THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM SUCH REGISTRATION SET
FORTH IN THE SECURITIES ACT OF 1933 PROVIDED BY SECTION 4(2) THEREOF, NOR HAVE
THEY BEEN REGISTERED WITH THE SECURITIES COMMISSION OF CERTAIN STATES IN
RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
CONDITIONS OF THIS AGREEMENT AND IN A TRANSACTION WHICH IS EITHER EXEMPT FROM
REGISTRATION UNDER SUCH ACTS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACTS.
--------------------------------------------------------------------------------
OPERATING AGREEMENT OF CGR INTERNATIONAL, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This OPERATING AGREEMENT OF CGR INTERNATIONAL, LLC ("Agreement") is made
and entered into as of the Effective Date, by and between CIRCLE G RESORT, LLC,
a Nevada limited liability company ("Circle G"), and AUSTRALIAN AGRICULTURE AND
PROPERTY DEVELOPMENT CORPORATION, a Delaware corporation ("AUAP").
RECITALS
A. Circle G has formed a limited liability company in the State of
Delaware, known as CGR INTERNATIONAL, LLC, d/b/a Circle G Resort, Home of the
Xxxxx Xxxxxxx Ranch (the "Company").
B. Circle G has created the Business Plan, as defined in this Agreement,
for the purpose of developing the Elvis Property and the Remaining Property (as
these terms are defined below) into an Xxxxx Xxxxxxx themed tourist attraction,
and has spent the past three (3) years working to fulfill the Business Plan.
C. AUAP has an agreement to acquire the property described on Exhibit "A"
attached hereto which is commonly known as the Xxxxx Xxxxxxx Ranch the ("Elvis
Property") and the properties adjoining the Elvis Property described on Exhibit
"B" attached hereto (the "Remaining Property").
X. XXXX desires to become a Member of Company and Circle G desires that
AUAP join the Company as a Member.
1
FOR AND IN CONSIDERATION OF the mutual covenants, rights, obligations and
promises contained herein, the benefits to be derived therefrom and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed by each Member, the Members hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms used in this Agreement shall have
the following meanings (unless otherwise expressly provided herein);
(a) "Act" shall mean the Delaware Limited Liability Company Act at
Delaware Code Annotated xx.xx. 10-101 et seq.
(b) "Advisory Board" means the board of three (3) persons who have the
authority to break deadlocks of the Members and Managers as described in Section
5.10 below.
(c) "Affiliate" of any Person means any Person that, directly or
indirectly, controls, is controlled by or is under common control with, such
Person.
(d) "Agreement" shall mean this Agreement as originally executed and
as amended from time to time.
(e) "Available Cash Flow" shall mean all cash funds of the Company on
hand at the end of each calendar quarter of each year, less (i) provision for
payment of all outstanding and unpaid current cash obligations of the Company at
the end of such quarter (including those which are in dispute); and (ii)
provisions for adequate reserves for income tax liabilities for Members
attributable to the Company and for reasonably anticipated cash expenses and
contingencies (which may include Company indebtedness), but without deduction
for depreciation or any other non-cash expenses.
(f) "Bankruptcy" means, with respect to any Person or Entity, that:
(a) a petition has been filed by or against such Person or Entity as a "debtor"
and the adjudication of such Person or Entity as a bankrupt under the provisions
of the bankruptcy laws of the United States of America has commenced; (b) such
Person or Entity has made an assignment for the benefit of its creditors
generally; or (c) a receiver has been appointed for substantially all of the
property and assets of such Person or Entity.
(g) "Book Value of the Company" means the amount of money and the book
value of all property of the Company determined in accordance with generally
accepted account principles reduced by the liabilities of the Company, except
that in determining the book value of the Company, no capital contributions made
during the 90 day period ending on the date of determination shall be counted.
2
(h) "Budget" means the estimated revenues and expenses of the Company
as amended from time to time by the Managers.
(i) "Business Plan" means the Business Plan for the Company that is
hereafter approved by the Managers, as the same may be amended from time to time
as permitted by this Agreement. The Business Plan shall detail the development
of the Property as a world-class, family-oriented Xxxxx Xxxxxxx themed resort.
(j) "Capital Balance" for each Unit means the Capital Contribution
made to acquire each Unit increased by an amount determined by dividing any
Capital Contribution that was not made to acquire Units divided by the number of
Units owned by the Member at the time of such Capital Contribution reduced by
the amount of any distribution with respect to such Unit.
(k) "Capital Contribution" means the cash, cash equivalents or the
agreed fair market value of property which a Member contributes to the Company
for Units or as a contribution to capital, net of any liabilities secured by
such contributed property or which the Company assumes or subject to which the
Company takes the property. Capital contributions shall not include obligations
to contribute cash at a future date, until such contributions of cash are
actually made.
(l) "Cause" means fraud, gross negligence, breach of fiduciary
obligation or willful breach of the obligations under this Agreement.
(m) "Certificate of Formation" shall mean the certificate of formation
for the Company, filed with the Secretary of State of the State of Delaware on
_____, 2005 pursuant to the Act as may be amended from time to time.
(n) "Code" means the United States Internal Revenue Code of 1986, as
amended from time to time.
(o) "Company" shall refer to CGR INTERNATIONAL, LLC, d/b/a Circle G
Resort, Home of the Xxxxx Xxxxxxx Ranch.
(p) "Circle G Managers" shall mean the two (2) Managers appointed by
Circle G, as either of them may be removed or replaced from time to time at the
sole discretion of Circle G.
(q) "AUAP Manager" shall mean the two (2) Managers appointed by XXXX,
as either of them may be removed or replaced from time to time at the sole
discretion of AUAP.
(r) "Effective Date" means June 13, 2005.
3
(s) "Elvis Property" shall have the meaning set forth in the recitals.
(t) "Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association or any foreign trust or foreign business
organization.
(u) "Fiscal Year" shall mean the Company's fiscal year, which shall be
the calendar year.
(v) "Loan" means the loan as described in Section 9.4 of this
Agreement from AUAP made to the Company and secured by the Elvis Property and
the Remaining Property, pursuant to the terms of a promissory note and mortgage
executed as of the Effective Date.
(w) "Management Committee" shall mean the four (4) Managers selected
in accordance with this Agreement.
(x) "Managers" shall mean the Circle G Managers and AUAP Managers.
(y) "Member" shall mean all Persons who own Units.
(z) "Members Owning a Deciding Interest" shall mean one or more
Members owning Units which equal or exceed sixty-five percent (65%) of all the
Units held by all Members.
(aa) "Officer" shall mean the individuals designated as elected or
designated as Officers as provided in this Agreement.
(bb) "Pari-passu" shall mean on a pro-rata basis.
(cc) "Person" shall mean any individual or entity, and the heirs,
executors, administrators, legal representatives, successors, and assigns of
such "Person" where the context so permits.
(dd) "Property shall mean the Elvis Property and Remaining Property.
(ee) "Reorganization" means the merger or conversion of the company,
or a sale of assets, or other transaction pursuant to which a Person or Persons
acquire all or substantially all of the assets of the Company in a single or
series of related transactions.
(ff) "Remaining Property" shall have the meaning set forth in the
recitals.
4
(gg) "Selling Member" shall mean any Member who transfers for
consideration all or any portion of its Units.
(hh) "Spin-Off" shall mean any means by which a public company creates
an additional public company including through a rights offering or otherwise.
(ii) "Subsidiary" shall mean an entity which the is owned by more than
50% of the parent company
(jj) "Transfer" shall mean any transfer of Units by sale, exchange,
gift, inheritance, operation of law or other transfer.
(kk) "Transferee" shall mean any Person who acquires Units from a
Person other than the Company.
(ll) "Unit" shall mean the Units issued by the Company as evidence of
an equity ownership interest in the Company.
ARTICLE II
FORMATION OF COMPANY
2.1. Formation. Circle G has formed Company as a Delaware Limited
Liability Company pursuant to the Act. The Officers shall execute and file on
behalf of the Company such amendments to the Certificate of Formation, and such
trade name affidavits, additional instruments and amendments thereto, as may
from time to time be necessary or appropriate to carry out this Agreement and
enable the company to conduct its business in accordance with the applicable
laws.
2.2. Name. The name of the company is CGR, INTERNATIONAL, LLC. d/b/a
Circle G Resort, Home of the Xxxxx Xxxxxxx Ranch.
2.3. Place of Business. The Company may locate its places of business at
any place or places as the Managers may from time to time deem advisable.
2.4 Registered Office and Registered Agent. The Company's initial
registered office and registered agent at that address shall be as set forth in
the Certificate of Formation. The registered office and registered agent may be
changed form time to time and by filing the address of the new registered office
and/or the name of the new registered agent with the Delaware Secretary of State
pursuant to the Act and by giving notice to each of the Members in the manner
provided in this Agreement.
2.5. Term. The term of the Company shall be perpetual. The Company shall
continue until the Company is dissolved in accordance with either the provisions
of this Agreement or the Act.
5
ARTICLE III
PURPOSES
3.1 Purpose. The sole purpose of the Company shall be to develop and
carry out the Business Plan.
3.2 Business Plan. The Business Plan to be approved by the Managers will
establish the initial business plan for the Company for the first phase of its
operations and, once approved, shall be followed by the Managers unless the
Business Plan is amended as permitted in this Agreement.
3.3 Timeshare Issues.
(a) Notwithstanding anything contained in the Business Plan or herein
to the contrary, the Members hereby agree that the Company will accept any
offer, if made, of three hundred million dollars ($300,000,000) for the sale of
time shares, which are to be built on the Elvis Property, less ten percent (10%)
commission provided that the offeree of such offer funds the three hundred
million dollars ($300,000,000) within nine (9) months from the execution of this
Agreement.
(b) The Business Plan shall provide that approximately 4,392 timeshare
units will be constructed on the Elvis Property.
ARTICLE IV
MEMBERSHIP
4.1 Names. The names and addresses of the initial Members are as
follows:
AUAP 00000 Xxxxx Xxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, Xx. 00000 XXX
Circle G 0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
4.2 Meetings of Members.
(a) Date, Time and Place of Meetings of Members; Minutes. Meetings of
Members may be held at such date, time and place within or without the State of
Delaware as the Management Committee may fix from time to time, provided that a
quorum exists at such meeting. No annual or regular meetings of Members are
required. At any Members' meeting, if there is no chairman and/or secretary, the
Management Committee shall appoint a Person to preside at the meeting and a
Person to act as secretary of the meeting. The secretary of the meeting shall
6
prepare minutes of the meeting which shall be placed in the minute books of the
Company.
(b) Power to Call Meetings. Meetings of the Members may be called by
the Management Committee or upon written demand of any Member for the purpose of
addressing any matters on which the Members may vote. Upon calling a meeting,
the Management Committee shall, reasonably in advance of such meeting, notify
each Member of the date, time and place of the meeting.
(c) Notice of Meeting. Written notice of a meeting of Members shall be
sent or otherwise given to each Member in accordance with Section 4(b) not fewer
than five (5) nor more than sixty (60) days before the date of the meeting. The
notice shall specify the place, date and hour of the meeting and the general
nature of the business to be transacted. No other business may be transacted at
this meeting.
(d) Xxxxxx of Giving Notice; Affidavit of Notice. Notice of any
meeting of Members shall be given at the address of each Member appearing on the
books of the Company or given by the Member to the Company for the purpose of
notice. If no such address appears on the Company's books or is given, notice
shall be deemed to have been given if sent to that Member by first-class mail or
other written communication to the Company's principal executive office. Notice
shall be deemed to have been given at the time when delivered personally or
deposited in the mail, or sent by other means of written communication
(including by facsimile or e-mail).
(e) Quorum. The presence in person or by proxy of a Members Owning a
Deciding Interest shall constitute a quorum at a meeting of Members. Except as
otherwise provided in this Agreement, any action taken at a meeting at which a
quorum is present shall require a vote of Members Owning a Deciding Interest.
(f) Adjourned Meeting; Notice. Any Members' meeting, whether or not a
quorum is present, may be adjourned from time to time by a vote of Members
Owning a Deciding Interest, but in the absence of a quorum, no other business
may be transacted at that meeting. When any meeting of Members is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken,
unless a new record date for the adjourned meeting is subsequently fixed, or
unless the adjournment is for more than forty-five (45) days from the date set
for the original meeting, in which case the Management Committee shall set a new
record date and send notice.
(g) Waiver of Notice or Consent. Attendance of a Person at a meeting
shall constitute a waiver of notice of that meeting, except when the Person
objects, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting if that
objection is expressly made at the meeting. Neither the business to be
7
transacted nor the purpose of any meeting of Members need be specified in any
written waiver of notice.
(h) Action by Written Consent Without a Meeting. Any action that may
be taken at a meeting of Members may be taken without a meeting, if a consent in
writing setting forth the action so taken, is signed by the Members Owning a
Deciding Interest and delivered to the Company within thirty (30) days of the
record date for that action. All such consents shall be filed with the
Management Committee or the secretary, if any, of the Company and shall be
maintained in the Company's records. Any Member giving a written consent, or the
Member's proxy holders, may revoke the consent by a writing received by the
Management Committee or secretary, if any, of the Company before written
consents have been filed.
(i) Telephonic Participation by Member at Meetings. Members may
participate in any Members' meeting through the use of any means of conference
telephones or similar communications equipment as long as all Members
participating can hear one another. A Member so participating is deemed to be
present in person at the meeting.
(j) Voting Rights. The Member shall have one vote for each Unit that
the Member owns.
ARTICLE V
MANAGEMENT OF THE COMPANY
5.1. Management. The business and affairs of the Company shall be
managed by its Managers. Subject to Section 7.1 hereof and non-waivable
provisions of applicable law, the Managers shall have full and complete
authority, power and discretion to manage and control the business, affairs, and
properties of the Company, to make all decisions regarding those matters and to
perform any and all other acts or activities customary or incident to the
management of the Company's business to the extend provided or limited by this
Agreement.
5.2. Number, Tenure and Qualifications of Managers. The Company shall
have four (4) managers, two (2) managers shall be designated and appointed by
Circle G and one (2) managers shall be designated and appointed by AUAP. Each
Circle G Manager shall hold office until removed by Circle G or resigns pursuant
to Section 5.6. Each AUAP Manager shall hold such office until removed by XXXX
or resigns pursuant to Section 5.6. The Circle G Managers appointed by Circle G
may be removed and replaced at any time in the sole discretion of Circle G. The
AUAP Managers appointed by XXXX may be removed and replaced at any time in the
sole discretion of AUAP. Managers need not be Members. Except where a specific
number of Managers is set forth, all actions of the Managers shall be taken by
the consent or affirmative vote of a majority of the Managers, with or without a
meeting.
8
5.3. Liability for Certain Acts. The Managers do not, in any way,
guarantee the return of the Members' Capital Contributions or a profit for the
Members from the operations of the Company. No Manager shall be liable to the
Company or to any Member for any loss or damage sustained by the Company or any
Member, unless the loss or damage shall have been the result of fraud, deceit,
gross negligence, willful misconduct, breach of this Agreement or a wrongful
taking by the Manager.
5.4. Managers and Members Have No Exclusive Duty to Company. No Manager
shall be required to manage the Company as the Manager's sole and exclusive
function and any Manager and/or Member may have other business interests and may
engage in other activities in addition to those relating to the Company. Neither
the Company nor any Member shall have any right, by virtue of this Agreement, to
share or participate in such other investments or activities of the Manager
and/or Member or to the income or proceeds derived therefrom. Neither any
Manager nor any Member shall incur any liability to the Company or to any of the
Members as a result of engaging in any other business or venture as long as such
business or venture does not conflict with nor work to the detriment of the
business of the Company.
5.5. Indemnity of the Managers, Officers, Employees and Other Agents.
The Company shall indemnify the Managers, Officers, employees of the Company,
and other agents and make advances for expenses to the maximum extent permitted
under the Act, consistent with any employment or indemnification agreement with
such Person, except to the extent the claim for which indemnification is sought
results from any negligence, fraud or intentional acts by such Person.
5.6 Cessation as Manager. Any Manager shall cease to be a Manager on the
Manager's death, incompetence, dissolution, becoming a debtor under the United
States Bankruptcy Code, resignation or removal. A Manager may resign at any time
by giving written notice to the Members of the Company. The resignation of any
Manager shall take effect upon receipt of notice thereof or at such later time
as shall be specified in such notice; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
5.7. Vacancies. Circle G shall fill any vacancy in the Management
Committee due to the resignation or removal of a Circle G Manager. XXXX shall
fill any vacancy in the Management Committee due to the resignation or removal
of an AUAP Manager.
5.8. Compensation, Reimbursement, Organization Expenses.
(a) The compensation of the Managers shall be fixed from time to time
by the Members, and no Manager shall be prevented from receiving such
compensation by reason of the fact that he is also a Member. No Member shall be
entitled to compensation from the Company for services rendered to the Company
as such. Upon the submission of appropriate documentation each Member shall be
9
reimbursed by the Company for reasonable out-of-pocket expenses incurred by such
Member on behalf of the Company or at the Company's request.
(b) The Company shall reimburse the Managers and Members for the legal
expenses reasonably incurred by them in connection with the formation,
organization and capitalization of the Company, including the legal fees
incurred in connection with the preparation of this Agreement and other actions
in connection with the organization, operation, and liquidation of the Company.
AUAP acknowledges that Circle G asserts that it has incurred approximately
$3,320,000.00 in out-of-pocket expenses to date on behalf of the Company
(excluding legal fees due to in connection with the pre-development phase of the
Company). AUAP shall have the right to audit these expenses and, if they were
incurred for the benefit of the Company, the Company will (i) pay up to
$250,000.00 of the same contemporaneously with the acquisition of the Elvis
Property and (ii) carry the balance on its books as an outstanding loan accruing
interest at the rate of 7.5% per annum. This loan amount shall be repaid by the
Company on a pari-passu basis with all other loans made by Members to the
Company. Other than (i) expenses approved in the above-referenced audit and (ii)
legal fees incurred in connection with the pre-development phase of the Company
in an amount no greater than $50,000.00, Circle G shall indemnify and hold the
Company harmless from and against any and all other costs, obligations or
expenses incurred by Circle G in connection with the Property or allegedly on
behalf of the Company.
(c) The Managers shall cause the Company to make an appropriate
election to treat the expenses incurred by the Company in connection with the
formation and organization of the Company to be amortized over a sixty (60)
month period beginning in the month in which the Company begins its business
operations to the extent that such expenses constitute "organizational expenses"
of the Company within the meaning of Code Section 709(b) (2).
5.9 Meetings of the Management Committee.
(a) Date, Time and Place of Meetings of the Management Committee.
Meetings of the Management Committee may be held at such date, time and place
within or without the State of Delaware as the Management Committee may fix from
time to time. At each Management Committee meeting, if there is no chairman
and/or secretary, the Management Committee shall elect a Person to preside at
the meeting and a Person to act as secretary of the meeting. The secretary of
the meeting shall prepare minutes of the meeting which shall be placed in the
minute books of the Company.
(b) Power to Call Meetings. Meetings of the Management Committee may
be called by any Manager.
(c) Notice of Meeting. Written notice of a meeting of the Management
Committee shall be sent or otherwise given to each Manager not less than two (2)
days prior to the date of the meeting. The notice shall specify the place, date
and hour of the meeting and the general nature of the business to be transacted.
10
(d) Quorum. The presence in person or by telephone (in accordance with
subsection 5.9(h) of a majority of the number of Managers then in office shall
constitute a quorum at a meeting of Managers.
(e) Adjourned Meeting; Notice. Any Management Committee meeting, where
a quorum is present, may be adjourned from time to time by the vote of the
Managers represented at that meeting either in person or by telephone in
accordance with Section 5.9(h), but in the absence of a quorum, no other
business may be transacted at that meeting. When any meeting of the Management
Committee is adjourned to another time or place, notice need not be given of the
new meeting if the time and place are announced at a meeting at which the
adjournment is taken.
(f) Waiver of Notice or Consent. The actions taken at any meeting of
the Management Committee however called and noticed, and wherever held, have the
same validity as if taken at a meeting duly held after regular call and notice,
if a quorum is present either in person or by telephone in accordance with
Section 5.9(h). Attendance of a Person at a meeting (in person or by telephone)
shall constitute a waiver of notice of that meeting, except when the Person
objects, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting if that
objection is expressly made at the meeting. Neither the business to be
transacted nor the purpose of any meeting of the Management Committee need be
specified in any written waiver of notice.
(g) Action by Written Consent Without a Meeting. Any action that may
be taken at a meeting of the Management Committee may be taken without a
meeting, if a consent in writing setting forth the action so taken, is signed
and delivered to the Company by Managers having not less than the minimum number
of votes that would be necessary to authorize or take that action at a meeting
at which all Managers entitled to vote on that action at a meeting were present
and voted. All such consents shall be filed with the Company or the secretary,
if any, of the Company and shall be maintained in the Company records. All
notices of actions taken without a meeting shall be given to all Managers.
(h) Telephonic Participation by Managers at Meetings. Managers may
participate in any Management Committee meeting through the use of any means of
conference telephones or similar communications equipment as long as all
Managers participating can hear one another. A Manager so participating is
deemed to be present in person at the meeting.
5.10 Advisory Committee.
11
(a) Deadlock. The Managers and Members acknowledge that the existence
of four (4) Managers creates the potential for deadlocks on any particular
matter. For such period of time as there exists an even number of Managers, the
Members desire to create a method for breaking deadlocks and hereby form the
Advisory Committee for such purpose. A deadlock shall be deemed to occur when
(i) the Managers vote two (2) to two (2) on a particular proposal, (ii) the
Managers are unable to work out a mutually agreeable compromise within a
reasonable time period, and (iii) one of the Managers declares a deadlock in
writing by notice to the other Managers and the members of the Advisory
Committee. The decision of the Advisory Committee shall be deemed the deciding
vote on any deadlock situation and be binding on the Managers. While the
decisions of the Advisory Committee are binding on the Managers, the Managers
are free at any time by a majority vote of Managers to override each and every
decision of the Advisory Committee. Accordingly, all deadlocks that are broken
by a decision of the Advisory Committee shall be deemed the decision of the
Managers and not the Advisors.
(b) Appointment of Advisory Committee. Each Member may appoint one (1)
member of the Advisory Committee (an "Advisor") who is not an Affiliate of a
Member or Manager (or if an Affiliate, the other Member must approve the
appointment), and the appointed Advisors shall mutually select a third Advisor.
The initial Advisors are as follows:
AUAP Appointed Advisor: Xxxxxxx Xxxx, Esq.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xx. 00000
Circle G Appointed Advisor: Xxx Xxxx XXX, Esq.
Xxxxxxxxx, Xxxxxxx & Xxxxx, LLP
000 Xxxxxxxxx Xx., XX
16th Floor Xxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Mutually Appointed Advisor: A CPA from the accounting firm selected
to perform the audits for the Company
Each Advisor shall remain an Advisor until the earlier of (i) ten (10) days
after such Advisor resigns, (ii) the death or disability of an Advisor, or (iii)
the date AUAP or Circle G replaces the Advisor appointed by such party. Upon the
resignation, death or disability of the Advisor appointed by XXXX, AUAP shall
name a replacement Advisor. Upon the resignation, death or disability of the
Advisor appointed by Circle G, Circle G shall name a replacement Advisor. Upon
the resignation, death or disability of the Advisor appointed by the AUAP
Advisor and the Circle G Advisor, the AUAP Advisor and the Circle G Advisor
shall jointly name a replacement Advisor.
(c) No Liability for Advisors; Indemnity. The Company acknowledges and
agree that the Advisors have no liability whatsoever to the Company, its Members
or to third parties for acting in the capacity as an Advisor. The Company shall
12
indemnify the Advisors from any and all loss, cost, damage, liability or expense
(including, without limitation, attorney's fees and court costs) that an Advisor
may incur as a result of or arising from any actions taken for or on behalf of
the Company.
(d) Strict Confidence. The Company acknowledges that in order for the
Advisory Committee to function properly, the votes cast by any Advisor on any
matter be kept and maintained in strict confidence by the Advisors. The Advisory
Committee shall make all decisions on a majority basis without disclosing
whether the decision was unanimous or split.
(e) Third Party Consultants. The Company acknowledges that certain
deadlocks may pertain to matter for which the Advisors may need or request third
party advice. The Advisory Committee has the complete authority to retain, at
Company expense, any outside third party consultant that the Advisory Committee
deems appropriate in order to make a determination on a deadlock, including,
without limitation, legal counsel. The Company shall directly enter into any
agreements with such consultants as requested by the Advisory Committee.
(f) Compensation. The Company shall pay each Advisor a fee for their
services based on their usual hourly rate or as may otherwise be agreed upon in
writing between the Advisor and the Company. The Company shall reimburse each
Advisor for any and all expenses incurred on behalf of the Company. The Company
shall make such payments to each Advisor within thirty (30) days after receipt
of a statement for the same.
5.11 Operational Manager. The Managers acknowledge that for purposes of
the efficient operation of the Company that one Manager be appointed as the
"Operational Manager". The Operational Manager shall have no additional power or
authority, but shall be the Manager designated to coordinate the implementation
of the decisions of the Management Committee. The Operational Manager may in
turn designate an individual responsible for communicating on behalf of the
Operational Manager. The initial Operational Manager shall be Circle G. The
Operational Manager may be replaced upon the vote of Members Owning a Deciding
Interest.
ARTICLE VI
OFFICERS OF THE COMPANY
6.1. Election and Tenure. The Officers shall be appointed by the
Managers and shall serve until their removal, resignation or other termination
in office.
6.2. Resignation, Removal and Vacancies. Any Officer may resign at any
time by giving written notice of resignation to the Managers, or in the case of
an Officer other than the President, to the President. Such resignation shall
take effect when the notice is received by the Company unless the notice
specifies a later effective date, and acceptance of the resignation shall not be
necessary to render such resignation effective. Any Officer may at any time be
13
removed by the Managers, with or without cause. If any office becomes vacant for
any reason, the vacancy may be filled by the Managers. An Officer appointed to
fill a vacancy shall be appointed for the unexpired term of such Officer's
predecessor in office and shall continue in office until a successor shall be
elected or appointed and shall qualify, or until such Officer's earlier death,
resignation or removal. The appointment of an Officer shall not itself create
contract rights in favor of the Officer, and the removal of any Officer does not
affect the Officer's contract rights, if any, with the Company, and the
resignation of an Officer does not affect the Company's contract rights, if any,
with the Officer.
6.3 President. The President shall be the chief executive Officer of the
Company. The President shall preside at meetings of the Members. The President
shall have general and active management of the business of the Company; shall
see that all orders and resolutions of the Managers are carried into effect; and
shall perform all duties as may from time to time be assigned by the Managers.
6.4 Vice Presidents. The Vice Presidents, if any, shall perform such
duties and possess such powers as from time to time may be assigned to them by
the Managers or the President. In the absence of the President or in the event
of the inability or refusal of the President to act, the Vice President (or in
the event there be more than one Vice President, the Vice Presidents in the
order designated by the Managers, or in the absence of any designation, then in
the order of the election or appointment of the Vice Presidents) shall perform
the duties of the President and when so performing shall have all the powers of
and be subject to all the restrictions upon the President.
6.5 Secretary. The Secretary shall perform such duties and shall have
such powers as may from time to time be assigned by the Managers or the
President. In addition, the Secretary shall perform such duties and have such
powers as are incident to the office of Secretary including, without limitation,
the duty and power to give notice of all meetings of Members, the preparation
and maintenance of minutes of the directors' and Members' meetings and other
records and information required to be kept by the Company and for
authenticating records of the Company, and to be custodian of the Company
records.
6.6 Treasurer. The Treasurer shall perform such duties and shall have
such powers as may from time to time be assigned by the Managers or the
President. In addition, the Treasurer shall perform such duties and have such
powers as are incident to the office of Treasurer including, without limitation,
the duty and power to keep and be responsible for all funds and securities of
the Company, to deposit funds of the Company depositories selected in accordance
with this Agreement, to disburse such funds as ordered by the Managers, making
proper accounts thereof, and to render as required by the Managers statements of
all these transactions taken as Treasurer and of the financial condition of the
Company.
14
6.7 Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries and Assistant Treasurers, if any, shall perform such duties as shall
be assigned to them by the Secretary or the Treasurer, respectively, or by the
President or the Managers. In the absence, inability or refusal to Act as the
secretary or the treasurer, the assistant secretaries or assistant treasurers,
respectively, in the order designated by the Managers, or in the absence of any
designation, then in the order of their election or appointment, shall perform
the duties and exercise the powers of the secretary or treasurer, as the case
may be.
ARTICLE VII
LIMITATIONS ON AUTHORITY
7.1 Certain Powers of Managers and Officers and Restrictions on
Authority of the Managers and Officers.
(a) Subject to Subsections 7.1(b) hereof, any Manager, President, any
Vice President and Treasurer (except as indicated below) shall have power and
authority, on behalf of the Company:
(i) to do and perform all acts as may be necessary or appropriate
to carry out the Company's purpose during the ordinary course of business;
(ii) to open, close and convert bank accounts in the name of the
Company, and determine the signatories thereon;
(iii) to purchase liability and other insurance to protect the
Company's property and business;
(iv) to employ accountants, legal counsel, managing agents or other
experts to perform services for the Company and to compensate them from Company
funds; and
(v) to make any expenditures included or described in the Budget.
The fact that a Manager, an Officer or a Member is, or is directly or indirectly
affiliated or connected with any Person to whom the expenditure would be made,
shall not prohibit the Officer from dealing with that Person provided that the
Person shall fully disclose the affiliation or connection and the transaction
has been approved by the Managers (other than any Manager directly or indirectly
affiliated with such Person).
(b) The Officers and Managers, upon receiving the consent of Members
Owning a Deciding Interest shall have authority on behalf of the Company:
(i) to borrow money in any single transaction or series of related
transactions for the Company from banks, other lending institutions, the
Managers, Members, or affiliates of the Managers or Members where such borrowing
is (a) not included in the Budget, (b) in excess of the amount provided for the
Budget, or (c) in excess of $100,000.00;
15
(ii) to invest any Company funds temporarily (by way of example but
not limitation) in time deposits, short-term governmental obligations,
commercial paper or other investments;
(iii) to make any expenditures (whether for operating expenses or
capital acquisitions) which are (a) not included in the Budget, (b) in excess of
the amounts provided for in the Budget, or (c) in excess of $100,000.00. The
fact that a Manager or a Member is directly or indirectly affiliated or
connected with, any Person to whom the expenditure would be made, shall not
prohibit the Officer from dealing with that Person provided that the Person or
Member or Member shall fully disclose the affiliation or connection and the
transaction has been approved by remaining Managers;
(iv) to amend or modify the Budget;
(v) to issue Units in excess of the Units initially authorized in
Section 10.1 for such consideration as the Managers determine;
(vi) to cause a change in the purpose of the Company;
(vii) to cause the Company to be party to a reorganization;
(viii) to do any act which would make it impossible to fulfill the
purpose of the Company;
(ix) to amend this Agreement
(x) to cause the Company to voluntarily initiate a proceeding under
which the Company would become a debtor under the United States Bankruptcy Code;
(xi) to sell, exchange or otherwise dispose of all, or
substantially all, of the Company's assets in a single or series of related
transactions, other than in the ordinary course of business as set froth in the
Budget or Business Plan; and
(ix) to amend or modify the Business Plan.
(c) Notwithstanding any other provision of this Section 7.1, neither
the Managers nor any Member or Members shall have the authority to amend this
Agreement or take any action that would have a material adverse effect on a
similarly situated group of Members (the "Affected Group") without the consent
of Members of the Affected Group holding a majority of the Units held by all
Members within the Affected Group, or, if the material adverse affect does not
affect a group of Members in the same way, by each Member who would suffer a
material adverse affect. For purposes of this Subsection 7.1(c), a material
16
adverse affect is any increase in the obligation to make contributions, any
modification of the allocation to the affected Member or Affected Group of
profits, losses, income, gain, loss or credit for tax purposes or any
modification in a Member's right to distributions.
7.2. Right to Rely on the Managers.
(a) Any Person dealing with the Company may rely (without duty of
further inquiry) upon a certificate signed by a majority of the Managers as to:
(i) the identity of any Manager, Member, or Officer;
(ii) the existence or nonexistence of any fact or facts which
constitute a condition precedent to acts on behalf of the Company by any Manager
or Officer which are in any other manner germane to the affairs of the Company.
(iii) the Persons who are authorized to execute and deliver any
instrument or document of the Company; or
(iv) any act or failure to Act by the Company or any other matter
whatsoever involving the Company or any Member.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF MEMBERS
8.1. Limitation of Liability. A Member shall not be personally liable
for any debts or losses of the Company beyond such Member's Capital
Contributions and any obligation of the Member under Article IX to make
Contributions, except as otherwise required by law.
8.2. List of Members. Upon written request of any Member, the Managers
shall provide a list showing the names, addresses and Units owned by each of the
Members.
8.3. Company Books. In accordance with Section 10.7 herein, the Managers
shall maintain and preserve, during the term of the Company, and for five (5)
years thereafter, all accounts, books, and other relevant Company documents.
Upon reasonable request, each Member shall have the right, during ordinary
business hours, to inspect and copy such Company documents at the requesting
equity Member's expense.
8.4 Priority and Return of Capital. No Member shall have priority over
any other Member, either as to the return of Capital Contributions or as to
profits, losses, or distributions; provided that this Section shall not apply to
loans (as distinguished from Capital Contributions) which a Member has made to
the Company.
17
ARTICLE IX
CONTRIBUTIONS TO THE COMPANY
9.1 Initial Capital Contribution. Concurrently with the execution of
this Agreement, each the Members shall contribute the following to the Company
as its initial Capital Contribution:
AUAP $510.00
Circle G $490.00
In addition, AUAP hereby assigns to the Company all rights that it has to
acquire the Elvis Property and the Remaining Property. Any monies expended by
AUAP to acquire the Elvis and Remaining Property shall be credited to the
obligation of AUAP under Section 9.4 and Circle G hereby assigns to Company all
rights that it has to develop the project as described in the Business Plan.
9.2 AUAP Future Funding. AUAP shall be responsible for funding all the
capital needs of the Company in accordance with the Business Plan that are not
supplied by third party lenders, either in the form of a loan or an equity
contribution, with an interest rate or rate of return, as applicable, of seven
and a half percent (7 1/2%) per annum. The parties recognize that a significant
portion of the financing for the project described in the Business Plan will be
supplied by third parties and the terms of these loans will depend on the
marketplace at the time. Any dilution required in order to close an approved
loan shall be on a pari passu basis between AUAP and Circle G.
9.4 AUAP Initial Funding. AUAP shall, at closing of the purchase of the
Elvis Property and the Remaining Property, lend to the Company sufficient funds
to acquire the Elvis Property and Remaining Property and to establish sufficient
working capital to fund the initial budgetary requirements of the Company, which
loan shall be secured by the Elvis Property and any portions of the Remaining
Property acquired with these funds, to be repaid over five (5) years, with
interest at a rate of seven and a half percent (7 1/2%) per annum, interest only
for the first three (3) years, with a principal payment of one half of the
amount loaned each on the fourth and fifth anniversary dates. AUAP and Circle G
acknowledge that some of the Remaining Property may be acquired in part with the
proceeds of a loan frrm a third party, in which event AUAP shall, to the extent
required, subordinate its mortgage against the affected Property.
ARTICLE X
UNITS
10.1. Classes of Units. The Company shall have one class of Units. Each
Unit shall have equal rights and preferences in the assets of the Company. The
Company initially is authorized to issue 1,000,000 Units as follows:
18
AUAP 510,000 Units
Circle G 490,000 Units
10.2 Distributions.
(a) The Company shall make distributions of all cash, revenues and
funds received by the Company from Company operations, less the sum of the
following to the extent paid or set aside by the Company: (a) all principal and
interest payments on indebtedness of the Company and all other sums paid to
lenders; (b) all principal and interest payments on indebtedness of the Company,
if any, to Members; (c) all cash expenditures incurred incident to the normal
operation of the Company's business; (d) such reserves as the Managers deem
reasonably necessary to the proper operation of the Company's business.
Distributions shall be distributed to the Members in proportion to Units owned
by the Members.
(b) Subject to the above, distributions to members shall be made at
such times as determined by the Managers in their discretion as long as the
projections in the Business Plan are being met and do not exceed the need for
reserves for the project set forth in the Business Plan. All amounts withheld
pursuant to any provisions of federal, state or local tax law with respect to
any payment or distribution to the Members from the Company shall be treated as
amounts distributed to the relevant Member or Members pursuant to this Section
10.2.
(c) Notwithstanding any other provision in this Agreement, the
Managers shall make distributions of Available Cash Flow to the Members within
ninety (90) days after the end of each fiscal year in an amount equal to at
least forty percent (40%) of the total taxable income for the immediately
proceeding fiscal year. Each Member will receive at least forty percent (40%) of
the amount for which that Member is attributed income on the K-1 form given to
the Member each tax year.
10.3 Limitation Upon Distributions. No distribution shall be declared
and paid that would be prohibited under Section 18-607(a) of the Act.
10.4 Interest On and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to return of its Capital
Contribution, except as otherwise specifically provided for in Section 9.2.
10.5 Loans to Company. Nothing in this Agreement shall prevent any
Member from making secured or unsecured loans to the Company in accordance with
terms and conditions approved by the Managers.
10.6 Accounting Period. The Company's accounting period shall be the
calendar year.
19
10.7 Records, Audits and Reports. At the expense of the Company, the
Managers shall maintain records and accounts of all operations and expenditures
of the Company. At a minimum the Company shall keep at its principal place of
business the following records:
(a) A current list of the full name and last known business,
residence, or mailing address of each Member;
(b) A copy of the Certificate of Formation of the Company and all
amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;
(c) Copies of the Company's federal, state, and local income tax
returns and reports, if any, for the four most recent years;
(d) Copies of the Company's currently effective Agreement, copies
of any writings permitted or required with respect to a Member's obligation to
contribute cash, property or services, and copies of any financial statements of
the Company for the three most recent years;
(e) Minutes of every annual, special meeting and court ordered
meeting; and
(f) Any written consents obtained from Members for actions taken by
Members without a meeting.
10.8 Distribution of Reports. Company shall provide quarterly financial
reports to its Members within thirty (30) days after each quarter. The reports
shall be legally sufficient so as to enable AUAP to file its quarterly and
annual SEC reports.
ARTICLE XI
TRANSFERABILITY
11.1 Transferability of Units. Subject to the restrictions contained
below in Section 11.2, a Member may at any time Transfer all or any portion of
his or its Units to any Person or Company provided that the following conditions
are satisfied:
(a) Except in the case of a Transfer involuntarily by operation of
law, the Selling Member and Transferee shall execute and deliver to the Company
(i) such documents and instruments of conveyance as may be necessary or
appropriate in the opinion of counsel to the Company to effect such Transfer. In
the case of a Transfer of Units involuntarily by operation of law, the Transfer
shall be confirmed by presentation to the Company of legal evidence of such
Transfer, in form and substance satisfactory to counsel to the Company. In all
cases, the Company shall be reimbursed by the Transferee for all costs and
expenses that it reasonably incurs in connection with such Transfer. The Members
20
hereby recognize and acknowledge that one of the Members is a publicly traded
company and therefore has the right to transfer such ownership as long as it
remains an affiliated entity of the public company, including a Subsidiary,
joint venture or Spin-Off of the public company.
(b) The Selling Member and Transferee shall furnish the Company with
the Transferee's taxpayer identification number, sufficient information to
determine the Transferee's initial tax basis in the Units transferred, and any
other information reasonably necessary to permit the Company to file all
required federal and state tax returns and other legally required information
statements or returns. Without limiting the generality of the foregoing, the
Company shall not be required to make any distribution otherwise provided for in
this Agreement with respect to any transferred Units until it has received such
information.
(c) Except in the case of a Transfer of an Units involuntarily by
operation of law, either (i) such Units shall be registered under the Securities
Act, and any applicable state securities laws, or (ii) the Selling Member shall
provide an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that such Transfer is exempt from all
applicable registration requirements and that such Transfer will not violate any
applicable laws regulating the Transfer of securities.
(d) Except in the case of a Transfer of Units involuntarily by
operation of law, the Selling Member shall provide an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Managers, to the
effect that such Transfer will not cause the Company to be deemed to be an
"investment company" under the Investment Company Act of 1940.
(e) Unless otherwise approved by the Company, no Transfer of Units
shall be made except upon terms which would not, in the opinion of counsel
chosen by and mutually acceptable to the Company and the Selling Member that the
transfer of Units will not result in the termination of the Company within the
meaning of Section 708 of the Code or cause the application of the rules of
Sections 168(g)(1)(B) and 168(h) of the Code or similar rules to apply to the
Company.
(f) Notwithstanding the foregoing to the contrary, a Member may
transfer all or a portion of its Membership Interest to an Affiliate upon notice
to, but without the consent of, the other Members.
11.2 Notice of Proposed Transfers.
(a) Subject to subsection 11.3 below, a Member who desires to Transfer
its Units (the "Selling Member") shall give the Company and the Members notice
of its desire stating (i) the number of Units to be transferred (the "Transfer
Interest"); (ii) the name and business address (or residential address if such
21
Person does not have a business address) of the proposed transferee; (iii) the
amount and form of consideration, if any, to be received on account of the
Transfer; (iv) the date of the proposed Transfer; and (v) all other relevant
terms and conditions of the Transfer (the "Voluntary Transfer Notice"). The
Selling Member shall also provide the Company and the Members with copies of all
written documentation concerning the proposed transfer.
(b) Option of the Company. The Company may, but shall not be required
to, purchase all or part of the Transfer Interest on the terms and conditions
specified in the Voluntary Transfer Notice. To exercise its option, the Company
must notify the Members, including the Selling Member, within thirty (30) days
of its receipt of the Voluntary Transfer Notice.
(c) Option of the Members. If the Company does not exercise its option
pursuant to Section 11.2(b) then the other Members (the "Purchasing Members")
shall be entitled, within forty-five (45) days of receipt of the Voluntary
Transfer Notice, to give notice to the Selling Member to purchase the Transfer
Interest. Unless there is agreement otherwise, any Transfer Interest purchased
by the Purchasing Member shall be purchased proportionately by each Purchasing
Member based on the proportion of Units then owned by such Member.
(d) Transfer Permitted if Options Lapse. If the Company, and/or the
other Members have not given notice of their intention to purchase all of the
Transfer Interest within the time periods set forth in this Section 11.2, the
Selling Member may transfer all of the Transfer Interest to the transferee named
in the Voluntary Transfer Notice if (i) the terms and conditions of the sale are
no more favorable to such transferee than those contained in the Voluntary
Transfer Notice, (ii) the transferee agrees to become a party to this Agreement
by executing a counterpart signature page to this Agreement and (iii) the
transfer occurs within ninety (90) days from the date of the Voluntary Transfer
Notice.
(e) Closing shall occur and payment shall be made within ninety (90)
days from the date of the Voluntary Transfer Notice.
11.3 Requirements for Transfer.
(a) Notwithstanding Section 11.2, no Transfer of Units by a Member
shall be permitted if it would, or would reasonably likely, in the reasonable
judgment of the Management Committee:
(i) result in the termination (within the meaning of Section 708(b) of
the Code) of the Company for federal income tax purposes;
(ii) result in violation of the Securities Act, any comparable state
law or the applicable securities laws of any other jurisdiction;
(iii) result in a violation of any law, rule, or regulation by the
Member, any other Member, any Manager or the Company; or
22
(iv) cause the Company to be deemed a "publicly traded partnership" as
such term is defined in Section 7704(b) of the Code and Treasury Regulations
thereunder.
11.4 Involuntary Disposition. Before any involuntary disposition
(including, but not limited to, bankruptcy, insolvency, judgment lien or court
order) of Units, a Member shall give to the Company written notice disclosing in
full the nature and details of the involuntary disposition (the "Involuntary
Disposition Notice") and the Company or remaining Members shall have the option
to purchase the Units within ninety (90) days after receipt of such notice or
after learning of an event leading to an involuntary disposition. The option set
forth herein is exercisable by delivering written notice to such Member at any
time during the 90-day period after receipt by the Company of the Involuntary
Disposition Notice.
(a) Purchase Price. The purchase price for all Units sold and
purchased pursuant to this Section 11.4 (the "Purchase Price") shall be the
price determined in accordance with this Section 11.4(a) and shall be paid
pursuant to the terms and conditions of Section 11.4(b). The Purchase Price of
the Units to be sold shall be determined as of the last day of the month
immediately preceding the Involuntary Disposition Notice and shall be equal to
(i) the fair market value of the Company divided by (ii) the number of Units
outstanding as of the day immediately preceding the date of exercise by the
party having a purchase option pursuant to this Section and (iii) multiplied by
the number of Units to be sold. The fair market value of the Units as used in
this Section is the price that would be agreed upon by a willing seller and a
willing buyer under usual and ordinary circumstances, after consideration of all
relevant information and without any compulsion upon the seller to sell or upon
the buyer to buy. If the parties are unable to agree upon the fair market value
of the Units, such fair market value shall be determined by a mutually
acceptable business valuation appraiser with experience in valuing comparable
businesses to the Company. If the parties are unable to agree upon an appraiser,
the appraiser shall be selected by a mutually acceptable independent certified
public accountant, other than the certified public accountant which is auditing
or reviewing the books of the Company at such time.
(b) Payment of Purchase Price. For any purchase of Units under
11.4(a), the Purchase Price shall be paid as follows:
(i) Cash at the closing of the sale of the Units payable to the
seller in an amount equal to 20% of the Purchase Price.
(ii) The balance in two (2) equal annual installments, payable
beginning on the first anniversary of the closing of the sale of the Units, with
a subsequent payment on the second anniversary date of the closing of the sale
of the Units until fully paid. The principal balance shall bear interest from
the date of the closing of the sale of the Units until fully paid at a rate
equal to the prime rate published from time to time in the Wall Street Journal.
Accrued interest on the unpaid principal balance shall be paid simultaneously
23
with each payment of principal. The Company or a Member purchasing Units may
prepay the unpaid balance at any time without penalty or premium.
(iii) Any deferred Purchase Price shall be subordinated in right of
payment to the debt of the Company, and the seller of any Units pursuant to
shall execute any subordination agreement the Company may request in order to
document the subordination of such deferred amount.
(c) Closing. Unless otherwise agreed to in writing by the parties to
the sale, the closing of the purchase and sale of Units by a Member and his
Permitted Transferees, (the "Closing"), shall take place at the time and place
agreed to by the parties to the purchase and sale; provided however, that such
date shall be within one hundred and twenty (120) days of the Involuntary
Disposition Notice.
11.5 Admission of Substitute Members. An assignee of Units of the
Company shall be admitted as a Substitute Member only with a vote of Members
Owning a Deciding Interest. If so admitted, the Substitute Member shall have,
with respect to the Units so assigned, all the rights and powers and shall be
subject to all the restrictions and liabilities of that Member who assigned such
Units had by virtue of such Member's ownership of the assigned Units. The
admission of a Substitute Member shall not release any Member who assigned such
Units from liability to the Company that may have arisen prior to the transfer.
11.6 Rights of Assignees. Unless it is a Substitute Member, the Assignee
of any Units shall have no right to vote on, consent to, approve or participate
in the determination of any matter, or to otherwise participate in the
management of the business and affairs of the Company or to become a Member.
Unless it is a Substitute Member, the Assignee is only entitled to receive
distributions and to be allocated the Profits and Losses attributable to the
Units transferred to the Assignee.
11.7 Resignation or Withdrawal of a Member. Except as specifically
provided in this Agreement, no Member shall have the right to resign or withdraw
as a Member or withdraw its interest in the capital of the Company.
11.8 Disassociation of a Member. The Bankruptcy or Dissolution of a
Member or the redemption by the Company of all of such Member's Units: (a) will
cause such Member to become a Disassociated Member; (b) will terminate the
continued membership of such Member in the Company; and will result in the in an
Involuntary Disposition as contained in Section 11.4.
11.9 Rights of a Disassociated Member. In the event any Member becomes a
Disassociated Member, the Disassociated Member or its legal representative,
successor or assign may request admission to the Company as a Substitute Member.
If no request for Substitute Member status is made or granted, the Disassociated
Member or its legal representative, successor or assign shall thereafter have
only those rights of an Assignee under this Agreement.
24
ARTICLE XII
ADMISSION OF MEMBERS
The Managers, with the consent of Members Owning a Deciding Interest,
may admit new Members and issue Units in excess of the initial authorized Units
and accept such Capital Contribution as the Managers, with the consent of
Members Owning a Deciding Interest, determine from time to time.
ARTICLE XIII
DISSOLUTION AND TERMINATION
13.1. Dissolution. The Company shall be dissolved upon the written
agreement of Members Owning a Deciding Interest. Notwithstanding any provision
of the Act to the contrary, the Company shall continue and not dissolve as a
result of the death, retirement, resignation, expulsion, bankruptcy, or
dissolution of any Member or any other event that terminates the continued
Membership of the Member.
13.2. Winding up, Liquidation and Distribution of Assets.
(a) Upon dissolution, the Managers shall immediately proceed to wind
up the affairs of the Company.
(b) Upon the winding up of the Company, the assets shall be
distributed as follows:
(i) First, to creditors, including Members and Managers who are
creditors in satisfaction of liabilities of the Company (whether by payment or
the making of reasonable provision for payment thereof) other than liabilities
for which reasonable provision for payment has been made; and
(ii) Then, to the Members pro rata in proportion to their Units.
13.3. Certificate of Cancellation. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefore and all of the remaining property and assets have been distributed to
the Members, a Certificate of Cancellation shall be prepared, executed and filed
in accordance with the Act.
13.4. Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Agreement, upon dissolution,
each Member shall look solely to the assets of the Company for the return of its
Capital Contribution. If the distribution provided in Section 13.2 is
insufficient to return the Capital Contribution of one or more Members, such
Member or Members shall have no recourse against any other Member, Manager or
Officer.
25
ARTICLE XIV
TAXATION MATTERS
14.1. Scope of Article XIV. This Article XIV addresses certain issues of
the taxation of the Company and its Members and is not intended to affect any
other economic rights of the Members. To the extent any provision of this
Article XIV is inconsistent with any other provision of this Agreement, such
other provision shall govern.
14.2. Company Treated as a Partnership-Election To Be Treated As
Corporation. The Company shall be treated as a partnership for federal tax
purposes and shall not elect to be treated as a corporation under Regulations
ss. 301.7701-3(c) unless such treatment is approved by Members Owning a Deciding
Interest. If such election is approved, any Manager may execute the election to
be treated as a corporation.
14.3. Definitions.
(a) "Code" shall mean the Internal Revenue Code of 1986 or
corresponding provisions of subsequent superseding federal revenue laws.
(b) "Tax Items" shall mean the income, gain, loss, and credit of the
Company determined for tax purposes.
(c) "Treasury Regulations" shall include proposes, temporary and final
regulations promulgated under the code in effect as of the date of filing the
certificate of formation and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
14.4. Allocation of Tax Items.
(a) Tax Items shall be allocated among the Members in accordance with
the Member's Interest in the Company. In allocating Tax Items, the allocations
should consider the Members' relative contributions to the Company, the
interests of the Members in economic profits and losses, the interests of the
Members in cash flow and other non-liquidating distributions, and the rights of
the Members to distributions upon liquidation.
(b) To the extent consistent with Code Section 704(b), the Company
should allocate Tax Items as if it maintained capital accounts in accordance
with Treasury regulations ss. 1.704-1(b) (2) (iv) which are credited or charged
with Tax Items in such a manner to cause the capital accounts to equal the
amount that would be distributed on liquidation at the close of each Fiscal
Year. In making allocations, the capital accounts should be computed without an
obligation to restore deficit capital accounts as described in Treasury
Regulations ss. 1.704-1(b)(2)(c), with a "qualified income offset" as defined in
Treasury Regulations ss. 1.704-1(b)(2)(d)(6), in which capital accounts are
revalued as provided in Treasury Regulations ss. 1.704-1(b)(2)(iv)(f) and in
26
which built in gain and built in lass as defined Treasury Regulations ss.
1.704-3(a)(6) is accounted for using the traditional method of making section
704(c) allocations as described in Treasury Regulations ss. 1.704-3(b).
14.5. Returns and Other Elections. The Managers shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company in each jurisdiction in which the Company does business. Copies of such
returns or pertinent information therefrom, shall be furnished to the Members
within a reasonable time after the end of each Fiscal Year.
All elections permitted to be made by the Company under federal or state
laws and the appointment of the tax matters partner for purposes of Code ss.
6231 shall be made by the Managers.
ARTICLE XV
REPRESENTATIONS AND WARRANTIES
15.1. In General. As of the date hereof, each of the Members hereby
makes each of the representations and warranties applicable to such Member as
set forth in Section 15.2 hereof, and such warranties and representations shall
survive the Member's execution of this Agreement.
15.2. Representations and Warranties. Each Member hereby represents and
warrants that:
(a) Due Incorporation or Formation; Authorization of Agreement. If
such Member is a corporation or a partnership or a limited liability company or
a trust, it is duly organized or duly formed, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or formation
and has the corporate or partnership, company or trust power and authority to
own its property and carry on its business as owned and carried on at the date
hereof and as contemplated hereby. Such Member is duly licensed or qualified to
do business and in good standing in each of the jurisdictions in which the
failure to be so licensed or qualified would have a material adverse effect on
its financial condition or its ability to perform its obligations hereunder.
Such Member has the individual, corporate, partnership, company or trust power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and, if such Member is a corporation or partnership or
limited liability company or trust, the execution, delivery, and performance of
this Agreement has been duly authorized by all necessary corporate or
partnership or company or trust action. This Agreement constitutes the legal,
valid, and binding obligation of such Member.
(b) No Conflict With Restrictions; No Default. Neither the execution,
delivery, and performance of this Agreement nor the consummation by such Member
of the transactions contemplated hereby (i) will conflict with, violate, or
result in a breach of any of the terms, conditions, or provisions of any law,
regulation, order, writ, injunction, decree, determination, or award of any
court, any governmental department, board, agency, or instrumentality, domestic
27
or foreign, or any arbitrator applicable to such Member or any of its
Affiliates, (ii) will conflict with, violate, result in a breach of, or
constitute a default under any of the terms, conditions, or provisions of the
articles of incorporation, bylaws, partnership agreement, operating agreement or
trust agreement of such Member or any of its Affiliates if such Member is a
corporation, partnership, or limited liability company, or of any material
agreement or instrument to which such Member or any of its Affiliates is a party
or by which such Member or any of its Affiliates is or may be bound or to which
any of its material properties or assets is subject, (iii) will conflict with,
violate, result in a breach of, constitute a default under (whether with notice
or lapse of time or both), accelerate or permit the acceleration of the
performance required by, give to others any material interests or rights, or
require any consent, authorization, or approval under any indenture, mortgage,
lease agreement, or instrument to which such Member or any of its Affiliates is
a party or by which such Member or any of its Affiliates is or may be bound, or
(iv) will result in the creation or imposition of any lien upon any of the
material properties or assets of such Member or any of its Affiliates.
(c) Governmental Authorizations. Any registration, declaration, or
filing with, or consent, approval, license, permit, or other authorization or
order by, any governmental or regulatory authority, domestic or foreign, that is
required in connection with the valid execution, delivery, acceptance, and
performance by such Member under this Agreement or the consummation by such
Member of any transaction contemplated hereby has been completed, made, or
obtained on or before the Effective Date.
(d) Litigation. There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of such Member or any of its
Affiliates, threatened against or affecting such Member or any of its Affiliates
or any of their properties, assets, or businesses in any court or before or by
any governmental department, board, agency, or instrumentality, domestic or
foreign, or any arbitrator that could, if adversely determined (or, in the case
of an investigation, could lead to any action, suit, or proceeding, that could,
if adversely determined), reasonably be expected to materially impair such
Member's ability to perform its obligations under this Agreement or to have a
material adverse effect on the consolidated financial condition of such Member;
and such Member or any of its Affiliates has not received any currently
effective notice of any default, and such Member or any of its Affiliates is not
in default, under any applicable order, writ, injunction, decree, permit,
determination, or award of any court, any governmental department, board,
agency, or instrumentality, domestic or foreign, or any arbitrator that could
reasonably be expected to materially impair such Member's ability to perform its
obligations under this Agreement or to have a material adverse effect on the
consolidated financial condition of such Member.
(e) Investment Company Act; Public Utility Holding Company Act.
Neither such Member nor any of its Affiliates is, nor will the Company as a
result of such Member holding an interest in the Company be, an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended. Neither such Member nor any of its Affiliates is, nor
will the Company as a result of such Member holding an interest in the Company
be, a "holding company," "an affiliate of a holding company," or a "subsidiary
28
of a holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
(f) Investigation. Such Member is acquiring its interest in the
Company based upon its own investigation, and the exercise by such Member of its
rights and the performance of its obligations under this Agreement will be based
upon its own investigation, analysis, and expertise. Such Member's acquisition
of its interest in the Company is being made for its own account for investment
and not with a view to the sale or distribution thereof. Each Member is a
sophisticated investor possessing an expertise in analyzing the benefits and
risks associated with acquiring investments that are similar to the acquisition
of its interest in the Company.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1. Accounting Principles. The profits and losses of the Company shall
be determined in accordance with generally accepted accounting principles
applied on a consistent basis using the accrual method of accounting. It is
intended that the Company will elect those accounting methods which provide the
Company with the greatest tax benefits.
16.2. Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an executive officer of the party to whom the same is directed,
the next business day following its delivery to a national next business day
courier, or three (3) days following it being sent by registered or certified
mail, postage and charges prepaid, addressed to the Member's and/or Company's
address, as appropriate, which is set for in this Agreement.
16.3. Books of Account and Records. Proper and complete records and
books of account shall be kept or shall be caused to be kept by the Managers.
Such books and records shall be maintained as provided in Section 10.7. The
books and records shall be maintained at the principal place of business of the
Company and shall be open to the reasonable inspection and examination of the
Members, or their duly authorized representatives during reasonable business
hours.
16.4. Application of Delaware Law. This Agreement and the application of
interpretation hereof, shall be governed exclusively by its terms and by the
laws of the State of Delaware, and specifically the Act.
16.5. Confidentiality. Except as contemplated hereby or required by a
court of competent authority, each Member shall keep confidential and shall not
disclose to any third party and shall use its reasonable efforts to prevent its
affiliates, employees, agents, and representatives from disclosing to third
parties without the prior written consent of the Managers any information which
(1) pertains to this Agreement, any negotiations pertaining thereto, and of the
29
transaction contemplated hereby, or the business of the Company, or (2) pertains
to non-public or proprietary information of any Member or the Company or which
any Member has labeled in writing as confidential or proprietary; provided that
any Member my disclose such information to its affiliates, employees, agents,
and representatives. No Member shall use, and each Member shall use its best
efforts to prevent any affiliate of such Member from using, any information
which (1) pertains to this Agreement, any negotiations pertaining hereto, any of
the transactions contemplated hereby, or business of the Company, or (2)
pertains to nonpublic or proprietary information of any Member of the Company or
which any Member has labeled in writing as confidential or proprietary, except
in furtherance of the business of the Company.
16.6. Waiver of Action for Partition. Each Member and assignee
irrevocably waives during the term of the Company any right that it may have to
maintain any action for partition with respect to the property of the Company.
16.7. Amendments. This Agreement may not be amended except by the
written agreement of the Members Owning a Deciding Interest.
16.8. Execution of Additional Instruments. Each Member hereby agrees to
execute such further statements of interest and holdings, designations, powers
of attorney and other documents or instruments as may be necessary to comply
with any laws, rules or regulations.
16.9. Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act which would have originally
constituted a violation, from having the effect of an original violation.
16.10. Rights and Remedies Cumulative. The rights and remedies provided
by this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive the right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
16.11. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the application
thereof shall not be affected and shall be enforceable to the fullest extent
permitted by law.
16.12. Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective successors and assigns.
30
16.13. Creditors. None of the provisions of this Agreement shall be for
the benefit of, or enforceable by, any creditors of the Company.
16.14. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
16.15. Rule Against Perpetuities. Parties hereto intend that the rule
against Perpetuities (and any similar rule of law) not be applicable to any
provisions of this Agreement. However, notwithstanding anything to the contrary
in this Agreement, if any provision in this Agreement would be invalid or
unenforceable because of the rule against perpetuities or any similar rule of
law but for this Section 16.15, the parties hereto hereby agree that any future
interest which is created pursuant to said provision shall cease if it is not
vested within twenty-one years after the death of the survivor of the group
composed of the undersigned Members and their living issue as of the Effective
Date.
31
The UNDERSIGNED HEREBY agree, acknowledge and certify that the
foregoing Agreement constitutes the Operating Agreement of the Company adopted
by the Members of the Company as of the Effective Date.
MEMBERS
CIRCLE G RESORT, LLC,
a Nevada limited liability company
By: /s/ Xxxx Xxxxxxx
------------
Name: Xxxx Xxxxxxx
Manger:
AUSTRALIAN AGRICULTURE AND PROPERTY
DEVELOPMENT CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx Xxxx
----------
Name: Xxxxxx Xxxx
Title: Chief Financial Officer
32
EXHIBITS
Exhibit "A" Elvis Property
Exhibit "B" Remaining Property
33
