Exhibit 10.5
SANDALWOOD HOSPITALITY ADVISORS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of ___, 2002
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
FORMATION OF LIMITED LIABILITY COMPANY
2.1 Formation.................................................................8
2.2 Company Name..............................................................8
2.3 Purpose and Character of Business.........................................8
2.4 Principal Business Office, Registered Office and Registered Agent.........8
2.5 Term of the Company.......................................................9
2.6 Qualification in Other Jurisdictions......................................9
ARTICLE 3
CAPITALIZATION
3.1 Issuance of Interests.....................................................9
3.2 Member Loans.............................................................10
3.3 Capital Accounts.........................................................10
3.4 Deficit Capital Accounts.................................................11
3.5 No Interest on Capital Contributions.....................................11
ARTICLE 4
BOOKS; ACCOUNTING; TAX ELECTIONS; REPORTS; INSURANCE
4.1 Fiscal Year..............................................................11
4.2 Method of Accounting and Taxation........................................11
4.3 Books and Records and Inspection.........................................12
4.4 Financial Statements and Board of Manager Minutes........................12
4.5 Filing of Returns and Other Writings; Tax Matters Member;
Additional Information...................................................12
ARTICLE 5
ALLOCATIONS
5.1 Allocations of Profit and Loss...........................................13
5.2 Allocations for Tax and Book Purposes....................................14
5.3 Certain Accounting Matters...............................................14
5.4 Tax Allocations; Code Section 704(c).....................................14
5.5 Compliance With Section 704(b)...........................................15
5.6 Curative Allocations.....................................................15
ARTICLE 6
DISTRIBUTIONS
6.1 Cash Distributions.......................................................16
6.2 No Distributions in Violation of Section 18-607 of the Act...............16
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ARTICLE 7
RIGHTS AND OBLIGATIONS OF MEMBERS AND MANAGERS
7.1 Limited Liability of Members.............................................16
7.2 Managing Directors.......................................................17
7.3 Oversight of Members.....................................................19
7.4 Designation of Officers..................................................21
7.5 Administrative Services..................................................21
7.6 Standard of Care, Etc....................................................21
7.7 Indemnification..........................................................21
7.8 Members..................................................................22
ARTICLE 8
RESTRICTIONS ON TRANSFER; Transfers in Certain Circumstances
8.1 Limitation on Transfers..................................................23
8.2 Termination of Interests.................................................24
8.3 Substituted Members......................................................24
ARTICLE 9
DISSOLUTION; LIQUIDATION; TERMINATION
9.1 Dissolution..............................................................24
9.2 Procedures Upon Dissolution..............................................25
9.3 Termination of Company...................................................25
ARTICLE 10
MISCELLANEOUS
10.1 Notices.................................................................26
10.2 Word Meanings...........................................................27
10.3 Binding Provisions......................................................27
10.4 Title to Company Property...............................................27
10.5 Governing Law...........................................................27
10.6 Separability of Provisions..............................................27
10.7 Section Titles..........................................................28
10.8 Further Assurances......................................................28
10.9 Counterparts............................................................28
10.10 Entire Agreement........................................................28
10.11 Amendments..............................................................28
10.12 Confidentiality.........................................................28
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SANDALWOOD HOSPITALITY ADVISORS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
This LIMITED LIABILITY COMPANY AGREEMENT of SANDALWOOD HOSPITALITY
ADVISORS, LLC (the "Company") dated as of ___, 2002, is entered into by and
among Haberhill Lodging Ventures LLP ("Haberhill"), a Maryland limited liability
company, and BT Lodging Ventures LLC ("BTL"), a Delaware limited liability
company (each, an "Initial Member" and collectively, the "Initial Members").
RECITALS:
WHEREAS, the Company was formed as a limited liability company under
the Delaware Limited Liability Company Act, 96 Del. C. ss.18-01, et seq., as
amended from time to time (the "Act"), pursuant to a Certificate of Formation
dated as of April 11, 2002 and filed with the office of the Secretary of State
of the State of Delaware on April 12, 2002;
WHEREAS, the parties to this Agreement desire to set forth in this
Agreement the rights and duties of the Members relating to the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and adequacy of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings set
forth below or in the Section of this Agreement referred to below:
Accountant(s): the meaning set forth in Section 4.2(b).
Act: the meaning set forth in the Recitals.
Adjusted Capital Account Balance: with respect to any Member, the
balance of such Member's Capital Account after giving effect to the following
adjustments:
(i) credit to such Capital Account such Member's share of
"partnership minimum gain" or "partner nonrecourse debt minimum gain" as
such terms are defined in Section 1.704-2 of the Treasury Regulations or
any amount which such Member would be required to restore under this
Agreement or otherwise; and
(ii) debit to such Capital Account the items described in
Section 1.7041(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
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The foregoing definition of Adjusted Capital Account Balance is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
Adjusted Capital Account Deficit: means, with respect to any Member,
the deficit balance, if any, in such member's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments: (a)
credit to such Capital Account of any amounts which such member is obligated to
restore pursuant to any provision of this Agreement or is deemed to be obligated
to restore pursuant to Treasury Regulations Section 1.704-2(g) and Treasury
Regulations Section 1.704-2(i)(5) and (b) debit to such Capital Account of the
items described in Treasury Regulations Sections 1.704-1(b)(2) (ii)(d)(4), (5)
and (6).
Affiliate: when used with reference to a specified Person, (i) any
other Person that directly or indirectly controls or is controlled by or is
under common control with the specified Person.
Agreement: this Limited Liability Company Agreement, as it may be
further amended, restated or supplemented from time to time as herein provided.
Bankruptcy: when used with reference to a specified Person, such
Person's (i) application for or consent to the appointment of a receiver,
trustee or liquidator of all or substantially all of its assets; (ii) filing of
a voluntary petition in bankruptcy under the United States Bankruptcy Code;
(iii) filing of an involuntary petition in bankruptcy against such Person, which
petition shall have remained unstayed or undismissed for a period of sixty (60)
days; (iv) entering of an order for relief in bankruptcy; or (v) admitting in
writing its failure to pay its debts when they come due.
Book Gain or Book Loss: the gain or loss recognized by the Company
for book purposes in any fiscal year or other period by reason of any sale or
disposition with respect to any of the assets of the Company. Such Book Gain or
Book Loss shall be computed by reference to the Book Value of such property or
assets as of the date of such sale or disposition, rather than by reference to
the tax basis of such property or assets as of such date, and each and every
reference herein to "gain" or "loss" shall be deemed to refer to Book Gain or
Book Loss, rather than to tax gain or tax loss, unless the context manifestly
otherwise requires.
Book Value: as of any particular date, the value at which the asset
is properly reflected on the books and records of the Company as of such date in
accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations. The
initial Book Value of each asset shall be its cost, unless such asset was
contributed to the Company by a Member, in which case the initial Book Value
shall be the amount established as its fair market value by agreement of the
contributing Member and the Managing Directors, and, in each case, such Book
Value shall thereafter be adjusted for Depreciation with respect to such asset
rather than for the cost recovery deductions to which the Company is entitled
for Federal income tax purposes with respect thereto. The Book Values of all
Company assets shall be adjusted to equal their respective fair market values,
as determined reasonably and in good faith by the Managing Directors, as of the
following times: (i) the acquisition after the date hereof of an additional
interest in the Company by any new or existing Member in exchange for more than
a de minimis additional Capital
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Contribution (including, but not limited to, the exercise of an option to
acquire an Interest in the Company); (ii) the distribution by the Company to a
Member of more than a de minimis amount of Company assets, including money, if,
as a result of such distribution, such Member's interest in the Company is
reduced; and (iii) the termination of the Company for Federal income tax
purposes pursuant to Section 708(b)(1)(B) of the Code.
BTL: the meaning set forth in the Preamble.
Business Day: any day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are permitted or required by law to
be closed.
Capital Account: the meaning set forth in Section 3.3.
Capital Contributions: the total amount of cash and fair market
value, as determined reasonably and in good faith by the Managing Directors, of
other property contributed to the Company by a Member, including, with respect
to any Member, the amount set forth opposite such Member's name on Schedule
3.1(b).
Certificate: the Certificate of Formation of the Company as provided
for pursuant to the Act, as amended and restated from time to time as herein
provided.
Code: the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent Federal law of similar import, and, to the extent
applicable, any Treasury Regulations promulgated thereunder.
Company: the meaning set forth in the Preamble.
Depreciation: for each fiscal year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable
with respect to an asset for such year or other period; provided, however, that
if the Book Value of an asset differs from its adjusted basis for Federal income
tax purposes at the beginning of any such year or other period, Depreciation
shall be an amount that bears the same relationship to the Book Value of such
asset as the depreciation, amortization, or other cost recovery deduction
computed for tax purposes with respect to such asset for the applicable period
bears to the adjusted tax basis of such asset at the beginning of such period,
or if such asset has a zero adjusted tax basis, Depreciation shall be an amount
determined under any reasonable method selected by the Managing Directors.
Distributable Cash: cash and the fair market value, as determined
reasonably and in good faith by the Managing Directors, received at the time of
reference thereto by the Company from operations or capital transactions (other
than upon dissolution and liquidation of the Company) remaining after (a)
payment of all costs and expenses of the Company incurred or accrued by the
Company at the time of reference thereto, (b) payment of all obligations of the
Company then due other than to Members, and (c) provision for such reserves as
the Managing Directors deem to be necessary or appropriate.
Entity: any general partnership, limited partnership, corporation,
joint venture, trust, limited liability company, limited liability partnership,
business trust, cooperative, or other unincorporated organization or
association.
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Haberhill: the meaning set forth in the Preamble.
Initial Capital: the meaning set forth in Section 3.1(c).
Initial Members: the meaning set forth in the Preamble.
Interests: the meaning set forth in Section 3.1(a).
Majority in Interest: when used with respect to Members, Members
whose Capital Contributions constitute, in the aggregate, a majority of the
Capital Contributions of all Members; and, when used with respect to Series A
Members, Series A Members whose Capital Contributions allocable to their Series
A Interests constitute, in the aggregate, a majority of the Capital
Contributions allocable to the Series A Interests of all Series A Members.
Managing Directors: those Persons who are designated as such from
time to time pursuant to Section 7.2(b).
Member: each of the Persons executing this Agreement as members of
the Company, together with any Person who becomes a substituted or additional
Member as herein provided and who is listed as a member of the Company in the
books and records of the Company, in such Person's capacity as a member of the
Company.
Member Loans: the meaning set forth in Section 3.2.
Notice: the meaning set forth in Section 10.1.
percentage in Interest: when used with respect to Members, Members
whose Capital Contributions constitute, in the aggregate, the stated percentage
of the Capital Contributions of all Members; and, when used with respect to
Series A Members, Series A Members whose Capital Contributions allocable to
their Series A Interests constitute, in the aggregate, the stated percentage of
the Capital Contributions allocable to the Series A Interests of all Series A
Members.
Person: any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
Profit and Loss: for each fiscal year or other period, an amount
equal to the Company's taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (provided that for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(i) Any income of the Company that is exempt from Federal
income tax and not otherwise taken into account in computing Profit or
Loss pursuant to this provision shall be added to such taxable income or
loss;
(ii) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant
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to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account in computing Profit or Loss pursuant to this
provision, shall be subtracted from such taxable income or loss;
(iii) Book Gain or Book Loss shall be taken into account in
lieu of any tax gain or tax loss recognized by the Company by reason of
any sale or disposition of an asset of the Company;
(iv) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year
or other period, computed as provided in this Agreement; and
(v) Any items that are specially allocated pursuant to Section
5.5 or Section 5.6 shall not be taken into account in computing Profit and
Loss.
If the Company's taxable income or loss for such fiscal year or
other period, as adjusted in the manner provided above, is a positive amount,
such amount shall be the Company's Profit for such period; and if a negative
amount, such amount shall be the Company's Loss for such period.
If the Book Value of the Company assets is adjusted pursuant to the
penultimate sentence of the definition of Book Value, the amount of such
adjustment shall be included in computing Profit or Loss. If any Company asset
is distributed in kind (whether in connection with the liquidation of the
Company or otherwise), the Company shall be deemed to have realized Profit or
Loss thereon in the same manner as if the Company had sold such asset for an
amount equal to its fair market value on the date of distribution, as determined
reasonably and in good faith by the Managing Directors.
Regulatory Allocations: the meaning set forth in Section 5.5.
Sandalwood REIT: Sandalwood Lodging Investment Corporation, a
Maryland corporation structured to qualify as a real estate investment trust.
Series A Member: the meaning set forth in Section 3.1.
Series A Interests: the class of Interests designated as Series A
Interests and having the rights, priorities, benefits and duties provided
herein.
Series B Interests: the class of Interests designated as Series B
Interests and having the rights, priorities, benefits and duties provided
herein.
Tax Matters Member: the Member designated on the Company's annual
federal information tax return as the Tax Matters Partner of the Company, as
provided in Section 6231(a)(7) of the Code, and as designated in Section 4.5.
Transfer: the meaning set forth in Section 8.1.
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Treasury Regulations: the Federal income tax regulations, including
any temporary or proposed regulations, promulgated under the Code, as such
Treasury Regulations may be amended from time to time (it being understood that
all references herein to specific sections of the Treasury Regulations shall be
deemed also to refer to any corresponding provisions of succeeding Treasury
Regulations).
Year: the meaning set forth in Section 4.1.
ARTICLE 2
FORMATION OF LIMITED LIABILITY COMPANY
2.1 Formation. The Company was formed as a limited liability company
pursuant to the Act on April 12, 2002. The parties hereto, by execution of this
Agreement, hereby agree that the rights, duties and liabilities of the Members
shall be as provided in the Act, except as otherwise provided herein.
2.2 Company Name. The name of the Company shall be Sandalwood
Hospitality Advisors, LLC. The business of the Company shall be conducted under
such name or such other names as may from time to time be established by the
Managing Directors, with Notice to each Member.
2.3 Purpose and Character of Business. The business of the Company
shall be to engage in the following activities:
(a) managing the business and operations of Sandalwood REIT;
(b) acting as the managing member of, and managing the business and
operations of, Sandalwood Lodging LLC, a majority-owned subsidiary of Sandalwood
REIT; and
(c) managing the business and operations of, and acting as managing
member or general partner of, other direct of indirect majority-owned
subsidiaries of Sandalwood REIT.
Subject to the provisions of Section 7.3, the Company may also
invest in, and manage the business and operations of, other entities organized
to invest in the lodging industry.
2.4 Principal Business Office, Registered Office and Registered
Agent. The principal place of business of the Company shall be c/o Madison
Capital Management, LLC, 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000.
In addition, each Managing Director may maintain an office at such location as
the Company may approve (which consent shall not be unreasonably withheld).
Furthermore, the Managing Directors at any time and from time to time may change
the location of the Company's principal place of business and may establish
additional offices as it shall deem advisable.
The address of the Company's registered office in the State of
Delaware shall be Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000.
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The Company's registered agent for service of process in the State
of Delaware is The Corporation Trust Company, Corporation Trust Center, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
2.5 Term of the Company. The term of the Company began on the filing
of the Certificate of Formation of the Company with the Secretary of State and
will continue perpetually until terminated pursuant to the provisions of this
Agreement or by law.
2.6 Qualification in Other Jurisdictions. The Managing Directors
shall cause the Company to be qualified, formed, reformed or registered under
assumed or fictitious name statutes or similar laws in any jurisdiction, if such
qualification, formation, reformation or registration is necessary in order to
protect the limited liability of the Members or to permit the Company lawfully
to transact business.
ARTICLE 3
CAPITALIZATION
3.1 Issuance of Interests.
(a) The economic and voting interests of Members in the Company,
including the rights of Members under this Agreement and the Act ("Interests"),
will be divided into two classes: Series A Interests and Series B Interests.
Each class of membership shall have such relative rights, powers and duties as
this Agreement shall provide.
Except as expressly provided in this Agreement or the Act, only the
holders of Series A Interests ("Series A Members") will be entitled to vote. The
voting interest of each Series A Member ranks parri passu with the voting
interest of each other Series A Member, and is proportionate to the Capital
Contribution of such Member allocable to its Series A Interests relative to the
Capital Contributions of all Series A Members allocable to their Series A
Interests.
The economic interest of each Member (whether such Member is the
holder of a Series A Interest or a Series B Interest) ranks parri passu with the
economic interest of each other Member, and is proportionate to the Capital
Contribution of such Member relative to the Capital Contributions of all
Members.
(b) The Series A Interests will be issued to the Initial Members.
Additional Members may be admitted only with the consent of the Series A Members
pursuant to Section 7.3 and the Interests of the Person so admitted shall,
except with the consent of the Series A Members pursuant to Section 7.3, be
Series B Interests (whether such Interests are acquired pursuant to Section
3.1(c), Section 3.1(d) or otherwise).
(c) The initial capital of the Company is $1.5 million (the "Initial
Capital"), $600,000 of which has been contributed, one-third by Haberhill, and
two-thirds by BTL. The balance of the Initial Capital is payable, in the same
proportions, as from time to time called by the Managing Directors.
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If either Initial Member (the "defaulter") declines timely to pay
its share of any capital call for the Initial Capital, the non-defaulting
Initial Member may, at its sole option, (1) pay the defaulted portion of the
defaulter's capital call, (2) subject to the provisions of Section 7.3, offer
the defaulted portion of the defaulter's capital call to third parties, or (3)
reduce the amount it pays of such capital call to be proportionate to the amount
paid by the defaulter.
(d) The launch budget for the Company is $2.5 million. The Initial
Members anticipate raising the additional capital from third parties. If the
Initial Members are unable to raise the additional capital, or to reduce the
need for additional capital, then, subject tot he provisions of Section 7.3, the
Managing Directors may require that the additional required capital be
contributed one-third by Haberhill and two-thirds by BTL, in which case either
or both of the Initial Partners may syndicate its capital call to third parties,
subject to the requirement that any such syndication, in conjunction with the
syndication by the other Initial Member and any other capital transactions by
the Company, not be in violation of the securities of blue sky laws of any
jurisdiction, and not affect the tax status of the Company or Sandalwood REIT.
3.2 Member Loans.
(a) The Managing Directors may request that the Members make loans
to the Company ("Member Loans"). No Member is required to make any Member Loan,
but each Member shall have the right to lend its proportionate share (determined
as provided in Section 3.2(b)) of each Member Loan.
(b) Each Member who is willing to make a Member Loan shall be is
entitled to lend, first, the lesser of (i) such Member's proportionate share of
the aggregate Member Loans requested, based on such Member's Capital
Contribution relative to the Capital Contributions of all Members who are
willing to make a Member Loan, and (ii) the amount that such Member is willing
to lend. If the amounts so determined do not equal the full amount of Member
Loans requested and some Members are willing to lend more than their shares
determined in the preceding sentence, each Member willing to lend more will be
entitled to lend, second, such Member's proportionate share of the remaining
unfunded amount of the Member Loans requested, based on the additional amount
that such Member is willing to lend relative to the aggregate additional amount
that all Members are willing to lend.
(c) Member Loans bear interest at the highest rate permitted by
applicable law, but not in excess of 15% per annum, and are subordinated to all
claims of third parties and are senior only to Members' Interests.
3.3 Capital Accounts. A separate capital account (a "Capital
Account") shall be established and maintained for each Member. Each Member shall
have a single Capital Account that reflects all Interests held by such Member,
regardless of the class of Interest owned and regardless of the time or manner
in which such Interests were acquired. Each such Capital Account shall have an
original balance equal to the Capital Contribution of such Member. Thereafter,
the Capital Accounts of the Members shall be maintained in accordance with the
following provisions:
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(a) To each Member's Capital Account there shall be credited the
amount of cash and fair market value, as determined by the Managing Directors
reasonably and in good faith, of any property actually contributed to the
Company pursuant to any provision of this Agreement, such Member's allocable
share of Profit and the amount of any Company liabilities that are assumed by
such Member or that are secured by any Company property distributed to such
Member as well as any other credits as may be required by Section
1.704-1(b)(2)(iv) of the Treasury Regulations.
(b) To each Member's Capital Account there shall be debited the
amount of cash and the fair market value, as determined by the Managing
Directors reasonably and in good faith, of any Company property distributed to
such Member pursuant to any provision of this Agreement, such Member's allocable
share of Loss and the amount of any liabilities of such Member that are assumed
by the Company or that are secured by any property contributed by such Member to
the Company as well as any other debits as may be required by Section
1.704-1(b)(2)(iv) of the Treasury Regulations.
(c) The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Section 1.704-1(b)(2)(iv) of the
Treasury Regulations, and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
(d) A Member shall not be entitled to withdraw any part of its
Capital Account or to receive any distributions from the Company except as
provided in Article 6; nor shall a Member be entitled or required to make any
loan or Capital Contribution to the Company other than as expressly provided
herein. No loan made to the Company by any Member (whether or not a Member Loan)
shall constitute a Capital Contribution to the Company for any purpose.
(e) Except as required by the Act, no Member shall have any
liability for the return of the Capital Contribution of any other Member.
3.4 Deficit Capital Accounts. No Member with a deficit in his
Capital Account shall be obligated to restore such deficit balance or make a
Capital Contribution to the Company solely by reason of such deficit.
3.5 No Interest on Capital Contributions. No Capital Contribution of
any Member shall bear interest or otherwise entitle the contributing Member to
any compensation for use thereof.
ARTICLE 4
BOOKS; ACCOUNTING; TAX ELECTIONS; REPORTS; INSURANCE
4.1 Fiscal Year. The fiscal year ("Year") of the Company for tax and
accounting purposes shall be the calendar year.
4.2 Method of Accounting and Taxation.
(a) The books of account of the Company shall be maintained on a
cash basis. It is the intention of the Members that the Company be taxed as a
partnership for Federal income
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tax purposes and the Managing Directors shall take all action and make all
elections necessary to ensure that the Company is so taxed.
(b) The Company will maintain a system of internal accounting
controls sufficient to provide reasonable assurance that transactions will be
recorded as necessary to permit preparation of financial statements to maintain
asset accountability. The independent auditor of the Company (the "Accountants")
shall at all times be an independent certified public accounting firm.
Initially, the Accountants shall be KPMG LLP.
4.3 Books and Records and Inspection.
(a) Books of Account and Records. The Company shall maintain proper
and complete records and books of account of the Company's business, including
all such transactions and other matters as are usually entered into records and
books of account maintained by Persons engaged in businesses of like character
or as are required by law. To the extent required by law, the Company shall also
keep at its principal office and place of business all records required by the
Act.
(b) Inspection. All records and documents described in Section
4.3(a) shall be open to inspection and copying upon reasonable Notice by any of
the Members or their representatives at any reasonable time during business
hours and at such Member's expense.
4.4 Financial Statements and Board of Manager Minutes.
(a) Annual Report. The Managing Directors shall deliver or cause to
be delivered to each Member within one hundred five (105) days after the end of
each Year an annual report for the Company containing the following:
(i) (A) an audited consolidated balance sheet of the Company,
as at the end of such Year, and (B) audited consolidated statements of
income, changes in Members' capital and cash flows of the Company, for
such Year, setting forth in each case in comparative form the figures for
the previous Year, all in reasonable detail, and accompanied by an opinion
thereon of the Accountants; and
(ii) a statement of the Members' Capital Accounts, including a
listing of all transactions recorded in such Capital Accounts for the
Year.
(b) Quarterly Reports. The Managing Directors shall deliver or cause
to be delivered to each Member as soon as possible but in any event within
forty-five (45) days after the end of each of the first three quarters during a
Year, a management-prepared balance sheet, income statement and cash flow
statement for the Company with respect to such period just ending and the Year
to date.
4.5 Filing of Returns and Other Writings; Tax Matters Member;
Additional Information. (a) The Managing Directors shall cause the preparation
and timely filing of all Company tax returns and shall, on behalf of the
Company, timely file all other writings required by any governmental authority
having jurisdiction to require such filing. To the extent
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practicable, the Company shall furnish to each Member a copy of such Member's
Schedule K-1 on a date not later than March 30 of each year.
(b) BTL is designated as the initial Tax Matters Member for the
Company. The Tax Matters Member may be changed by the Managing Directors,
provided that a Member who is the Tax Matters Member for a taxable year of the
Company shall remain Tax Matters Member for such year if required by Treasury
Regulations.
The Tax Matters Member shall not enter into any extension of the
period of limitations as provided under Section 6229 of the Code without first
obtaining the written consent of the Members. The Tax Matters Member shall not
file a request for administrative adjustment on behalf of the Company without
the prior written consent of any Member who would be adversely affected thereby.
The Tax Matters Member shall keep each Member fully and promptly informed of all
federal income tax proceedings to which the Company is a party, and shall
forward to each Member a copy of any document received in its capacity as Tax
Matters Member from a taxing authority within five (5) business days of receipt.
[At the request of any Member in connection with a transfer of an Interest in
the Company in accordance with the terms of this Agreement, the Tax Matters
Member shall elect to adjust the basis of the assets of the Company under
Section 754 of the Code.]
Expenses incurred by the Tax Matters Member in its capacity as such
shall be borne by the Company.
(c) Upon reasonable prior request from time to time from the
Members, the Company will, or will direct its Accountants to, (i) provide
promptly to each such Member such information as is necessary to permit such
Member to prepare timely financial statements, which information shall include,
without limitation, information as to the accounting principles employed in the
preparation of the Company's financial statements and the worksheets of the
Company and the Accountants drawn in connection with the preparation of the
Company's financial statements, and (ii) provide reasonable access to the
employees of the Company and the Accountants responsible for the preparation of
the Company's financial statements and the related aforementioned work sheets.
ARTICLE 5
ALLOCATIONS
5.1 Allocations of Profit and Loss.
(a) Profit. Subject to Sections 5.5 and 5.6, Profits for any Year
shall be allocated as of the last day of the Year to and among the Members as
follows:
(i) first, to the Members, pro rata in proportion to the
excess of the Loss previously allocated to each Member pursuant to Section
5.1(b) over all Profit previously allocated to such Member pursuant to
this Section 5.1(a)(i), until there shall, during the term of this
Agreement, have been allocated to each Member pursuant to this Section
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5.1(a)(i) Profit equal in amount to the Loss allocated, during the term of
this Agreement, to such Member pursuant to Section 5.1(b);
(ii) second, to the Members, pro rata in proportion to the
excess of the Distributable Cash previously allocated to each Member
pursuant to Section 6.1(a)(iii) over all Profit previously allocated to
such Member pursuant to this Section 5.1(a)(ii), until there shall, during
the term of this Agreement, have been allocated to each Member pursuant to
this Section 5.1(a)(ii) Profit equal in amount to the Distributable Cash
distributed, during the term of this Agreement, to such Member pursuant to
Section 6.1(a)(iii); and
(iii) third, to the Members, pro rata in proportion to their
Capital Contributions.
(b) Loss. Subject to Sections 5.5 and 5.6, Losses for any Year shall
be allocated as of the last day of the Year to and among the Members as
follows:
(i) first, to the Members, pro rata in proportion to their
positive Capital Account balances, until the Capital Account balance of
each Member shall have been reduced to zero; and
(ii) second, to the Members, pro rata in proportion to their
Capital Contributions.
5.2 Allocations for Tax and Book Purposes. Except as otherwise
provided herein, any allocation to a Member for a fiscal year or other period of
a portion of the Profit or Loss, or of a specially allocated item, shall be
determined to be an allocation to that Member of the same proportionate part of
each item of income, gain, loss, deduction or credit, as the case may be, as is
earned, realized or available by or to the Company for Federal tax purposes.
Each Member will report his respective share of federal income taxes in
accordance with the allocations set forth herein.
5.3 Certain Accounting Matters. In the event of a sale of an
Interest in the Company, for purposes of determining Profit, Loss or any other
items allocable to any period, Profit, Loss and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Tax Matters
Member using any permissible method under Section 706 of the Code and the
Treasury Regulations promulgated thereunder.
5.4 Tax Allocations; Code Section 704(c). In accordance with Section
704(c) of the Code and the Treasury Regulations promulgated thereunder, income,
gain, loss, and deduction with respect to any property contributed to the
capital of the Company shall, solely for income tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted basis of
such property to the Company for Federal income tax purposes and its fair market
value, as determined by the Managing Directors reasonably and in good faith, at
the time of contribution. Similarly, any allocations of income, gain, loss and
deduction subsequent to an adjustment of the Book Value of the Company's assets
shall take account of any variation between the adjusted tax basis of the asset
to the Company and its Book Value in
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the same manner as under Section 704(c) of the Code and any Treasury Regulations
promulgated thereunder. Any elections or other decisions relating to such
allocations shall be made by the Managers in a manner that reasonably reflects
the purpose and intention of this Agreement. Allocations pursuant to this
section are solely for purposes of Federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Profit, Loss or distributions pursuant to any provision of
this Agreement. The Company shall use the traditional method with curative
allocations, as described in Treasury Regulations Section 1.704-3(c).
5.5 Compliance With Section 704(b). The allocations set forth below
(the "Regulatory Allocations") are intended to comply with certain requirements
of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations and shall be made
as and to the extent provided in this Section 5.5. the extent provided in this
Section 5.5.
(a) Qualified Income Offset. A Member who unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially allocated items of Company
income and gain in an amount and manner sufficient to eliminate, to the extent
required in the Treasury Regulations, a deficit in such Member's Capital Account
or Adjusted Capital Account Balance (i.e. an Adjusted Capital Account Deficit),
as the case may be, in accordance with the requirements of Treasury Regulations
Section 1.7041(b)(2)(ii)(d). This Section 5.5(a) is intended to comply with the
qualified income offset provision of such Treasury Regulations Section, and
shall be interpreted consistently therewith.
(b) Minimum Gain Chargeback. Notwithstanding any other provision of
this Article 5, if there is a net decrease in "partnership minimum gain" or
"partner nonrecourse debt minimum gain" of the Company (as such terms are
defined in Treasury Regulations Section 1.704-2) during any fiscal year or other
period, prior to any other allocation pursuant hereto, items of Company income
and gain for such fiscal year or other period (and, if necessary, for subsequent
fiscal years or periods) shall be specially allocated among the Members in
accordance with Treasury Regulations Sections 1.704-2(f) and (i). The items to
be so allocated shall be determined in accordance with Treasury Regulations
Sections 1.704-2(f)(6) and (j)(2).
(c) Allocation of "Partner Nonrecourse Deductions". "Partner
nonrecourse deductions" as defined in Section 1.704-2(i)(1) of the Treasury
Regulations for any fiscal year or other period shall be specially allocated to
the Members who bear the economic risk of loss for the "partner nonrecourse
debt" to which such "partner nonrecourse deductions" are attributable, as
provided in Section 1.704-2(i)(1) of the Treasury Regulations.
(d) Allocation of "Nonrecourse Deductions". "Nonrecourse deductions"
as such term is defined in Section 1.704-2(b)(1) of the Treasury Regulations for
any fiscal year or other period shall be allocated to the Members in accordance
with their respective Percentage Interests.
5.6 Curative Allocations. The Regulatory Allocations provided for in
Section 5.5 may not be consistent with the manner in which the Members intend to
divide Company Profits, Losses and similar items. Accordingly, Profits, Losses
and other items will be reallocated among
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the Members (in the same year, and to the extent necessary, in subsequent years)
in a manner consistent with Treasury Regulation Section 1.704-1(b) and 1.704-2
so as to prevent the Regulatory Allocations from distorting the manner in which
Company Profits, Losses and other items are intended to be allocated among the
Members pursuant to this Article 5.
ARTICLE 6
DISTRIBUTIONS
6.1 Cash Distributions.
(a) The Managing Directors may, from time to time (and, subject to
the availability of funds therefor, not less frequently than quarterly), make
distributions to the Members from funds legally available from Distributable
Cash as follows:
(i) first, to the Members to whom accrued and unpaid interest
on Member Loans is payable, pro rata in proportion to the amount of
accrued and unpaid interest owing to each such Member;
(ii) second, to the Members to whom the principal amount of
outstanding Member Loans is payable, pro rata in proportion to the unpaid
principal amount owing to each such Member; and
(iii) third, to the Members, pro rata in proportion to their
Capital Contributions.
(b) Notwithstanding the provisions of Section 6.1(a), the Managing
Directors shall, not later than April 15 of any calendar year, to the extent
that there are funds legally available therefor from Distributable Cash, make
distributions to the Members from such funds until the aggregate amount
distributed to the Members pursuant to Section 6.1(a)(iii) during the 12-month
period ending on such April 15 shall at least equal to the "tax liability" (as
hereinafter defined) for the preceding Year. The "tax liability" for any Year is
the amount of tax that would be paid by a married individual resident in the
State of New York, filing jointly with his or her spouse, at the highest
marginal Federal and New York State income tax rates, on the aggregate amount of
Profit, if any, allocated to the Members pursuant to Section 5.1(a) for such
Year.
6.2 No Distributions in Violation of Section 18-607 of the Act.
Notwithstanding anything to the contrary in this Agreement, the Company shall
not make any distribution that would violate Section 18-607 of the Act.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF MEMBERS AND MANAGERS
7.1 Limited Liability of Members.
(a) Except as otherwise provided by the Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the
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debts, obligations and liabilities of the Company, and the Members shall not be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member of the Company. Except as otherwise provided
by the Act, each of the Members shall only be liable to make payment of its
respective Capital Contributions as and when due hereunder and other payments as
expressly provided in this Agreement. If and to the extent a Member's Capital
Contribution shall be fully paid, such Member shall not, except as required by
the express provisions of the Act regarding repayment of sums wrongfully
distributed to Members, be required to make any further contributions. No Member
in his capacity as such shall have the authority to act for or bind the Company.
(b) Any Member may, in its sole discretion, assume personal
liability for any debt, obligation or liability of the Company if and to the
extent that such assumption will not materially adversely affect any other
Member (and the reduction of a Member's Capital Account, or a Member's tax basis
in its Interest, as a consequence of such assumption can constitute a material
adverse effect).
7.2 Managing Directors.
(a) In General. Subject to the provisions of Sections 7.2(c) and
7.3, full responsibility and exclusive and complete discretion in the management
and control of the business and affairs of the Company, full and exclusive
authority to make all decisions affecting the Company's affairs and business,
and full, complete and exclusive discretion to take any and all action that the
Company is authorized to take and to make all decisions with respect thereto
shall be vested in a board of three Managing Directors (the "Managing
Directors"). The Managing Directors collectively shall constitute the "manager"
of the Company for all purposes of the Act and no individual Managing Director
shall have the authority to bind or act for the Company except pursuant to, and
subject tot he provisions of, Section 7.2(c). No Managing Director shall be
personally liable for any of the debts, obligations, liabilities or contracts of
the Company. Without limiting the generality of the foregoing and subject to
Sections 7.2(c) and 7.3, the authority of the Managing Directors shall include,
but shall not be limited to:
(i) Employing or otherwise engaging officers and employees of
the Company and establishing the terms of their compensation and benefits;
(ii) Approving contracts and incurring debt and other
obligations on behalf of the Company;
(iii) Establishing financial policies, determining
distributions, and overseeing maintenance of the books of account and
other records of the Company;
(iv) Making any regulatory filings;
(v) Overseeing and reviewing compensation;
(vi) Establishing and eliminating reserves; and
(vii) Approving expenses of the Company.
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(b) Designation of Managing Directors. The initial Managing
Directors of the Company shall be Xxxxxxx X.X. Xxxxxx, Xxxxxxx X. X'Xxxx and
Xxxxx X. Xxxxxx. So long as Haberhill and BTL are the only Series A Members:
(i) Haberhill is entitled to designate one Managing Director
(initially, Xxxxxxx X. X. Xxxxxx) and BTL is entitled to designate two
Managing Directors (initially, Xxxxxxx X. X'Xxxx and Xxxxx X. Xxxxxx );
(ii) If Haberhill holds less than a 16-2/3% Interest,
Haberhill's right to designate a Managing Director will terminate and, if
BTL requests, the Haberhill designee must resign;
(iii) If BTL holds less than a 33-1/3% Interest, (w) BTL's
right to designate a second Managing Director will terminate, (x) if
Haberhill requests, one of the two BTL designees (as BTL, in its sole and
absolute discretion, shall determine) must resign, (y) Haberhill shall be
entitled to designate two Managing Directors, and (z) if Haberhill has
requested that one of the two BTL designees resign, Haberhill shall
designate a successor Managing Director; and
(iv) If BTL holds less than a 16-2/3% Interest, BTL's right to
designate a Managing Director will terminate and, if Haberhill requests,
the BTL designee must resign.
If additional Series A Members are admitted, the designees of Haberhill and BTL
will resign and their successors will be elected by the Series A Members using
cumulative voting.
(c) Actions. Any action of or by the Managing Directors on any
matter may be taken by a majority of the Managing Directors, acting together.
The Managing Directors cannot, without the affirmative vote or consent of the
required percentage in Interest of the Members or Series A Members, as the case
may be, take any action requiring the affirmative vote or consent of more than a
Majority in Interest of the Series A Members.
(d) Compensation of Managing Directors. The members of the Managing
Directors will not be compensated for serving as such, but will be reimbursed
for any expenses or costs incurred by them in their capacities as Managing
Directors and in participating in the management of the business and affairs of
Sandalwood REIT and in the offering of interests in Sandalwood REIT.
(e) Commitment of Time. Each of the Managing Directors will be
required to devote to the business of the Company such time and attention as he
or she shall reasonably determine to be necessary for the proper performance of
his or her duties. The Managing Directors may engage or hold interests in other
business ventures of every kind and description, and none of the other Managing
Directors, the Members or the Company shall be entitled to any interest in such
other ventures.
(f) Offices. Each Managing Director may maintain an office at such
location as the Company may approve (which approval shall not be unreasonably
withheld) and the
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Company will bear, or reimburse such Managing Director for, the expenses and
costs of such office.
7.3 Oversight of Members. The Series A Members shall oversee the
management of the Company (comparable to the oversight function of the board of
directors of a corporation). All decisions will be by the affirmative vote or
consent of a Majority in Interest of the Series A Members, except as follows:
(a) Notwithstanding any other provision of this Agreement to the
contrary, the affirmative vote or consent of 75% in Interest of the Series A
Members shall be required for each of the following matters:
(i) election to invest in and/or manage other entities;
(ii) increase of the capital of the Company;
(iii) incurrence of indebtedness other than Member Loans;
(iv) amendment of this Agreement; provided, however, that any
provision of this Agreement requiring the affirmative vote or consent of a
greater percentage in Interest of the Members or the Series A Members, as
the case may be, shall be amended only with the affirmative vote or
consent of the percentage in Interest of the Members or Series A Members,
as the case may be, provided for in such provision; and
(v) dissolution of the Company.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the affirmative vote or consent of 83-1/3% in Interest of the Series A
Members shall be required for each of the following matters:
(i) admission of additional Members (including the admission
as a Member of any heir or successor of a deceased Member to whom the
Interest of the deceased Member has been bequeathed or has passed by the
laws of intestate succession);
(ii) issuance of additional Series A interests; provided,
however, that so long as Haberhill and BTL are the only Series A Members,
additional Series A Interests may be issued only with the consent of 100%
in Interest of the Series A Members;
(iii) amendment of the management agreement between Sandalwood
REIT and the Company;
(iv) removal of a Managing Director; provided, however, that
so long as Haberhill and BTL are the only Series A Members, a Managing
Director may be removed only with the consent of 100% in Interest of the
Series A Members;
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(v) sale, mortgage or other disposition of (other than to an
entity wholly-owned by the Members in the same proportions that they own
the Company) the interest of the Company in Sandalwood REIT or any
subsidiary of Sandalwood REIT;
(vi) merger of the Company with or into any other entity
(other than to an entity wholly-owned by the Members in the same
proportions that they own the Company);
(vii) consent to any Transfer; provided, however, that so long
as Haberhill and BTL are the only Series A Members, consent to any
Transfer requires the consent of 100% in Interest of the Series A Members;
(viii) waiver of any of the provisions of Section 8.1; and
(ix) cause the Company to take an act of Bankruptcy.
(c) Notwithstanding any other provision of this Agreement to the
contrary; the unanimous affirmative vote or consent of all Members shall
be required for each of the following matters:
(i) any alteration of the provisions of this Agreement
governing limitation on liability of Members and indemnification and
exculpation of Managing Directors; and
(ii) changing the order or priority of distributions or tax
allocations.
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7.4 Designation of Officers. The Managing Directors may designate
such executive officers of the Company as the Managing Directors may determine.
The Managing Directors may use descriptive words or phrases to designate the
standing, seniority or area of special competence of the officers selected or
appointed. Any two or more offices may be held by the same person. All officers
as between themselves and the Company shall have such authority and perform such
duties in the management of the Company as the Managing Directors may, subject
to the provisions of Sections 7.2 and 7.3, from time to time determine, and may
act on behalf of the Company in the manner and regarding such matters as the
Managing Directors may, subject to the provisions of Sections 7.2 and 7.3,
authorize.
7.5 Administrative Services. Initially, the Company will not have
any employees. All administrative, support and back office services will be
outsourced to Madison Capital Management, LLC and its Affiliates that are part
of the Madison Capital group of companies, at its cost (reflecting its
cost-sharing obligations with others), without xxxx-up. Notwithstanding the
foregoing, the Company may elect to retain employees and migrate any or all of
such services in-house. Any decision by the Managing Directors regarding
outsourcing of administrative, support and back office services to Madison
Capital Management, LLC and its Affiliates or to any other Person, and the
retention of employees and migration of such services in-house, shall be made
only in, or not adverse to, the best interests of the Company and on terms and
subject to conditions not less favorable (taking into account the capabilities
and quality of service of the service providers and the needs and resources of
the Company) than could be obtained in an arms'-length transaction with an
unrelated third party.
7.6 Standard of Care, Etc. To the extent that, at law or in equity,
any Managing Director or any Member or any Affiliate of a Member or a Managing
Director or any director, officer, stockholder, employee, agent or
representative of a Member or a Managing Director or such Affiliate has duties
(including fiduciary duties) and liabilities to the Company or to the Members,
no such Person shall be liable to the Company or to any Member for its good
faith reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they expand or restrict the duties and liabilities
of any such Person otherwise existing at law or in equity, are agreed by the
Members and the Managing Directors to replace such other duties and liabilities
of such Person.
7.7 Indemnification. No Member, Managing Director or employee of the
Company shall be liable to the Company, any other Member or any other Person who
has an interest in the Company for any loss, cost, expense, damage, liability or
claim incurred by reason of, caused by, resulting from or arising out of any act
or omission performed or omitted by such Member or Managing Director in good
faith and in a manner believed by such Member or Managing Director to be within
the scope of the authority conferred on such Member or Managing Director by this
Agreement, except that this sentence shall not apply to any Member or Managing
Director of the Company in respect of any such loss, cost, expense, damage,
liability or claim caused by, resulting from or arising out of such Person's
gross negligence or willful misconduct. To the full extent permitted by
applicable law, the Company shall indemnify and hold harmless each Member and
Managing Director from and against any loss, cost, expense, damage, liability or
claim by reason of, caused by, resulting from or arising out of any act or
omission performed or omitted by such Person in good faith and, as applicable,
in a manner believed by such Member or Managing Director to be within the scope
of the authority
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conferred on it by this Agreement, except that no Member or Managing Director
shall be entitled to be indemnified in respect of any loss, cost, expense,
damage, liability or claim caused by, resulting from or arising out of such
Person's gross negligence or willful misconduct by such Person with respect to
such acts or omissions; provided, however, that any indemnity under this Section
7.7 shall be provided out of and to the extent of Company assets only, and no
Member shall have personal liability on account thereof.
7.7 Members.
(a) Meetings. The Members shall meet at least once every year at the
principal offices of the Company or at such other place as may be fixed by the
Managing Directors, unless such meeting shall be waived by all of the Members.
Special meetings may be called by 16-2/3% in Interest of the Series A Members.
(b) Quorum. No action may be taken at a meeting of the Members
unless a quorum consisting of a Majority in Interest of the Series A Members is
present in person or by proxy.
(c) Manner of Acting. If a quorum is present at any meeting, the
vote or consent of the required percentage of Interest of the Members or Series
A Members, as the case may be, provided herein shall be the act of the Members.
(d) Notice of Meetings. Notice stating the time, place, date and
purpose of the meeting, and indicating that such notice is being issued by or at
the direction of the Person or Persons calling the meeting, shall be delivered
no fewer than ten (10) days before the date of the meeting to each Member.
(e) Record Date. For the purpose of determining the Members entitled
to Notice of or to vote at any meeting of the Members or any adjournment of such
meeting, or Members entitled to receive payment of any distribution, or to make
a determination of Members for any other purpose, the date on which Notice of
the meeting is mailed or the date as of which the Managing Directors determine
to make such distribution, as the case may be, shall be the record date for
making such a determination. When a determination of Members entitled to vote at
any meeting of Members has been made pursuant to this Section 7.7, the
determination shall apply to any adjournment of the meeting.
(f) Proxies. A Member may vote in person or by proxy executed in
writing by the Member or by a duly authorized attorney-in-fact.
(g) Action by Members Without a Meeting. Whenever the Members of the
Company are required or permitted to take any action by vote, such action may be
taken without a meeting, without prior Notice and without a vote, if a consent
or consents in writing setting forth the action so taken shall be signed by not
less than the required percentage of Interest of the Members or Series A
Members, as the case may be, and shall be delivered to the Company. Every
written consent shall bear the date of signature of the Member who signs the
consent.
(h) Waiver of Notice. Notice of a meeting need not be given to any
Member who submits a signed waiver of notice, in person or by proxy, whether
before or after the
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meeting. The attendance of any Member at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of notice of
such meeting, shall constitute a waiver of notice by him or her.
(i) Notice shall be given to all Members of each vote or consent of
the Members or Series A Members, as the case may be.
ARTICLE 8
RESTRICTIONS ON TRANSFER;
TRANSFERS IN CERTAIN CIRCUMSTANCES
8.1 Limitation on Transfers.
(a) Except as expressly permitted in this Article 8, each Member
shall not, directly or indirectly, sell, transfer, assign, pledge, hypothecate,
mortgage or in any other way encumber or otherwise dispose of (collectively,
"Transfer") the whole or any part of his or its Interests or any interest
therein without prior written consent of the Series A Members (other than a
transferring Series A Member) pursuant to Section 7.3, in their sole and
absolute discretion, and only if the purchaser, transferee or holder of the
encumbrance assumes all obligations of the transferor (including any obligation
for an unpaid capital call) under, and agrees to be bound by all of the terms
of, and become a party to, this Agreement. The Company shall not transfer on its
books any Interests unless there has been full compliance with the terms hereof
or such provisions have been waived by the appropriate Members. Any purported
transfer in violation of this Agreement shall be null and void.
(b) Members may not resign prior to dissolution and final winding up
of the Company.
(c) Subject to the provisions of Section 8.1(e), any Member may
bequeath his or her Interest to his or her heirs, and the Interest of any Member
may pass to by the laws of intestate succession to the successors of such
Member, provided that the heir or successor of such Member shall not be admitted
as a Member without the prior written consent of the Series A Members (other
than any deceased Series A Member, the heirs, successor, executor or
administrator of such deceased Series A Member not voting in his or her place)
pursuant to Section 7.3, and only if such heir or successor shall have assumed
all obligations of the deceased Member (including any obligation for an unpaid
capital call) under, and agreed to be bound by all of the terms of, and become a
party to, this Agreement. If an heir or successor of a deceased Member shall not
have been admitted as a Member, such heir or successor, or the executor or
administrator of the estate of the deceased Member, shall transfer such Interest
in accordance with Section 8.1(a).
(d) In the event that the of the death, permanent disability or
divorce of the holder of any direct or indirect equity interest in a Series A
Member, the withdrawal of such holder from the business of the Company, or the
occurrence with respect to such holder of an event provided in Section 18-304 of
the Act, then, except as provided in this Section 8.1(d), the Series A Interests
of such Member shall become, and for all purposes be, without any action on
23
the part of the Company or such Member, Series B Interests and such Member shall
cease being a Series A Member. If there is more than one holder of equity
interests in such Member, such Member shall distribute to the disabled,
divorced, withdrawing or bankrupt holder of such equity interest or such
holder's guardian, trustee, or conservator, or the executor, heirs, successors
of the deceased holder, the Series A Interests allocable to such holder, based
on such holder's equity interest in such Series A Member, and, upon the making
of such distribution, such Series A Interests shall, except as provided in this
Section 8.1(d), become, and for all purposes be, without any action on the part
of the Company or such Member or such distributee, Series B Interests. The
remaining Series A Interests held by such Member shall be unaffected and the
Member shall remain a Series A Member. Notwithstanding the foregoing provisions
of this Section 8.1(d), if, within 45 days after the death, permanent disability
or divorce of, or withdrawal from the business of the Company by, the holder of
a direct or indirect equity interest in a Series A Member, the Series A Interest
of such Member allocable to such holder is Transferred to another Series A
Member, such Series A Interest shall not lose its character as, and for all
purposes shall remain, a Series A Interest.
8.2 Termination of Interests.
(a) A Member shall cease to be a Member upon the transfer of 100% of
its Interest in accordance with Section 8.1.
(b) The happening of an event provided in Section 18-304 of the Act
will not terminate the Interest of a Member.
8.3 Substituted Members. A Person who becomes an assignee of a
Member's Interest in accordance with the provisions of this Agreement shall be
admitted to the Company as a substituted Member only by executing an appropriate
agreement agreeing to be bound by the terms of this Agreement.
ARTICLE 9
DISSOLUTION; LIQUIDATION; TERMINATION
9.1 Dissolution.
(a) The Company shall be dissolved and the affairs of the Company
wound up upon the occurrence of any of the following events:
(i) the happening of an event specified in Section
18-801(a)(4) or (5) of the Act;
(ii) the entry of a decree of judicial dissolution pursuant to
Section 18-802 of the Act; and
(iii) the election by 75% in Interest of the Series A Members
to dissolve the Company.
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(b) Dissolution of the Company shall be effective on the day on
which the event occurs giving rise to the dissolution, but the Company
shall terminate only in accordance with the provisions of Section 9.3.
9.2 Procedures Upon Dissolution.
(a) General. If the Company dissolves, it shall commence winding up
pursuant to the appropriate provisions of the Act and the procedures set forth
in this Section 9.2. Notwithstanding the dissolution of the Company, prior to
the termination of the Company, the business of the Company and the affairs of
the Members, as such, shall continue to be governed by this Agreement.
(b) Control of Winding Up. The winding up of the Company shall be
conducted by BTL, as liquidator (the "Liquidator"). If the dissolution is caused
by entry of a decree of judicial dissolution, the winding up shall be carried
out in accordance with such decree.
(c) Manner of Winding Up. The Company shall engage in no further
business following dissolution other than that necessary for the orderly winding
up of the business and liquidation of its assets. The maintenance of offices
shall not be deemed a continuation of the business for purposes of this Section
9.2(c). Upon dissolution of the Company, the Liquidator shall determine the
time, manner and terms of any sale or sales of Company property pursuant to such
winding up, consistent with its fiduciary responsibilities and having due regard
to the activity and condition of the relevant market and general financial and
economic conditions.
(d) Application of Proceeds. Upon liquidation of the assets of the
Company, the proceeds shall be applied (a) to pay the expenses of liquidation,
(b) to pay all other expenses of the Company, (c) to satisfy all claims against
and obligations of the Company other than to Members, and (d) to create such
reserves as the Liquidator deems appropriate. Any cash or assets of the Company
remaining after liquidation and winding up of the affairs of the Company shall
be distributed as follows:
(i) first, to the Members to whom accrued and unpaid interest
on Member Loans is payable, pro rata in proportion to the amount of
accrued and unpaid interest owing to each such Member;
(ii) second, to the Members to whom the principal amount of
outstanding Member Loans is payable, pro rata in proportion to the unpaid
principal amount owing to each such Member;
(iii) third, to the Members, pro rata in proportion to their
positive Capital Account balances, until the Capital Account of each
Member shall have been reduced to zero; and
(iv) fourth, to the Members, pro rata in proportion to their
Capital Contributions.
9.3 Termination of Company. Upon the completion of the liquidation
of the Company and the distribution of the proceeds thereof, the Company's
affairs shall terminate and
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the Managing Directors shall cause to be filed with the Secretary of State of
the State of Delaware a certificate of cancellation in accordance with the Act,
as well as any and all other documents required to effectuate the termination of
the Company.
ARTICLE 10
MISCELLANEOUS
10.1 Notices.
(a) All notices and communications provided for hereunder
("Notices") shall be in writing and shall be deemed to be received (i) when so
delivered by hand, (ii) if telecopied, upon receipt of confirmation of receipt
by sender, provided that a confirmation copy is also sent by first class mail,
(iii) three (3) days after have been deposited in the U.S. Mail by registered or
certified mail with return receipt requested (postage prepaid), or (iv) one (1)
business day after have been deposited with a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(b) If to the Company, at:
Xxxxx X. Xxxxxx
Managing Director
Sandalwood Hospitality Advisors, LLC
c/o Madison Capital Management, LLC
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx, Esq.
Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
(c) If to Haberhill, at:
Xxxxxxx X. X. Xxxxxx
Haberhill Lodging Ventures, LLC
00000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
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with a copy to:
Xxxxxxxxxxx X. Xxxxxxxx, Esq.
Xxxxxx Xxxxx LLP
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
(d) If to BTL, at:
Xxxxx X. Xxxxxx
c/o Madison Capital Management, LLC
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
10.2 Word Meanings. The words such as "herein", "hereinafter",
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural and the masculine gender shall include the
feminine and neuter, and vice versa, unless the context otherwise requires.
10.3 Binding Provisions. The covenants and agreements contained
herein shall be binding upon, and inure to the benefit of the parties hereto and
the heirs, legal representatives, successors and assigns of the respective
parties hereto. No other party shall be deemed a third-party beneficiary of this
Agreement.
10.4 Title to Company Property. All property owned by the Company,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Company as an entity, and no Member, individually, shall have any ownership
of such property. The Company may hold any of its assets in its own name or in
the name of its nominee, which nominee may be one or more individuals,
companies, trusts or other entities.
10.5 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware for contracts
to be wholly performed in such state. Each party hereto hereby irrevocably and
unconditionally agrees to be subject to the jurisdiction of the courts of the
State of New York, and of the federal courts sitting in the State of New York
and that service of process may be made on each party hereto by prepaid
certified mail with a validated proof of mailing receipt constituting evidence
of valid service, and that service made pursuant hereto shall, to the fullest
extent permitted by applicable law, have the same legal force and effect as if
served upon such party personally within the State of New York. Each party
hereto hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions.
10.6 Separability of Provisions. Each provision of this Agreement
shall be considered separable and if for any reason any provision or provisions
herein are determined to
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be invalid, unenforceable or illegal under any existing or future law, such
invalidity, unenforceability or illegality shall not impair the operation of or
affect those portions of this Agreement which are valid, enforceable and legal.
10.7 Section Titles. Section titles are for descriptive purposes
only and shall not control or alter the meaning of this Agreement as set forth
in the text.
10.8 Further Assurances. The Members shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement.
10.10 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and supersedes all prior understandings or agreements
between the parties.
10.11 Amendments.
(a) This Agreement may not be amended except by a written
instrument, consented to by the required percentage in Interest of Series A
Members or Members, as the case may be, provided in Section 7.3.
(b) Notwithstanding any provision of this Agreement other than
Section 7.3(c), amendments hereto which, in the opinion of counsel to the
Company, are necessary to maintain the status of the Company as a partnership
for Federal or state income tax purposes may be made by the Managing Directors
without the necessity of any consent of the Members.
(c) Subject to Section 7.3, the Managing Directors are hereby
authorized to make such amendments to the Certificate as may be required under
the Act or as may be necessary to conform the Certificate to the provisions of
this Agreement. Upon the adoption of any amendment to the Certificate, such
amendment shall be filed with the Secretary of State of the State of Delaware
and with each jurisdiction in which recordation is necessary for the Company to
conduct business or to preserve the limited liability of the Members.
(d) Subject to Section 7.3, each Member hereby irrevocably appoints
and constitutes each Managing Director as its agent and attorney-in-fact to
execute, deliver, swear to, file and record any and all such amendments. The
durable power of attorney given herewith is irrevocable, is coupled with
interest and shall survive the incapacity of the Member granting it.
10.12 Confidentiality. Each Member agrees not to reveal to any
person or entity any of the trade secrets or confidential information concerning
the organization, business or finances of the Company or otherwise use such
information, except (i) for the benefit of the Company and as may be required in
the ordinary course of performing such Member's duties and responsibilities on
behalf of the Company, whether as a Managing Director or otherwise and (ii) as
legally required to be disclosed or otherwise subject to legal, judicial,
regulatory or self-regulatory requests for such documents or information.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Limited Liability Company Agreement under seal as of the day and year first
above written.
HABERHILL LODGING VENTURES LLC
By: _______________________________
Name:
Title:
BT LODGING VENTURES LLC
By: _______________________________
Name:
Title:
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