OPERATING AGREEMENT OF
THE Cosmopolitan AT XXXXX PARK, LLC
DATED AS OF MARCH 15,1996
TABLE OF CONTENTS
ARTICLE I
Name, Office, Agent, Organization, Powers and Members.......1
1.01 Defined Terms.................................1
1.02 Name of the Limited Liability Company........1
1.03 Office of the Limited Liability Company; Agent
for Service of Process.......................1
1.04 Organization .... .....................1
1.05 Purposes and Powers..........................2
1.06 Members......................................2
ARTICLE II
Capital Contributions and Liability of Members..............4
2.01 Capital Accounts..............................4
2.02 Capital Contributions.........................4
2.03 No Withdrawal of or Interest in Capital.......4
2.04 Managers as Members ..........................4
2.05 Liability of Members..........................4
ARTICLE III
Loans; Additional Equity ...................................4
2.01 Voluntary Loans.................................4
2.02 Additional Equity................................4
ARTICLE IV
Cash Distributions..........................................5
4.01 Distribution of Distributable Cash...........5
4.02 Distributions Upon Transfer or Admission.....5
4.03 Certain Payments to the Internal Revenue
Service Treated as Distributions.............6
4.04 Distribution of Assets in Kind...............6
ARTICLE V
Allocation of Net Profits and Net Losses................6
5.01 Basic Allocations.............................6
5.02 Allocations of Nonrecourse Deductions and
Minimum Gain..................................7
5.03 Overriding Allocations of Net Profits and Net
Losses........................................8
5.04 Allocations Upon Transfer or Admission........9
ARTICLE VI
Management.................................................10
6.01 Management of the LLC........................10
6.02 Managers.....................................12
6.03 Members......................................14
6.04 Interpretation of Rights and Duties of
Managers and Members.........................15
6.05 Certain Permitted Transactions...............15
6.06 Budget and Major Decisions...................16
6.07 Binding the LLC..............................17
6.08 Contracts with Members.......................17
6.09 Indemnification and Exculpation..............17
6.10 Other Activities.............................18
ARTICLE VII
Fiscal Matters.............................................18
7.01 Books and Records...........................18
7.02 Reports.....................................19
7.03 Bank Accounts...............................19
7.04 Fiscal Year.................................19
7.05 Tax Matters Partner.........................19
ARTICLE VIII
Transfers of Interests.....................................20
8.01 General Restrictions on Transfer ...........20
8.02 Restrictions as to Certain Matters..........21
8.03 Transfers of Interests by Members Who Serve
as Managers.................................22
8.04 Permitted Transfers.........................22
8.05 Right of First Refusal.....................23
ARTICLE IX
Dissolution and Termination................................24
9.01 Events Causing Dissolution..................24
9.02 Continuation of the LLC.....................25
9.03 Procedures on Dissolution...................25
9.04 Management Rights During Winding Up.........25
9.05 Distributions Upon Liquidation..............25
9.06 Distributions Upon Liquidation..............25
9.07 Disposition of Documents and Records........26
ARTICLE X
Default and Dissolution....................................26
10.01 Events of Default............................26
10-02 Election of Non-Defaulting Member............27
10.03 Closing......................................27
ARTICLE XI
Appraisal..................................................28
11.01 General......................................28
11.02 Appraisal Procedures.........................28
ARTICLE XII
Arbitration................................................29
12.01 Initiation...................................29
12.02 Costs........................................29
ARTICLE XIII
General Provisions.........................................29
13.01 Notices......................................29
13.02 Word Meanings................................30
13.03 Binding Provisions...........................30
13-04 Applicable Law.............................. 30
13.05 Counterparts.................................30
13.06 Separability of Provisions...................30
13.07 Section Titles...............................30
13.08 Amendments...................................30
13.09 Third Party Beneficiaries....................30
13.10 Entire Agreement.............................30
13.11 Waiver of Partition..........................31
13.12 Survival of Certain Provisions...............31
ARTICLE XIV
Definitions................................................31
SCHEDULE A.................................................40
SCHEDULE B.................................................41
THIS OPERATING-RATING AGREEMENT, dated as of the
fifteenth day of March, 1996, is by and among each of
the persons named on Schedule A hereto as a Manager
(collectively, the "Managers" and individually, a
"Manager'), and each of the persons named on Schedule
B hereto as a Member (collectively, the "Members" and
individually, a "Member').
WHEREAS, The Cosmopolitan at Xxxxx Park, LLC (the
"LLC") has been formed as a limited liability company
under the Delaware Limited Liability Company Act (the
'Act') by the filing on the date hereof of a Certificate of
Formation (the "Certificate") in the office of the
Secretary of State of the State of Delaware; and
WHEREAS, the Managers and the Members wish to set
out fully their respective rights, obligations and duties
with respect to the LLC and its business, management and
operations.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of
which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Name, Office, Agent, Organization, Powers and Members
1.01 Defined Terms. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in Article XIV of this
Agreement.
1.02 Name of the Limited Liability company. The name of the limited
lliability company formed hereby is The Cosmopolitan at Xxxxx Park,
LLC. The name of the LLC may be changed at any time or from time to
time with the approval of the Board of Managers and the Consent of the
Members.
1.03 Office of the Limited Liability company, Agent for Service
of Process. The address of the registered office of the LLC for purposes
of the Act is c/x 'Xxxxxxxx-Xxxx Corporation System, Inc., 0000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, 00000. The name and address of the
resident agent for service of process for the LLC is Xxxxxxxx-Xxxx
Corporation System, Inc., 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, 00000.
The Board of Managers may establish places of business of the LLC within
and without the State of Delaware, as and when required by its business
and in furtherance of its purposes set forth in Section 1.05 hereof, and
may appoint agents for service of process in all jurisdictions in which
the LLC shall conduct business. The Board of Managers may cause the LLC
to change from time to time its resident agent for service of process, or
the location of its registered office, provided, however, that the Members
shall promptly be notified in writing of any such change.
1.04 Organization. The Board of Managers shall cause to be filed
such certificates and documents as may be necessary or appropriate to comply
with the Act and any other applicable requirements for the operation of
a limited liability company in accordance with the laws of the State of
Delaware and any other jurisdictions in which the LLC shall conduct
business, and shall continue to do so for so long as the LLC conducts business
therein.
1.05 Purposes and Powers. The general character of the business of
the LLC, as set forth in the Certificate, is to engage in investment in, and
ownership and development of, real estate and interests therein, including
buying, acquiring, owning, operating, selling, financing, refinancing,
disposing of and otherwise dealing with interests in real estate, directly or
indirectly through joint ventures, partnerships or other entities; and to
engage in any activities directly or indirectly related or incidental
thereto, Subject to all other provisions of this Agreement, in furtherance
of the conduct of its business, the LLC is hereby expressly authorized:
(a) to acquire, develop, own, operate and dispose of the
Property;
(b) to enter into, execute, modify, amend, supplement,
acknowledge, deliver, perform and carry out contracts of any kind,
including operating agreements of limited liability companies (whether as
a member or manager), joint venture, limited and general partnership
agreements, contracts with Affiliates, and including guarantees and
contracts establishing business arrangements or,necessary to, in connection
with, or incidental to the accomplishment of the purposes of the LLC, and
to secure the same by mortgages, pledges or other liens;
(e) to borrow money, including, without limitation, the
Xxxxxx Loan, and issue evidences of indebtedness in furtherance of any or
all of the purposes of the LLC, and to secure the same by mortgages, pledges
or other liens;
(d) to the extent that funds of the LLC are available
therefore, to pay all expenses, debts and obligations of the LLC;
(e) to enter into or engage in any kind of activity
necessary to, in connection with, or incidental to the accomplishment of the
purposes of the LLC, so long as said activities may be lawfully carried
on or performed by a limited liability company under the laws of
the State of Delaware;
(f) to execute and deliver any and all documents and
instruments required by Xxxxxx Financial, Inc. in connection with the
borrowing and evidencing of the Xxxxxx Loan; and
(g) to take any other action not prohibited under the
Act or other applicabl law.
1.06 Members.
(a) The Members of the LLC are identified on Schedule
B hereto. Additional Members may be admitted to the LLC (i) pursuant to
and in accordance with the provisions of Article VIII hereof, or (ii)
with the approval of Members holding not less than two-thirds of the
Percentage Interests held by all Members, which approval shall
specify the capital contribution, Percentage Interest, economic interest and
any other rights and obligations of such additional Member. In connection
with any such admission, this Agreement (including Schedule B) shall be
amended to reflect the additional Member, its capital contribution, if any, its
Percentage Interest, and any other rights and obligations of the additional
Member.
(b) Each Member, by execution of this Agreement or
an amendment hereto reflecting such Member's admission to the LLC, hereby
represents and warrants to the LLC as follows:
(i) It is acquiring an interest in the LLC for its
own account for investment only, and not with a view to, or for sale
in connection with, any distribution thereof in violation of the Securities
Act, or any rule or regulation thereunder.
(ii) It understands (i) that the interest in the LLC
it is acquiring has not been registered under the Securities Act or
applicable-able state securities laws and cannot be resold unless
subsequently registered under the Securities Act and such laws or unless an
exemption from such registration is available, (ii) that such registration
under the Securities Act and such laws is unlikely at any time in the future
and that neither the LLC nor the Members nor the Managers are
obligated to file a registration statement under the Securities Act or such
laws, and (iii) that the assignment, sale, transfer, exchange, or other
disposition of the interests in the LLC is restricted in accordance
with the terms of this Agreement.
(iii) It has had such opportunity as it
has deemed adequate to ask questions of and receive answers
from the Managers concerning the terms and conditions, and to obtain from
representatives of the LLC such information which the LLC possesses or ran
acquire without unreasonable effort or expense, as is necessary to evaluate
the merits and risks of an investment in the LLC.
(iv) It has, either alone or with its professional
advisers, sufficient experience in business, financial and investment matters
to be able to evaluate the merits and risks involved in investing in the LLC
and to be an informed investment decision with respect to such investment.
(v) It can afford a complete loss of the value of
its investment in the LLC and is able to bear the economic risk of holding
such investment for an indefinite period.
(vi) If it is an entity, it is duly organized,
validly existing and in good standing under the laws of its state of
organization and that it has full organizational power to execute and
deliver this Agreement and to perform its obligations hereunder.
ARTICLE - II
Capital Contributions and Liability of Members
2.01 Capital Accounts. For each Member (and each permitted assignee),
the LLC shall establish and maintain a separate Capital Account.
2.02 Capital Contributions. Each Member has contributed to the
capital of the LLC the amount set forth opposite its name on Schedule B
attached hereto.
2.03 No Withdrawal of or Interest in Capital. Except as otherwise
provided in this Article 11, no Member shall be obligated or permitted to
contribute any additional capital to the LLC. No interest shall accrue on
any contributions to the capital of the LLC, and no Member shall have the
right to withdraw or to be repaid any capital contributed by it or to receive
any other payment in respect of its interest in the LLC, including without
limitation as a result of the withdrawal or resignation of such Member
from the LLC, except as specifically provided in this Agreement.
2.04 Managers as Members. Any Manager may hold an interest in
the LLC as a Member, and such person's rights and interest as a Manager
shall be distinct and separate from such person's rights and interest as
a Member. 2.05 Liability of Members. The liability of the Members for
the losses, debts and obligations of the LLC shall be limited to their
capital contributions; provided, however, that under applicable law, the
Members may under certain circumstances be liable to the LLC to the
extent of previous distributions made to them in the event that the LLC does
not have sufficient assets to discharge its liabilities. Without limiting
the foregoing, (i) no Member, in his, her or its capacity as a Member (or,
if applicable, as a manager), shall have any liability to restore any negative
balance in his, her or its Capital Account, and (ii) the failure of the LLC
to observe any formalities or requirements relating to exercise of its powers or
management of its business or affairs under this Agreement or the Act shall
not be grounds for imposing personal liability on the members or Managers
for liabilities of the LLC.
ARTICLE III
Loans; Additional Equity
2.01 Voluntary Loans. In the event that the LLC requires
additional funds to carry out its purposes, to conduct its business, or
to meet its obligations, or to make any expenditure authorized by this
Agreement, the LLC may borrow funds from such third party tender(s) or
Member(s), and on such terms and conditions as may be acceptable to the
Board of Managers.
2.02 Additional Equity. To the extent that HPP accumulates
from whatever sources operating reserve amounts greater than $140,000 at
the end of any fiscal year, such excess amounts shall be contributed
within thirty (30) days of the end of such fiscal year to the LLC as
additional capital contributions. Notwithstanding any provisions of
Articles IV and V, any such additional capital contributions shall be
distributed by the LLC and applied as a return of the outstanding portion
of the Xxxxxx Equity.
ARTICLE IV
Cash Distributions
4.01 Distribution of Distributable Cash.
(a) Subject to the provisions of Section 4.01(b) below,
Distributable Cash of the LLC shall be distributed to the Members following
the end of each fiscal year of the LLC (or at such other times as the
Board of Managers may determine),
(i) First, to Xxxxxxx X. Xxxxxx in payment of any
current or accrued portion of the preferred return on the Xxxxxx
Equity;
(ii) Second, to the distribution to HPP of an
amount equal to the Preferred Return;
(iii) Third, to Xxxxxxx X. Xxxxxx in payment of
any unpaid principal portion of the Xxxxxx Equity;
(iv) Fourth, to the payment of any principal or
interest due with respect to any loans from Members pursuant to
the terms of Article III hereof, with any such payments to be
applied first to accrued but unpaid interest and then to principal; and
(v) Fifth, the balance, if any, to the Members in
accordance with their respective Percentage Interests.
(b) Notwithstanding the foregoing, in the event of a
liquidation of the LLC following or in conjunction with a Capital Transaction,
any Distributable Cash arising therefrom and remaining after the payments
and distributions described in clauses First through Fourth of Section
4.01(a) above be distributed to the Members in accordance with the
provisions of Section 9.06(b),
4.02 Distributions Upon Transfer or Admission. In the event that
a Member acquires an interest in the LLC either by transfer from another
Member or by acquisition from the LLC, an equal portion of the
Distributable Cash (other than Distributable Cash from a Capital
Transaction) of the LLC for the year in which such acquisition occurs shall
be allocated to each day of such year, and such Distributable Cash so
allocated to the portion of the year prior to the date of the acquisition of
the interest in the LLC by the Member shall be distributed among the Members
without giving effect to such acquisition, and such Distributable Cash so
allocated to the portion of the year from and after the date of the
acquisition of such interest shall be distributed among the Members by
giving effect to such acquisition Distributable Cash from a Capital
Transaction or upon the liquidation of the LLC shall be distributed to the
Members based upon the actual ownership of interests in the LLC on the date
of the event giving rise to such Distributable Cash.
4.03 Certain Payments to the Internal Revenue Service Treated as
Distributions.
(a) For purposes of this Section 4.03, the LLC may
assume that any Member who fails to provide to the Board of Managers
satisfactory evidence of its tax status for United States federal
income tax purposes is a foreign person taxable as a corporation.
(b) Notwithstanding anything to the contrary herein, to
the extent that the LLC is required, or elects, pursuant to applicable
law, either (i) to pay tax (including estimated tax) on a Member's allocable
share of LLC items of income or gain, whether or not distributed, or
(ii) to withhold and pay over to the tax authorities any portion of a
distribution otherwise distributable to a Member, the Board of Managers
may pay over such tax or such withheld amount to the tax authorities,
and such amount shall be treated as a distribution to such Member at
the time it is paid to the tax authorities.
4.04 Distribution of Assets in Kind. No Member shall have the
right to require any distribution of any assets of the LLC in kind. If
any assets of the LLC are distributed in kind, such assets shall be
distributed on the basis of their fair market value as determined by the
Board of Managers. Any Member entitled to any interest in such
assets shall, unless otherwise determined by the Board of Managers, receive
separate assets of the LLC and not an interest as a tenant in-common with
other Members so entitled in any asset being distributed.
ARTICLE V
Allocation of Net Profits and Net Losses
5.01 Basic Allocations.
(a) Except as provided in Sections 5.02 and 5.03
below (which shall be applied first), the Net Profits and Net Losses of
the LLC from operations for any year (or other fiscal period) shall be
allocated to and among the Members in accordance with their respective
Percentage Interests.
(b) Except as provided in Sections 5.02 and 5.03
below (which shall be applied first), any Net Profit, arising from a Capital
Transaction or upon liquidation of the LLC shall be allocated as follows:
(i) First, to any Members having negative
Adjusted Capital Account balances, in proportion to and to the extent of such
negative balances; and
(ii) The balance, if any, to the Members in
such proportions and in such amounts as would result in the respective
Adjusted Capital Account balance of each Member equaling, as nearly as
possible, such Member's share of the then LLC Capital determined by
calculating the amount the Member would receive if an amount equal
to the LLC Capital were distributed to the Members in accordance with
the provisions of Section 4.01(a) hereof.
(c) Except as provided in Sections 5.02 and 5.03
below (which shall be applied first), any Net Losses arising from a Capital
Transaction or upon liquidation of the LLC shall be allocated among the
Members as follows:
(i) First, to each Member with a positive
Adjusted Capital Account balance, in the amount of such positive balance;
provided, however, that if the amount of Net Losses to be allocated
is less than the sum of the Adjusted Capital Account balances of all
Members having positive Adjusted Capital Account balances, then the Net
Losses shall be allocated to the Members in such proportions and in
such amounts as would result in the respective Adjusted Capital Account
balance of each Member equaling, as nearly as possible, such Member's
share of the then LLC Capital determined as set forth in Section 5.01(b)(ii)
above; and
(ii) The balance, if any, to the Members in accordance
with their Percentage Interests.
(d)If the amount of Net Profits allocable to the Members pursuant to
Section 5.01(b)(ii) or the amount of Net Losses allocable to them pursuant to
Section 5.01(r-)(i) is insufficient to allow the Adjusted Capital
Account balance of each Member to equal such Member's share of the LLC-
Capital, such Net Profits or Net Losses shall be allocated among the
Members in such a manner as to decrease the differences between the
Members' respective Adjusted Capital Account balances and their respective
shares of the LLC Capital in proportion to such differences.
(e) Allocations of Net Profits and Net Losses provided for
in this Section 5.01 generally shall be made as of the end of the fiscal
year of the LLC; provided, however, that allocations of Net Profits and
Net Losses pursuant to Sections 5.01(b) and (c) shall be made no later
than immediately prior to the time that the proceeds from the event giving
rise to such Net Profits or Net Losses are distributed to the Members.
(f) Net Profits and Net Losses allocated hereunder to the
Members (or to any particular group of Members) as a group shall be allocated
to and among them based on their respective Percentage Interests.
5.02 Allocations of Nonrecourse Deductions and Minimum Gain.
Notwithstanding the provisions of Section 5.01 above,
the following allocations of Gross
Income and Nonrecourse Deductions shall be made in the
following order of priority:
(a) If in any year there is a net decrease
in- the amount of Minimum Gain attributable to either (i) Nonrecourse
Debt that is not Partner Nonrecourse Debt or (ii) Partner Nonrecourse Debt,
then each Member shall first be allocated items of Gross Income for
such year (and, if necessary, subsequent years) in an amount equal to such
Member's share of the net decrease in such Minimum Gain (determined in
accordance with Treasury Regulation Sections 1.704-2(g)(2)and 1.704-2(i)
(5)) to the minimum extent required by, and in the manner specified in,
Treasury Regulation Sections 1.704 2(f) and 1.704-2(i)(4).
(b) All Nonrecourse Deductions of the LLC for any
year other than Nonrecourse Deductions attributable to Partner
Nonrecourse Debt shall be allocated to and among the Members in accordance
with their respective Percentage Interests.
(c) All Nonrecourse Deductions of the LLC for any
year attributable to Partner Nonrecourse Debt shall be allocated to the
Members who bear the Economic Risk of Loss with respect to the debt.
5.03 Overriding Allocations of Net Profits and Net Losses.
Notwithstanding the provisions of Section 5.01 above, but subject
to the provisions of Section 5.02 above, the following allocations of Net
Profits and Net Losses and items thereof shall be made.
(a) If, during any year a member receives any
adjustment, allocation or distribution described in Treasury Regulation
Section 1.704 1(b)(2)(ii)(d)(4), (5) or (6), and, as a result of such
adjustment, allocation or distribution, such Member's Capital Account
has an Excess Negative Balance, then items of Gross Income for
such year (and, if necessary, subsequent year) shall first be allocated
to such Member in an amount equal to such Member's Excess Negative
Balance.
(b) In no event shall Net Losses of the LLC be allocated
to a Member if such allocation would cause or increase an Excess
Negative Balance in such Member's Capital Account.
(c) In the event that Net Profits, Net Losses or items
thereof are allocated to one or more Members pursuant to subsections (a)
or (b) above, subsequent Net Profits and Losses from operations will fast
be allocated (subject to the provisions of subsections (a) and (b)) to
the Members in a manner designed to result in each Member having a
Capital Account balance equal to what it would have been had the original
allocation of Net Profits, Net Losses or items thereof pursuant to
subsections (a) or (b) not occurred.
(d) Except as otherwise provided herein or as required
by Code Section 704, for tax purposes, all items of income, gain, loss,
deduction or credit shall be allocated to the Members in the same manner
as are Not Profits and Net Losses; provided, however, that if the
Carrying Value of any property of the LLC differs, from its adjusted basis for
tax purposes, then items of income, gain, loss, deduction or credit related
to such property for tax purposes shall be allocated among the Members
so as to take account of the variation between the adjusted basis of
the property for tax purposes and its Carrying Value in the manner provided
for under Code Section 704(c).
(e) To the extent that any portion of any Net Profits
realized upon a sale or other disposition of any asset of the LLC is
treated as ordinary income pursuant to Code Sections 1245 or 1250
("Recapture Income'), such Recapture Income shall be allocated (prior
to any allocation of Net Profits from such event pursuant to Sections 5.01
above) as follows:
(i) In the case of Recapture Income arising under
Code Section 1245, to each Member in an amount equal to the amount
of depreciation deductions allocated to such Member with respect to such
asset; and
(ii) In the case of Recapture Income arising
under Code Section 1250, to each Member in an amount equal to the
excess of the amount of "depreciation adjustments" (as defined in Code
Section 1250(b)(1) and (4)) allocated or attributable to such Member with
respect to such asset over the amount of depreciation adjustments that
would have been allocated or attributable to such Member had the"straight-line
method of adjustment" (as described in Code Section 1250(b)(5)) been used
with respect to such asset; provided, however,that in the event the amount of
Recapture Income arising from from the sale or disposition is less than the
aggregate amount set forth in clause (i) or(ii) (whichever is applicable), the
Recapture Income shall be allocated to Members based on the order in
time in which they were allocated depreciation deductions or adjustments with
respect to such asset.
(f) Subject to the other provisions of this Section 5.03,
if at any time any portion of any of the LLC's assets is treated as "tax-
exempt use property' within the meaning of Code Section 168(h) (or
successor provision), those Members who are not "tax-exempt entities'
within the meaning of Code Section 168(h) will be allocated as nearly as
possible the same amount of Net Profits and Net Losses, as they would have
been allocated had none of such assets been treated as "tax-exempt use
property.
5.04 Allocations Upon Transfer or Admission. In the event that
a Member acquires an interest in the LLC either by transfer from another
Member or by acquisition from the LLC, an equal portion of the Gross
Income, Net Profits, Net Losses and Nonrecourse Deductions from operations
of the LLC for the year in which such acquisition occurs shall be allocated
to each day of such year, and the Gross Income, Net Profits, Net
Losses and Nonrecourse Deductions so allocated to the portion of the year
prior to the date of the acquisition of the interest in the LLC by the
Member shall be allocated among the Members without giving effect to
such acquisition, and the Gross Income, Net Profits, Net Losses and
Nonrecourse Deductions so allocated to the portion of the year from and
after the date of the acquisition of such interest shall be allocated
among the Members by giving effect to such acquisition. Gross Income,
Net Profits, Net Losses and Nonrecourse Deductions from a Capital
Transaction shall be allocated among the Members based upon the actual
ownership of interests in the LLC on the date of the Capital Transaction
giving rise to such Gross Income, Net Profits, Net Losses and
Nonrecourse Deductions.
ARTICLE VI
Management
6.01 Management of the LLC-C. The business and
affairs of the LLC shall be managed by or under the
direction of a Board of Managers, who may exercise all
of the powers of the LLC except as otherwise provided
by law or this Agreement (including without
limitation, Section 6.07 below). In the event of a
vacancy in the Board of Managers, the remaining
managers, except as otherwise provided by law, may exercise
the powers of the fall Board until the vacancy is failed
All management and other responsibilities not
specifically reserved to the Members in this Agreement
shall be vested in the Board of Managers, and the
Members shall have no voting rights except as specifically
provided in this Agreement. Each Manager shall devote
such time to the affairs of the LLC as may be
reasonably necessary for performance by the Manager of
his, her or its duties hereunder, provided such Persons shall
not be required to devote full time to such affairs.
Specifically, but not by way of limitation, but
subject to the provisions of Section 6.07,
the Board of Managers shall be authorized in the name and
on behalf of the LLC, to cause the LLC to do all things
necessary or appropriate to carry on the business and
purposes of the LLC, including without limitation the
following:
(a). to acquire by purchase, lease,
exchangeor otherwise and to sell, finance,
refinance, encumber and otherwise deal with, any real or
personal property;
(b) to borrow money and issue evidences
of indebtedness or to guarantee loans
and to secure the same by mortgage, deed of trust, pledge or
other lien on any assets or property of the LLC and
to pay, prepay, extend, amend or otherwise modify the
terms of any such borrowings;
(c) to employ executive,administrative
and support personnel in connection with the business of the LLC,
to pay salaries, expense reimbursement, employee benefits, fringe
benefits, bonuses and any other form of compensation or employee
benefit to such persons and entities, at such times and in such
amounts as may be determined by the Board of Managers
in its sole discretion, in order to provide executive,
administrative and support services in connection with
the business of the LLC;
(d) to hire or employ such
agents, employees, managers, accountants,
attorneys, consultants and other persons necessary or
appropriate to carry out the business and operations of
the LLC, and to pay fees, expenses, salaries, wages
and other compensation to such persons;
(e) to pay, extend, renew, modify,
adjust, submit to arbitration, prosecute,
defend or compromise, upon such terms as it may
determine and upon such evidence as it may deem
sufficient, any obligation, suit, liability, cause of action
or claim, including taxes, either in favor of or against
the LLC;
(f) to determine the appropriate accounting
method or methods to be used by
the LLC;
(g) to cause the LLC to make or revoke any
of the elections referred to in Sections 108, 704, 709, 754 or 1017 of
the Code or any similar provisions enacted in lieu
thereof, or in any other Section of the Code;
(h) to establish and maintain reserves for
such purposes and in such amounts as it deems appropriate from time to
time;
(i) to pay all organizational expenses and
general and administrative expenses
of the LLC;
0) to deal with, or otherwise engage in
business with, or provide services to and receive compensation therefor
from, any person who has provided or may in the future
provide any services to, lend money to, sell property to, or
purchase property from the LLC, including without limitation, any Member
or Manager.
(k) to engage in any kind of 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 LLC;
(l) to pay any and all fees and to make any
and all expenditures which it, in
its sole discretion, deems necessary or appropriate in
connection with the organization of the
LLC, the management of the affairs of the LLC, and the
carrying out of its obligations and responsibilities under
this Agreement, including, without limitation, fees,
reimbursements and expenditures payable to a Member or
Manager;
(m) to exercise all powers and authority
granted by the Act to managers, except
as otherwise provided in this Agreement;
(n) to cause the LLC and its properties
and assets to be maintained and
operated in such manner as the Board of Managers may
determine, subject, however, to
obligations imposed by applicable laws or by any mortgage or
security interest encumbering the LLC and such properties
and assets from time to time, and by any lease, rental
agreement or other agreement pertaining thereto;
(o) to cause to be obtained and continued in
force all policies of insurance
required by any mortgage, lease or other agreement relating to
the LLC's business or any part
thereof, or determined by the Board of Managers to be in the
best interests of the LLC;
(p) to cause to be paid any and all taxes,
charges and assessments that may be levied, assessed or imposed upon any
of the assets of the LLC, unless the same are contested by the LLC; and
(q) to negotiate for and enter into leases for
space in the Property on terms approved by the Members; and
(r) to perform any other act which
the Board of Managers may deem necessary, convenient or desirable
for the LLC or its business.
6.02 Managers.
(a) Number, Election and Qualification.
The number of Managers which shall constitute the whole Board of
Managers shall be determined by resolution of the Members, but in no
event shall such number be less than three nor more
than seven unless the Members specifically vote pursuant to Section
6.03(c) to cause the LLC to be Member managed, in
which case there shall be no Board of Managers. The
Managers shall be elected at an annual meeting of Members by such
Members as have the right to vote at such election.
Managers need not be Members of the LLC.
Each person elected to serve as a Manager of the
LLC shall sign this Agreement, or a counterpart hereof
or amendment hereto, or other writing pursuant to which
such person (I) acknowledges receipt of a copy of this
Agreement, as amended and in effect as of the date of
such writing, (ii) agrees that he or she is a party to and
bound by this Agreement, (iii) agrees to perform the
duties of a Manager hereunder, and (iv) agrees to
execute and deliver such additional agreements, instruments,
certificates and documents, including without limitation an
amendment to the Certificate, which may be necessary,
appropriate or convenient to reflect the foregoing
matters and the election of such person as a Manager of the
LLC.
Upon the death, resignation, removal or
expiration of the term of any Manager (a
"Terminated Manager"), (i) such Terminated Manager
shall have no further authority under this Agreement, (ii)
such Terminated Manager shall have no further obligations
or rights under this Agreement (except for liabilities and
rights accruing prior to the date of death, resignation,
removal or expiration of his term, such as, for example,
rights to indemnification under Section 6.9 which related
to actions or omissions occurring during such person's
service as a Manager), and (iii) no writing or instrument
shall be required to be executed by the LLC or the
Terminated Manager to reflect such cessation of service, except that the
Terminated Manager (or its Legal Representative or
attorneyin-fact, as provided in the following paragraph)
shall execute and deliver any agreement, instrument,
certificate or document, including an amendment to the
Certificate, which may be reasonably required to reflect that the
Terminated Manager is no longer a Manager of the LLC.
Each person now or hereafter serving as a
Manager of the LLC, by execution of this Agreement, an
amendment hereto, or an instrument acknowledging that it is
bound hereby, hereby constitutes and appoints each other
person who may from time to time be serving as a
Manager, and each of them acting singly, such Manager's
agent and attorneyin-fact for the purpose of executing
and delivering any and all agreements, instruments and
other documents (including without limitation, an amendment to
the Certificate) as are necessary or appropriate to
reflect that he, she or it is no longer a Manager of the LLC following the
death, resignation, removal or expiration of the term of such
Manager, which power of attorney, is hereby agreed and
acknowledged to be coupled with an interest and
irrevocable, and shall survive the death, dissolution,
bankruptcy or incapacity of any Manager until such time as
the withdrawal of such Manager from the LLC has been
reflected by all necessary or appropriate agreements,
instruments and other documents.
(b) Enlargement of the Board Subject to
the provisions of Section 6,02(a)
above, the number of Managers be increased at any time and from
time to time by the Members.
(c) Tenure. Each Manager shall hold office
until the next annual meeting and
until his successor is duly elected and qualified, or until
his earlier death, resignation or
removal.
(d) Vacancies. Unless and until filled by
the Members, any vacancy in the
Board of Managers, however occurring, including a vacancy
resulting from an enlargement of the Board, may be filled
by vote of a majority of the Managers then in office, although
less than a quorum, or by a sole remaining Manager. A Manager
elected to fill a vacancy shall be electedfor the unexpired
term of his predecessor in office, and a Manager chosen to
fill a position resulting from an increase in the number of
Managers shall hold office until the next annual meeting
of Members and until his successor is duly elected and
qualified, or until his earlier death, resignation or
removal.
(e) Resignation. Any Manager may
resign by delivering his written resignation to the LLC at its principal
office. Such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or
upon the happening of some other
event.
(f) Regular Meetings. Regular meetings of the Board
of Managers may be held without notice at such time and place, either within or
without the State of Delaware, as shall be determined from time to
time by the Board of Managers; provided that any Manager who is
absent when such a determination is made shall be given notice of the
determination. A regular meeting of the Board of Mangers may
be held without notice immediately after and at the same
place as the annual meeting of Members.
(g) Special Meetings. Special meetings of the Board of
Managers may be held at any time and place, within or without the State of
Delaware, designated in a call by two or more Managers, or by one Manager
in the event that there is only a single Manager in office.
(h) Notice of Special Meetings. Notice of
any special meeting of Managers shall be given to each Manager by the
Secretary or by the officer or one of the Managers calling the meeting.
Notice shall be duly given to each Manager (i) by giving notice to such
manager in person or by telephone at least 24 hours in advance of the
meeting, (ii) by sending a telegram
or telex, or delivering written notice by hand, to his last
known business or home address at
least 24 hours in advance of the meeting, or (iii) by mailing
written notice to his last known
business or home address at least 72 hours in advance of the
meeting. A notice or waiver of
notice of a meeting of the Board of Managers need not specify
the purposes of the meeting.
(i) Meetings by Telephone Conference
Calls. Managers or any members of
any committee designated by the Managers may participate
in a meeting of the Board of
Managers or such committee by means of conference
telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each
other, and participation by such means shall constitute
presence in person at such meeting.
(j) Quorum. A majority of the total
number of the whole Board of Managers shall constitute a
quorum at all meetings of the Board of Managers. In the
event one or more of the Managers shall be disqualified to
vote at any meeting, then the required quorum shall be
reduced by one for each such Manager so disqualified;
provided, however, that in no case shall less than one-
half (1/2) of the number so fixed constitute a quorum. In the
absence of a quorum at any such meeting, a majority of the
Managers present may adjourn the meeting from time to
time without further notice other than announcement at the
meeting, until a quorum shall be present.
(k) Action at Meeting. At any meeting
of the Board of Managers at which
a quorum is present, the vote of a majority of those present
shall be sufficient to take any action,
unless a different vote is specified by law, the Certificate or
this Agreement.
(1) Action by Consent. Any action required
or permitted to be taken at any
meeting of the Board of Managers or of any committee of
the Board of Managers may be taken without a meeting, if
all members of the Board or committee, as the case may
be, consent to the action in writing, and the written consents
are filed with the minutes of proceedings of the Board or
committee.
(m) Removal. Except as otherwise provided
by the Act, any one or more or
all of the Managers may be removed, with or without
cause, by Members holding a majority of the Percentage
Interests then held by all Members.
6.03 Members.
(a) Place of Meetings. All meetings of
Members shall be held at such place
within or without the State of Delaware as may be
designated from time to time by the Board of Managers
or, if not so designated, at the registered office of the LLC.
(b) Annual Meeting. There shall be
held an annual meeting of Members for
the election of Managers and for the transaction of
such other business as may properly be brought before the
meeting. Such meeting shall be held on a date to be fixed by the
Board of Managers (which date shall not be a legal holiday
in the place where the meeting is
to be held) at the time and place to be fixed by the Board of
Managers and stated in the notice
of the meeting. If no annual meeting is held in
accordance with the foregoing provisions, a
special meeting may be held in lieu of the annual meeting, and
any action taken at that special
meeting shall have the same effect as if it had been taken at
the annual meeting, and in such case
all references in this Agreement to the annual meeting of the
Members shall be deemed to refer to such special meeting.
(c) Right to Elect to be Member-
Managed. At any annual meeting (or any
special meeting, as described in Section 6.03(d) below), the
Members may elect (by vote of all Members) to cause
the LLC to be managed by the Members. In connection
with any such election, this Agreement shall be amended
by the Members to reflect appropriate provisions regarding
the management and operation of the LLC by the Members.
(d) Special Meetings. Special meetings of
Members may be called at any time
by the Board of Managers. Business transacted at any
special meeting of Members shall be
limited to matters relating to the purpose or purposes stated
in the notice of meeting.
(e) Notice of Meetings. Except as otherwise
provided by law, written notice
of each meeting of Members, whether annual or special, shall
be given not less than 10 nor
more than sixty (60) days before the date of the meeting to
each Member entitled to vote at such
meeting. The notices of all meetings shall state the place,
date and hour of the meeting. The
notice of a special meeting shall state, in addition, the
purpose or purposes for which the
meeting is called. If mailed, notice is given when deposited
in the United States mail, postage
prepaid, directed to the Member at his address as it appears on
the records of the LLC.
(f) Action at Meeting. When a quorum is
present at any meeting, the
Members representing a majority of the total Percentage
Interests of all Members entitled to vote (or if there are
two or more classes of Members entitled to vote as separate
classes, then in the case of each such class, the holders of a
majority of the total Percentage Interests of that class
entitled to vote on such matter) shall decide any matter to be
voted upon by the Members at such meeting, except when a
different vote is required by express provision of law, the
Certificate or this Agreement.
(g) Action. Any action required or
permitted to be taken at any annual or special meeting of Members of the LLC
may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so
taken, is signed by the Members having not less than the
minimum aggregate Percentage Interests that would be
necessary to authorize or take such action at a meeting at
which all Members to vote on such action were present and
voted. Prompt notice of the taking of an action without
a meeting by less than unanimous written consent shall be
given to those Members who have not consented in writing.
6.04 Interpretation of Rights and Duties of
Managers and Members. To the fullest
extent permitted by the Act and other applicable law, and to
the extent not inconsistent with the specific provisions of this Agreement
or the Certificate, it is the intention of the parties that:
(a) the Board of Managers shall have the
power to do any and all acts,
statutory and otherwise, with respect to the LLC which the
board of directors of a Delaware
corporation would have with respect to such Delaware
corporation; and
(b) the Members shall have no power or
authority whatsoever with respect to
the management of the business and affairs of the LLC,
6.05 Certain Permitted Transactions. Without
limitation of any of its powers set forth
in Section 6.01 above, the Board of Managers is expressly
authorized, in the name and on behalf
of the LLC, to cause the LLC to enter into a Property
Management Agreement with Claremont Management Company,
pursuant to which Claremont Management Company will
provide certain property management services to the LLC.
6.06 Budget and Major Decisions.
(a) Not less often than Once
each fiscal Year, the Board of Managers shall
prepare and submit to the Members for their
consideration a budget (the "Budget") setting forth the estimated
receipts and expenditures (capital, Operating and
other) of the LLC for the period covered by the
Budget. The Members shall review and adjust the
Budget on a quarterly basis. When the Consent of
the Members to any Budget has been obtained,
the Board of Managers shall implement the Budget and shall be
authorized, subject to the provisions of Section 6.06(b),
without the need for any further Consent of the Members
to make the expenditures and incur the obligations
provided for in the Budget.
(b) Notwithstanding the provisions
of Section 6.01 or any other provision of this
Agreement to the contrary, without the prior written
Consent of the Members, no act shall be taken,
sum expended, decision made or obligation incurred
by the LLC, the Board of Managers, the
Property Manager, or any Member with respect to
a matter within the scope of any of the major
decisions enumerated below (the 'Major Decisions'),
unless and until the same has been expressly
delegated by the Members in writing. The Major
Decisions shall include:
(i) the acquisition of real estate other than the
Property;
(ii) changing the use of the Property from
its contemplated use a residential rental apartment complex;
(iii) under or making commitments to undertake major
improvements to the Property, meaning thereby improvements of
such a major scope as may reasonably be construed to be
such, having due regard for the cost thereof, the nature and
extent of the work, labor and materials, the
duration of performing and installing the same, and
the impact thereof on the Property;
(iv) selling the Property or any material part
thereof, directly or indirectly;
(v) offering or selling interests in the LLC;
(vi) exercising the powers under Section
6.01(b) as to secured borrowing or mortgaging for obligations,
except that, the Managers, without the consent of the
Members, shall have the right to refinance the Xxxxxx Loan
as long as the terms of the new loan(s) are no less
favorable to the LLC than the existing loans.
(vii) selecting or varying
depreciation and accounting methods and making
other decisions with respect to treatment of
various transactions for state or federal income
tax purposes or other financial purposes not
otherwise specifically provided for herein, provided
that such methods and decisions shall be
consistent with the other provisions of this Agreement;
(viii) the approval of all construction and
architectural contracts and all architectural plans, specifications
and drawings prior to the construction, addition to and/or
alteration of the Property or any portion thereof, and any
Modifications of such contracts, plans, specifications
and drawings, except for such matters as may be
expressly delegated in writing to the Property Manager by the
Members;
(ix) determining whether or not distributions should
be made to the Members;
(x) approving the Budget pursuant to the provisions
of Section 6.06 hereof-,
(xi) making any expenditure or incurring any
obligation which when added to any other expenditure for the fiscal
year of the LLC exceeds the Budget or any line item specified in the
Budget;
(xii) the selection, termination or removal of the
Property Manager other than pursuant to the terms of the Property Management
Agreement;
(xiii) the election of the members of the Board of Managers; or
(xiv) any other decision or action which by any
provision of this Agreement is subject to the Consent of the
Members or which materially affects the LLC or the
assets or operations thereof.
6.07 Binding the LLC. Except as the Board of Managers may
generally or in any particular case or cases otherwise authorize,
and subject to the other provisions of this Agreement and the
Certificate, all deeds, leases, contracts, bonds, notes, checks, drafts
or other obligations made, accepted or endorsed by the
LLC shall be signed by the Managers or any one of
them acting singly.
6.08 Contracts with Members. Subject to the
provisions of Section 6.06, with the approval of a
majority in number of disinterested Managers in each
case, the LLC may engage in business with, or enter
into one or more agreements, leases, contracts or other
arrangements for the furnishing to or by the LLC of
goods, services or space with any Member or Affiliate
of a Member, and may pay compensation in connection
with such business, goods, services or space,
provided in each case the amounts payable thereunder are reasonably
comparable to those which would be payable to
unaffiliated Persons under similar agreements, and
if the determination of such amounts is made in good
faith it shall be conclusive absent manifest error.
6.09 Indemnification and Exculpation.
(a) No Manager, or its Affiliates, shall
have any liability to the LLC or to any
Member for any loss suffered by the LLC which arises
out of any action or inaction of any Manager or its
Affiliates if such Manager or its Affiliates, as the
case may be, in good faith, determined that such course
of conduct was in the best interests of the LLC and
such course of conduct did not constitute gross
negligence or willful misconduct of such Manager or
its Affiliates. Each Manager and its Affiliates shall be indemnified by
the LLC against any losses, judgments, liabilities.
expenses and amounts paid in settlement of any claims
sustained by it with respect to actions taken by such Manager
or its Affiliates on behalf of the LLC, provided that no
indemnification shall be provided for any person with respect
to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the
reasonable belief that his action was in the best interest of
the LLC. Without limiting the foregoing, such
indemnification may include payment by the LLC of expenses
incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such
action or proceeding, upon receipt of an undertaking by the
person indemnified to repay such payment if he shall be
adjudicated not to be entitled to indemnification under this
Section 6.9, which undertaking may be accepted without
reference to the financial ability of such person to
make repayment, Any indemnification to be provided hereunder
may be provided although the person to be indemnified is
no longer a Manager or an Affiliate of a Manager.
(b) Notwithstanding the provisions of
Section 6.9(a) above, foregoing, no
Manager, nor its respective Affiliates, nor any person
acting as a broker-dealer, shall be
indemnified for any losses, liabilities or expenses arising
from or out of a violation of federal
or state securities laws or any other intentional or
criminal wrongdoing. Any indemnity under this Section 6.9
shall be paid from, and only to the extent of, LLC assets,
and no Member shall have any personal liability on amount
thereof. The LLC shall not incur the cost of that
portion of any insurance, other than public liability
insurance, which insures any party against any liability
as to which such party is herein prohibited from being
indemnified.
6.10 Other Activities. Except as provided
in Section 6. 10(b) below, the Members, Managers and any
Affiliates of any of them, may engage in and possess
interests in other business, ventures and investment
opportunities of every kind and description,
independently or with others, including serving as
directors, officers, stockholders, managers, members and
general or limited partners of corporations, partnerships or other limited
liability companies with purposes similar to those of the
LLC. Neither the LLC nor any other Member or Manager
shall have any rights in or to such ventures or opportunities
or the income or profits therefrom.
ARTICLE VII
Fiscal Matters
7.01 Books and Records. The Board of Managers
shall keep or cause one Manager or a designated third
party to keep, complete and accurate books and records of
the LLC on the income tax method of reporting and
otherwise in accordance with generally accepted accounting
principles consistently applied, which shall be maintained and
be available, in addition to any documents and information
required to be furnished to the Members under the Act, at
the office of the LLC for examination and copying by any
Member or Manager, or his, her or its duly authorized
representative, at its reasonable request and at its expense
during ordinary business hours. A current list of the
full name and last known address of each Member and
Manager, a copy of this Agreement, any amendments thereto, the
Certificate, including all certificates of amendment
thereto, executed copies of all powers of attorney, if
any, pursuant to which this Agreement, any amendment, the
Certificate or any certificate of amendment has been
executed, copies of the LLC's financial statements and
federal, state and local income tax returns and
reports, if any, for the three most recent fiscal years,
shall be maintained at the registered office of the LLC
required by the Act.
The LLC shall have no obligation to deliver or mail
a copy of the Certificate or any
amendment thereto to the Members .
7.02 Reports. Within one hundred twenty (120) days
after the end of each fiscal year,
the Board of Managers shall cause to be prepared and sent to
all Members a financial report of
the LLC, including a balance sheet and a profit and loss
statement, and, if such profit and loss
statement is not prepared on a cash basis, a statement of
changes in financial position, all of
which shall be certified by an independent certified public
accountant if required by Consent of
the Members. Within ninety (90) days after the end of each
fiscal year, the Board of Managers shall furnish (or cause
to be furnished) to all Members such information as may
be needed to enable the Members to file their federal income
tax return and any required state income tax return.
The cost of all such reporting shall be paid by the LLC
as an LLC expense. Any Member may, at any time, at its own
expense, cause an audit of the XXX xxxxx to be made by
a certified public accountant of its own selection, All
expenses incurred by such accountant shall be home by such
Member.
7.03 Bank Accounts. The Board of Managers shall
be responsible for causing one or
more accounts to be maintained in a bank (or banks) which is
a member of the F.D.I.C., which accounts shall be used for
the payment of the expenditures incurred in connection
with the business of the LLC, and in which shall be deposited
any and all cash receipts. All deposits and funds not needed
for the operations of the LLC may be invested in short-
term investments, including securities issued or fully
guaranteed by United States government agencies,
certificates of deposit of banks, bank repurchase agreements
covering the securities of the United States government,
commercial paper rated A or better by Xxxxx'x Investors
Services, Inc., money market funds, interest-bearing time
deposits in banks and thrift institutions and such other
similar investments as the Board of Managers may approve. All
such amounts shall be and remain the property of the LLC,
and shall be received, held and disbursed by the Board
of Managers for the purposes specified in this Agreement.
There shall not be deposited in any of said accounts any
funds other than funds belonging to the LLC, and no other
funds shall in any way be commingled with such funds.
Withdrawals from any LLC bank or similar account shall
be made and other activity conducted on such signature or
signatures as shall be approved by the Board of Managers.
7.04 Fiscal Year. The fiscal year of the LLC
shall end on December 31 of each year.
7.05 Tax Matters Partner. The Board of Managers
shall designate a Member to serve
as the "tax matters partner" of the LLC. If at any time such
person is not eligible under the
Code to serve, or refuses to serve, as the "tax matters
partner," another Member shall be
designated by the Board of Managers to serve as the "tax
matters partner." The "tax matters
partner" is hereby authorized to and shall perform all duties
of a "tax matters partner" under the
Code and shall serve as "tax matters partner" until his, her
or its resignation or until the
designation of his, her or its successor, whichever occurs
sooner.
ARTICLE VII
Transfer ofInterests
8.01 General Restrictions on Transfer.
(a) No Member may Transfer his, her or
its interest in the LLC unless the Board of Managers (acting
exclusive of any Manager which is, or is affiliated with, the
Transferring Member) and the other Member shall have
previously approved such Transfer in
writing, the granting or denying of which approval shall
be in the Board's and such other
Member's absolute discretion.
No assignment of the interest of a Member shall be
made if, in the opinion of counsel
to the LLC, such assignment (i) may not be effected
without registration under the Securities
Act, (ii) would result in the violation of any applicable state
securities laws, (iii) unless approved
by the Board of Managers (acting exclusive of any Manager
which is, or is affiliated with, the
Transferring Member), would result in a termination of the
LLC under Section 708 of the Code
or (iv) unless approved by the Board of Managers (acting
exclusive of any Manager which is,
or is affiliated with, the Transferring Member), would result
in the treatment of the LLC as an
association taxable as a corporation or as a "publicly
traded limited partnership" for tax
purposes. The LLC shall not be required to recognize any
such assignment until the instrument
conveying such interest has been delivered to the Board
of Managers for recordation on the
books of the LLC. Unless an assignee becomes a
substituted Member in accordance with the
provisions of Section 8.01(b), it shall not be entitled to any
of the rights granted to a Member
hereunder, other than the right to receive all or part of the
share of the net profits, net losses,
cash distributions or return of capital to which his assignor
would otherwise be entitled.
(b) An assignee of the interest of a
Member, or any portion thereof, shall
become a substituted Member entitled to all the rights of a
Member if, and only if:
(i) the assignor gives the assignee such right;
(ii) the remaining Member shall have consented to
such substitution in writing, the granting or denying of which
consent shall be in her or its absolute discretion:
(iii) the assignee pays to the LLC all
costs and expenses incurred in connection with such substitution,
including specifically, without limitation, costs incurred in the review
and processing of the assignment and in amending the LLC's then
current Certificate and/ or Operating Agreement, if required; and
(iv) the assignee executes and delivers an
Amendment to this Agreement (and to the Certificate, if required),
which Amendment shall be executed by a Manager and by such assignee,
and such other instruments, in form and substance satisfactory to
the Board of Managers (acting exclusive of any manager which is, or is
affiliated with, the assigning Member), as may be necessary,
appropriate or desirable to effect such in Section 8.02(b), shall be
deemed(L by acceptance of the acquisition thereof, to have agreed to
be subject to and bound by all of the obligations of this
Agreement with respect to such interest
and shall be subject to the provisions of this Agreement with
respect to any subsequent Transfer of such interest.
(e) Any Transfer in contravention of any of
the provisions of this Agreement
shall be null and void and ineffective to transfer any interest
in the LLC, and shall not bind, or
be recognized by, or on the books of, the LLC, and
any transferee or assignee in such
transaction shall not be or be treated as or deemed to be a
Member for any purpose, except to
the extent provided in Section 8.01(d) above. In the
event any Member shall at any time
Transfer an interest in the LLC in contravention of any of the
provisions of this Agreement, then
each other Member shall, in addition to all rights and remedies
at law and equity, be entitled to
a decree or order restraining and enjoining such
transaction, and the offending Member shall not
plead in defense thereto that there would be an adequate
remedy at law; it being expressly
hereby acknowledged and agreed that damages at law
would be an inadequate remedy for a
breach or threatened breach of the provisions of this
Agreement concerning such transactions.
8.03 Transfers of Interests by Members Who Serve as Managers.
(a) A Transfer or assignment of an
interest by a Member who serves as a
Manager shall transfer only the economic interest, rights,
duties and obligations of the transferor
in its capacity as a Member, and no transferee shall obtain,
as a result of such Transfer or
assignment, any rights as a Manager.
(b) A Member serving as a Manager who assigns
or Transfers all (but not less than all) of its interest as a Member
shall be deemed to have tendered his or her resignation as
a Manager to the Board of Managers effective as of the date
of such transfer or assignment. A
majority of the Board of Managers, exclusive of the
resigning member, may accept or reject
such resignation. If accepted, the acceptance date shall be
the effective date of the resignation.
Failure to reject such resignation within thirty (30) days
after the tender thereof shall be deemed
to constitute acceptance of such resignation.
8.04 Permitted Transfers. The following Transfers
shall be permitted without the
approval of the Board of Managers otherwise required
under Section 8.01(a) above, but such
permitted Transfers shall in any event be subject to Sections
8.01(b) and 8.02 hereof:
(a) An interest as a Member of the LLC may
be Transferred from time to time
as a part of any proceeding under the present or any
future federal bankruptcy act or any other
present or future applicable federal, state, or other
statute or law relating to bankruptcy,
insolvency, or other relief for debtors, and subject to the
requirements and provisions thereof.
(b) An interest as a Member of the LLC may
be Transferred from time to time
to any Legal Representative(s) and/or Affiliate(s) and/or
member(s) of the Immediate Family of
the transferring Member.
8.05 Right of First Refusal.
(a) A Member may Transfer the whole or any
portion of his, her or its interest
as a Member of the LLC without the approval of the
Board of Managers otherwise required
under this Agreement if such Member (the "Offering Member")
first obtains a Bona Fide Offer
for the purchase of the entire interest to be Transferred and
makes the interest which is the
subject of the Bona Fide Offer available to the other Members
on a first refusal basis upon the
same terms and provisions as are set forth in such Bona Fide
Offer, in the manner hereinafter
set forth.
(b) The Offering Member shall furnish a
true and complete copy of the Bona
Fide Offer to each other Member, together with full
and fair disclosure of any material
information available as to the proposed transaction and the
parties thereto, and the other
Members shall have a period of sixty (60) days thereafter
within which to elect, by written
notice to the Offering Member (the "Exercise Notice"), to
purchase the entire interest to be
Transferred at the price (the "Purchase Price") and upon the
terms set forth in the Bona Fide
offer. Each Exercise Notice shall contain a statement
of the maximum percentage of the
Offering Member's interest which the Member giving such
notice wishes to purchase, and if
such amounts do not total at least 100% of the Offering
Member's interest which is the subject
of the Bona Fide Offer, then no Member shall have the right
to purchase any interest of the
Offering Member.
(c) If there shall be a dispute as to the
amount of the Offering Member's interest which any Member(s) may
purchase pursuant to Section8.05(b), each Member
participating in any such purchase (a 'Purchasing Member')
shall be entitled to purchase a pro
rata amount of the Offering Member's interest based
upon the Percentage Interest of such
Purchasing Member in relation to the aggregate
Percentage Interests held by all Members
participating in such purchase, unless the Purchasing
Members agree to purchase such interest
based upon an allocation other than such pro rata allocation.
(d) If the interest of the Offering Member is
being purchased by one or more Purchasing Members, the closing shall
take place at the principal office of the LLC, on the date
specified in the Exercise Notice of the Purchasing Member
who is purchasing the largest portion
of such interest (which date shall not be earlier than ten (10)
nor more than thirty (30) days after
the sixtieth (60th) day following delivery of such Exercise
Notice to the Offering Member). At
the closing, the Purchase Price shall be paid by the
Purchasing Member(s) upon the terms set
forth in ft Bona Fide Offer and the Offering Member shall
execute and deliver such instruments
as may be required to vest in the Purchasing Member(s) (or his,
her, its, or their designees) the
interest to be sold free and clear of all liens, claims and
encumbrances. All information, trade
secrets or confidential financial or other data of the LLC
shall be the property of the LLC, and
the Offering Member shall not disclose or use to the
detriment of the other Member(s) any
confidential information, trade secrets or confidential
financial or other data of the LLC;
provided, however, that the offering Member may make
such disclosures as he, she, or it
reasonably believes may be required by law, regulation, or
rule of any government authority
or any court order or other legal process.
(e) If the interest of the offering Member shall not
be purchased by Purchasing
Member(s) as aforesaid, the Offering Member may sell such
interest to the maker of the Bona
Fide offer, but only upon the terms and provisions originally
set forth in the Bona Fide Offer,
provided such sale satisfies the following requirements:
(i) Such sale is concluded within
one hundred twenty (120) days after
the delivery to the offeree of the Bona Fide offer; and
(ii) The maker of the Bona Fide
offer shall enter into a valid and
binding agreement the effect of which will be that
any interest in the LLC which is so
Transferred shall continue to remain subject to the
provisions of this Agreement with the
same force and effect as if such Person had originally
been a party hereto.
ARTICLE IX
Dissolution and Termination
9.01 Events Causing Dissolution. The LLC shall
be dissolved and its affairs wound
up upon:
(a) the sale or other disposition of all or
substantially all of the assets of the
LLC, unless the disposition is a transfer of assets of
the LLC in return for consideration other
than cash and the Board of Managers determines not to
distribute any such non-cash items to the
Members;
(b) subject to the provisions of Section
9.02, upon the death, insanity, retirement, resignation, expulsion,
Bankruptcy, dissolution or occurrence of any other event
which terminates the membership of a Member, except
for a Transfer effected in accordance
with the provisions of Article VIII;
(c) the election to dissolve the LLC made in
writing by the Board of Managers with the Consent of the Members,
(d) any consolidation or merger of the LLC
with or into any entity following
which the LLC is not the resulting or surviving entity;
(e) the occurrence of an Event of Default
following which the non-Defaulter
elects to dissolve the LLC pursuant to the provisions of
Section 10-02(d); or
(f) the occurrence of an event specified
under the laws of the State of
Delaware as one effecting dissolution, except that where,
under the terms of this Agreement or
the Act, the LLC is not to terminate, then the LLC
shall immediately be reconstituted and
reformed on all the applicable terms, conditions, and
provisions of this Agreement,
(g) December 31, 2010.
9.02 Continuation of the LLC.
Notwithstanding the occurrence of an event specified in Section
9.01(b), the LLC shall not be dissolved and its business and
affairs shall not be
discontinued, and the LLC shall remain in existence as a
limited liability company under the
laws of the State of Delaware, if the remaining Members, acting
by Consent, elect within ninety
(90) days after such occurrence to continue the LLC and the
LLC's business. If such election
to continue the LLC and its business is made by one Member,
an additional Member shall be
admitted to the LLC in connection with such election.
9.03 Procedures on Dissolution. Dissolution of
the LLC shall be effective on the day
on which occurs the event giving rise to the dissolution, but
the LLC shall not terminate until
the Certificate shall have been cancelled and the assets of the
LLC shall have been distributed
as provided herein. Notwithstanding the dissolution of the LLC,
prior to the termination of the
LLC, as aforesaid, the business of the LLC and the affairs
of the Members, as such, shall
continue to be governed by this Agreement. The Board of
Managers or, if there be none, a
liquidator appointed with the Consent of the Members, shall
liquidate the assets of the LLC,
apply and distribute the proceeds thereof as contemplated by
this Agreement and cause the
cancellation of the Certificate.
9.04 Management Rights During Winding Up. During the
period of the winding up
of the affairs of the LLC, the rights and obligations of the
Members set forth herein with respect
to the management of the LLC shall continue, For purposes
of winding up, the Board of
Managers shall continue to act as such and shall make all
decisions relating to the conduct of
any business or operations during the winding up period and to
the sale or other disposition of
LLC assets; provided that if the termination of the LLC results
from an Event of Default, the
defaulting Member shall have no further right to participate in
the management or affairs of the
Venture or to attend Board of Manager meetings or vote on
decisions by the Board of Managers,
but shall nonetheless be bound by all decisions made by
the non-Defaulter. Each Member
hereby waives any claims it may have against the non
Defaulter that may arise out of the
management by the non-Defaulter of the LLC, so long as such non
Defaulter acts in good faith.
9.05 Distributions Upon Liquidation. If the LLC is
dissolved for any reason while
there is work in progress on the development or construction of
the Property and Improvements,
winding up of the affairs and termination of the business of
the LLC may include completion
of the work in progress to the extent of constructing and
leasing or selling improvements then
being developed on such Property or Improvements as the
Board of Managers may determine
to be necessary to bring the matters under construction to a
state of completion convenient to
permit a sale of the LLC's interest in such work, giving due
regard to the interests of the
Members.
9.06 Distributions Upon Liquidation.
(a) After payment of liabilities owing to
creditors, the Board of Managers or
liquidator shall set up such reserves as it deems reasonably
necessary for any contingent or
unforeseen liabilities or obligations of the LLC. Said reserves
may be paid over by the Board
of Managers or such liquidator to a bank, to be held in escrow
for the purpose of paying any
such contingent or unforeseen liabilities or obligations and, at
the expiration of such period as
the Board or liquidator may deem advisable, such reserves shall
be distributed to the Members
or their assigns in the manner set forth in paragraph (b) below.
(b) After paying such liabilities and
providing for such reserves, the Board of
Managers or liquidator shall cause the remaining net assets of
the LLC to be distributed to and
among the Members in accordance with their respective
positive Adjusted Capital Account
balances (after such balances have been adjusted to reflect the
allocation of Net Profits or Net
Losses arising from such event pursuant to Sections 5.01, 5.02
and 5.03) . In the event that any
part of such net assets consists of notes or accounts receivable
or other non-cash assets, the
Board of Managers or liquidator may take whatever steps it
deems appropriate to convert such
assets into cash or into any other form which would facilitate
the distribution thereof. If any
assets of the LLC are to be distributed in kind, such assets
shall be distributed on the basis of
their fair market value (net of any liabilities). Any dispute
concerning such fair market value
shall be settled by arbitration in accordance with the
provisions of Article XII.
9.07 Disposition of Documents and Records. All
documents and records of the LLC
including, without limitation, all financial records,
vouchers, canceled checks and bank
statements, shall be delivered to HPP upon termination of the LLC.
ARTICLE X
Default and Dissolution
10.01 Events of Default.
(a) The occurrence of any of the following
events shall constitute an event of
default (an "Event of Default") hereunder on the part of the
Member with respect to whom such
event occurs (a "Defaulting Member") if within thirty (30) days
following notice of such default
from the other Member (ten (10) days if the default is due
solely to the nonpayment of monies),
the Defaulting Member fails to pay such monies, or in the
case of non-monetary defaults, fails
to commence substantial efforts to cure such default or
thereafter fails within a reasonable time
to prosecute to completion with diligence and continuity the
curing of such default; provided,
however, that the Bankruptcy of a Member shall
constitute an Event of Default immediately upon such
occurrence without any requirement of notice or passage
of time (except as specifically set forth in ft definition
of "Bankruptcy" set forth in Article XIV).
(i) the violation by a Member of any
of the restrictions set forth in
Article VIII of this Agreement upon the right of a Member
to transfer her or its interest
in the LLC;
(ii) the Bankruptcy of a Member; and
(iii) a default in the performance of or
a failure to comply with any other material agreements, obligations or
undertakings of a Member herein contained.
10.02 Election of Non-Defaulting Member.
(a) Upon the occurrence of an Event of
Default by a Defaulting Member, the
Non-Defaulting Member shall have the right to acquire the
interest of the Defaulting Member
for cash, except as provided in Section 10,02 (b) hereof, at a
price determined pursuant to the
appraisal procedures set forth in Article XI, subject to
adjustment as set forth in Section 10.03
(b). In furtherance of such right, the Non-Defaulting
Member may notify the Defaulting
Member at any time following an Event of Default of the Non
Defaulting Member's election to institute the appraisal
procedures set forth in Article )U. Upon the determination of
the value of the Defaulting Member's interest, the Non
Defaulting Member may notify the Defaulting Member of the
election by the Non-Defaulting Member to purchase the interest
of the Defaulting Member.
(b) In the event that an Event of Default
consists of the Bankruptcy of the
Defaulting Member, the Non-Defaulting Member shall have the
right to purchase the Defaulting Member's interest by
payment of twenty percent (20%) of the purchase price (as
determined by the appraisal procedure pursuant to Article XI)
for such interest at closing, the balance of the purchase
price to be payable in equal monthly installments over a period
of five (5) years, the unpaid balance to bear interest at
the Designated Prime Rate as of the date of closing, with the
right of prepayment of any amount at any time without premium.
(c) The closing of the purchase shall take
place as provided in Section 10.03;
provided, that upon the closing of such purchase the Non
Defaulting Member may elect to offset against the purchase
price the amount of any loss, damage or injury, the amount
of which has been established by a final non-appealable
judgment, caused to it by the default of the Defaulting
Member.
(d) If the Non-Defaulting Member does not elect
to acquire the entire interest of the Defaulting Member as set forth in
Section 10.02 (a), the Non-Defaulting Member may elect to dissolve and
terminate the LLC pursuant to Section 9.01 of this Agreement
by written notice to the Defaulting Member. The right of
the Non-Defaulting Member to institute the procedures for
purchase of the Defaulting Member's interest as set forth in
this Section 10.02 shall continue unless and until such
NonDefaulting Member elects to exercise its right to
terminate the LLC as provided in this Section-10.02 (d).
10.03 Closing.
(a) The closing of any sale of an interest in
the LLC pursuant to this Article
X (the "Closing") shall be held at the principal office of the
LLC, unless otherwise mutually
agreed, on a mutually acceptable date not more than sixty (60)
days after receipt of written
notice from the Non-Defaulting Member to purchase the
interest of the Defaulting Member pursuant to the provisions
of Section 10.02 and the determination of the value of the
Defaulting Member's interest pursuant to the appraisal
procedures set forth in Article XI.
(b) At the Closing, any closing
adjustments which are then usual and
customary, shall be made between the purchasing party or parties
and each selling party as of
the date of Closing- The price to be paid for a selling Member's
interest also shall be adjusted
as follows, There shall be determined, as of the date of the
Closing, (i) the aggregate amount
of all additional capital contributions made by the selling
Member pursuant to the provisions of
this Agreement between the date as of which the price for such
interest was established and the
date of the Closing, and (ii) the aggregate amount of all
distributions, whether of capital or
otherwise, made to the selling Member during such period
pursuant to the provisions of Article IV. If the amount
determined under clause (i) exceeds the amount determined
under clause (ii), the price shall be increased by an amount
equal to such excess-, if the amount determined under clause
(ii) exceeds the amount determined under clause (i), the price
shall be decreased by an amount equal to such excess. Any
Member transferring its or his interest shall transfer
such interest free and clear of any liens, encumbrances or any
interests of any third party and shall execute or cause to be
executed any and all documents required to fully transfer
such Interest to the acquiring Members, including, but not
limited to, any documents necessary to evidence such
transfer, and all documents required to release any interest
of a Member's spouse or any other party who may claim an
interest in such interest. Any monetary default by the
selling Member must be cured out of the proceeds from such
sale at the Closing. Following the date of Closing, the
selling Member shall have no further rights to any distributions
of Distributable Cash, other LLC income or any distributions
attributable to any period or event following the date of
Closing and all such rights shall vest in the selling Member's
transferee.
ARTICLE XI
Appraisal
11.01 General. Whenever this Agreement provides
for the valuation of an interest in
the LLC to be purchased or sold, the value of such interest in
the LLC shall be determined as
follows. The parties shall first attempt to agree upon the
"net fair market value' of the LLC
and of the Interests in the LLC to be purchased or sold. The
'net fair market value' of the LLC
shall mean the cash price which a sophisticated purchaser would
pay on the effective date of the appraisal for all
tangible assets of the LLC in excess of the mortgages or
other liens then encumbering the LLC's assets, such valuation to be made on
the assumption that such assets are subject to the terms and
conditions of this Agreement and to any other agreements,
including leases, management and service agreements then in
effect. A sophisticated purchaser shall be one who would
take into account the nature, extent, maturity date,
and other terms of the liabilities of the LLC, whether fixed
or contingent, including the favorable or unfavorable nature
of any mortgages or other liens then encumbering the
Property or other LLC assets, and the prospects that the
income from the LLC assets would be sufficient to satisfy such
liabilities when due, excluding any liability under any
financing already taken into account, The "net fair
market value" of an interest shall mean the value of the
interest to be sold or purchased, based on the net fair
market value of the LLC, and subject to the terms and
provisions of this Agreement.
11.02 Appraisal Procedures. In the event that the
Members are unable to mutually agree upon the net fair
market value of the LLC and of the interests to be sold or
purchased within thirty (30) days following the date on which
the appraisal procedures set forth in this Article XI are
instituted as provided in this Agreement, the Members
shall attempt to agree upon the appointment of three (3)
disinterested appraisers who shall be members of the American
Institute of Appraisers. If the Members are unable to agree
upon the selection of three (3) appraisers within seventy
five (75) days of the date the appraisal procedures are
instituted as Provided in this Agreement, then a petition
may be made by either Member to the presiding judge
of the Superior Court for the Commonwealth of
Massachusetts, County of Suffolk, for such selection.
Each Member shall have the right to submit the names of
three (3) appraisers so qualified and the judge shall
select the three (3) appraisers from the names so
submitted. Each appraiser so selected shall furnish the
Members and the certified public accountants for the LLC
with a written appraisal within ninety (90) days following his
selection, setting forth his determination of the net fair
market value of all real estate and other tangible assets
owned by the LLC as of the date of the application to the
Superior Court. Such appraisal shall assume that the use
of the Property shall be the highest and best use thereof, and
the appraisal shall not include any value for any
intangible assets of the LLC, such as goodwill. The
average of the two closest valuations of such appraisers
shall be treated as the net fair market value of the LLC
and of the interests to be sold or purchased hereunder and
such determination shall be final and binding on the
Members. The cost of the appraisal shall be an expense of the
LLC.
ARTICLE XII
Arbitration
12.01 Initiation. In such cases where this
Agreement provides for the determination of
any matter by arbitration, the game shall be settled and
finally determined by arbitration in the
City of Boston, Massachusetts in accordance with the
Rules of Commercial Arbitration of the American
Arbitration Association, or its successor, or in any
case where the American Arbitration Association, or its successor, is
not in existence or fails or refuses to act within a
reasonably prompt period of time (but in no event
exceeding sixty (60) days from the date a request for
arbitration is filed), the arbitration shall proceed in
accordance with the laws relating to arbitration then in
effect in the Commonwealth of Massachusetts. Any
arbitration pursuant to this Agreement shall be conducted
by three (3) arbitrators, The judgment upon the award
rendered in any such arbitration shall be final and binding
upon the parties and may be entered in any court having
jurisdiction thereof.
12.02 Costs. All fees and expenses of the arbitrators
and all other expenses of the
arbitration, except for attorneys' fees, shall be shared by
the Members in accordance with their respective Percentage
Interests. Each Member shall bear its own attorneys' fees.
ARTICLE XIII
General Provisions
13-01 Notices. Except for notices of meetings of
Managers and Members, notice of which shall be given in
the manner provided in Sections 6,02(h) and 6.0a(e),
respectively, any and all notices under this Agreement shall
be effective (a) on the fourth business day after being
sent by registered or certified mail, return receipt requested,
postage prepaid, (b) on the first business day after
being sent by express mail, receipt confirmed telecopy,
or commercial overnight delivery service providing a receipt
for delivery, (c) on the date of hand delivery or (d) on
the date actually received, if sent by any other method. In
order to be effective, all such notices shall be addressed,
if to the LLC at its registered office under the Act, if
to a Member at the last address of record on the XXX xxxxx,
and copies of such notices shall also be sent to the last
address for the recipient which is known to the sender, if
different from the address so specified.
13.02 Word Meanings. The words such as "herein,"
"hereinafter," and "hereunder" refer to this Agreement as a
whole and not merely to a subdivision in which such
words appear unless the context otherwise requires. The
singular shall include the plural and the masculine gender
shall include the feminine and neuter, and vice versa,
unless the context otherwise requires.
13.03 Binding Provisions. Subject to the restrictions
on transfers set forth herein, the
covenants and agreements contained herein shall be binding
upon, and inure to the benefit of,
the parties hereto, their heirs, Legal Representatives,
successors and assigns.
13.04 Applicable Law. This Agreement shall be
construed and enforced in accordance
with the laws of the State of Delaware, including the Act, as
interpreted by the courts of the
State of Delaware, notwithstanding any rules regarding choice
of law to the contrary.
13.05 Counterparts. This Agreement may be executed
in several counterparts and as
so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all
of the parties have not signed the original or the same
counterpart.
13 .06 Separability of Provisions. Each provision of
this Agreement shall be considered
separable.
13.07 Section Titles. Section titles are for
descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in
the text.
13.08 Amendments. Except as otherwise specifically
provided in this Agreement, this
Agreement may be amended or modified only with the Consent of
the Members.
13-09 Third Party Beneficiaries. The provisions of
this Agreement, including Article
III (except Section 3.02), are not intended to be for the
benefit of any creditor (other than a
Member who is a creditor) or other Person (other than a Member
or Manager in his, her or its capacity as such) to whom
any debts, liabilities or obligations are owed by (or who
otherwise have any claim against) the- LLC or any of the
Members or Managers. Moreover, notwithstanding
anything contained in this Agreement, including without
limitation Article III (except Section 3,02), no such
creditor or other Person shall obtain any rights under
this Agreement or shall, by reason of this Agreement, make
any claim in respect of any debt, liability or obligation
(or otherwise) against the LLC or any Member or Manager.
13. 10 Entire Agreement. This Agreement
embodies the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
To the extent that any provision of this Agreement is
prohibited or ineffective under the
Act, this Agreement shall be considered amended to the,
smallest degree possible in order to
make the Agreement effective under the Act (and, if
the Act is subsequently amended or interpreted in such
manner as to make effective any provision of this
Agreement that was formerly rendered invalid, such
provision shall automatically be considered to be valid
from the effective date of such amendment or
interpretation). The Members and Managers hereby agree
that each Member and each Manager shall be entitled to
rely on the provisions of this Agreement, and no
Member or Manager shall be liable to the LLC or any
other Member or Manager for any action or refusal to
act taken in good faith reliance on the terms of this
Agreement.
The Members and the Managers hereby agree that
the duties and obligations imposed on the Members and
Managers as such shall be those set forth in this
Agreement, which is intended to govern the relationship
among the LLC, the Members and the Managers,
notwithstanding any provision of the Act or common law to the
contrary.
13 .11 Waiver of Partition. Each Member agrees that
irreparable damage would be done to the LLC if any Member
brought an action in court to dissolve the LLC.
Accordingly, unless otherwise expressly authorized in this
Agreement, each Member agrees that he, she or it shall
not, either directly or indirectly, take any action to require
partition or appraisal of the LLC or of any of the
assets or properties of the LLC, and notwithstanding
any provisions of this Agreement to the contrary, each Member
(and his, her or its successors and assigns) accepts
the provisions of the Agreement as his, her or its sole
entitlement on termination, dissolution and/or liquidation
of the LLC and hereby irrevocably waives any and all
right to maintain any action for partition or to compel any
sale or other liquidation with respect to his, her or its
interest, in or with respect to, any assets or properties
of the LLC; and each Member agrees that he, she or it
will not petition a court for the dissolution, termination or
liquidation of the LLC.
13.12 Survival of Certain Provisions. The Members
acknowledge and agree that this Agreement contains
certain terms and conditions which are intended to
survive the dissolution and termination of the LLC,
including without limitation, the provisions of Sections
2.05 and 6.9. The Members agree that such provisions of this
Agreement which by their terms require, given their
context, that they survive the dissolution and
termination of the LLC so as to effectuate the intended
purposes and agreements of the Members, shall survive
notwithstanding that such provisions had not been
specifically identified as surviving and notwithstanding
the dissolution and termination of the LLC or the
execution of any document terminating this Agreement,
unless such termination document specifically provides for
nonsurvival by reference to this Section 10.12 and to specific
nonsurviving provisions.
ARTICLE XIV
Definitions
The following capitalized terms used in this
Agreement shall have the respective
meanings ascribed to them below:
"Act" means the Delaware Limited Liability Company
Act, in effect at the time of the
initial filing of the, Certificate with the Office of the
Secretary of State of the State of Delaware,
and as thereafter amended from time to time.
"Adjusted Capital Account" means an offer which
complies with the following conditions:
(i) The offer shall be in writing and shall
constitute an agreement legally binding on the offeror
without any material conditions precedent or right on
the part of the offeror to withdraw the offer within sixty
(60) days-,
(ii) The offeror shall be a financially responsible Person,
(iii) The offer shall be for a purchase solely
for cash payable all at the time of sale; and
(iv) The offeror shall be a Person who is not
an Affiliate of the Offering Member(s) For this purpose
the term 'Affiliate' shall include, in addition to the
Persons specified in the definition thereof, all
beneficial owners of the specified Person and members
of the Immediate Family of such beneficial owners.
"Budget" shall have the meaning set forth in Section 6.06(a).
"Capital Account" means a separate account
maintained for each Member and adjusted in accordance
with Treasury Regulations under Section 704 of the
Code. To the extent consistent with such Treasury
Regulations, the adjustments to such accounts shall
include the following:
(i) There shall be credited to each Member's
Capital Account the amount of any cash (which shall
not include imputed or actual interest on any
deferred contributions) actually contributed by such
Member to the capital of the LLC, the fair market value
(without regard to Code Section 7701(g)) of any
property contributed by such Member to the capital of the
LLC (net of any liabilities secured by such property
that the LLC is considered to assume or take
subject to under Code Section 752) and such Member's share
of the Net Profits and Gross Income of the LLC and
of any items in ft nature of income or gain separately
allocated to the Members; and there shall be charged against each
Member's Capital Account the amount of all cash
distributions to such Member, the fair market value
(without regard to Code Section 7701(g)) of any
property distributed to such Member by the LLC (net
of any liability secured by such property that
the Member is considered to assume or take subject to under
Code Section 752) and such Member's share of the Net
Losses of the LLC and of any items in the nature of
losses or deductions separately allocated to the Members.
(ii) If the LLC at any time distributes any of
its assets in-kind to any Member, the Capital Account
of each Member shall be adjusted to account for that
Member's allocable share of the Net Profits, Net Losses
or Gross Income that would have been realized by
the LLC had it sold the assets that were distributed at
their respective fair market values (taking Code Section
7701(g) into account) immediately prior to their distribution.
(iii) In the event any interest in the LLC
is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to
the transferred interest.
"Capital Transaction" means a sale or other
disposition of all or a portion of the LLC's property
in a single transaction or in a series of related
transactions.
"Xxxxxx Equity" means the capital contribution made to
the LLC by Xxxxxxx X. Xxxxxx in the
amount of $650,000, upon which amount Xxxxxxx X.
Xxxxxx shall receive a preferred return at the annual
rate of twelve percent (12%) as set forth in Section 401.
"Carring Value" means, with respect to any
asset, the asset's adjusted basis for federal income
tax purposes, except as follows:
(i) The initial Carrying Value of any
asset contributed to the LLC shall be
such asset's gross fair market value at the time of such contribution;
(ii) The Carrying Values of all LLC
assets shall be adjusted to equal their respective
gross fair market values upon an election by the LLC
pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(f) to
adjust the Members' Capital Accounts;
(iii) If the adjusted basis of any asset
acquired by the LLC is determined by reference to
the madjusted basis of any other asset of the LLC, the
Carrying Value of the acquired asset shall be
determined by reference to the Carrying Value of the other asset
rather than its adjusted basis; and
(iv) If the Carrying Value of an asset
has been determined pursuant to clause (i), (ii) or
(iii) of this definition, such Carrying Value shall
thereafter be adjusted in the same manner as would
the asset's adjusted basis for federal income tax purposes
except that depreciation deductions shall be computed
in accordance with clause (i) of the definition of
"Net Profits" and "Net Losses".
"Certificate" means the Certificate of
Formation creating the LLC, as it may, from time to
time, be amended in accordance with the Act.
"Closing" shall have the meaning set forth in
Section 10.03(a).
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Consent" means the written consent or
approval of more than 50% in interest, based on the
Percentage, Interests of the Members as specified on
Schedule B of those Members entitled to
participate in giving such Consent, and if more than one class
of members is so entitled then more than 50% shall be so
required with respect to each such class.
"Defaulting, Member" shall have the meaning set
forth in Section 10.01(a).
"Distributable Cash" means, with respect to any fiscal
period, the excess of all cash
receipts of the LLC from any source whatsoever, including
normal operations, sales of assets, proceeds of
borrowings, capital contributions of the Members,
proceeds from a Capital Transaction, and any and all other
sources over the sum of the following amounts:
(i) cash disbursements for advertising and
promotion expenses, salaries, employee
benefits (including profit-sharing, bonus and similar
plans), fringe benefits, accounting and
bookkeeping services and equipment, costs of sales of
assets, utilities, rental payments with
respect to equipment or real property, management fees
and expenses, insurance, real estate taxes, legal
expenses, costs of repairs and maintenance, and any and all
other items which are customarily considered to be
"operating expenses";
(ii) payments of interest, principal and
premium and points and other costs of
borrowing under any indebtedness of the LLC, including
without limitation (A) any mortgages or deeds of trust
encumbering the real property or other assets owned or leased
by the LLC, and (B) the Xxxxxx Loan, but specifically
excluding payments of any kind in respect of any loan made
by a Member pursuant to Article III;
(iii) payments made to purchase capital
assets, and for capital construction,
rehabilitation, acquisitions, alterations and improvements; and
(iv) amounts set aside as reserves for
working capital, contingent liabilities,
replacements or for any of the expenditures described in
clauses (i), (ii) and (iii) above which
are deemed by the Board of Managers to be necessary to meet
the current and anticipated future needs of the LLC.
"Economic Risk of Loss" means the risk as
determined under Treasury Regulation Section 1.752-2
(taking all applicable 'grandfathering' rules into
account) that a member or person related to a member will suffer an
economic loss as a result of the failure of the limited
liability company to repay a liability.
"Excess Negative Balance" for a Member means the
excess, if any, of (i) the negative balance in a
Member's Capital Account after reducing such balance by
the net adjustments, allocations and distributions
described in Treasury Regulation Section 1.704-I(b)(2)(ii)(d)(4), (5)
and (6) which, as of the end of the LLC's taxable year are
reasonably expected to be made to such Member, over
(ii) the sum of (A) the amount, if any, which the
Member is required to restore to the LLC upon liquidation
of such Member's interest in the LLC (or which is so
treated pursuant to Treasury Regulations Section l@704-
1(b)(2)(ii)(c)), (13) the Member's Share of Minimum Gain
and (C) that portion of any indebtedness of the LLC
(other than Partner Nonrecourse Debt) with respect to which
the Member bears the Economic Risk of Loss that such
indebtedness would not be repaid out of the LLC's assets if all of the
LLC's assets were sold at their respective Carrying
Values as of the end of the fiscal year or other period and
the proceeds from the sales together with any amounts
described in clause (A), above, were used to pay the
LLC's liabilities.
"Gross Income" means, for each fiscal year or
other period, an amount equal to the
LLC's gross income as determined for federal income tax
purposes for such fiscal year or period but computed
with the adjustments specified in clauses (i), (ii) and (iii)
of the definition of
'Net Profits' and 'Net Losses".
"Xxxxxx Loan" means the loan in the original principal
amount of $7,000,000 made to the LLC by Xxxxxx
Financial, Inc. and secured by a first mortgage lien on the
Property.
"HPP" means Historic Preservation Properties
1989 Limited Partnership, a Delaware limited
partnership, and its successors and assigns.
"Immediate Family" (i) with respect to any
individual, means his ancestors, spouse,
issue, spouses of issue, any trustee or trustees,
including successor and additional trustees,
principally for the benefit of any one or more of such
individuals, and any entity or entities all
of the beneficial owners of which are such trusts and/or such
individuals, but (ii) with respect
to a legal Representative, means the Immediate Family of
the individual for whom such Legal Representative was
appointed and (iii) with respect to a trustee, means the
Immediate Family of the individual with respect to whom the
principal beneficiaries are members of the Immediate
Family.
"Invested Capital" means, at any point in time,
for any Member, the excess of (i) the
aggregate amount of the capital contributed to the LLC by
such Member over (ii) the aggregate amount distributed
(or deemed distributed) to such Member pursuant to Section 4.01(c).
"Legal Presentative" means, with respect to any
individual, a duly appointed executor,
administrator, guardian, conservator, personal
representative or other legal representative
appointed as a result of the death or incompetency of such
individual.
'LLC" means the limited liability company
formed pursuant to the Certificate and this Agreement,
as it may from time to time be constituted and amended.
"LLC Capital" means an amount equal to the
sum of all of the Members' Adjusted Capital Account
balances determined immediately prior to the
allocation to the Members pursuant to Sections
5.01(b)(ii) or 5.01(c)(i) of any Net Profits or Net Losses from a sale
or other disposition of the assets of the LLC other than in
the ordinary course of the LLC's trade or business,
increased by the aggregate amount of Net Profits to be
allocated to the Members pursuant to Section 5.01(b)(ii)
as a result of such sale or other disposition or decreased
by the aggregate amount of Net Losses to be allocated to
the Members pursuant to Section 5.01(c)(i) as a result of
such sale or other disposition.
"Major Decision" shall have the meaning set forth in
Section 6.%(b).
"Manager" shall refer to any Person named as
manager in this Agreement and any Person who becomes a
manager as permitted by this Agreement, in each such
Person's capacity as (during the period during which such
Person serves as) a member of the Board of Managers of
the LLC. "Managers" or the "Board of Managers" shall refer
collectively to all of such Persons named as Managers
in this Agreement and any Person who becomes a Manager as
permitted by this Agreement. in their capacity as (during
the period during which such Persons serves as) Managers of the LLC.
"Member" shall refer to any Person named as
Member in this Agreement and any Person who becomes an
additional, substitute or replacement Member as permitted
by this Agreement, in such Person's capacity as a Member of
the LLC. 'Members' shall refer collectively to all such
Persons in such capacity,
"Minimum Gain" means the amount determined by
computing with respect to each Nonrecourse Debt of the
LLC, the amount of Gross Income, if any, that would be
realized by the LLC if it disposed of the property securing
such debt in full satisfaction thereof, and by then
aggregating the amounts so computed. For purposes of
determining the amount of such Gross Income with respect
to a liability, the Carrying Value of the asset securing the
liability shall be allocated among all the liabilities that
the asset secures in the manner set forth in Treasury
Regulation Section 1.7042(d)(2).
"Net Profits" and "Net Losses," mean the taxable
income or loss, as the case may be, for
a period as determined in accordance with Code Section
703(a) computed with the following adjustments:
(i) Items of gain, loss, and deduction shall be
computed based upon the Carrying Values of the LLC's assets rather
than upon the assets, adjusted bases for federal income tax
purposes, and, in particular, except to the extent required
by Treasury Regulation Section 1. 704- 3, the amount of any
deductions for depreciation or amortization with respect to
an asset for a period shall equal such asset's Carrying
Value multiplied by a fraction the numerator of which
shall be the amount of depreciation or amortization with
respect to such asset allowable for federal income tax,
purposes for such period and the denominator of which shall
be such asset's adjusted basis;
(ii) Any tax-exempt income received by the LLC shall
be included as an item of gross income;
(iii) The amount of any adjustments to the Carrying
Values of any assets of the LLC pursuant to Code Section 743 shall not
be taken into account;
(iv) Any expenditure of the LLC described in
Code Section 705(a)(2)(B) (including
any expenditures treated as being described in Section
705(a)(2)(B) pursuant to Treasury Regulations under Code
Section 704(b)) shall be treated as a deductible expense; and
(v) The amount of Gross Income and
Nonrecourse Deductions specially allocated to any Members
pursuant to Section 5,01, 5,02 and 5.03 shall not be
included in the computation,
"Nonrecourse Debt' means any liability of a limited
liability company to the extent that
the liability is nonrecourse for purposes of Treasury
Regulation Section 1. 100 1 -2 .
"Nonrecourse Deductions" for a taxable year
means deductions funded by Nonrecourse Debt (as determined
under Treasury Regulation Sections 1.704-2(c) and 1-704-
2(i)(2)) for such year and are generally equal to the excess,
if any, of (i) the net increase in Minimum Gain
during such year over (ii) the sum of (A) the aggregate
distributions of proceeds from Nonrecourse Debts
attributable to increases in Minimum Gain during such year
and (B) increases in Minimum Gain during such year
attributable to conversions of liabilities into
Nonrecourse Debts.
"Partner Nonrecourse Debt" means any Nonrecourse
Debt to the extent that a member bears the Economic
Risk of Loss associated with the debt.
"Percentage Interest" shall be the percentage
interest of a Member set forth in Schedule
as amended from time to time.
"Person" means any natural person, corporation,
partnership (whether general or limited), limited
liability company, trust, estate, association, or other
unincorporated entity.
"Preferred Return" means. with respect to a
specified fiscal year of the Company, an
amount which, when added to all other cash available to
HPP from its operations or any other source in such
fiscal year, equals $140,000.
"Property" means the real estate, together with
the improvements thereon, located in St.
Xxxx, Minnesota and more particularly described in Exhibit A attached hereto,
"Property Management Agreement" means the
property management agreement in effect from time to time
between the LLC and the Property Manager.
"Property Manager" means Claremont
Management Company, a Massachusetts corporation,
and its successors, or any other manager appointed from time
to time with the consent of the Members.
"Securities Act" means the Securities Act of1933, as amended.
"Share of Minimum Gain" means, for each
Member, the sum of such Member's share of Minimum
Gain attributable to Nonrecourse Debt other than Partner
Nonrecourse Debt (computed in accordance with Treasury
Regulation Section 1.704-2(g)) and such Member's share
of Minimum Gain attributable to Partner Nonrecourse
Debt (computed in accordance with Treasury Regulation
Section 1.7042(i)(5)).
"Transfer" and any grammatical variation thereof
shall refer to any sale, exchange, issuance, redemption, assignment,
distribution,encumbrance, hypothecation, gift, pledge, retirement,
resignation, transfer or other withdrawal, disposition or
alienation in any way (whether voluntarily, involuntarily
or by operation of law) as to any interest as a
Member. Transfer shall specifically, without limitation of the
above, include assignments and distributions resulting from
death, incompetency, Bankruptcy, liquidation and dissolution.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement under seal as; of the day and year first above written.
MANAGERS:
Xxxxxxx Xxxxxx
Xxxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx, Xx.
MEMBERS:
HISTORIC PRESERVATION
PROPERTIES 1989
LIMITED PARTNERSHIP, a
Delaware limited
partnership, by its general
partner, Boston Historic
Partners Limited
Partnership, by its general
partners
By: Portfolio Advisory Services,
Inc.
Xxxxxxxx X. Xxxxxxxx, President
Xxxxxxx X. Xxxxxx
SCHEDULE A
TO
OPERATING AGREEMENT
OF LLC
MANAGERS
Xxxxxxx Xxxxxx
c/o Claremont Companies
Batterymarch Park II
Xxxxxx, XX 00000
Xxxxxxxx X. Xxxxxxxx
x/x Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx Xxxx 00
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxx, Xx.
c/o Claremont Companies
Batterymarch Park 11
Xxxxxx, XX 00000
SCHEDULE B
TO
OPERATING AGREEMENT
OF LLC
MEMBERS
Percentage Interest
as to Profits and Percentage
Capital losses from Interset in all
Member Contribution Operations other respects
Historic Preservation $100 50% 50%
Properties 1989 Limited
Partnership x/x
Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx Xxxx XX
Xxxxxx, XX 00000
Xxxxxxx B- Xxxxxx $650,000 50% 50%
x/x Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx Xxxx XX
Xxxxxx, XX 00000
