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EXHIBIT 10.46
OPERATING AGREEMENT
OF
APTEK MAINTENANCE SERVICES LLC
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS 1
ARTICLE II
FORMATION 8
2.1 ORGANIZATION 8
2.2 AGREEMENT, EFFECT OF INCONSISTENCIES WITH ACT 8
2.3 NAME 8
2.4 EFFECTIVE DATE 9
2.5 TERM 9
2.6 REGISTERED AGENT AND OFFICE 9
2.7 PRINCIPAL OFFICE; OTHER OFFICES 9
2.8 CONSULTING FEES 9
2.9 FOREIGN QUALIFICATION 10
ARTICLE III
NATURE OF BUSINESS 10
ARTICLE IV
ACCOUNTING AND RECORDS 10
4.1 ACCESS TO INFORMATION 10
4.2 AUDITS 10
4.3 RECORDS TO BE MAINTAINED 11
4.4 REPORTS TO MEMBERS 11
4.5 ADOPTION AND APPROVAL OF ANNUAL BUDGET 12
ARTICLE V
MEMBERSHIP INTERESTS 12
5.1 MEMBERSHIP INTERESTS 12
5.2 INITIAL OWNERSHIP OF MEMBERSHIP INTERESTS 13
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS 13
6.1 MANAGEMENT RIGHTS 13
6.2 ACTION BY MEMBERS 16
6.3 LIABILITY OF MEMBERS 16
6.4 INDEMNIFICATION 16
6.5 REPRESENTATIONS AND WARRANTIES 17
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6.6 CONFLICTS OF INTEREST 18
ARTICLE VII
MEMBER-MANAGERS 19
7.1 MEMBER-MANAGERS 19
7.2 TERM OF MEMBER-MANAGER 19
7.3 AUTHORITY OF MEMBERS TO BIND THE COMPANY 20
7.4 STANDARD OF CARE 21
ARTICLE VIII
CONTRIBUTIONS AND CAPITAL ACCOUNTS 21
8.1 INITIAL CONTRIBUTIONS 21
8.2 ADDITIONAL CONTRIBUTIONS 21
8.3 MAINTENANCE OF CAPITAL ACCOUNTS 22
8.4 COMPLIANCE WITH SECTION 704(B) OF THE CODE 22
8.5 ADVANCES 22
ARTICLE IX
DISTRIBUTIONS AND ALLOCATIONS 23
9.1 DISTRIBUTIONS 23
9.2 ALLOCATIONS 23
ARTICLE X
TAXES 27
10.1 ELECTIONS 27
10.2 TAXES OF TAXING JURISDICTIONS 28
10.3 TAX MATTERS MEMBER 28
10.4 ACCRUAL METHOD OF ACCOUNTING 28
10.5 CONSISTENT REPORTING 28
ARTICLE XI
DISPOSITION OF MEMBERSHIP INTERESTS; CHANGE IN CONTROL 29
11.1 DISPOSITION 29
11.2 PERMITTED ASSIGNMENTS 29
11.3 COMPLIANCE WITH SECURITIES LAWS 30
11.4 CALL OPTION AGREEMENT 30
11.5 CHANGE IN CONTROL 33
ARTICLE XII
DISSOCIATION OF A MEMBER 34
12.2 PURCHASE OF DISSOCIATED MEMBER'S MEMBERSHIP INTEREST 34
12.3 PURCHASE PRICE OF DISSOCIATED MEMBER'S MEMBERSHIP INTEREST 35
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12.4 DAMAGES 35
ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS; WITHDRAWAL
RIGHTS OF MEMBERS; EXCLUSION OF MEMBERS 36
13.1 ADMISSION OF SUBSTITUTE MEMBERS 36
13.2 ADMISSION OF PERMITTED TRANSFEREES 36
13.3 ADMISSION OF ADDITIONAL MEMBERS 36
13.4 WITHDRAWAL RIGHTS OF MEMBERS 36
13.5 EXPULSION OF MEMBERS 36
ARTICLE XIV
DISSOLUTION AND WINDING UP 36
14.1 DISSOLUTION 36
14.2 EFFECT OF DISSOLUTION 37
14.3 DISTRIBUTION OF ASSETS ON DISSOLUTION 37
14.4 WINDING UP AND CERTIFICATE OF DISSOLUTION 37
ARTICLE XV
AMENDMENT 38
ARTICLE XVI
MISCELLANEOUS PROVISIONS 38
16.1 NOTICE 38
16.2 NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES 39
16.3 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER THIS AGREEMENT 39
16.4 GOVERNING LAW 39
16.5 ARBITRATION 40
16.6 COUNTERPARTS 40
16.7 RULES OF CONSTRUCTION 40
16.8 SPECIFIC PERFORMANCE 41
16.9 KEY MAN INSURANCE 41
16.10 OTHER INSURANCE 41
ARTICLE XVII
NHP INCORPORATED GUARANTY 42
17.1 GUARANTY 42
17.2 NATURE OF GUARANTY 42
17.3 REPRESENTATIONS AND WARRANTIES 42
17.4 OWNERSHIP OF NHP 42
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ARTICLE XVIII
BIDDING PROCEDURES FOR NHP INCORPORATED 43
18.1 NHP MAINTENANCE CONTRACTS IN COMPLIANCE WITH THIS ARTICLE 43
18.2 PARTICIPATION IN BUDGETING AND PLANNING PROCEDURES 44
18.3 ANNUAL REQUIREMENTS CONTRACTS 45
18.4 BIDDING PROCEDURES 45
18.5 BOOKS AND RECORDS 46
18.6 TIMELY CONSULTATION 46
18.7 TERMINATION OF ARTICLE XVIII UPON SALE 47
18.8 TERMINATION OF ARTICLE XVIII FOR PROPERTIES OUTSIDE THE
NEW YORK TRADE AREA 47
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OPERATING AGREEMENT
OF
APTEK MAINTENANCE SERVICES LLC
This Operating Agreement (this "Agreement") of Aptek Maintenance Services
LLC, a Delaware limited liability company organized pursuant to the Act (the
"Company"), is entered into and shall be effective as of the Effective Date, by
and among the Company and the Persons executing this Agreement as Members.
ARTICLE I
DEFINITIONS
For purposes of this Agreement, unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
ACT - The Delaware Limited Liability Company Act, 6 Del-C. Section 18-101,
ET SEQ., and any successor statute, as amended from time to time.
ADDITIONAL MEMBER - A Member other than an Initial Member or a Substitute
Member who has acquired a Membership Interest from the Company.
ADJUSTED CAPITAL ACCOUNT DEFICIT - With respect to any Member, the deficit
balance, if any, in such Member's Capital Account as of the end of the relevant
taxable year, after giving effect to the following adjustments:
(I) SUCH DEFICIT SHALL BE DECREASED BY ANY AMOUNTS WHICH SUCH
MEMBER IS DEEMED TO BE OBLIGATED TO RESTORE, PURSUANT TO REGULATION Section
1.704-2(G)(1); AND
(II) SUCH DEFICIT SHALL BE INCREASED BY THE ITEMS DESCRIBED IN
REGULATIONS SectionSection1.704-1(B)(2)(II)(D)(4), (5) AND (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulation Section1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
ADMISSION AGREEMENT - The Agreement between an Additional Member and the
Company described in Article 13 or a Substitute Member and the Company, pursuant
to which an Additional Member or a Substitute Member becomes a Member of the
Company.
AFFILIATE - An individual or Organization is an affiliate of a Person if
such individual or Organization: (i) directly or indirectly controls or has the
power to control
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the Person; (ii) is directly or indirectly controlled by the Person; or (iii) is
directly or indirectly controlled by a third party or parties that also controls
or has the power to control the Person. For the purposes of this definition,
the term "control" and its variations shall mean the possession directly or
indirectly of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise. The parties hereto acknowledge and agree that the
Initial Members shall not be deemed to be Affiliates of one another.
Furthermore, NHP Partners, the NHP Foundation and Harvard Management, and their
respective Affiliates, shall be deemed to be Affiliates of NHP Incorporated.
AGREEMENT - This Operating Agreement including all amendments adopted in
accordance with this Agreement and the Act.
ANNUAL BUDGET - An annual budget for the Company's operations and financing
requirements for each fiscal year of the Company as adopted by the Members in
accordance with Section 4.5.
ASSIGNEE - A Person to whom a Membership Interest has been transferred who
has not been admitted as a Substituted Member.
BANKRUPT MEMBER - Any Member:
(a) that (i) makes a general assignment for the benefit of creditors,
(ii) files a voluntary bankruptcy petition, (iii) becomes the subject of an
order for relief or is declared insolvent in any federal or state bankruptcy or
insolvency proceeding, (iv) files a petition or answer seeking for such Member a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any law, (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such Member in a proceeding of the type described in clauses (i)-
(iv), or (vi) seeks, consents to, or acquiesces in the appointment of a trustee,
receiver, or liquidator of the Member or of all or any substantial part of the
Member's properties, or
(b) with respect to which (i) a proceeding is commenced seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any law and 90 days have expired without
the proceeding being dismissed, or (ii) without that Member's consent or
acquiescence, a trustee, receiver, or liquidator is appointed of that Member or
of all or any substantial part of its properties and 90 days have expired
without the appointment being vacated or stayed, or if stayed, 90 days have
expired after the date of expiration of a stay, unless the appointment has been
vacated.
BRIDGE BUDGET - Shall have the meaning set forth in Section 4.5.
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BUSINESS DAY - Any day other than Saturday, Sunday or any legal holiday
observed in the Commonwealth of Virginia or the State of New York.
BUY-SELL AGREEMENT - Shall mean the agreement set forth in Section 11.4(b).
CAPITAL ACCOUNT - The account maintained for a Member or Assignee
determined in accordance with Article VIII.
CERTIFICATE- The Certificate of Formation of the Company as properly
adopted and amended from time to time by the Members and filed with the
Secretary of State of the State of Delaware.
CODE - The Internal Revenue Code of 1986, as amended from time to time.
COMMITMENT - The obligation of a Member or Assignee to make a Contribution
in the future.
COMPANY - Aptek Maintenance Services LLC, a limited liability company
formed under the laws of the State of Delaware, and any successor Organization.
COMPANY BUSINESS - All business of the Company, specifically excluding the
business of Triboro Maintenance.
COMPANY BUSINESS COSTS - Shall have the meaning set forth in Section 7.1.
COMPANY LIABILITY - Any enforceable debt or obligation for which the
Company is liable or which is secured by any Company Property.
COMPANY PROPERTY - Any Property owned by the Company.
CONTRIBUTION - Any contribution of Property to the Company made by or on
behalf of a new or existing Member or Assignee as consideration for a Membership
Interest.
DISINTERESTED MEMBER - A Member other than a Member who has a direct or
indirect interest in any transaction other than as a Member of the Company
generally.
DISTRIBUTION - A transfer of Property to a Member on account of a
Membership Interest as described in Article 9.
DISPOSITION (DISPOSE) - Any sale, assignment, lease, transfer, conveyance,
exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute or
as security or encumbrance (including dispositions by operation of law).
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DISSOCIATION - Any action which causes a Person to cease to be a Member as
described in Article 12 hereof.
DISSOCIATED MEMBER - A Person who has ceased to be Member as a result of
Dissociation under Article 12 hereof.
EBITDA - For any period, the excess of (a) the sum of (i) net income, and
(ii) to the extent included in net income, depreciation, amortization, interest
expense and taxes, over (b) to the extent included in net income, interest
income, it being understood and agreed that the components of EBITDA, shall be
calculated in accordance with "GAAP" (as hereinafter defined).
EFFECTIVE DATE - The Effective Date is as of December 17, 1996.
GAAP - Generally accepted accounting principles as in effect in the United
States of America, applied on a consistent basis.
IMMEDIATE FAMILY - A Person's Immediate Family exclusively includes the
Person's estate, spouse, children (including natural, adopted and stepchildren)
and grandchildren, or trust exclusively for the benefit of any of the foregoing.
INITIAL CONTRIBUTION - The Contribution agreed to be made by the Initial
Members as described in Article 8.
INITIAL MEMBER-MANAGER - The Member-Manager, whose duties are set forth in
Section 7.1, appointed as of the Effective Date, which shall be Property
Resources Corporation, a New York corporation.
INITIAL MEMBERS - Those Persons identified on EXHIBIT A, attached hereto
and made a part hereof by this reference, who have initially executed this
Agreement.
LEGAL REQUIREMENTS - Any federal, state, county, local or foreign statute,
law, rule, regulation, ordinance, code, handbook, written policy, rule of common
law, order, decree, judgment or other legal, judicial, regulatory, governmental
or quasi-governmental requirement.
LIQUIDATING DISTRIBUTION - A Distribution made as consideration for a
Membership Interest, pursuant to Section 14.3.
MAJORITY OF THE DISINTERESTED MEMBERS - The affirmative vote or consent of
Members entitled to vote on, consent to, or approve a particular matter owning
in excess of one-half of the Membership Interests held by Members, other than
Members who have
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direct or indirect interest in any transaction, other than as a Member. A
Member who has Disposed of that Member's entire Membership Interest to an
Assignee, but has not ceased to be a Member as provided below, shall be
considered a Member for the purpose of determining a Majority of the
Disinterested Members.
MAJORITY OF THE REMAINING MEMBERS - The affirmative vote or consent of
Remaining Members entitled to vote on, consent to, or approve a particular
matter owning in excess of one-half of the Membership Interests held by
Remaining Members. Assignees shall not be considered Members entitled to vote
for the purpose of determining a Majority of the Remaining Members. A Member
who has Disposed of that Member's entire Membership Interest to an Assignee, but
has not ceased to be a Member as provided below, shall be considered a Member
for the purpose of determining a Majority of the Remaining Members.
MEMBER - An Initial Member, Substitute Member or Additional Member acting
in its capacity as a Member of the Company.
MEMBER-MANAGER - The Member who, at any time, has been elected by the
Members pursuant to Article VII hereof to manage the day-to-day operations of
the Company in accordance with the terms of this Agreement.
MEMBERSHIP INTEREST - The rights of a Member or, in the case of an
Assignee, the rights of the assigning Member, in Distributions (liquidating or
otherwise) and allocations of the profits, losses, gains, deductions, and
credits of the Company.
MINIMUM GAIN - Has the meaning set forth in Regulation Section1.704-
2(b)(2), or any corresponding provision of any succeeding Regulation.
MONEY - Cash or other legal tender of the United States, or any obligation
that is immediately reducible to legal tender without delay or discount. Money
shall be considered to have a fair market value equal to its face amount.
NET CASH FLOW - The sum of (A) the gross revenues provided from operations
of the Company (not including accrued but unreceived revenues), including
revenue from the investment of Company cash reserves or deposits and cash
previously set aside as reserves which the Members determine, by Unanimous
Member Vote, are not needed for the operation of the Company's business and are
available for distribution, plus (B) the net proceeds from any Disposition of
Company Property, or any part thereof, or any financing or refinancing of any
indebtedness of the Company, plus (C) all cash Contributions, less (D) the sum
of operating expenses (including, but not limited to, the consulting fee payable
pursuant to Section 2.8 hereof), capital expenditures and debt payments,
including payments on any Member loans, and on any other obligations of the
Company and any cash set aside as reserves for the conduct of the Company's
business, as determined by a
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Unanimous Member Vote. The items constituting the Net Cash Flow shall be
determined on a cash basis and no deduction therefrom shall be made for
depreciation or amortization or similar non-cash expenditures.
NHP - Shall mean NHP Maintenance Services Company.
NHP ENTITY OR ENTITIES - Shall have the meaning set forth in Section 18.1.
ORGANIZATION - A Person other than a natural person. Organization
includes, without limitation, corporations (both non-profit and other
corporations), partnerships (both limited and general), joint ventures, limited
liability companies, limited liability partnerships, and unincorporated
associations, but the term does not include joint tenancies and tenancies by the
entirety.
PERMITTED TRANSFEREE - With respect to a Member which is an Organization,
shall mean any Affiliate of such Organization of which such Member owns a
minimum of eighty percent (80%) of such Affiliate's voting stock or other voting
equity interests, and with respect to a Member which is an individual, includes
such Member's Immediate Family, and with respect to PRC, shall mean Xxxxx Xxxxx
and Xxxx Xxxxxxx, their respective Immediate Family members and Affiliates
controlled by Xxxx Xxxxxxx and Xxxxx Xxxxx, provided that Xxxxx Xxxxx, Xxxx
Xxxxxxx, their respective Immediate Family members or Affiliates controlled by
Xxxx Xxxxxxx and Xxxxx Xxxxx shall at all times continue to own at least 26% of
the outstanding Membership Interests owned by PRC as of the date hereof, and
provided further that both Xxxxx Xxxxx and Xxxx Xxxxxxx remain principal
executive officers of PRC and day-to-day operational control of PRC remains
vested in Xxxx Xxxxxxx and Xxxxx Xxxxx or, in either Xxxx Xxxxxxx or Xxxxx Xxxxx
in the event of the death or incapacity of one of them.
PERSON - An individual, trust, estate, or any Organization permitted to be
a member of a limited liability company under the laws of the State of Delaware.
PRC - Shall mean Property Resources Corporation, a New York corporation.
PRC BUSINESS COSTS - Shall have the meaning set forth in Section 7.1.
PREFERENCE PERIOD - Shall have the meaning set forth in Section 7.1.
PRIME RATE - Shall mean the prime rate of interest published in the "Money
Rates" section of the WALL STREET JOURNAL as the base rate of interest on
corporate loans posted by the nation's largest banks; which rate shall be
adjusted as and when any changes in the WALL STREET JOURNAL's prime rate occurs,
or if such rate is no longer published, then the prime rate or an equivalent
announced from time to time by the Bank of Boston (or its successors).
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PROCEEDING - Any judicial or administrative trial, hearing or other
activity, civil criminal or investigative, the result of which may be that a
court, arbitrator, or governmental agency may enter a judgment, order, decree,
or other determination which, if not appealed and reversed, would be binding
upon the Company subject to the jurisdiction of such court, arbitrator, or
governmental agency.
PROPERTY - Any property, real or personal, tangible or intangible
(including goodwill), including Money and any legal or equitable interest in
such property, but excluding services and promises to perform services in the
future.
REGULATIONS - Except where the context indicates otherwise, the permanent
or temporary regulations of the Department of the Treasury under the Code as
such regulations may be lawfully changed from time to time.
REMAINING MEMBERS - With respect to any act, event or occurrence
contemplated hereby, all of the Members of the Company other than the Member(s)
to whom such act, event or occurrence directly relates. For example, in the
event of the Dissociation of a Member or the Disposition of a Membership
Interest, all Members at the time of such Dissociation other than the
Dissociated Member or all Members other than the Member who proposed such
Disposition, respectively.
SERVICE PROPERTY OR SERVICE PROPERTIES - Shall mean the properties to which
the Company provides maintenance and other services more particularly set forth
in Article III.
SUBSTITUTE MEMBER - An Assignee who has been admitted to all of the rights
of membership pursuant to this Agreement.
TAXABLE YEAR - The taxable year of the Company as determined pursuant to
section 706 of the Code.
TAXING JURISDICTION - Any state, local, or foreign government that collects
tax, interest or penalties, however designated, on any Member's share of the
income or gain attributable to the Company.
TAX MATTERS MEMBER - Shall have the meaning set forth in Section 10.3.
UNANIMOUS MEMBER VOTE - The affirmative vote or consent of all Members
entitled to vote on, consent to, or approve a particular matter owning in excess
of one-half of the Membership Interests. Assignees shall not be considered
Members entitled to vote for the purpose of determining a Unanimous Member Vote.
A Member who has Disposed of all or a portion of that Member's Membership
Interest (as permitted hereunder) to an
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Assignee, but has not ceased to be a Member as provided below, shall be
considered a Member for the purpose of determining a Unanimous Member Vote.
ARTICLE II
FORMATION
2.1 ORGANIZATION. The Members hereby organize the Company as a Delaware
limited liability company pursuant to the provisions of the Act.
2.2 AGREEMENT, EFFECT OF INCONSISTENCIES WITH ACT. For and in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Members executing this Agreement hereby agree to the terms and
conditions of this Agreement, as it may from time to time be amended according
to its terms. It is the express intention of the Members that this Agreement
and the Non-Compete Agreement of even date herewith, by and between the Initial
Members (the "Non-Compete Agreement"), shall be the sole source of agreement of
the parties regarding the Company, and, except to the extent a provision of this
Agreement expressly incorporates federal income tax rules by reference to
sections of the Code or Regulations or is expressly prohibited or ineffective
under the Act, this Agreement shall govern, even when inconsistent with, or
different than, the provisions of the Act or any other applicable law or rule.
To the extent any provision of this Agreement is prohibited, ineffective,
invalid, illegal or unenforceable under the Act, or other applicable law or
rule, this Agreement shall be considered amended to the smallest degree possible
in order to make the Agreement effective under the Act or other applicable law
or rule. In the event that either the Act, or other applicable law or rule, is
subsequently amended or interpreted in such a way to make any provision of this
Agreement that was formerly invalid, illegal or unenforceable valid (or there
shall be added as part of this Agreement a provision as similar as possible to
such invalid, illegal or unenforceable provision), such new or amended provision
shall be considered to be valid and effective on the date upon which the prior
provision was held to be invalid, illegal or unenforceable. Any of the
remaining provisions shall not in any way be impaired or affected. The Members
hereby agree that each Member shall be entitled to rely on the provisions of
this Agreement, and no Member shall be liable to the Company or to any Member
for any action or refusal to act taken in good faith reliance on the terms of
this Agreement. The Members and the Company hereby agree that the duties and
obligations imposed on the Members of the Company as of the Effective Date of
this Agreement, are those set forth in this Agreement and the Non-Compete
Agreement, which Agreements supersede and replace all prior or contemporaneous
agreements, commitments and understandings, oral or written, between the Members
and the Company, and which are intended to govern the relationship among the
Company and the Members, notwithstanding any provision of the Act or common law
to the contrary.
2.3 NAME. The name of the Company is Aptek Maintenance Services LLC,
and all business of the Company shall be conducted under that name or under any
other name approved
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by Members holding a majority of the outstanding Membership Interests, but in
any case, only to the extent permitted by applicable law. The Company shall be
permitted to use PRC's or NHP Incorporated's respective names to describe the
Company on letterhead of the Company in a format reasonably acceptable to each
of the Members. Use of PRC's or NHP Incorporated's respective names in any
other advertisements, promotions, signage or marketing material shall be subject
to each Member's prior written consent. At such time as an Initial Member
ceases to be a Member, such right shall terminate, and the Company shall
promptly cease to use such former Member's name.
2.4 EFFECTIVE DATE. This Agreement shall become effective upon the
Effective Date.
2.5 TERM. The Company shall be dissolved and its affairs wound up in
accordance with the Act and this Agreement on December 31, 2045, unless the term
shall be extended by amendment to this Agreement and the Certificate, or unless
the Company shall be sooner dissolved and its affairs wound up in accordance
with the Act or this Agreement.
2.6 REGISTERED AGENT AND OFFICE. The registered agent for the service
of process and the registered office shall be that Person and location reflected
in the Certificate as filed in the office of the Secretary of State of the State
of Delaware. The Members, by Unanimous Member Vote, may, from time to time,
change the registered agent or office through appropriate filings with the
Secretary of State of the State of Delaware. In the event the registered agent
ceases to act as such for any reason or the registered office shall change, the
Members, by Unanimous Member Vote, shall promptly designate a replacement
registered agent or file a notice of change of address as the case may be. If
the Members, by Unanimous Member Vote, shall fail to designate a replacement
registered agent or change of address of the registered office within twenty
(20) Business Days, any Member may designate a replacement registered agent or
file a notice of change of address.
2.7 PRINCIPAL OFFICE; OTHER OFFICES. The principal office of the
Company shall be at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
place(s) as the Member-Manager may designate from time to time, which need not
be in the State of Delaware. The Company may have such other offices as the
Members, by Unanimous Member Vote, may determine to be appropriate.
2.8 CONSULTING FEES. For so long as PRC is the Member-Manager of the
Company, the Company shall pay a total annual aggregate consulting fee to PRC in
the amount of One Hundred Twenty-five Thousand Dollars ($125,000.00), which
amount shall be pro-rated from the Effective Date for the remainder of 1996. In
exchange for such consulting fee, PRC shall arrange for Xxxxx Xxxxx and/or Xxxx
Xxxxxxx to provide executive, management and operational oversight to the
Company at no additional cost, at such time, and to the extent, reasonably
necessary or appropriate in order to provide the Member-Manager with such
services in connection with the Member-Manager's management of the Company. In
the event that PRC is the Member-Manager, but both Xxxxx Xxxxx and Xxxx Xxxxxxx
are no longer available, the Company shall continue to
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pay the consulting fee set forth herein provided that PRC provides an
individual(s) to replace Xx. Xxxxx or Xx. Xxxxxxx who is reasonably acceptable
to NHP. Such consulting fee shall be treated as a payment by the Company to an
independent contractor. The consulting fee shall be paid in equal quarterly
payments, in arrears, on the first Business Day of the next succeeding quarter.
2.9 FOREIGN QUALIFICATION. Promptly following the Effective Date, the
Member-Manager shall cause the Company to become qualified as a foreign limited
liability company in the State of New York.
ARTICLE III
NATURE OF BUSINESS
The Company may engage in any lawful business permitted by the Act or the
laws of any jurisdiction in which the Company may do business, including:
providing property maintenance services and related construction, capital
improvements and other related maintenance services, for (i) properties in the
NHP Incorporated New York City portfolio; and (ii) other properties in
jurisdictions where the Company has opened and maintains offices throughout the
continental United States, whether controlled by NHP Incorporated, PRC, or any
other third party (exclusively), provided that such properties are not, as of
the Effective Date, being serviced, or otherwise under contract for service,
with Triboro Maintenance or otherwise subject to the exclusivity and non-compete
provisions to which the Members of the Company are subject, pursuant to the
terms of the Non-Compete Agreement. In furtherance of the foregoing, in the
event that the Company establishes, or causes to be established, a computer
software system which will allow the Company to interface with the Service
Properties owned or managed by NHP Incorporated, such system shall be
established at the expense of the Company. The Company shall have the authority
to do all things necessary or convenient to accomplish its purpose and operate
its business as described in this Article III. The Company exists only for the
purpose specified in this Article III, and may not conduct any other business
without a Unanimous Member Vote. Nothing contained herein shall be deemed to
obligate any Member of the Company to violate any Legal Requirement.
ARTICLE IV
ACCOUNTING AND RECORDS
4.1 ACCESS TO INFORMATION. In addition to the other rights
specifically set forth in this Agreement, each Member shall have access to all
records of and reports by the Company and to all information to which a Member
is entitled to have access pursuant to the Act.
4.2 AUDITS. The independent public accountant for the Company shall be
Xxxxxx Xxxxxxxx LLP, which shall conduct annual audits of the Company's books,
records and financial statements. Additionally, each Member shall have the
right to conduct, or cause to be conducted,
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from time to time, a supplemental or additional audit of the books, records and
financial statements of the Company. The Member conducting, or causing to be
conducted, such supplemental audit shall bear the entire expense of the audit.
4.3 RECORDS TO BE MAINTAINED. The Member-Manager shall maintain the
following records at the Company's principal office:
(a) A current list of the full name and last known business
address of each Member, former Member and other holder of a Membership Interest
and the Membership Interest of each such Person;
(b) A copy of the Certificate and all amendments thereto,
together with executed copies of any powers of attorney pursuant to which the
Certificate and/or any amendments thereto have been executed;
(c) Copies of the Company's federal, foreign, state and local
income tax returns or information and reports, if any, for the five (5) most
recent years;
(d) Copies of this Agreement including all amendments hereto;
(e) Any financial statements of the Company for the five (5)
most recent years; and
(f) Complete and accurate books and records of the Company and
supporting documentation of the transactions with respect to the conduct of the
Company's business, and shall utilize a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP.
4.4 REPORTS TO MEMBERS.
(a) The Member-Manager shall provide to each Member within
twenty (20) days after the end of each fiscal month, copies of the Company's
regularly prepared monthly operating reports, if any, and a statement of all
transactions with Affiliates for such month. The Member-Manager shall provide
consolidated financial statements for each of the three month periods ended
February 28 (or 29), May 31, and August 31, of each year in conformity with
GAAP, as soon as available and in no event later than twenty (20) days after the
end of each three (3) month period. The Member-Manager shall provide to each
Member as soon as available and in any event within sixty (60) days after the
end of each fiscal year, the audited consolidated financial statements of the
Company, including a report from such auditor (selected pursuant to Section 4.2)
expressing an opinion on the Company's consolidated financial statements (and as
to fair presentation, such auditor's report shall be unqualified). At such time
as the Company directly or
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indirectly contributes ten percent (10%) or more to NHP Incorporated's
consolidated EBITDA, then upon NHP's request, NHP may require that reports
provided for in the second sentence of this Section 4.4 shall be provided to
each Member on a calendar quarter basis, rather than pursuant to the reporting
schedule set forth above, in which event, the Member-Manager shall provide any
such reports no later than seven (7) days after the end of the first, second and
third calendar quarters and sixty (60) days after the end of each calendar year.
(b) The Member-Manager shall provide all Members and Assignees
with those information returns required by the Code and the laws of any state.
4.5 ADOPTION AND APPROVAL OF ANNUAL BUDGET. The Company shall, upon a
Unanimous Member Vote, adopt and approve each annual budget of the Company
(each, an ANNUAL BUDGET). In the event that the Members of the Company have not
adopted and approved an Annual Budget on or before December 31 of the
immediately preceding year, the Member-Manager may unilaterally adopt an Annual
Budget with respect to the immediately following calendar year which provides
for a minimum of a ten percent (10%) increase in Net Cash Flow over the actual
Net Cash Flow (excluding purchase and sale of assets outside the ordinary course
of business, incurrence or repayment of indebtedness and any Contributions) for
the immediately preceding year (the BRIDGE BUDGET) until such time as an Annual
Budget is agreed to by Unanimous Member Vote. In the event that the Company
performed at a loss for the preceding year, the Bridge Budget shall provide for
a Net Cash Flow of at least zero without regard to Contributions or loans.
ARTICLE V
MEMBERSHIP INTERESTS
5.1 MEMBERSHIP INTERESTS.
(a) The Company shall have one class of Membership Interests.
(b) The holders of the Membership Interests (i) shall share in
each item of Company income, gain, loss, deduction and credit as provided in
Articles VIII and IX, (ii) shall be entitled to quarterly Distributions, (iii)
shall not be subject to any right of redemption by the Company and shall have no
conversion rights and (iv) shall be entitled to one vote per percentage point of
Membership Interest on each matter submitted to a vote or consent of Members.
Each Membership Interest shall be identical in all respects with each other
Membership Interest. The Members (excluding those who are Dissociated and those
who are not yet Dissociated, but who have received notice that the procedures
set forth in Article 12.2(a) hereof are being exercised) shall be entitled to
vote their Membership Interests on any matter submitted generally to a vote of
all of the Members.
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5.2 INITIAL OWNERSHIP OF MEMBERSHIP INTERESTS. The names and addresses
of the Initial Members and their respective percentage ownership of Membership
Interests are as reflected on EXHIBIT A, attached hereto and by this reference
made a part hereof as if set forth fully herein.
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS
6.1 MANAGEMENT RIGHTS. Except as otherwise provided herein, any action
by the Member-Manager in accordance with the terms hereof shall bind the
Company. Notwithstanding anything herein to the contrary, neither the Company
nor the Member-Manager acting on behalf of the Company may take any of the
following actions without first obtaining a Unanimous Member Vote:
(a) the merger, consolidation, conversion or other structural
reorganization of the Company.
(b) the liquidation, dissolution, reorganization or
recapitalization of the Company.
(c) making, executing, or delivering on behalf of the Company
any assignment for the benefit of creditors or any guarantee, indemnity bond, or
surety bond, or any equivalent thereof other than endorsements for collection
and indemnity or surety bonds in the ordinary course of business.
(d) the adoption or approval of any material change in any
approved Annual Budget.
(e) unless otherwise expressly provided for in the approved
Annual Budget in effect at such time:
(i) ENTER INTO OR AGREE TO ENTER INTO ANY MATERIAL
AGREEMENT, ARRANGEMENT OR UNDERSTANDING, WHETHER ORAL OR WRITTEN, WITH ANY
PERSON(S) (INCLUDING ANY MEMBER, MEMBER-MANAGER OR AFFILIATE OF THE COMPANY)
INVOLVING CONSIDERATION IN EXCESS OF $50,000.00 INDIVIDUALLY, OR IN A SERIES OF
RELATED AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS IN ANY CALENDAR YEAR; OR
(ii) INCUR, REFINANCE, REPLACE, EXTEND, AMEND OR MODIFY
ANY COMPANY LIABILITY OR ISSUE OR GRANT ANY GUARANTY, ENDORSEMENT (OTHER THAN
FOR COLLECTION) OR INDEMNIFICATION OF ANY INDEBTEDNESS OR OBLIGATION OF ANY
PERSON, IN EACH CASE OTHER
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THAN IN THE ORDINARY COURSE OF BUSINESS AND OTHER THAN AN UNSECURED WORKING
CAPITAL LINE OF CREDIT NOT TO EXCEED $50,000.00; OR
(iii) (A) ACQUIRE, BY ANY MEANS, ANY PROPERTY OR
BUSINESSES ON BEHALF OF THE COMPANY OR (B) MAKE OR COMMIT TO MAKE ANY CAPITAL
EXPENDITURES, IN EACH CASE IN EXCESS OF THE HIGHER OF (X) $50,000.00, OR (Y) 5%
OF NET ASSETS OF THE COMPANY, WHETHER IN A SINGLE TRANSACTION OR IN A SERIES OF
RELATED TRANSACTIONS DURING ANY CALENDAR YEAR; OR.
(iv) THE DISPOSITION OF ANY COMPANY PROPERTY (EXCLUDING
DISPOSITIONS WHICH ARE CONSISTENT WITH THE ANNUAL BUDGET OR, IF A BRIDGE BUDGET
IS THEN IN EFFECT, IN A MANNER CONSISTENT WITH THE MOST RECENT ANNUAL BUDGET
APPROVED BY UNANIMOUS MEMBER VOTE), IN ANY SINGLE TRANSACTION OR SERIES OF
RELATED TRANSACTIONS, HAVING A VALUE IN EXCESS OF $10,000.00, OR THE DISPOSITION
OF COMPANY ASSETS HAVING A VALUE IN EXCESS OF $50,000.00 IN THE AGGREGATE IN ANY
ONE (1) CALENDAR YEAR PERIOD, OTHER THAN INVENTORY IN THE ORDINARY COURSE OF
BUSINESS.
(f) except as expressly provided for in this Agreement, (i)
issue, sell or otherwise Dispose of, or (ii) purchase, redeem or otherwise
acquire; or (iii) grant any option or other right (including any preemptive
right) to subscribe for or purchase, or (iv) enter into any agreement for the
issuance (contingent or otherwise) of, or (v) create any call, commitment,
appreciation right, claim or other right of any character relating to, any
Membership Interest (or any right to purchase any Membership Interest) in the
Company.
(g) admit new Members (whether Substitute Members or Additional
Members) and determine, establish or agree as to the amounts and the timing of
their Contributions or otherwise enter into any Admission Agreement other than
pursuant to Section 13.2 hereof.
(h) enter into any employment, consulting or termination
agreement (oral or written) with any employee or proposed employee of, or
consultant or proposed consultant to, or advisor or proposed advisor (including
any legal counsel, accountants or other advisor) to, the Company, where the
amount of salary or compensation (expressly excluding for such purpose the value
of any benefits payable under any such agreement) exceeds $50,000.00 as to
employees and $25,000.00 as to consultants, each in any calendar year (pro-rated
from the Effective Date for the remainder of the 1996 calendar year), or where
the term of such employment or consulting agreements exceeds a term of one (1)
year, unless otherwise expressly provided for in the approved Annual Budget in
effect at such time or, if a Bridge Budget is then in effect, in a manner
consistent with the prior Annual Budget, and except as provided for in Section
2.8 hereof. Any and all such agreements shall be on commercially reasonable
terms, which commercial reasonability shall irrefutably be assumed in any
contract approved by Unanimous Member Vote.
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(i) confess a judgment, or settle or compromise any Proceeding
involving a payment by or to the Company in excess of $25,000.00 individually or
in the aggregate in any calendar year.
(j) dispose of or otherwise encumber or permit to exist and
continue a security interest in or lien on all or substantially all of the
Property or businesses of the Company, excluding purchase money liens in the
ordinary course of business.
(k) form any partnership or joint venture with, or make any
investment in any Organization, including the formation of and any investment in
any subsidiary of the Company (whether or not wholly owned by the Company).
(l) file or permit to remain unchallenged, any bankruptcy
action (or other similar action) by or against the Company, or, except in
accordance with Article XIV, cause the voluntary dissolution and winding up of
the Company.
(m) establish any bank, trust, securities or other depository,
credit line or safe deposit account on behalf of the Company, other than any
such accounts which are located in the United States or its territories.
(n) make any loan or advance to any Person, including, without
limitation, any Member or Member-Manager of the Company (or any Affiliate of any
Member or Member-Manager, any Affiliate of the Company and any employee of the
Company or of any Member or Member-Manager) other than an advance of reasonable,
actual expenses in the ordinary course of business.
(o) change the fiscal year or change the accounting policies,
practices or procedures of the Company from the historical accounting policies,
practices and procedures of the Company.
(p) approve any transaction or agreement or arrangement between
the Company and any Member or Affiliate of a Member of the Company, other than
as expressly permitted under the terms of this Agreement.
(q) enter into or agree to enter into any agreement to do any
of the foregoing.
(r) take any other action otherwise expressly requiring a
Unanimous Member Vote under this Agreement.
With respect to (e), (h), (i) and (q) (but, with respect to (q), only to
the extent relating to paragraphs (e) and (h)) above, in the event that the
Member-Manager is unable to gather a sufficient number of Members together to
take a Supermajority Member Vote at a special meeting called pursuant to Section
6.2(b) within twenty (20) days after any such request, then the Member-
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Manager may proceed with any transaction which is otherwise in accordance with
the terms of this Agreement provided that the Member-Manager, provided the
Members with written notice two (2) times within the first ten (10) business
days of such period (once every five (5) business days), which notice sets forth
the nature of the transaction and the consequences of such Member's failure to
respond.
6.2 ACTION BY MEMBERS.
(a) Members may act by either (i) the affirmative vote of
Members present or by proxy at a meeting of Members convened pursuant to the
provisions of this Section 6.2 or (ii) the written consent of the Members, in
each case owning the Membership Interests required to take the subject action.
In the case of any action by written consent, each Member will certify as to the
percentage of Membership Interests owned by such Member at such time. Any
Member may require that any Unanimous Member Vote may be conducted by secret
ballot.
(b) There will be no regular meetings of Members. A special
meeting of Members may be called, and shall be held, at the direction of any
Member. Any such direction will be delivered to each Member and shall include a
description of the matter(s) to be voted upon at such special meeting, as well
as the time of such special meeting (which must be at least seven (7) Business
Days following the date the direction is delivered to any Member), which time
requirement may be waived by a Unanimous Member Vote.
(c) Members may participate in meetings of Members by means of
conference telephone or similar communications equipment which will allow all
Persons participating in the meeting to hear each other. Such participation in
a meeting shall constitute presence in person at such meeting.
(d) Members shall vote according to the Membership Interests
held by such Members that are entitled to vote on the subject matter of the
meeting.
6.3 LIABILITY OF MEMBERS. No Member shall be liable as a Member for
the liabilities of the Company. The failure of the Company to observe any
formalities or requirements relating to the 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 for liabilities of the Company.
6.4 INDEMNIFICATION.
(a) Neither any Member, nor any Member acting as Member-Manager
or Officer, nor any Affiliate of the foregoing, nor any consultant retained
pursuant to Section 2.8 hereof (each, an INDEMNIFIED PARTY), shall be liable to
the Company or any Member
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for any loss suffered by the Company or any Member which arises out of any act
or omission of the Indemnified Party taken in its/his/her official capacity
hereunder, including Section 2.8, involving the exercise of discretion or
business judgment, if (i) such act or omission was committed, or omitted, by the
Indemnified Party in good faith and in the reasonable belief that such act or
omission was in the best interests of the Company and (ii) such act or omission
did not constitute or involve any gross negligence or willful misconduct of or
by the Indemnified Party. Each Indemnified Party shall be indemnified, defended
and held harmless by the Company from and against any and all losses, judgments,
liabilities, amounts and expenses (including reasonable attorneys' fees and
legal costs and disbursements as well as reasonable amounts paid in settlement
of any claims) arising out of or in connection with any act or omission for
which such Indemnified Party would not be liable to the Company pursuant to the
provisions of the immediately preceding sentence. Notwithstanding anything to
the contrary herein, each of the Members hereby indemnifies the other Members
and the Company for any action or liability arising out of a breach of such
Member's representations and warranties set forth in Section 6.5 hereof.
(b) The Company shall advance, or otherwise pay on a current
basis (to the extent any insurer does not do so), all sums, costs, fees and
expenses, including reasonable attorneys' fees and legal expenses, necessary to
defend and hold harmless any Indemnified Party entitled, or potentially
entitled, to indemnification pursuant to Section 6.4(a) above unless or until it
is agreed or finally determined that such Indemnified Party is not entitled to
indemnification. Any such advances (whether or not made under protest or with a
reservation of rights) shall be without prejudice to the rights of the Company
to obtain reimbursement of such advances, in whole or in appropriate part, from
any Person agreed or finally determined to be not entitled to indemnification in
whole or in part.
6.5 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and to each other Member that: (a) it is duly organized,
validly existing, and in good standing under the law of its state of
organization and that it has full organizational power to execute and agree to
this Agreement and to perform its obligations hereunder; (b) the Member is
acquiring its interest in the Company for the Member's own account as an
investment and without an intent to distribute all or any portion of such
interest; (c) the Member acknowledges that the Membership Interests have not
been registered under the Securities Act of 1933 or any state securities laws,
and may not be resold or transferred by the Member without appropriate
registration or the availability of an exemption from such requirements; (d)
this Agreement has been duly authorized, executed and delivered by it, is not
subject to any further consent, waiver, authorization, approval or filing
requirements, and constitutes a legal, valid and binding agreement of it,
enforceable against it in accordance with its terms; and (e) any and all
statements, representations or warranties regarding such Member contained in any
filing with a government or governmental agency relating to the Company, which
was based on information supplied by such Member, did not contain any
misstatement or omission, which misstatement or omission made the information
materially misleading at the time made.
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6.6 CONFLICTS OF INTEREST
(a) Any Affiliate of the Company or any Member, may be employed
or engaged by the Company to render services (including, but not limited to,
"Venture Overhead Services" (hereinafter defined), such as rent) to or on behalf
of the Company for compensation; PROVIDED, HOWEVER, that (x) such compensation
and services shall be priced at fair market value, and (y) after full and
accurate disclosure of the interest to all of the Members, the Members, by a
Unanimous Member Vote, authorize the terms of such engagement (unless provided
for in the most recently approved Annual Budget as services to be provided by
such Person, or if a Bridge Budget is then in effect in a manner consistent with
the most recent Annual Budget which was approved by a Unanimous Member Vote).
Notwithstanding the foregoing, the Members acknowledge and agree that the
requirements of (x) and (y) above and Section 6.1(p) are not applicable to: (i)
the actions contemplated by Section 2.8 hereof; nor (ii) Section 7.1 hereof
concerning the first two (2) years of operation of the Company; and the Members
further acknowledge and agree that the requirements of (y) above are not
applicable to: (iii) transactions by and between the Company and Aptek
Management Company LLC; nor (iv) transactions by and between the Company and
PRC's third-party property management portfolio.
(b) Members shall account to the Company and hold as trustee
for it any Property, profit, or benefit derived by the Member, without the
consent of a Majority of the Remaining Members, in the conduct and winding up of
the Company business or from a use or appropriation by the Member of Company
Property including information developed exclusively for the Company and
opportunities expressly offered to the Company.
(c) A Member does not violate a duty or obligation to the
Company merely because the Member's conduct furthers the Member's own interest.
A Member may lend Money to and transact other business with the Company upon
full disclosure to all of the Members and compliance with paragraph (a) above.
The rights and obligations of a Member who lends Money to or transacts business
with the Company are the same as those of a Person who is not a Member, subject
to other applicable law. No transaction with the Company shall be voidable
solely because a Member has a direct or indirect interest in the transaction if
either the transaction is permitted under Section 6.6(a), or after full and
accurate disclosure, all of the Disinterested Members authorize, approve, or
ratify the transaction by Unanimous Member Vote.
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ARTICLE VII
MEMBER-MANAGERS
7.1 MEMBER-MANAGERS. The Member-Manager shall be responsible for
carrying on the day-to-day business affairs of the Company which are not
otherwise delegated in this Agreement, including, but not limited to providing
accounting and other administrative services to the Company. The Initial Member
-Manager shall also be responsible for all costs associated with carrying on the
Company's business not otherwise set forth in EXHIBIT B through December 31,
1998 (the PREFERENCE PERIOD), excluding only the One Hundred Twenty-five
Thousand Dollar ($125,000.00) annual consulting fee to be paid pursuant to
Section 2.8 (collectively, the VENTURE OVERHEAD SERVICES). During such
Preference Period, the Member-Manager shall bear the expense of such Venture
Overhead Services.
In the event that after the Preference Period the Company and PRC (or any
Affiliates of PRC) shall share the services of employees, consultants,
equipment, other aspects of professional and/or administrative services or
Venture Overhead Services, the Member-Manager shall use commercially reasonable
efforts after such Preference Period to allocate the corresponding costs and
expenses (including an allocation of personnel) devoted to the Company business
(the COMPANY BUSINESS COSTS) and to PRC's (and its Affiliates') business which
is independent of the Company business existing as of the Effective Date, such
as Triboro Maintenance Company's business (collectively, the PRC BUSINESS
COSTS), and after the Preference Period PRC shall remain solely responsible for
the costs and expenses of any and all of the PRC Business. The Members agree in
good faith to determine and agree upon the Company Business Costs and the PRC
Business Costs.
After the Preference Period, NHP has the right to cause the Company to
obtain some or all of such services from an independent source.
7.2 TERM OF MEMBER-MANAGER. No Member-Manager shall have any
contractual right to such position. Each Member-Manager shall serve until the
earliest of:
(a) The Dissociation of such Member-Manager;
(b) The Resignation of such Member-Manager;
(c) The expiration of the initial term on December 31, 1999,
after which time the Members shall elect a Member-Manager by Unanimous Member
Vote for successive terms of two (2) years each; or
(d) The election to remove upon a change in control under
Section 11.5 hereof.
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In the event of a vacancy in the position of Member-Manager, the Members by
Unanimous Member Vote shall appoint a replacement Member-Manager. Any of the
Members may succeed as Member-Manager as elected or appointed by Unanimous
Member Vote, or the Members may jointly appoint a third-party manager. In the
event that the Members are unable to reach a Unanimous Member Vote in order to
appoint a replacement Member-Manager, the Call Option Agreement may then be
triggered by NHP or, if the requirements of Section 11.4(b) are met, either
Member may exercise the Buy-Sell Agreement. In the event of the expiration of
the current Member-Manager's term, such Member-Manager may be re-elected
pursuant to the terms of this Section 7.2 and shall continue to serve until such
a successor is duly elected.
If at any time the Company experiences any material adverse deviation from
the Annual Budget, the Member-Manager shall promptly notify the Members, in
writing: (i) that such a deviation exists, and as to the extent and cause of
such deviation; and (ii) of the Member-Manager's proposed solution to rectify
such deviation from the Annual Budget and proposed method of avoiding any such
deviation in the future. The Remaining Members shall be afforded an opportunity
to participate in the Member-Manager's refinement, modification (as the
Remaining Members deem necessary or advisable) and implementation of the
solution proposed in (ii) immediately above.
7.3 AUTHORITY OF MEMBERS TO BIND THE COMPANY. Only the Member-Manager
and agents of the Company authorized by the Member-Manager shall have the
authority to bind the Company consistent with the terms of this Agreement. No
Member who is not either a Member-Manager or otherwise expressly authorized by
the Member-Manager as an agent shall take any action to bind the Company, and
each Member shall indemnify the Company for any costs, liabilities, obligations,
or damages incurred by the Company as a result of the unauthorized action of
such Member. Subject to Section 6.1 hereof, the Member-Manager has the power
and authority, on behalf of the Company, to do all things necessary or
convenient to carry out the business and affairs of the Company, including,
without limitation:
(a) Procuring general business liability insurance insuring
against all risks normally insured against by companies of similar size engaged
in similar lines of business;
(b) Arranging for the maintenance of any offices maintained by
the Company according to standards reasonably acceptable within the industry and
for the provision of all necessary or appropriate repairs and replacements;
(c) Arranging for appropriate office record keeping,
bookkeeping and accounting, as herein required and otherwise required by the
Act;
(d) Arranging for the billing and collection on behalf of the
Company of all fees, charges or other compensation due to the Company, in
addition to the responsibility to direct, endorse and deposit all checks and
other funds, as well as take such other actions (including the establishment of
the Company's bank account(s), at a federally insured banking
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institution located within the United States) regarding the handling of checks
and other funds owed, owned or held by or on behalf of the Company; and
(e) Subject to NHP's prior review and approval, not to be
unreasonably withheld or delayed, preparing, or causing to be prepared, and
filing all material periodical and other required reports to any governmental
and regulatory agencies, including tax returns, and performing all related
administrative functions.
7.4 STANDARD OF CARE. The Member-Manager shall discharge its duties to
the Company and the Members in good faith and with that degree of care that an
ordinary prudent individual/organization in a similar position would use under
similar circumstances. In discharging its duties, the Member-Manager shall be
fully protected in relying in good faith upon the records required to be
maintained under Article IV and upon such information, opinions, reports or
statements by any Person as to matters the Member-Manager reasonably believes
are within such other Person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Company, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, Net Cash Flow of the Company or any other facts pertinent
to the existence and amount of assets from which Distributions to Members might
properly be paid.
ARTICLE VIII
CONTRIBUTIONS AND CAPITAL ACCOUNTS
8.1 INITIAL CONTRIBUTIONS. Each Initial Member shall make the
Contribution described for that Member on EXHIBIT A, attached hereto and
incorporated herein, at the time and on the terms specified on EXHIBIT A and
shall perform that Member's Commitment. The value of the Contributions shall be
as set forth on EXHIBIT A. No interest shall accrue on any Contribution and no
Member shall have the right to withdraw or be repaid any Contribution except as
provided in this Agreement. Each Additional Member shall make the Contribution
and shall perform the Commitment described in the Admission Agreement. The
value of the Additional Member's Contribution and the time for making such
Contribution shall be set forth in the Admission Agreement.
8.2 ADDITIONAL CONTRIBUTIONS. In addition to the Initial
Contributions, the Members, by Unanimous Member Vote, may determine from time to
time that additional Contributions are needed to enable the Company to conduct
its business. If the Members determine that, in addition to the Initial
Contributions and Commitments, additional Contributions are needed to enable the
Company to conduct its business, the Members may attempt to arrange for the
borrowing of such funds from Members (including Members or Affiliates of
Members) on such terms as may be approved by a Unanimous Member Vote, from an
independent third party lender or lenders, or from additional Contributions of
the Members; PROVIDED, HOWEVER, that it is expressly understood and
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agreed that no Member or any Affiliate or Assignee of a Member has, or shall
have, any obligation to lend or contribute to the Company additional funds
pursuant to this Section 8.2.
8.3 MAINTENANCE OF CAPITAL ACCOUNTS. The Company shall establish and
maintain a Capital Account for each Member and Assignee in accordance with the
following provisions:
(a) A Member's Capital Account shall be credited with such
Member's Contributions, the amount of any Company Liabilities assumed by such
Member (or which are secured by Company Property distributed to such Member),
such Member's distributive share of Profit and any item in the nature of income
or gain specially allocated to such Member pursuant to the provisions of Section
9 hereof; and
(b) A Member's Capital Account shall be debited with the amount
of Money and the fair market value of any Company Property distributed to such
Member, the amount of any liabilities of such Member assumed by the Company (or
which are secured by Property contributed by such Member to the Company), such
Member's distributive share of Loss and any item in the nature of expenses or
losses specially allocated to such Member pursuant to the provisions of Section
9 hereof.
If any Membership Interest is transferred pursuant to the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it is attributable to the transferred Membership Interest. If the
fair market value of Company Property is adjusted pursuant to this Agreement or
as required pursuant to the Regulations, the Capital Account of each Member
shall be adjusted to reflect the aggregate adjustment in the same manner as if
the Company had recognized gain or loss equal to the amount of such aggregate
adjustment.
8.4 COMPLIANCE WITH SECTION 704(B) OF THE CODE. The provisions of this
Article 8 as they relate to the maintenance of Capital Accounts are intended,
and shall be construed, and, if necessary, modified to cause the allocations of
profits, losses, income, gain and credit pursuant to Article 9 to have
substantial economic effect under Regulation 1.704-1(b), in light of the
Distributions made pursuant to Articles 9 and 14 and the Contributions made
pursuant to this Article 8. Notwithstanding anything herein to the contrary,
this Agreement shall not be construed as creating a deficit restoration
obligation or otherwise personally obligate any Member or Assignee to make a
Contribution in excess of the Initial Contribution and Commitment, if any, of
the Member or Assignee.
8.5 ADVANCES. If any Member shall advance any funds to the Company in
excess of its Commitment as a loan to the Company, such loan shall be repaid
prior to any Distributions, and the amount of such advance shall neither
increase its Capital Account nor entitle it to any increase in its share of the
distributions of the Company.
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ARTICLE IX
DISTRIBUTIONS AND ALLOCATIONS
9.1 DISTRIBUTIONS. Except as otherwise provided in Section 14.3 hereof
with respect to Distributions to be made upon the dissolution and liquidation of
the Company, all Net Cash Flow for a fiscal year (which shall be a calendar
year) shall be distributed to Members quarterly, within thirty (30) days after
the end of each quarter, as follows:
(a) The first One Million Dollars ($1,000,000.00) of Net Cash
Flow for each year of the Preference Period (pro-rated for the first calendar
year from the Effective Date) shall be distributed, seventy percent (70%) to PRC
and thirty (30%) to NHP. All other Net Cash Flow during the Preference Period
shall be distributed to Members in proportion to their respective Membership
Interests; and
(b) All Net Cash Flow for all subsequent fiscal years of
operation shall be distributed to Members in proportion to their respective
Membership Interests.
Notwithstanding anything to the contrary which may be contained herein, it
is the intention of the Members that Distributions shall be limited to sums from
Net Cash Flow derived or earned from the Company's operation, less amounts
retained for for working capital and reserves which are consistent with prudent
business practices. In furtherance of the foregoing: no Distributions of cash
shall be made absent complete satisfaction of outstanding indebtedness of the
Company without a Unanimous Member Vote, excluding purchase money indebtedness
or indebtedness with respect to capital leases; and no Distributions of cash
shall be made until or unless payables are paid or reduced so as not to exceed
thirty (30) days outstanding, absent providing reasonable reserves for such
payables (in light of accounts receivables) or a Unanimous Member Vote.
9.2 ALLOCATIONS
(a) PROFIT AND LOSS. "Profit" and "Loss" mean, for each
taxable year of the Company (or other period for which Profit or Loss must be
computed), the Company's taxable income or loss determined in accordance with
Section 703(a) of the Code, and after deduction for amounts paid for the
consulting fees provided for in Section 2.8, with the following adjustments:
(i) ALL ITEMS OF INCOME, GAIN, LOSS OR DEDUCTION
REQUIRED TO BE STATED SEPARATELY PURSUANT TO SECTION 703(A)(1) OF THE CODE SHALL
BE INCLUDED IN COMPUTING COMPANY TAXABLE INCOME OR LOSS;
(ii) ANY TAX-EXEMPT INCOME OF THE COMPANY, NOT OTHERWISE
TAKEN INTO ACCOUNT IN COMPUTING THE COMPANY'S TAXABLE INCOME, SHALL BE INCLUDED
IN COMPUTING PROFIT OR LOSS;
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(iii) ANY EXPENDITURES OF THE COMPANY DESCRIBED IN
SECTION 705(A)(2)(B) (OR TREATED AS SUCH PURSUANT TO REGULATION Section1.704-
1(B)(2)(IV)(I)) AND NOT OTHERWISE TAKEN INTO ACCOUNT IN COMPUTING PROFIT OR
LOSS, SHALL BE SUBTRACTED FROM TAXABLE INCOME OR LOSS; AND
(iv) ANY ITEMS WHICH ARE SPECIALLY ALLOCATED PURSUANT TO
THIS SECTION 9 HEREOF SHALL NOT BE TAKEN INTO ACCOUNT IN COMPUTING PROFIT OR
LOSS.
(b) STANDARD ALLOCATION OF PROFIT AND LOSS. Except as
otherwise set forth in this Section 9.2: the Profit and Loss of the Company for
each fiscal year shall be allocated among the Members in a manner such that the
capital accounts of each Member at the end of each such fiscal year would be
equal to the Net Cash Flow that would otherwise be distributed to such Member if
all the assets of the Company were Disposed of at book value at the end of such
fiscal year and Net Cash Flow were distributed to the Members in accordance with
Section 9.1.
(c) ALLOCATIONS CAUSING NEGATIVE CAPITAL ACCOUNTS; MINIMUM GAIN
RULE AND QUALIFIED INCOME OFFSET.
(i) NOTWITHSTANDING THE PROVISIONS OF SECTION 9.2(B):
1) IF THE ALLOCATION OF A LOSS TO A MEMBER FOR
ANY FISCAL YEAR PURSUANT TO SECTION 9.2(B)(II) WOULD CAUSE SUCH MEMBER TO HAVE
AN ADJUSTED CAPITAL ACCOUNT DEFICIT OR INCREASE SUCH ADJUSTED CAPITAL ACCOUNT
DEFICIT AS OF THE END OF SUCH FISCAL YEAR, THEN THE PORTION OF SUCH LOSS THAT
WOULD HAVE SUCH EFFECT SHALL INSTEAD BE SPECIALLY ALLOCATED AMONG AND CHARGED TO
THE CAPITAL ACCOUNTS OF THE OTHER MEMBERS, PRO RATA, IN PROPORTION TO THEIR
RESPECTIVE MEMBERSHIP INTERESTS, SUBJECT TO THE PROVISIONS OF THIS SECTION
9.2(C); AND
2) IF, AT THE END OF THE FISCAL YEAR, ANY
MEMBER HAS AN ADJUSTED CAPITAL ACCOUNT DEFICIT, THEN (I) ITEMS OF GROSS INCOME
FOR SUCH FISCAL YEAR SHALL BE SPECIALLY ALLOCATED TO SUCH MEMBER TO THE EXTENT
NECESSARY TO ELIMINATE SUCH DEFICIT, (II) THE PROFIT OR LOSS OF THE COMPANY FOR
SUCH FISCAL YEAR SHALL BE RECOMPUTED BY ELIMINATING SUCH SPECIALLY ALLOCATED
ITEMS OF GROSS INCOME, AND (III) THE RECOMPUTED PROFIT OR LOSS SHALL BE
ALLOCATED TO THE REMAINING MEMBERS AS PROVIDED IN SECTION 9.2(B) AND THIS
SECTION 9.2(C).
(ii) ANY SPECIAL ALLOCATIONS OF PROFIT OR GROSS INCOME
PURSUANT TO THIS SECTION 9.2(C) SHALL BE TAKEN INTO ACCOUNT IN COMPUTING
SUBSEQUENT ALLOCATIONS OF PROFIT AND LOSS SO THAT, TO THE EXTENT POSSIBLE, THE
AGGREGATE AMOUNTS OF PROFIT AND LOSS ALLOCATED TO EACH MEMBER WILL BE EQUAL TO
THE AGGREGATE AMOUNTS THAT WOULD
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HAVE BEEN ALLOCATED TO SUCH MEMBER IN THE ABSENCE OF UNEXPECTED INCREASES OR
DECREASES IN ITS ADJUSTED CAPITAL ACCOUNT.
(d) NONRECOURSE. To the extent that (a) any Member or Members
may bear the burden of an economic loss corresponding to any Company Loss,
deduction or item in the nature thereof attributable to a Company Liability that
would be considered nonrecourse for purposes of Regulation Section1.1001-2, (b)
any Member makes a loan or Contribution to the Company in order to fund a
Company expense corresponding to any Loss, deduction or item in the nature
thereof, or (c) any Member bears the economic risk of loss for a Company
Liability by reason of such Member's obligation to make a net payment to a
creditor with respect to such liability or a net contribution to the Company
with respect to such liability, such Loss, deduction or item in the nature
thereof shall be allocated solely to the Member or Members who bear such
economic burden, who make such loan or Contribution, or who make such net
payment or contribution, in the same proportions as such Members bear such
economic burden or make such loan, Contribution or net payment. The foregoing
provisions are intended to comply with Regulation Section1.704-2 and shall be
interpreted and applied in a manner consistent with such Regulations.
(e) SPECIAL ALLOCATIONS OF ITEMS IN THE NATURE OF INCOME OR
GAIN.
(i) EXCEPT AS PROVIDED IN SECTION 9.2(E)(III) HEREOF,
IF ANY MEMBER UNEXPECTEDLY RECEIVES ANY ADJUSTMENT, ALLOCATION OR DISTRIBUTION
DESCRIBED IN REGULATION 1.704-1(B)(2)(II)(D)(4), (5) OR (6), ITEMS OF COMPANY
INCOME AND GAIN SHALL BE SPECIALLY ALLOCATED TO SUCH MEMBER IN AN AMOUNT
SUFFICIENT TO ELIMINATE, TO THE EXTENT REQUIRED BY THE REGULATIONS, THE ADJUSTED
CAPITAL ACCOUNT DEFICIT OF SUCH MEMBER AS QUICKLY AS POSSIBLE.
(ii) EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.2(E)(III)
HEREOF, IF ANY MEMBER HAS A DEFICIT CAPITAL ACCOUNT AT THE END OF ANY COMPANY
TAXABLE YEAR WHICH IS IN EXCESS OF THE AMOUNT SUCH MEMBER IS DEEMED TO BE
OBLIGATED TO RESTORE PURSUANT TO THE PENULTIMATE SENTENCE OF REGULATION
Section1.704-2(G)(1), EACH SUCH MEMBER SHALL BE SPECIFICALLY ALLOCATED ITEMS OF
COMPANY INCOME AND GAIN IN THE AMOUNT OF SUCH EXCESS AS QUICKLY AS POSSIBLE.
(iii) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION
9.2, IF THERE IS A NET DECREASE IN COMPANY MINIMUM GAIN DURING ANY COMPANY
TAXABLE YEAR, EACH MEMBER WHO WOULD OTHERWISE HAVE AN ADJUSTED CAPITAL ACCOUNT
DEFICIT AT THE END OF SUCH YEAR SHALL BE SPECIFICALLY ALLOCATED ITEMS OF COMPANY
INCOME AND GAIN FOR SUCH YEAR (AND, IF NECESSARY, SUBSEQUENT YEARS) IN AN AMOUNT
SUFFICIENT TO ELIMINATE SUCH ADJUSTED CAPITAL ACCOUNT DEFICIT AS QUICKLY AS
POSSIBLE. THE ITEMS TO BE SO ALLOCATED SHALL BE DETERMINED IN ACCORDANCE WITH
REGULATION Section1.704-1(B)(4)(IV)(E). THIS SECTION 9.2(E)(III) IS INTENDED TO
COMPLY WITH THE MINIMUM GAIN CHARGE BACK
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REQUIREMENT IN SUCH SECTION OF THE REGULATIONS AND SHALL BE INTERPRETED
CONSISTENTLY THEREWITH.
(iv) TO THE EXTENT AN ADJUSTMENT TO THE ADJUSTED TAX
BASIS OF ANY COMPANY PROPERTY PURSUANT TO CODE SECTION 734(B) OR CODE SECTION
743(B) IS REQUIRED, PURSUANT TO REGULATION Section1.704-1(B)(2)(IV)(M), TO BE
TAKEN INTO ACCOUNT IN DETERMINING CAPITAL ACCOUNTS, THE AMOUNT OF SUCH
ADJUSTMENT TO THE CAPITAL ACCOUNTS SHALL BE TREATED AS AN ITEM OF GAIN (IF THE
ADJUSTMENT INCREASES THE BASIS OF THE ASSET) OR LOSS (IF THE ADJUSTMENT
DECREASES THE BASIS OF THE ASSET) AND SUCH GAIN OR LOSS SHALL BE SPECIALLY
ALLOCATED TO THE MEMBERS IN A MANNER CONSISTENT WITH THE MANNER IN WHICH THEIR
CAPITAL ACCOUNTS ARE REQUIRED TO BE ADJUSTED PURSUANT TO SUCH SECTION OF THE
REGULATION.
(v ) ANY SPECIAL ALLOCATIONS OF ITEMS OF INCOME OR GAIN
PURSUANT TO SECTIONS 9.2(E)(I) - (IV) HEREOF SHALL BE TAKEN INTO ACCOUNT IN
COMPUTING SUBSEQUENT ALLOCATIONS OF PROFITS PURSUANT TO THIS SECTION 9.2, SO
THAT THE NET AMOUNT OF ANY ITEMS SO ALLOCATED AND THE PROFITS, LOSSES AND ALL
OTHER ITEMS ALLOCATED TO EACH MEMBER PURSUANT TO THIS SECTION 9.2 SHALL, TO THE
EXTENT POSSIBLE, BE EQUAL TO THE NET AMOUNT THAT WOULD HAVE BEEN ALLOCATED TO
EACH SUCH PERSON PURSUANT TO THE PROVISIONS OF THIS SECTION 9.2 IF SUCH SPECIAL
ALLOCATIONS HAD NOT BEEN REQUIRED.
(f) TAX ALLOCATIONS.
(i) IN ACCORDANCE WITH CODE SECTION 704(C) AND THE
REGULATIONS THEREUNDER, INCOME, GAIN, LOSS AND DEDUCTION WITH RESPECT TO ANY
PROPERTY CONTRIBUTED TO THE CAPITAL OF THE COMPANY SHALL, SOLELY FOR TAX
PURPOSES, BE ALLOCATED AMONG THE MEMBERS SO AS TO TAKE ACCOUNT OF ANY VARIATION
BETWEEN THE ADJUSTED BASIS OF SUCH PROPERTY CONTRIBUTED TO THE COMPANY FOR
FEDERAL INCOME TAX PURPOSES AND ITS INITIAL FAIR MARKET VALUE.
(ii) IF THE FAIR MARKET VALUE OF ANY COMPANY PROPERTY IS
ADJUSTED PURSUANT TO THIS AGREEMENT OR REQUIRED BY THE REGULATIONS, SUBSEQUENT
ALLOCATIONS OF INCOME, GAIN, LOSS AND DEDUCTION WITH RESPECT TO SUCH ASSET SHALL
TAKE ACCOUNT OF ANY VARIATION BETWEEN THE ADJUSTED BASIS OF SUCH ASSET FOR
FEDERAL INCOME TAX PURPOSES AND ITS FAIR MARKET VALUE IN THE SAME MANNER AS
UNDER CODE SECTION 704(C) AND THE REGULATIONS THEREUNDER.
(iii) ANY ELECTIONS OR OTHER DECISIONS RELATING TO SUCH
ALLOCATIONS SHALL BE MADE BY THE TAX MATTERS MEMBER IN ANY MANNER THAT
REASONABLY REFLECTS THE PURPOSE AND INTENTION OF THIS AGREEMENT. ALLOCATIONS
PURSUANT TO THIS SECTION 9.2(F) ARE SOLELY FOR PURPOSES OF FEDERAL, STATE AND
LOCAL TAXES AND SHALL NOT AFFECT, OR IN ANY WAY BE TAKEN INTO ACCOUNT IN
COMPUTING, ANY CAPITAL ACCOUNT OR THE SHARE OF PROFITS, LOSSES, OTHER ITEMS OR
DISTRIBUTIONS PURSUANT TO ANY PROVISION OF THIS AGREEMENT.
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(g) ALLOCATION UPON TRANSFER.
IF ANY MEMBERSHIP INTEREST IS DISPOSED OF DURING ANY ACCOUNTING PERIOD
IN COMPLIANCE WITH THE PROVISIONS OF THIS AGREEMENT, PROFITS, LOSSES, EACH ITEM
THEREOF AND ALL OTHER ITEMS ATTRIBUTABLE TO SUCH MEMBERSHIP INTEREST FOR SUCH
PERIOD SHALL BE DIVIDED AND ALLOCATED BETWEEN THE TRANSFEROR AND THE TRANSFEREE
BY TAKING INTO ACCOUNT THEIR VARYING INTERESTS DURING THE PERIOD IN ACCORDANCE
WITH CODE SECTION 706(D), USING ANY CONVENTIONS PERMITTED BY LAW AND SELECTED BY
THE TAX MATTERS MEMBER AS LONG AS THE CONVENTIONS SELECTED REASONABLY ALLOCATE
AMONG THE MEMBERS THE INCOME, GAIN AND/OR LOSS OF THE COMPANY FOR SUCH PERIOD.
ALL DISTRIBUTIONS ON OR BEFORE THE DATE OF SUCH DISPOSITION SHALL BE
MADE TO THE TRANSFEROR, AND ALL DISTRIBUTIONS THEREAFTER SHALL BE MADE TO THE
TRANSFEREE. SOLELY FOR PURPOSES OF MAKING SUCH ALLOCATIONS AND DISTRIBUTIONS,
THE COMPANY SHALL RECOGNIZE SUCH DISPOSITION NOT LATER THAN THE END OF THE
CALENDAR MONTH DURING WHICH IT IS GIVEN NOTICE OF SUCH DISPOSITION, PROVIDED
THAT IF THE COMPANY DOES NOT RECEIVE A NOTICE STATING THE DATE OF THE
DISPOSITION OF SUCH MEMBERSHIP INTEREST AND SUCH OTHER INFORMATION AS THE
MEMBERS MAY REQUIRE WITHIN 30 DAYS AFTER THE END OF THE ACCOUNTING PERIOD DURING
WHICH THE DISPOSITION OCCURS, THEN ALL OF SUCH ITEMS SHALL BE ALLOCATED, AND ALL
DISTRIBUTIONS SHALL BE MADE TO THE PERSON WHO, ACCORDING TO THE BOOKS AND
RECORDS OF THE COMPANY, ON THE LAST DAY OF THE ACCOUNTING PERIOD DURING WHICH
THE DISPOSITION OCCURS, WAS THE OWNER OF THE MEMBERSHIP INTEREST. NEITHER THE
COMPANY, THE MEMBERS NOR THE MEMBER-MANAGER SHALL INCUR ANY LIABILITY FOR MAKING
ALLOCATIONS AND DISTRIBUTIONS IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION
9.2(G), WHETHER OR NOT THE MEMBER-MANAGER OR THE COMPANY HAS KNOWLEDGE OF ANY
DISPOSITION OF ANY MEMBERSHIP INTEREST.
ARTICLE X
TAXES
10.1 ELECTIONS. The "Tax Matters Member" (hereinafter defined)
may make any tax elections for the Company allowed under the Code or the tax
laws of any state or other jurisdiction having taxing jurisdiction over the
Company. To the extent any such election would reasonably be expected to result
in either (a) the Company no longer being taxed as a "pass through" entity for
U.S. federal or state tax purposes, or (b) materially and disproportionately
adversely affect the Members, it shall be subject to Unanimous Member Vote;
provided, however, that the Tax Matters Member shall not elect to use the
"remedial method" under Regulation section 1.704-3(d) or the "traditional method
with curative allocations" under Regulation section 1.704-3(c) without first
obtaining a Unanimous Member Vote.
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10.2 TAXES OF TAXING JURISDICTIONS. To the extent that the laws of any
Taxing Jurisdiction require, each Member and economic interest holder (or such
Members as may be required by the Taxing Jurisdiction) will submit an agreement
indicating that the Member will make timely income tax payments to the Taxing
Jurisdiction and that the Member accepts personal jurisdiction of the Taxing
Jurisdiction with regard to the collection of income taxes attributable to the
Member's income, and interest and penalties assessed on such income. If the
Member fails to provide such agreement, the Company may withhold and pay over to
such Taxing Jurisdiction the amount of tax, penalty and interest determined
under the laws of the Taxing Jurisdiction with respect to such income. Any such
payments with respect to the income of a Member shall be treated as a
Distribution for purposes of Article 9.
The Member-Manager may, where permitted by the rules of any Taxing
Jurisdiction, file a composite, combined or aggregate tax return reflecting the
income of the Company and pay the tax, interest and penalties of some or all of
the Members on such income to the Taxing Jurisdiction, in which case the Company
shall inform the Members of the amount of such tax, interest and penalties so
paid.
10.3 TAX MATTERS MEMBER. NHP shall be designated as the "TAX MATTERS
MEMBER" of the Company pursuant to section 6231(a)(7) of the Code; PROVIDED,
HOWEVER, that if NHP is ineligible to act as tax matters member, any other
Member may act as the Tax Matters Member of the Company. Any Member designated
as Tax Matters Member shall take such action as may be necessary to cause each
other Member to become a NOTICE MEMBER within the meaning of section 6223 of the
Code. Any Member who is designated Tax Matter Member may not take any action
contemplated by sections 6222 through 6232 of the Code without approval by
Unanimous Member Vote. The Tax Matters Member ("TMP") shall keep all Members
informed of all administrative and judicial proceedings for the adjustment of
Company items at the Company level. The TMP shall file a request for
administrative adjustment on behalf of the Company at the direction of a
majority in interest of the Members (with the substance of the requested
adjustment being determined by such majority in interest of the Members) and at
the Company's expense.
10.4 ACCRUAL METHOD OF ACCOUNTING. The records of the Company shall be
maintained on an accrual method of accounting.
10.5 CONSISTENT REPORTING. Each party hereto agrees to reflect and
report, on all tax forms or tax returns to be filed with any federal, state or
local governmental agency or taxing authority, the transactions contemplated and
evidenced by this Agreement in a manner that to the greatest extent possible is
consistent with the form of the transactions as evidenced by this Agreement and
the terminology used in this Agreement.
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ARTICLE XI
DISPOSITION OF MEMBERSHIP INTERESTS; CHANGE IN CONTROL
11.1 DISPOSITION. No Member or Assignee may Dispose of all or any
portion of the Member's or Assignee's Membership Interest except in strict
conformity with the provisions of this Article XI. A purported Disposition that
is not in conformity with the provisions of this Article XI shall be, and is
declared to be, void AB INITIO and will not entitle the purported transferee to
any rights or interest in the Company including, without limitation, any right
to receive any Distributions. Except as otherwise provided in this Article XI, a
Disposition of an interest in the Company does not entitle the transferee to
become a Member or exercise any rights of a Member. A Disposition that is in
conformity with the provisions of this Article XI will entitle the Assignee to
receive, to the extent assigned, only the Distributions and return of capital,
and to be allocated the net Profits and net Losses, attributable to such
Membership Interest. All costs and expenses incurred in connection with an
attempted or effective Disposition shall be borne by the transferor or the
intended transferor, except as may be otherwise provided for herein.
11.2 PERMITTED ASSIGNMENTS. A Member may assign its Membership
Interest:
(a) to Permitted Transferees or another Member or an assignee
of an acquiring Member pursuant to Section 11.4 or Section 11.5; or
(b) to a Person or Persons not referenced in Section 11.2(a)
only with the approval of a Majority of the Remaining Members; PROVIDED,
HOWEVER, that no Membership Interest shall be assigned pursuant to this Section
11.2:
(i) IF SUCH DISPOSITION, ALONE OR WHEN COMBINED WITH
OTHER TRANSACTIONS, WOULD RESULT IN A TERMINATION OF THE COMPANY WITHIN THE
MEANING OF SECTION 708 OF THE CODE;
(ii) WITHOUT AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE MAJORITY OF THE REMAINING MEMBERS THAT SUCH ASSIGNMENT IS
SUBJECT TO AN EFFECTIVE REGISTRATION UNDER, OR EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF, ALL APPLICABLE STATE AND FEDERAL SECURITIES LAWS;
(iii) UNLESS AND UNTIL THE COMPANY RECEIVES FROM THE
ASSIGNEE THE INFORMATION AND AGREEMENTS THAT THE MAJORITY OF THE REMAINING
MEMBERS MAY REASONABLY REQUIRE, INCLUDING BUT NOT LIMITED TO ANY TAXPAYER
IDENTIFICATION NUMBER AND ANY AGREEMENT THAT MAY BE REQUIRED BY ANY TAXING
JURISDICTION; OR
(iv) IF SUCH DISPOSITION WOULD RESULT IN THE COMPANY
BEING SUBJECT TO THE INVESTMENT COMPANY ACT OF 1940.
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11.3 COMPLIANCE WITH SECURITIES LAWS. No Member's Membership Interest
has been registered under the Securities Act of 1933, as amended, or under any
applicable state securities laws. The Company shall have no obligation to
register any Member's Membership Interest under the Securities Act of 1933, as
amended, or under any applicable state securities laws, or to make any exemption
therefrom available to any Member.
11.4 CALL OPTION AGREEMENT.
(a) NHP may at any time on or after January 1, 2000, elect to
require PRC to transfer its Membership Interests to NHP or its designee, subject
to and in accordance with the terms of this Section 11.4 (the CALL OPTION).
Promptly upon receipt of written notice from NHP (the NOTICE) of its option to
exercise the Call Option (and in no event later than fifteen (15) days after
receipt of such notice), PRC shall engage an appraiser at PRC's sole expense, to
value PRC's current Membership Interests (the PRC APPRAISER). The PRC Appraiser
shall be instructed in writing that in making a determination of the value of
PRC's Membership Interests, the PRC Appraiser may, in the PRC Appraiser's
commercially reasonable discretion, take into consideration: (i) all then-
current non-NHP related third party business then being performed by the Company
in the "New York Trade Area" (as such term is defined in that certain Non-
Compete Agreement of even date herewith by and between the Members, (the NON-
COMPETE AGREEMENT)), and in any "MSA" (as such term is defined in the Non-
Compete Agreement), other than the New York Trade Area, where in any such MSA
the Company has established and is currently operating an office prior to the
date of the exercise of this Call Option and generated in excess of $500,000 in
Distributions to NHP (or an NHP Affiliate) in the preceding fiscal year or
generated in excess of $250,000 in Distributions to NHP (or an NHP Affiliate) in
the preceding fiscal year and reasonably expects in the current or the coming
fiscal year to generate in excess of $500,000 in Distributions to NHP (ELIGIBLE
MSA), plus commercially reasonable projected growth in non-NHP third party
business then being performed by the Company in the New York Trade Area and each
Eligible MSA; (ii) the Company's then-current business from NHP owned or
controlled properties in the New York Trade Area and each Eligible MSA, such
properties' then existing capital budgets, and the bidding procedures set forth
in Article XVIII, but without taking into consideration any projected growth in
the number of such properties, all on a going concern basis (the APPRAISED
VALUE). In the event that NHP disagrees with the PRC Appraiser's Appraised
Value, then NHP may hire a second appraiser, at NHP's sole expense (the NHP
APPRAISER), to determine an Appraised Value which appraiser shall be given the
same instructions outlined above for the PRC appointed Appraiser. In the event
that the PRC Appraiser and the NHP Appraiser cannot agree upon an Appraised
Value for PRC's Membership Interest, then the two appraisers shall select a
third appraiser to determine the Appraised Value; provided, however, that the
Appraised Value determined by such third appraiser shall not exceed the
Appraised Value determined by the PRC Appraiser, or be less than the Appraised
Value determined by the NHP Appraiser. The fees and expenses of the third
appraiser shall be borne equally by PRC and NHP. NHP may, in its sole
discretion, withdraw from its exercise of the Call Option at anytime. In the
event that
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NHP withdraws from its exercise of the Call Option, NHP shall further be
prohibited from again exercising the Call Option for a two (2) year period
following the date of its withdrawal. In the event of such a withdrawal, NHP
shall pay (or reimburse PRC to the extent it has paid) all of the fees, costs
and expenses of the PRC Appraiser and the third appraiser, if any, and all other
reasonable fees, out-of-pocket costs and expenses incurred in connection with
the exercise of the Call Option by NHP. In making its determination of the
Appraised Value under this Section 11.4 which shall be on a discounted cash flow
basis, all appraisers shall be instructed to take into consideration the
expiration of any Housing Assistance Payment Contracts (or other subsidies, tax
abatements, contractual agreements or the like and the normal attrition of
business which could reasonably be expected, taking into account all relevant
circumstances (including, without limitation, any reasonably anticipated
disposition of properties by sale, foreclosure, deed in lieu of foreclosure or
otherwise and expiration of management agreements or the right to manage the
properties) which exist at the time of such appraisal. All appraisers will
speak with and take written comments from NHP and PRC in the course of their
deliberations to the extent NHP and PRC wish to provide such comments and in
fact provide such comments on a timely basis to permit the Appraised Value
determination to be made in accordance herewith. All appraisers will further
assume, for purposes of their determination of Appraised Value, that any
business of the Company from or related to NHP for a non-New York Trade Area MSA
will cease upon the expiration of the applicability of the Non-Compete Agreement
provisions for such MSA (all as described and defined in the Non-Compete
Agreement). Notwithstanding the foregoing, in the event that NHP exercises and
consummates the purchase of the PRC Membership Interests pursuant to and in
accordance with the Call Option at any time during the year commencing on
January 1, 2000, NHP agrees to pay in addition to the Appraised Value (at its
option) either (i) a one-time premium in an amount which is equal to Two Hundred
Thousand Dollars ($200,000.00); or (ii) a three (3) year consulting fee to PRC
in an amount equal to One Hundred Twenty-five Thousand Dollars ($125,000.00) per
annum, payable quarterly.
In the event PRC fails to appoint the PRC Appraiser within the time period
required in Section 11.4(a) or having appointed such PRC Appraiser, such PRC
Appraiser fails to provide such required Appraised Value in accordance herewith
within sixty (60) days from the time such PRC Appraiser was required to be
appointed hereunder, NHP shall have the right to appoint the NHP Appraiser under
the conditions set forth above whose Appraised Value shall be deemed the
Appraised Value for purposes of this Section 11.4.
(b) In the event that, from and after December 31, 1998,
revenues from the properties owned or controlled by NHP and its Affiliates
provide less than forty percent (40%) of the Company's revenues in the four (4)
quarters immediately preceding the exercise of the rights under this paragraph,
a Member desiring to withdraw from the Company and Dispose of all, but not a
portion of, its Membership Interests (the WITHDRAWING MEMBER) may, from and
after December 31, 1998, offer the Remaining Members on a pro rata basis all of
its Membership Interests at the price and under the terms and conditions set
forth in a
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written offering from such Withdrawing Member (the OFFERING MEMORANDUM). Upon
the receipt of an Offering Memorandum, the Remaining Members shall have the
option, but not the obligation, exercisable within thirty (30) days from the
receipt of the Offering Memorandum (the DETERMINATION DATE) to purchase from the
Withdrawing Member all of the Membership Interests owned by the Withdrawing
Member at the price provided for in the Offering Memorandum. In the event the
Remaining Members do not, on or before the Determination Date, elect to purchase
all of the Membership Interests held by the Withdrawing Member at the price
provided for in the Offering Memorandum, the Withdrawing Member shall have an
identical option to purchase such Remaining Members' Membership Interests, under
the same terms and conditions and at the same price per Interest, but
exercisable within thirty (30) days of the Determination Date. Neither PRC and
its Permitted Transferees, nor NHP and its Permitted Transferees may initiate
the Buy-Sell provision more than once in any six-month period.
(c) Once a Member has exercised its option under either Section
11.4(a) or 11.4(b), the parties are prohibited from exercising any option under
either such section until the first election option has been consummated or
withdrawn. The closing of the sale of Membership Interests pursuant to this
Section 11.4(a) or (b) shall be held at the office of the attorney for the
purchasing Member on a date and at a time to be mutually agreed upon by the
Members, but no later than sixty (60) days after (i) the final determination of
Appraised Value under 11.4(a), or (ii) the election to purchase by the acquiring
party under 11.4(b). Except as specified in paragraph (e) below, payment of the
purchase price for the Membership Interest shall be made by wire transfer of
immediately available funds or by certified check. Each Member shall bear its
own costs associated with the Call Option or the Buy-Sell Agreement, as
applicable.
(d) Upon the decision of NHP to exercise the Call Option or of
the Withdrawing Party to exercise the Buy-Sell Agreement, each Member covenants
and agrees that it shall disclose any and all discussions or negotiations which
have taken place with third parties, the consummation, conclusion, completion or
enactment of which could have a material impact on the Company, which have taken
place within the ninety (90) day period preceding the exercise of the Call
Option or the Buy-Sell Agreement as the case may be.
(e) In the event that PRC purchases NHP's Membership Interests
in the Company pursuant to the Buy-Sell Agreement, NHP agrees that NHP shall,
upon PRC's written request, allow up to seventy percent (70%) of the purchase
price for such Membership Interests to be paid by delivery of a promissory note
(and other reasonably required loan documents) made by PRC on the following
terms and conditions: interest shall be payable over a five (5) year period at
a variable interest rate which is equal to Prime Rate plus one percent (1%) per
annum for the first year during which such financing is outstanding (a LOAN
YEAR); Prime Rate plus two percent (2%) per annum for the second Loan Year;
Prime Rate plus three percent (3%) per annum for the third Loan Year; Prime Rate
plus four percent (4%) for the fourth Loan Year, and Prime Rate plus five
percent (5%) for the fifth Loan
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Year. Such loan shall be repaid with monthly installments of interest only for
the first Loan Year, and, thereafter with respect to each Loan Year, with
monthly installments of interest plus principal amortized on the basis of a
fifteen-year schedule commencing on the first day of the second Loan Year, and
secured by a first-priority, perfected lien on all PRC Membership Interests (and
those of its Affiliates and Permitted Transferees), in favor of NHP. The
aforesaid loan shall be made on the basis of loan documents prepared by NHP
which are reasonable and customary for similar transactions (including, without
limitation, legal opinions).
(f) In the event PRC acquires NHP's Membership Interests under
Section 11.4(b), NHP agrees and covenants that, for an eighteen (18) month
period from the date of such acquisition, (i) the bidding procedures set forth
in Article XVIII shall remain in effect in the New York Trade Area, and (ii) NHP
and its Affiliates shall not compete with the Company for non-NHP related
maintenance business in the New York Trade Area or any Eligible MSA as of the
date the election to acquire is made by PRC under 11.4(b). In the event NHP
acquires PRC's Membership Interests under this Section 11.4, PRC agrees and
covenants that it shall comply with Section 2(b) of the Non-Compete, as
applicable.
11.5 CHANGE IN CONTROL.
(a) In the event of a change in control of PRC, as defined in
(b) below, NHP may either (i) exercise the Call Option under 11.4(a), or (ii)
replace PRC as the Member-Manager, either by then becoming the Member-Manager or
by appointing a third-party as Member-Manager. Upon any such action based
solely on the death or incapacity of both Xxxxx Xxxxx and Xxxx Xxxxxxx, PRC and
its Permitted Transferees shall have the right, within six (6) months, to
require the Company to repurchase its interest in the Company at a price equal
to the lesser of: (i) one-half of the proceeds of the key man insurance
maintained pursuant to Section 16.9, which are actually received by the Company
in the event of the death of both Xxxxx Xxxxx and Xxxx Xxxxxxx; or (ii) fair
market value of such Membership Interests, as determined pursuant to Section
12.3.
(b) With respect to PRC, a "change in control" shall mean any
of the following:
(i) XXXXX XXXXX AND/OR XXXX XXXXXXX, THEIR RESPECTIVE
IMMEDIATE FAMILIES OR CONTROLLED AFFILIATES CEASE TO OWN AT LEAST FIFTY-ONE
PERCENT (51%) OF THE BENEFICIAL INTERESTS OR VOTING RIGHTS OR VOTING STOCK OR
VOTING EQUITY INTERESTS IN PRC AND SUCH PARTIES OR PRC SHALL CEASE TO OWN IN THE
AGGREGATE AT LEAST 50% OF THE MEMBERSHIP INTERESTS OF THE COMPANY; OR
(ii) XXXXX XXXXX AND XXXX XXXXXXX DO NOT BOTH CONTINUE
TO SERVE AS THE PRINCIPAL EXECUTIVE OFFICERS OF PRC AND IN DAY-TO-DAY
OPERATIONAL CONTROL OF PRC AND THE COMPANY, OR, IN THE EVENT OF THE DEATH OR
INCAPACITY OF EITHER XXXXX XXXXX OR XXXX XXXXXXX, XXXXX XXXXX OR XXXX XXXXXXX
(WHO IS THE SURVIVOR) DOES NOT CONTINUE TO
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SERVE AS A PRINCIPAL EXECUTIVE OFFICER OF PRC AND IN DAY-TO-DAY OPERATIONAL
CONTROL OF PRC.
ARTICLE XII
DISSOCIATION OF A MEMBER
12.1 DISSOCIATION. A Person shall cease to be a Member upon the
happening of any of the following events:
(a) the Member's becoming a Bankrupt Member and in the case of
NHP, the occurrence of any event with respect to NHP Incorporated which would
cause NHP Incorporated to be a Bankrupt Member were it a Member;
(b) in the case of a Member who is a natural person, the death
of the Member or the entry of an order by a court of competent jurisdiction
adjudicating the Member incompetent to manage the Member's estate;
(c) in the case of a Member who is acting as a Member by
virtue of being a trustee of a trust, the termination of the trust (but not
merely the substitution of a new trustee);
(d) in the case of a Member that is an Organization other than
a corporation, the dissolution and commencement of winding up of the
Organization;
(e) in the case of a Member that is a corporation, the filing
of a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; or
(f) in the case of an estate, the distribution by the
fiduciary of the estate's entire interest in the Company.
12.2 PURCHASE OF DISSOCIATED MEMBER'S MEMBERSHIP INTEREST. Upon the
Dissociation of a Member, if the Majority of the Remaining Members elect to
continue the business of the Company, a Majority of the Remaining Members shall,
subject to the provisions of the Act, elect one of the two following provisions:
(a) The Dissociated Member's Membership Interest shall be
purchased by the Company for a purchase price equal to the aggregate fair market
value of the Member's Membership Interest determined according to the provisions
of Section 12.3 hereof. The purchase price of such interest shall be paid by
the Company to the Member (or such Member's estate) in cash within 60 days of
determination of the aggregate fair market value or, at the Company's option,
said debt may be evidenced by a promissory note bearing interest at the Prime
Rate with interest payable quarterly, and the principal of which shall
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be due and payable upon the earlier of (i) expiration of five years or (ii) the
sale or other Disposition of all or substantially all of the Company Property;
or
(b) The Dissociated Member, or a Permitted Transferee of the
Dissociated Member's Interest, shall continue to hold the Dissociated Member's
Membership Interest as a Member.
12.3 PURCHASE PRICE OF DISSOCIATED MEMBER'S MEMBERSHIP INTEREST. The
fair market value of a Member's Interest to be purchased by the Company pursuant
to Section 12.2(a) shall be determined by agreement between the Dissociated
Member (or the Assignee of the Dissociated Member's Membership Interest, as the
case may be) and the Remaining Members of the Company, which agreement is
subject to approval by a Majority of the Remaining Members of the Company. For
this purpose, the fair market value of the Dissociated Member's Membership
Interest shall be computed as the amount which could reasonably be expected to
be realized by such Member upon the sale of all of the Company Property in the
ordinary course of business at the time of Dissociation. If the Dissociated
Member (or the Assignee of the Dissociated Member's Membership Interest, as the
case may be) and the Remaining Members of the Company cannot agree upon the fair
market value of such Membership Interest within 30 days, the fair market value
thereof shall be determined by appraisal. The Remaining Members of the Company
and the Dissociated Member (or the Assignee of the Dissociated Member's
Membership Interest, as the case may be) shall jointly select a certified
appraiser (and, in the event that the Remaining Members of the Company and the
Dissociated Member cannot agree upon an appraiser, then the appraiser shall be
selected by the Remaining Members' (if the Dissociated Member is NHP) or the
Company's (if the Dissociated member is PRC) and the Dissociated Member's
respective certified public accounting firms), which appraiser shall determine
the value of the Membership Interest. The purchase price for such Dissociated
Member's Membership Interest shall be equal to the value as determined by such
appraiser (the APPRAISED VALUE) unless such Appraised Value is higher than the
purchase price as determined by the Dissociated Member (in which event the
Dissociated Member's purchase price shall apply), or lower than the Company's
purchase price as determined by the Remaining Members of the Company (in which
event the Company's purchase price shall apply). The purchase price for such
Dissociated Member's Membership Interest, as determined by the preceding
sentence, shall be final and binding and may be enforced by legal proceedings.
The compensation of the appraiser shall be borne equally by the Dissociated
Member (or the Assignee of the Dissociated Member's Membership Interest, as the
case may be) and the Company.
12.4 DAMAGES. The provisions set forth herein shall not affect any
claim the Company may have against the Dissociated Member. The Company shall
have the right to offset any payments due under this Article 12 by any costs,
fees and damages that the Company may incur in connection with any such claim.
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ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS; WITHDRAWAL
RIGHTS OF MEMBERS; EXCLUSION OF MEMBERS
13.1 ADMISSION OF SUBSTITUTE MEMBERS. An Assignee of a Membership
Interest shall be admitted as a Substitute Member, to all the rights of the
Member who initially assigned the Membership Interest, only with the approval,
which may be withheld in their sole and absolute discretion, of a Majority of
the Remaining Members. If so admitted, the Substitute Member shall have all the
rights and powers and be subject to all the restrictions and liabilities of the
Member originally holding the Membership Interest. The admission of a
Substitute Member, without more, shall not release the Member originally holding
the Membership Interest from any liability to the Company that may have existed
prior to the approval.
13.2 ADMISSION OF PERMITTED TRANSFEREES. Notwithstanding Section 13.1
hereof, the Assignee of the Membership Interest of any Member shall be admitted
as a Substitute Member without the consent of the Remaining Members if the
Transferee is a Permitted Transferee and after execution of an Admission
Agreement in which such Assignee agrees to be bound by all of the terms and
conditions of this Agreement.
13.3 ADMISSION OF ADDITIONAL MEMBERS. Additional Members may be
admitted to the Company only upon the prior authorization of the Members
pursuant to a Unanimous Member Vote and, after execution of an Admission
Agreement, in which such Assignee agrees to be bound by all of the terms and
conditions of this Agreement.
13.4 WITHDRAWAL RIGHTS OF MEMBERS. No Member shall have the right to
withdraw or resign as a Member of the Company except (i) in connection with such
Member's Disposition of all, but not less than all, of its Membership Interests
in connection with Sections 11.4 and 11.5 or (ii) with the express prior written
consent of each of the Remaining Members, which consent may be granted or
withheld in the sole and absolute discretion of each such Remaining Member.
13.5 EXPULSION OF MEMBERS. No Member shall have the right to remove or
otherwise cause the expulsion from the Company of any other Member.
ARTICLE XIV
DISSOLUTION AND WINDING UP
14.1 DISSOLUTION. The Company shall be dissolved and its affairs wound
up, upon the first to occur of the following events:
(a) the expiration of the Term;
(b) the unanimous written consent of all of the Members;
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(c) the Dissociation of any Member, unless the business of the
Company is continued with the consent of a Majority of the Remaining Members; or
(d) upon a decree of judicial dissolution entered pursuant to
Section 18-802 of the Act.
14.2 EFFECT OF DISSOLUTION. Upon dissolution, the Company shall cease
carrying on, as distinguished from the winding up of, the Company business, but
the Company shall not be terminated, and shall continue until the winding up of
the affairs of the Company is completed and the certificate of cancellation has
been issued by the Secretary of State of the State of Delaware.
14.3 DISTRIBUTION OF ASSETS ON DISSOLUTION. Upon the winding up of the
Company, the Company Property shall be distributed:
(a) first, to creditors, including Members who are creditors,
to the extent permitted by law, in satisfaction of Company Liabilities;
(b) second, to the setting up of any reserves which the
Members, by Unanimous Member Vote, may deem necessary or appropriate for any
anticipated obligations or contingencies of the Company arising out of or in
connection with the operation or the business of the Company. Such reserves may
be paid over by the Members to an escrow agent or trustee selected by the
Members to be disbursed by such escrow agent or trustee in payment of any of the
aforementioned obligations or contingencies and, if any balance remains at the
expiration of such period as the Members shall deem advisable, shall be
distributed by such escrow agent or trustee in the manner hereinafter provided;
and
(c) thereafter, to the Members in accordance with their
Membership Interests.
Liquidation proceeds shall be paid as soon as practicable following liquidation,
and in any event within 90 days after the date of liquidation. Such
Distributions shall be in Money and/or Property (which shall be distributed
proportionately), except as determined by Unanimous Member Vote.
14.4 WINDING UP AND CERTIFICATE OF DISSOLUTION. The winding up of the
Company shall be completed when all debts, liabilities, and obligations of the
Company have been paid and discharged or reasonably adequate provision therefor
has been made, and all of the remaining Company Property has been distributed to
the Members. Upon the completion of winding up of the Company, a certificate of
cancellation shall be delivered for filing to the Secretary of State of the
State of Delaware. The certificate of cancellation shall set forth the
information required by the Act.
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ARTICLE XV
AMENDMENT
This Agreement may be amended or modified from time to time only by a
written instrument executed by each of the Members.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 NOTICE. All notices and other communications hereunder shall be in
writing (including telex or similar writing) and shall be deemed given (a) when
delivered personally to the recipient, (b) when sent to the recipient by
telecopy (with receipt electronically confirmed by sender's machine) if prior to
6 p.m. (Eastern Time) on a Business Day, otherwise on the next Business Day, or
(c) one (1) Business Day after the date sent to the recipient by reputable
express courier service (charges prepaid) to the parties at the following
addresses or telecopier numbers (or at such other address, or telecopy number
for a party as shall be specified by like notice):
(a) if to PRC, to:
Property Resources Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, Esquire
Fax: (000) 000-0000
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(b) if to NHP, to:
NHP Incorporated
Fairfax Square
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxxxxxx, Executive Vice President
and a copy to Xxxx Xxxxxx, Esquire, General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxxx & Berlin, Chartered
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxx, Esquire
Fax: (000) 000-0000
16.2 NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES. The Members have
formed the Company under the Act, and expressly do not intend hereby to form a
partnership under either the Delaware Uniform Partnership Act nor the Delaware
Revised Uniform Limited Partnership Act. The Members do not intend to be
partners one to another, or partners as to any third party. To the extent any
Member, by word or action, represents to another Person that any other Member is
a partner or that the Company is a partnership, the Member making such wrongful
representation shall be liable to any other Member who incurs personal liability
by reason of such wrongful representation.
16.3 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER THIS AGREEMENT. This
Agreement is entered into among the Company and the Members for the exclusive
benefit of the Company, its Members, and their permitted successors and assigns.
This Agreement is expressly not intended for the benefit of any creditor of the
Company or any other Person other than the Indemnified Parties as set forth in
Section 6.4 hereof. Except and only to the extent provided by applicable
statute or Section 6.4, no such creditor or third party shall have any rights
under this Agreement, Admission Agreement or any agreement between the Company
and any Member with respect to any Contribution or otherwise.
16.4 GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE,
INTERPRETATION, OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER
JURISDICTION.
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16.5 ARBITRATION. Except to the extent this Agreement provides
otherwise, any dispute arising under this Agreement shall be resolved by
arbitration as hereinafter provided. The party desiring arbitration shall give
written notice to that effect to the other party and to such party's counsel, as
provided for in Section 16.1 hereof. The party initiating the arbitration shall
send a copy of the notice initiating the arbitration to the American Arbitration
Association (or its successor) and shall request that the American Arbitration
Association select within 10 days thereafter an individual who meets the
following criteria to act as the arbitrator. The arbitrator must be (i)
"independent," I.E., not having at that time or at any time within the
immediately preceding five (5) years a substantial relationship with either
party to the arbitration, any Affiliate of either such party, or any officer or
director of any such party or Affiliate; (ii) an attorney having at least ten
(10) years experience, and (iii) knowledgeable in the areas of multi-family
residential real estate ownership, management and finance. No party to the
arbitration shall have any right to object to the individual named as the
arbitrator except upon the ground that the named individual does not meet the
aforesaid criteria. If more than one arbitration is conducted pursuant to this
Agreement, the parties agree to use the same arbitrator, subject to his
availability. The arbitration shall be conducted in the City of New York and,
to the extent consistent with this Paragraph, in accordance with the expedited
procedures set forth in and otherwise in accordance with the then Commercial
Arbitration Rules of the American Arbitration Association (or any organization
successor thereto). The arbitrator shall be instructed to proceed with all
reasonable diligence to resolve the dispute by no later than 30 days after the
date on which the American Arbitration Association received the request to
initiate the arbitration, to render his decision in writing and to deliver
counterpart copies thereof to each of the parties. The arbitrator may issue a
default award against a party that fails to appear at any meeting or hearing
scheduled by the arbitrator or which attempts to delay the arbitration. Such
decision shall be binding, final and conclusive on the parties. Judgment may be
had on the decision so rendered in any court of competent jurisdiction, federal
or state, and may be enforced in accordance with the laws of the State of
Delaware. The fees of the arbitrator, the fees of expenses of respective
counsel engaged by the parties, the fees and expenses of expert witnesses and
other witnesses called by the parties and the cost of transcripts shall be paid
by the party against which the dispute is resolved, unless otherwise specified
by the arbitrator.
16.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.7 RULES OF CONSTRUCTION. Unless the context otherwise requires:
(a) a term has the meaning assigned to it by this Agreement; (b) an accounting
term not otherwise defined has the meaning assigned to it in accordance with
GAAP; (c) "or" is not exclusive; and (d) words in the masculine, feminine or
neuter gender, and the singular or plural, shall be deemed to include the others
whenever and wherever the context so requires. Any references to any statute or
law will also refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. This Agreement represents the result of
bargaining and negotiations between the parties hereto during which each party
has had the benefit of legal counsel. Consequently, each
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of the parties hereto expressly waives and disclaims, in connection with the
interpretation of this Agreement, any rule of law requiring that ambiguous or
conflicting terms be construed against the party that drafted or prepared this
Agreement.
16.8 SPECIFIC PERFORMANCE. Without limiting or waiving in any respect
any rights or remedies of the parties hereto under this Agreement now or
hereinafter existing at law or in equity or by statute, each of the parties
hereto agrees that damages for breach are an inadequate remedy for loss suffered
by reason of breach hereof and that the parties hereto shall be entitled to seek
specific performance, or injunctive relief, as applicable, of or concerning the
obligations to be performed by the others in accordance with the provisions of
this Agreement.
16.9 KEY MAN INSURANCE. The Company is required to purchase on behalf
of the Company and Aptek Management Company LLC (APTEK) and maintain on the
Company's and Aptek's behalf one (1) key man insurance policy with respect to
each of Xxxx Xxxxxxx and Xxxxx Xxxxx in the amount of Two Million Dollars
($2,000,000.00) per person for a minimum, initial five (5) year term, subject to
an obligation to seek renewal after such initial term and of which policy the
Company and Aptek shall be equal, joint beneficiaries and the cost of which
shall be shared equally between the Company and Aptek. If one or both of the
Members are no longer members of Aptek, then the Company shall have the
obligation to procure and maintain on the Company's behalf, key man insurance
with respect to each of Xx. Xxxxxxx and Xx. Xxxxx in the amount of One Million
and No/100 Dollars ($1,000,000.00) per person for a minimum, initial five (5)
year term, subject to an obligation to seek renewal after such initial term.
16.10 OTHER INSURANCE. The Company shall purchase from and maintain,
with an insurer admitted to do business in the jurisdiction(s) in which the
Company operates, such insurance as will protect the Company and its Members
from all claims, subject to applicable deductibles and policy terms, including,
but not limited to, those that may arise out of or result from operations of the
Company, or operations for which the Company may be legally liable, whether such
operations be by the Company or by a subcontractor, or by anyone directly or
indirectly employed by any of them, or by anyone for whose acts any of them may
be liable. All insurance coverage shall be written with an insurer having an AM
Best Rating of A- VII or better and at a minimum shall include:
1. Commercial General Liability - $1,000,000 combined single
limit for bodily injury, property damage and personal injury including
contractual liability, products, completed operations and fire damage legal
liability.
2. Workers' Compensation for statutory limits and Employers'
Liability for the following limits:
$100,000 each accident
$500,000 disease - policy limit
$100,000 disease - each employee
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3. Automobile Liability - $1,000,000 combined single limit
for bodily injury and property damage.
4. Excess Liability - $10,000,000 combined single limit above
items 1, 2, and 3.
5. Comprehensive crime coverage including employee
dishonesty, forgery for $1,000,000 each occurrence.
6. All-Risk replacement cost coverage written on an agreed
amount basis to protect the physical assets of the Company.
Insurance coverage set forth in paragraphs 5 and 6 above may be written with a
deductible not to exceed $15,000. Notwithstanding anything to the contrary
above, insurance coverage amounts may be increased in a commercially reasonable
manner at the request of either Member.
ARTICLE XVII
NHP INCORPORATED GUARANTY
17.1 GUARANTY. NHP Incorporated, a Delaware corporation (GUARANTOR)
hereby irrevocably and unconditionally guarantees the due and prompt payment and
performance by NHP hereunder, and the obligations under Article XVIII, Sections
2.3, 8.1, 8.2, 10.5 and 11.4(b) (the OBLIGATIONS).
17.2 NATURE OF GUARANTY. The guaranty to be provided by Guarantor
pursuant to Section 17.1 hereof is a guaranty of payment, not merely of
collection, and is independent of any other guaranty or surety of the
Obligations. If NHP shall fail to perform or pay any Obligation, Guarantor
shall pay or perform such Obligation as and when due. Guarantor hereby waives
(i) promptness, diligence, notice, disclosure, presentment, protest and
dishonor, other than as specifically provided for herein, and (ii) any right to
force the Company to proceed first, concurrently or jointly against NHP, any
other guarantor, surety or other co-obligor.
17.3 REPRESENTATIONS AND WARRANTIES. Guarantor hereby makes the
representations and warranties set forth in Section 6.5(a), (d) and (e).
17.4 OWNERSHIP OF NHP. Guarantor represents and warrants that it is
Beneficial Owner of all of the outstanding equity of NHP, and that it shall not,
directly or indirectly, dispose or otherwise transfer any direct or indirect
equity interest in NHP, other than to an Affiliate, without the prior written
consent of all of the Members.
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ARTICLE XVIII
BIDDING PROCEDURES FOR NHP INCORPORATED
18.1 NHP MAINTENANCE CONTRACTS IN COMPLIANCE WITH THIS ARTICLE.
Subject to the termination of obligations under this Article XVIII as provided
herein, and other limitations set forth in this Agreement, from and after the
date of this Agreement, NHP Incorporated and its Affiliates of which it
maintains operational control (individually, an "NHP Entity"; collectively, the
"NHP Entities") shall not conduct on its own or enter into any arrangement,
agreement or understanding to provide third party maintenance work (an "NHP
Maintenance Contract"), with a Person (other than as permitted under the Non-
Compete Agreement) for the provision of any maintenance services within the
scope of Article III of this Agreement ("NHP Maintenance Services") to a
property owned or managed by any of the NHP Entities (the "NHP Properties") in
any "MSA"(as defined in the Non-Compete Agreement), where the Company conducts
and maintains business unless the NHP Entities shall have first complied with
the provisions of this Article XVIII; provided, however, that nothing herein
shall impose any limitation or restriction on any NHP Entity:
1. to the extent that any of the NHP Entities reasonably
determines that to comply with this Article XVIII could reasonably be expected
to violate any legal or fiduciary or, as set forth in 3. below, any contractual
obligation, or otherwise exceed its legal or contractual authority, any NHP
Entity may have to any other Person other than an NHP Entity;
2. with respect to the activities of any NHP Entity acquired
subsequent to the date hereof, to the extent that as of the date of such
acquisition such acquired NHP Entity was actively engaged in the provision of
maintenance business or service to such acquired NHP Entity's (or its Affiliates
immediately prior to such acquisition by NHP) existing portfolio as of the date
of the acquisition which would otherwise be subject to the terms of this
Agreement;
3. to the extent that: (i) such NHP Entity is bound to any
agreement or understanding (pre-existing this Agreement) which limits its
control to manage, provide for, or select providers for, or mandates selection
of, maintenance services in a manner which is inconsistent with the provisions
of this Article XVIII; (ii) an NHP Entity which becomes an NHP Entity subsequent
to the date of this Agreement, and as of the date it became an NHP Entity is
bound to any agreement which limits its control to manage, provide for or select
providers for, or mandates selection of, maintenance services in a manner which
is inconsistent with the provisions of this Article XVIII, in which case such
NHP Entity or an NHP Affiliate shall not receive any profit for contracting for
or performing such NHP Maintenance Services; or (iii) an NHP Entity which
becomes an NHP Entity subsequent to the date of this Agreement which conducts
its maintenance related activities for itself
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and its portfolio of properties on its own behalf or through controlled
Affiliates in a manner consistent in all material respects with such NHP
Entity's practices prior to the date on which such entity became an NHP Entity.
18.2 PARTICIPATION IN BUDGETING AND PLANNING PROCEDURES.
(a) In connection with the annual budgeting process for NHP
Maintenance Services for the NHP Properties, the NHP Entities which are subject
to the restrictions of this Article XVIII (and not otherwise provided an
exception hereunder) shall consult with the Company in determining the scope of
any required NHP Maintenance Services, the bid specifications for any such NHP
Maintenance Services, and the budget for such NHP Maintenance Services. The
final decision as to all such matters shall be made by the NHP Entities in their
sole discretion.
(b) In connection with any NHP Maintenance Services to be
undertaken outside of the annual budgeting process, the NHP Entities which are
subject to the restrictions of this Article XVIII (and not otherwise provided an
exception hereunder) shall consult with the Company in determining the scope of
the required NHP Maintenance Services, the bid specifications for such NHP
Maintenance Services, and the budget for such NHP Maintenance Services. The
final decision as to all such matters shall be made by the NHP Entities alone in
their sole discretion. Notwithstanding anything to the contrary contained
herein, the NHP Entities shall not be required to consult with the Company, or
otherwise comply with Article XVIII, as set forth in this paragraph (b): (i) for
Maintenance Services which are budgeted for an amount which is under Ten
Thousand Dollars ($10,000.00) for a single contract, provided that NHP will not
create multiple contracts for work which would customarily be set forth in one
contract or which has the purpose of avoiding this limitation; (ii) for change
orders for already awarded NHP Maintenance Contracts to the extent the relevant
NHP Entity determines in good faith that it would not be in the best interests
of the related property to have the change order work done by a contractor other
than the contractor that has the existing contract; (iii) for Maintenance
Services which must be performed upon an emergency basis due to the nature of or
timing required by such Maintenance Services; (iv) for Maintenance Services
which are not currently provided by the Company (and are therefore not listed on
EXHIBIT C hereto, which exhibit may be updated and revised by the Company from
time to time upon a Unanimous Member Vote); and (v) to the extent the Company's
NHP Maintenance Contracts with the NHP Entities for each classification and type
of maintenance work listed on EXHIBIT C to be performed would otherwise exceed
for an individual trade a minimum of sixty percent (60%), and exceed an
aggregate of eighty percent (80%) of the NHP Maintenance Contracts all as
measured on an annual dollar volume basis for all NHP Entities to the extent
subject to the restrictions of this Section 18.2(b) (based upon the aggregate
dollar amount of such contracts for all NHP Entities, in the aggregate).
Satisfaction of each of the criteria set forth in this Section 18.2(b) shall be
determined by the NHP Entities in their sole discretion.
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18.3 ANNUAL REQUIREMENTS CONTRACTS. The NHP Entities shall, to the
extent consistent with, and subject to, the terms of Section 18.2(b), contract
for their annual aggregate requirements on an annual basis at fixed rates for
apartment painting, floor tile, brick pointing, sidewalk repair, waterproofing,
exterminating, plumbing, carpentry work, plastering, electrical repair and other
maintenance services typically purchased pursuant to annual contracts (which
services are set forth on EXHIBIT C hereto, which exhibit may be updated from
time to time by the Company), pursuant to separate annual NHP Maintenance
Contracts by and between the applicable NHP Entity and the Company, for so long
as NHP reasonably determines in good faith that annual contracts are in the best
interest of the related project (collectively, the "Annual Requirements
Contracts"); provided, however, that an NHP Entity shall not be obligated to
enter into such Annual Requirements Contracts if such NHP Entity is unable to
obtain at least two "Competing Bids" (as defined below) for such Annual
Requirements Contract after commercially reasonable efforts to obtain such bids.
18.4 BIDDING PROCEDURES.
(a) Prior to entering into any NHP Maintenance Contract,
including any Annual Requirements Contracts, the NHP Entities may solicit
written bids from third parties (the "Competing Bids") for the NHP Maintenance
Services pursuant to written bid specifications setting forth the NHP
Maintenance Services to be performed (the "Bid Specifications"). After receipt
of any Competing Bids, the NHP Entities which are subject to the restrictions of
this Article XVIII shall provide the terms of such Competing Bids to the Company
and the Company shall have three (3) Business Days from its receipt of the
Competing Bids to submit its bid on the proposed NHP Maintenance Services to be
performed in accordance with the Bid Specifications (the "Company Bid"). The
NHP Entities shall keep the Company Bid strictly confidential and shall not
disclose the Company Bid to any other Person except as required by Legal
Requirements.
(b) If after compliance with paragraph (a) the NHP Entities
intend to proceed with such NHP Maintenance Services, the NHP Entities shall
accept the Company Bid unless the NHP Entities desire to accept a Competing Bid
received pursuant to paragraph (a), which is a Competing Bid from a company that
the NHP Entity determines, in its commercially reasonable judgment, is reputable
and financially responsible, reasonably able to provide the NHP Maintenance
Services pursuant to the Bid Specifications or different specifications set
forth in such Competing Bid (and which are otherwise acceptable to the NHP
Entity in its sole judgment), and offered for a price or upon terms which the
NHP Entity determines, in its commercially reasonable judgement, are more
advantageous overall, taking into account the quality of the work to be
performed (a "Competing Offer").
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(c ) If the applicable NHP Entity accepts the Company Bid, the
applicable NHP Entity and the Company shall enter into an Annual Requirements
Contract, or other appropriate NHP Maintenance Contract.
(d) If the Company does not submit a Company Bid or, if an NHP
Entity is not obligated to enter into such contract pursuant to this Article
XVIII, the NHP Entity shall be free to accept the Competing Offer, and to enter
into an NHP Maintenance Contract or Annual Requirements Agreement to purchase
the NHP Maintenance Services in accordance with this Article XVIII.
(e) If at any time after an NHP Entity has accepted a
Competing Offer or a Company Offer for any NHP Maintenance Services (including,
by way of example only, NHP Maintenance Contracts and Annual Requirements
Contracts) of Five Thousand Dollars ($5,000.00) or more, there is either (i) a
material change, in the NHP Entity's commercially reasonable judgment, in the
specifications and scope of the NHP Maintenance Services being provided, or (ii)
an increase in the consideration payable under such NHP Maintenance Contract in
excess of the greater of One Thousand Dollars ($1,000.00) or ten percent (10%)
of the total consideration payable under the NHP Maintenance Contract, and the
NHP Entities are not otherwise contractually bound by the terms of the Competing
Offer or NHP Maintenance Contract or the subject property or project would not
be materially adversely affected, then such NHP Entity shall once again comply
with the provisions of paragraphs (a) through (d).
(f) NHP will provide upon PRC's written request, no more
frequently than annually, a certification from an officer of NHP of NHP's
compliance with the procedures of this Article XVIII. The Company may request,
at PRC's sole expense, an audit by PRC's independent certified public accountant
of NHP's compliance with respect to the minimum percentage of Annual
Requirements Agreements and NHP Maintenance Contracts. In the event that such
audit reveals a failure by NHP to comply with such requirements which results in
an EBITDA effect on the Company of One Hundred Thousand Dollars ($100,000.00) or
more, NHP shall reimburse PRC for its actual cost of such audit.
18.5 BOOKS AND RECORDS. The NHP Entities shall keep true, complete and
accurate books of account containing information which may be necessary for the
purpose of showing compliance with this Article XVIII. Such books of accounts
shall be kept by the NHP Entities at the usual places where their like books are
kept, for the three (3) year period following the end of the calendar year to
which they pertain, and shall be open for the inspection of an independent
certified public accountant pursuant to Section 18.4(f) above.
18.6 TIMELY CONSULTATION. All consultation with the Company (or its
Affiliates) required of any NHP Entity must be accomplished by the Company (or
its Affiliates) in such a
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manner as to avoid any unreasonable in NHP's reasonable discretion delay in any
NHP Entity's normal course of business concerning its Maintenance Services.
18.7 TERMINATION OF ARTICLE XVIII UPON SALE. Upon the consummation of
the sale of any Membership Interest pursuant to Section 11.4 hereof, this
Article XVIII shall terminate and be of no further force and effect, subject to
Section 11.4(f) hereof.
18.8 TERMINATION OF ARTICLE XVIII FOR PROPERTIES OUTSIDE THE NEW YORK
TRADE AREA. This Article XVIII shall terminate and be of no further force and
effect with respect to Eligible MSAs at such time as the provisions of the Non-
Compete Agreement are no longer applicable to such Eligible MSAs.
[Signatures begin on next page]
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IN WITNESS WHEREOF, we have hereunto set out hand and seals on the date set
forth beside our names.
MEMBERS:
NHP MAINTENANCE SERVICES COMPANY
, 1996 By:
-------------------- -------------------------------------
Xxxxxx Xxxxxxxxxx
Executive Vice President
PROPERTY RESOURCES CORPORATION
, 1996 By:
-------------------- -------------------------------------
Xxxx Chatzhy
Vice President
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NHP Incorporated joins this Agreement only with respect to its obligations under
Articles XVII and XVIII.
NHP INCORPORATED
, 1996 By:
-------------------- -------------------------------------
Xxxxxx Xxxxxxxxxx
Executive Vice President
EXHIBIT A
TO OPERATING SERVICES AGREEMENT
OF APTEK MAINTENANCE SERVICES LLC
INITIAL MEMBERS
INITIAL MEMBER/ MEMBERSHIP INITIAL CUMULATIVE COMMITMENT
ADDRESS PERCENTAGES CONTRIBUTION FOR FUTURE
CONTRIBUTION - TO BE
PAID WITHIN FIVE (5)
BUSINESS DAYS OF A
WRITTEN DEMAND
THEREFORE BY THE
MEMBER-MANAGER
--------------- ---------- ------------ ---------------------
Maintenance Services 50% $40,000.00 $35,000.00
Companyc/o NHP XxxxxxxxxxxxXxxxxxx Xxxxxx0000 Xxxxxxxx XxxxXxxxx 000Xxxxxx, XX
00000-0000
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INITIAL MEMBER/ MEMBERSHIP INITIAL CUMULATIVE COMMITMENT
ADDRESS PERCENTAGES CONTRIBUTION FOR FUTURE
CONTRIBUTION - TO BE
PAID WITHIN FIVE (5)
BUSINESS DAYS OF A
WRITTEN DEMAND
THEREFORE BY THE
MEMBER-MANAGER
--------------- ---------- ------------ ---------------------
Property Resources 50% $40,000.00 $35,000.00
Corporation19 Xxxx 00xx XxxxxxXxx Xxxx, XX 00000
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56 EXHIBIT B
During the Preference Period, the Company shall be responsible for payment of:
1. All variable costs related to the business of the Company, including,
without limitation, employees (comprised only of field supervisors, data entry
clerks, drivers, stock room clerks, mechanics, apprentices and dispatchers),
vehicles, inventory, and equipment (excluding direct overhead);
2. All costs of indemnification of the Company pursuant to Section 6.4;
3. The cost of any governmental filing fee or foreign qualification of the
Company;
4. The costs of the annual audit, and the preparation of year end financial
statements pursuant to Section 4.4;
5. Taxes and tax preparation fees;
6. All third party legal fees, costs and expenses, including, without
limitation, those incurred in connection with Proceedings;
7. The cost of Key Man Insurance pursuant to Section 16.9 and Other
Insurance pursuant to Section 16.10;
8. The cost of a registered agent in the State of Delaware.
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EXHIBIT C
SCHEDULE OF TRADES
Brick Pointing
Waterproofing
Sidewalk Repair/Replacement
Apartment Restoration following Casualty Damages or Preparation of Apartments
Upon Tenant Turnover
Painting
Welding and Iron Work
Plumbing
Repair of Sprinkler, Standpipe, RPZ (back-flow prevention)
Roof Repair (patching)
Pest Control Management and Exterminating
Hardwood Flooring and Refinishing
V.C.T. Replacement
Electrical Repairs
Glass Replacement
Window Replacement
Tub Enclosures
Installation of Cabinets, Vanities and Countertops
Installation of Ceramic Floor and Wall Tiles
Plastering and Drywall
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