or to bring to the attention of the Company or the Members
any property or other business investment or opportunity, whether or not within
the scope of the Company's purposes, and any Member and any Affiliate of any
Member may at any time during the term of the Company own, invest in, develop or
manage, directly or indirectly, any property or other business investment or
opportunity, whether or not competitive with the Company or its assets or
otherwise within the scope of the Company purposes. Each of the Members
acknowledges and agrees that, except as provided in the AGHC Prospectus, each
Member 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 Company and,
except as provided in the AGHC Prospectus, none of the Members 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
Company or any Member or their Affiliates, and the Company, the Members and
their Affiliates shall have no rights or interests therein.
9.2 DAMAGES: CERTAIN CURE RIGHT: Offset. Each Member shall be
liable (and each Company employee shall be required to agree to be liable) to
the Company and the other Members for any actual (but not consequential or
incidental) damages arising from any breach hereof (or, in the case of an
employee, acting outside the scope of the employee's authority granted by the
Members or breaching any employment agreement with the Company). Upon any
alleged breach or default of this Agreement by any Member, it shall be a
condition to any action against such Member that such Member have received
notice of such alleged breach or default (which may be any notice otherwise
required by this Agreement) and that such Member 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 tunes thereafter, to use diligent
efforts to pursue such cure to completion, 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 to timely 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 Member under this Agreement shall be subject
to offset for amounts owed to the Company or the other Member under this
Agreement and shall be withheld and either retained by the Company or
reallocated to the other Member in a reasonable manner, as the case may be.
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9.3 NO AGENCY. Except as provided herein, nothing herein contained
shall be construed to constitute any Member hereof the agent of any other Member
hereof or to limit in any manner the carrying on of each Member'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 Delaware as applicable to a limited
liability company 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
Members or their Affiliates or among a Member (or its Affiliates) and the
Company concerning this Agreement, the Company or its assets. In any dispute
among the Members concerning the Company or this Agreement, the prevailing
Member(s) shall be entitled to recover its reasonable attorneys' fees and costs
(including litigation and collection costs) from the nonprevailing Member(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:
IF TO AGHOP, to it in care of:
American General Hospitality Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Loffinan, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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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.
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 Member may change the address to which notices
shall be sent to it, or any of its Authorized Representatives, by written notice
to all Members (said change of address or of Authorized Representatives to be
effective upon receipt by all Members).
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 Member to
or of any breach or default by any other Member 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 Member hereunder.
Failure on the part of any Member to object to or complain of any act or failure
to act of any other Member or to declare any other Member in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such Member 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.
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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 Members 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 Members and their respective successors and assigns. Whenever in
this instrument a reference to any party or Member is made, such reference shall
be deemed to include a reference to the successors and assigns of such party or
Member.
9.12 FURTHER ASSURANCES. The Members shall execute and deliver such
further instruments and do such further acts and things as may reasonably be
required to carry out the intent and purposes of this Agreement promptly upon
request from either Member.
9.13 WAIVER OF PARTITION. Unless otherwise specifically provided in
this Agreement (including Article 8), no Member shall, and each Member hereby
irrevocably waives the right to, either directly or indirectly, take any action
to require partition or appraisement of the Company, the Investment, or any part
thereof, and, notwithstanding any provision of applicable law to the contrary,
each Member 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 Company
or with respect to the assets of the Company, 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 Members.
9.16 NO DRAFTING PRESUMPTION. In interpreting the provisions of this
Agreement, no presumption shall apply against any Member that otherwise would
operate against such Member by reason of such document having been drafted by
such Member or at the direction of such Member or an Affiliate of such Member.
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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 Members 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 Company or the Members, and no such creditor or other Person shall obtain
any rights under any of 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 Contributions, against the
Company or the Members. In addition, no deficit balance in any Member's Capital
Account or in the capital account of any partner or member of a Member shall be
an asset of the Company, and no Member 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.
AMERICAN GENERAL HOSPITALITY
OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership, a Member
BY: AGH GP, Inc., a Nevada corporation,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
AGH UPREIT LLC, a Delaware limited
liability company, a Member
BY: American General Hospitality
Corporation, its member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
BY: American General Hospitality
Operating Partnership, L.P., a
Delaware limited partnership, its
member
By: AGH GP, Inc., a Nevada corporation,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
52
EXHIBIT A
DESCRIPTION OF THE INVESTMENT
The Holiday Inn Select - Bucks County 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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