ARTERY-BEAZER CLARKSBURG, LLC a Maryland Limited Liability Company OPERATING AGREEMENT
TABLE OF CONTENTS
Page | ||||
ARTICLE 1. DEFINITIONS |
2 | |||
1.1. Additional Capital Contribution(s) |
2 | |||
1.2. Administrative Manager |
2 | |||
1.3. Affiliate |
2 | |||
1.4. Artery Sale Lots |
2 | |||
1.5. Assignment Agreement |
2 | |||
1.6. Assignor |
2 | |||
1.7. Available Cash |
2 | |||
1.8. Articles |
2 | |||
1.9. Bankruptcy |
2 | |||
1.10. Beazer Sale Lots |
3 | |||
1.11. Business Plan and Development Budget |
3 | |||
1.12. Closing |
3 | |||
1.13. Code |
3 | |||
1.14. Company |
3 | |||
1.15. Company Financing |
3 | |||
1.16. Deferred Purchase Money Notes |
3 | |||
1.17. Development Management Agreement |
4 | |||
1.18. Development Costs |
4 | |||
1.19. Development Fees |
4 | |||
1.20. Development Work |
4 | |||
1.21. Initial Capital Contribution(s) |
4 | |||
1.22. Interest or Membership Interest |
4 | |||
1.23. Involuntary Withdrawal |
4 | |||
1.24. Liquidating Proceeds |
5 | |||
1.25. Lot Sale Agreement |
5 | |||
1.26. Managers |
5 | |||
1.27. Members |
5 | |||
1.28. Membership Interest or Interest |
5 | |||
1.29. Net Losses |
5 |
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1.30. Net Profits |
5 | |||
1.31. Operating Agreement |
6 | |||
1.32. Persons(s) |
6 | |||
1.33. Phase |
6 | |||
1.34. Prime Rate |
6 | |||
1.35. Property |
6 | |||
1.36. Purchase Price |
6 | |||
1.37. Resident Agent |
6 | |||
1.38. SDAT |
6 | |||
1.39. Seller |
6 | |||
1.40. Transfer |
6 | |||
1.41. Treasury Regulations |
6 | |||
1.42. Voluntary Withdrawal |
7 | |||
1.43. Underlying Purchase Agreement |
7 | |||
ARTICLE 2. ORGANIZATION |
7 | |||
2.1. Name |
7 | |||
2.2. Purpose |
7 | |||
2.3. Company Property |
7 | |||
2.4. Principal Office and Resident Agent |
7 | |||
2.5. Authority to Act with Respect to Wholly-Owned Entities |
7 | |||
8 | ||||
3.1. Admission of New or Substituted Members |
8 | |||
ARTICLE 4. CAPITAL CONTRIBUTIONS |
8 | |||
4.1. Initial Capital Contributions |
8 | |||
4.2. Additional Capital Contributions |
8 | |||
4.3. Member Loans |
9 | |||
4.4. Failure of a Member to Timely Contribute the Share of Additional
Capital; Remedies |
9 | |||
4.5. Responsibility for Deferred Purchase Money Notes |
10 | |||
ARTICLE 5. PROFITS AND LOSSES |
10 |
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TABLE OF CONTENTS
(continued)
(continued)
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5.1. Definitions |
10 | |||
5.2. Tax Characterization |
11 | |||
5.3. Determination of Net Profits and Net Losses |
11 | |||
5.4. General Allocation of Net Profits and Net Losses |
11 | |||
5.5. Special Allocations and Limitation |
11 | |||
5.6. Allocation on Admission of New Members or Transfers |
13 | |||
ARTICLE 6. DISTRIBUTIONS |
13 | |||
6.1. Distributions |
13 | |||
ARTICLE 7. MANAGEMENT: RIGHT’S, POWERS AND DUTIES |
14 | |||
7.1. Management |
14 | |||
7.2. Personal Service |
16 | |||
7.3. Duties of Parties |
17 | |||
7.4. Indemnification |
17 | |||
7.5. Tax Matters Partner |
18 | |||
7.6. Substitution of Managers |
18 | |||
7.7. Limitations on Liability |
19 | |||
ARTICLE 8. TRANSFER OF INTERESTS AND WITHDRAWAL OF MEMBERS; DEFAULT BY MANAGER |
19 | |||
8.1. Transfers |
19 | |||
8.2. Voluntary Withdrawal |
20 | |||
8.3. Involuntary Withdrawal |
20 | |||
ARTICLE 9. DISSOLUTION, CONTINUANCE AND WINDING UP; BUY-OUT |
20 | |||
9.1. Events of Dissolution |
20 | |||
9.2. Winding Up |
21 | |||
9.3. Distribution Upon Liquidation |
21 | |||
ARTICLE 10. BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS; ADMINISTRATIVE MANAGER |
21 | |||
10.1. Bank Accounts |
21 | |||
10.2. Books and Records |
21 | |||
10.3. Annual Accounting Period |
22 | |||
10.4. Reports |
22 |
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Page | ||||
10.5. Other Duties of Administrative Manager |
22 | |||
10.6. Administrative Fee |
22 | |||
ARTICLE 11. BUSINESS PLAN AND DEVELOPMENT BUDGET |
23 | |||
11.1. Procedures for Establishment |
23 | |||
11.2. Annual Development Budget |
23 | |||
11.3. Interim Amendments to Business Plan and Development Budget |
23 | |||
ARTICLE 12. DEVELOPMENT MANAGEMENT AGREEMENT |
23 | |||
12.1. Development Management Agreement |
23 | |||
ARTICLE 13. PROCEDURE FOR SALE OF LOTS |
24 | |||
13.1. Division of Property into Building Lots |
24 | |||
13.2. General |
24 | |||
13.3. Option to Purchase Lots from Artery Development Company LLC at Fairland Project |
25 | |||
ARTICLE 14. MEETINGS OF MEMBERS AND ACTIONS ON WRITTEN CONSENT |
26 | |||
14.1. Meetings |
26 | |||
14.2. Action by Members Without a Meeting |
26 | |||
14.3. Place of Meetings; Telephone Meetings |
26 | |||
14.4. Notice of Meetings |
26 | |||
14.5. Waiver of Notice |
26 | |||
ARTICLE 15. MISCELLANEOUS |
26 | |||
15.1. Notice |
26 | |||
15.2. Severability |
27 | |||
15.3. Interpretation |
27 | |||
15.4. Integration |
27 | |||
15.5. Counterparts; Effective Date |
27 | |||
15.6. Binding Effect |
27 | |||
15.7. No Third Party Beneficiaries |
27 | |||
15.8. Operation as Limited Liability Company |
27 | |||
15.9. Amendments |
27 | |||
15.10. Member Consent and Approval |
27 |
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15.11. Waiver |
28 | |||
15.12. Arbitration |
28 |
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ARTERY-BEAZER CLARKSBURG, LLC
A Maryland Limited Liability Company
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (“Operating Agreement” or “Agreement”) is
made effective as of ___, 2001 (the “Effective Date”), by and between Artery Clarksburg,
LLC, a Maryland limited liability company (“Artery”) and Beazer Clarksburg, LLC, a Maryland limited
liability company (“Beazer”).
A. The Members (as hereinafter defined), desiring to form a Maryland limited liability company
under the Maryland Limited Liability Company Act, Title 4A of the Corporations and Associations
Article of the Annotated Code of Maryland, as amended from time to time, (the “Act”) have entered
into this Agreement. The Members have caused the formation of a limited liability company under
the name Artery-Beazer Clarksburg, LLC (the “Company”) and have caused Articles of Organization in
the form attached hereto as Exhibit “B” (the “Articles”) to be executed and filed by Xxxx
X. Xxxxxx, Xx., as Authorized Party with the Maryland State Department of Assessments and Taxation
(“SDAT”) on May 14, 2001.
B. This Operating Agreement is subject to, and governed by, the Act and the Articles. The
Members hereby ratify the execution and filing of the Articles and approve the Articles as the
Articles of Organization of the Company. In the event of a direct conflict between the provisions
of this Agreement and either the mandatory provisions of the Act or the Articles, such provisions
of the Act or the Articles, as the case may be, will be controlling.
C. Pursuant to a Term Sheet entered into on April 30, 2001, by and between The Artery Group,
LLC and Beazer Homes Corp., the parties had agreed to acquire through the acquisition of membership
interests of a newly formed limited liability company, Clarksburg Skylark, LLC, which in turn owns
a 374-acre site located in Clarksburg, Maryland (the “Property”), as more particularly described in
Exhibit “C” attached hereto, which Property has recently been rezoned to PD-4 and which
would permit approximately 1,330 residential units and 89,000 square feet of retail use. The
acquisition of membership interests in the Skylark Clarksburg, LLC is being made pursuant to (i)
that Agreement of Purchase and Sale entered into on March 13, 2000, by and among the XxXxxx Joint
Venture as the “Seller” and Rocky Gorge Home, LLC as the Purchaser, as such Underlying Purchase
Agreement is further amended by that Amendment to Agreement of Purchase and Sale as entered into as
of May 15, 2001, by and among the Seller, Assignor and Assignee, providing for the transfer prior
to Closing by the Seller of the Property to Clarksburg Skylark, LLC in. exchange for 100% of the
membership interests in Clarksburg Skylark, LLC and the acquisition of 100% of the membership
interests in Clarksburg Skylark, LLC in lieu of the direct purchase of the Property (the
“Underlying Purchase Agreement”), and (ii) as assigned to Beazer Homes Corp. by that Assignment
Agreement entered into as of March 29, 2001, by and between Rocky Gorge Homes, LLC as Assignor and
Beazer Homes Corp. as Assignee (the “Assignment Agreement”), with each of the
Underlying Purchase Agreement and the Assignment Agreement having been assigned by Assignee to
Company.
D. The Members desire to enter into this Operating Agreement to memorialize the terms and
conditions set forth in the Term Sheet with respect to the acquisition of interests in the Skylark
Clarksburg, LLC and the payment of the Purchase Price (as defined herein) to Seller and Assignor,
and to further set forth the agreement of the Members with respect to obtaining entitlements for
the Property, including the potential creation of a special taxing district to finance certain
public infrastructure requirements for the Property, the subdivision of the Property into single
family detached, townhouse, and multi-family residential and commercial building lots, and the
Development Management, marketing and sale of such building lots to home builders and other
property owners on behalf of the Company.
ARTICLE 1. DEFINITIONS
The defined terms used in this Operating Agreement shall, unless the context otherwise
requires, have the meanings specified in this Section 1. Any term not defined in this Operating
Agreement shall have the meaning ascribed to it in the Act, and other relevant laws of the State of
Maryland. As used herein, the term:
1.1. Additional Capital Contribution(s) shall have the meaning set forth in Section
4.2 hereof.
1.2. Administrative Manager shall mean Beazer.
1.3. Affiliate shall mean any entity or other Person owned and controlled by, or
owning and controlling any Member in whole or in part, or that is under common ownership and
control with any Member.
1.4. Artery Sale Lots shall mean those residential building lots to be sold to home
builders at the direction of Artery, as provided in Article 13.
1.5. Assignment Agreement shall mean that Assignment Agreement entered into as of
March 29, 2001, by and between Rocky Gorge Homes, LLC as Assignor and Beazer Homes Corp, as
Assignee.
1.6. Assignor shall mean Rocky Gorge Homes, L.L.C.
1.7. Available Cash shall have the meaning set forth in Section 6.1(b).
1.8. Articles shall mean the Articles of Organization of the Company filed with and
accepted by SDAT on May 14, 2001, in the form attached hereto as Exhibit “B”.
1.9. Bankruptcy means with respect to any Person or entity:
(i) having an order entered for relief with respect to it or him under the Federal Bankruptcy
Code,
(ii) not paying or admitting in writing his or its inability to pay his or its debts generally
as they become due,
(iii) making an assignment for the benefit of creditors,
(iv) applying for, seeking, consenting to, acquiescing in the appointment of a receiver,
custodian, trustee, examiner, liquidator, or similar official for it or him or any substantial part
of its or his property or failing to cause the discharge of the same within sixty (60) days of such
appointment,
(v) instituting any proceeding seeking the entry of any order for relief under the Federal
Bankruptcy Code to adjudicate it or him a bankrupt or insolvent, or failing to cause dismissal of
such proceeding within sixty (60) days of the institution thereof, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, adjustment or composition of it or him or its or his
debts, under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors, or
failing to file an answer or other pleading denying the material allegations of any such proceeding
filed against it or him, or
(vi) taking any action to authorize or effect any of the foregoing actions or failing to
contest in good faith the appointment of a receiver, trustee, examiner, liquidator or similar
official for him or it or any substantial part of his or its property.
1.10. Beazer Sale Lots shall mean those residential building lots to be sold to home
builders at the direction of Beazer, as provided in Article 13.
1.11. Business Plan and Development Budget shall have the meaning set forth in Section
11 hereof.
1.12. Closing shall mean the closing of the sale of 100% of the membership interests
in Clarksburg Skylark, LLC to the Company.
1.13. Code means the Internal Revenue Code of 1986, as amended.
1.14. Company shall mean Artery-Beazer Clarksburg, LLC, the Maryland limited liability
company created pursuant to this Operating Agreement and the Articles filed pursuant thereto.
1.15. Company Financing shall have the meaning set forth in Section 7.1(d)(i)(a)
hereof.
1.16. Deferred Purchase Money Notes shall mean the deferred purchase money notes
evidencing the obligation of the Company to pay the deferred portions of the Purchase Price to
Seller and Assignor in the forms set forth in Exhibit “F” and Exhibit “G”,
respectively, attached hereto and made apart hereof.
1.17. Development Management Agreement shall have the meaning set forth in Section 12
hereof.
1.18. Development Costs shall mean all costs and expenses (i) which the Company shall
be responsible to pay and those (ii) actually incurred by the Company in connection with the
development of the Property, including but not limited to the Development Fees.
1.19. Development Fees shall mean the fees paid to Artery Development Company, LLC by
the Company for its development of the Property pursuant to the Development Management Agreement.
1.20. Development Work shall mean the development of the Property pursuant to the
Development Management Agreement, the Business Plan and Development Budget and this Operating
Agreement.
1.21. Initial Capital Contribution(s) shall have the meaning set forth in Section 4.1
hereof.
1.22. Interest or Membership Interest shall mean a Member’s respective percentage
interest in the Net Profits and Net Losses of the Company and distributions by the Company, as set
forth on Exhibit “A”, as the same may be amended pursuant to this Operating Agreement.
Allocations of Net Profits or Net Losses, and distributions shall be made as set forth in this
Operating Agreement and not on the basis of value of Members’ contributions.
1.23. Involuntary Withdrawal shall mean, with respect to any Member, the occurrence of
any of the following events:
(i) the Member makes an assignment for the benefit of creditors;
(ii) the Member files a voluntary petition of Bankruptcy;
(iii) the Member is adjudged bankrupt or insolvent or there is entered against the Member an
order for relief in any Bankruptcy or insolvency proceeding;
(iv) the Member files a petition or answer seeking for the Member any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation;
(v) the Member seeks, consents to, or acquiesces in the appointment of a trustee for, receiver
for or liquidation of the Member or of all or any substantial part of the Member’s properties;
(vi) the Member files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Member in any proceeding described in Subsections (i)
through (v);
(vii) any proceeding against the Member seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, continues for sixty (60) days after the commencement thereof, or
the appointment of a trustee; receiver, or liquidator for the Member or all or any substantial part
of the Member’s properties without the Member’s agreement or acquiescence, which appointment is not
vacated or stayed for sixty (60) days or, if the appointment is stayed, for sixty (60) days after
the expiration of the stay during which period the appointment is not vacated;
(viii) if the Member is an individual, the Member’s death or adjudication by a court of
competent jurisdiction as incompetent to manage the Member’s person or property;
(ix) if the Member is acting as a Member by virtue of being a trustee of a trust, the
termination of the trust;
(x) if the Member is a partnership or another limited liability company, the dissolution and
commencement of winding up of the partnership or limited liability company;
(xi) if the Member is a corporation, the dissolution of the corporation or the revocation of
its charter; or
(xii) if the Member is an estate, the distribution by the fiduciary of the estate’s entire
interest in the Company; or
(xiii) if any of the foregoing events shall occur with respect to an Affiliate of a Member
which, in the reasonable judgment of the other Member, may be reasonably expected to interfere with
the Affiliated Member’s performance of its responsibilities to the Company under this Operating
Agreement.
1.24. Liquidating Proceeds shall have the meaning set forth in Section 6.1(b).
1.25. Lot Sale Agreement shall mean the firm of agreement between the Company and home
builders regarding the purchase and sale of the finished residential building lots from the Company
in the form agreed to by the Members.
1.26. Managers shall mean the Persons so designated in Article 7.
1.27. Members (and individually a Member) shall mean those Persons identified on
Exhibit “A” and such other Persons who have been duty admitted as Members pursuant hereto.
1.28. Membership Interest or Interest shall mean a Member’s respective percentage
interest in the Net Profits and Net Losses of the Company and distributions by the Company, as set
forth on Exhibit “A”, as the same may be amended pursuant to this Operating Agreement.
Allocations of Net Profits or Net Losses, and distributions shall be made as set forth in this
Operating Agreement and not on the basis of value of Members’ contributions.
1.29. Net Losses shall have the meaning set forth in Section 5.1 hereof.
1.30. Net Profits shall have the meaning set forth in Section 5.1 hereof.
1.31. Operating Agreement (or Agreement) shall mean this Operating Agreement,
as amended, modified or supplemented from time to time.
1.32. Persons(s) shall mean and include any individual corporation, partnership,
association, limited liability trust, estate or other entity.
1.33. Phase shall mean the phase of development of the Property, as it shall be
incrementally developed in accordance with the terms of the Business Plan and Development Budget.
1.34. Prime Rate shall mean the rate so designated in The Wall Street Journal, as
adjusted from time to time. In the event that The Wall Street Journal is no longer published, then
the Prime Rate shall be that rate so designated in a comparable substitute financial publication,
as selected by the Managers.
1.35. Property shall mean that certain real property, containing approximately 374
acres of unimproved land located in Clarksburg, Maryland, as more particularly described in
Exhibit “C” attached hereto and made apart of this Operating Agreement which is owned by
Clarksburg Skylark, LLC.
1.36. Purchase Price shall mean the total amount to be paid by the Company to the
Seller and the Assignor in connection with the acquisition of 100% of the membership interests in
Clarksburg Skylark LLC, as set forth in the Underlying Purchase Agreement and Assignment Agreement
which shall consist of the sum of $24,500,000.00 payable as follows: (i) $8,000,000.00 to be paid
in cash at Closing ($6,500,000.00 payable to Seller and $1,500,000.00 payable to Assignor); (ii)
$13,500,000.00 payable to Seller under a Deferred Purchase Money Note in the form attached as
Exhibit “F” in four (4) equal annual installments beginning one year following the date of
Closing, with simple interest paid quarterly at 8% per annum; and (iii) $3,000,000.00 payable to
Assignor in three (3) equal annual installments beginning on March 25, 2002, and each year
thereafter, being interest at 10% per annum, payable quarterly in arrears under a Deferred Purchase
Money Note in the form attached as Exhibit “G”, each of the Members being responsible for
contributing one-half of the Purchase Price.
1.37. Resident Agent means the Person identified in Section 2.5 hereof.
1.38. SDAT means the Maryland State Department of Assessments and Taxation.
1.39. Seller shall mean the XxXxxx Joint Venture, consisting of the following
partners: Xxxxxxx XxXxxx (12.5 percent interest); XxXxxx Family, LLC (25 percent interest); Xxxxxxx
XxXxxx (12.5 percent interest); Xxxxxx XxXxxx Xxxxx, also known of record as Xxxxxx Xxx XxXxxx
(12.5 percent interest); and Xxxxxxx Xxxxxxxx (37.5 percent interest).
1.40. Transfer means, when used as a noun, any voluntary sale, hypothecation, pledge,
assignment, attachment or other transfer, and, when used as a verb, voluntarily sell, hypothecate,
pledge, assign or otherwise transfer.
1.41. Treasury Regulations shall have the meaning set forth in Section 5.1 hereof.
1.42. Voluntary Withdrawal shall mean a Member’s dissociation with the Company by
means other than by a Transfer or an Involuntary Withdrawal.
1.43. Underlying Purchase Agreement shall mean that Agreement of Purchase and Sale
entered into between Seller and Assignor as of March 13, 2000 with respect to the sale of the
Property, as further amended by that Amendment to Agreement of Purchase and Sale as entered into as
of May 15, 2001, by and among the Seller, Assignor, and Assignee.
ARTICLE 2. ORGANIZATION
2.1. Name. The name of the Company shall be “Artery-Beazer Clarksburg, LLC.” The
Company may do business under that name and under any other name or names which the Managers
select. If the Company does business under a name other than that set forth in the Articles, then
the Company shall file a trade name certificate as required by law.
2.2. Purpose. Subject to the terms hereof, the Company is organized to (a) acquire,
buy, own, invest in, manage, develop, construct, improve, refinance, exchange, dispose, market,
promote, sell and otherwise deal with the Property, directly or through acquisition and ownership
of 100% of the interests of an entity which owns the Property; (b) obtain all preliminary plans,
site plans, subdivision, engineering, land use and zoning and related approvals from the applicable
governmental authorities required to develop and sell the Property pursuant to the Development
Management Agreement and this Operating Agreement; (c) petition Xxxxxxxxxx County to create a
special taxing district for the Property and to enter into any and all agreements required to
effectuate the creation and implementation of such a special taxing district for the Property; (d)
oversee the subdivision of the Property into single family detached, townhouse and multi-family
residential and commercial building lots and the development and sale of such building lots
pursuant to the Development Management Agreement and this Operating Agreement; (e) have and to
exercise all powers now or hereafter conferred by the laws of the State of Maryland on limited
liability companies formed pursuant to the Act; and (f) do any and all things necessary,
convenient, or incidental to the foregoing.
2.3. Company Property. Title to all assets of the Company shall be taken and held
only in the name of the Company.
2.4. Principal Office and Resident Agent. The principal office of the Company in the
State of Maryland shall be located at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx
00000, and the Company shall maintain its administrative offices at 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000. The Managers may change the principal office of the Company and/or
establish additional offices of the Company within the State of Maryland, as the Managers may deem
advisable. The Resident Agent of the Company in the State of Maryland for service of process shall
be The Corporation Trust Incorporated. The post office address of the Resident Agent of the Company
is 300 But Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000. The Managers may, in their sole
and absolute discretion, change the Resident Agent of the Company to a Person who or which
qualifies as a Resident Agent under the Act.
2.5. Authority to Act with Respect to Wholly-Owned Entities. The Members intend that
any authority provided herein to any Manager or any Member and any agreement provided
herein between the Members shall apply with respect to any entity, including Clarksburg
Skylark, LLC, which owns the Property, as if such authority or agreement was contained in the
organizational documents of that wholly-owned entity.
ARTICLE 3. ADMISSION AND SUBSTITUTION OF MEMBERS
3.1. Admission of New or Substituted Members. The Company may admit new or
substituted Members with the consent of and under such terms as are required by all Members, which
consent may be withheld in the Members’ absolute discretion. Unless named in Exhibit “A” of
this Operating Agreement, or unless admitted to the Company as a substituted or new Member as
provided herein, no Person shall be considered a Member; and the Company need deal only with the
Members so named and so admitted. The Company shall not be required to deal with any other Person
by reason of a Transfer by a Member, except as otherwise provided in this Operating Agreement. Upon
admission of new or substituted Members, the Manager shall cause Exhibit “A” of the
Operating Agreement to be amended to reflect the current Membership of the Company.
ARTICLE 4. CAPITAL CONTRIBUTIONS
4.1. Initial Capital Contributions. Effective upon the date when this Operating
Agreement is duly executed and delivered by each Member listed on Exhibit “A” hereto on the
date hereof, the Members shall make the following “Initial Capital Contributions” to the Company:
(a) The Members shall each contribute funds to the Company on the following bases, which funds
shall include: (i) one-half of the cash portion of the Purchase Price required to be paid to the
Seller and the Assignor at the Closing of the sale of the interests in Skylark Clarksburg. LLC,
which shall consist of $4 million for each Member, $3,250,000 of which shall be payable to Seller
and $750,000 of which payable to Assignor (it being agreed that any deposits made to Seller or
Assignor by a Member shall be credited against the amounts required to be contributed hereunder);
(ii) one-half of the Company’s initial working capital requirements, which shall consist of
$150,000; and (iii) one-half of the Company’s additional working capital requirements, which shall
be provided pursuant to the Business Plan and Development Budget as agreed to by the Members
pursuant to Article 11 hereto.
(b) The parties acknowledge that the relative values of their respective Initial Capital
Contributions to the Company under this Section 4.1 are in the same proportion as their respective
Membership Interests.
(c) Except as provided herein, no Member shall be entitled to the return of its Capital
Contribution, and no interest shall be paid by the Company on any Capital Contribution or the
balance in any Member’s Capital Account.
4.2. Additional Capital Contributions. The Business Plan and Development Budget shall
specify when and if Additional Capital Contributions are required to be made to the Company. If
the Managers at any time or from time to time shall determine, based on the Business Plan and
Development Budget, that the Company requires Additional Capital Contributions to pay any costs
associated with the Property, including but not limited to (i) real
estate taxes assessed against the Property; (ii) premiums on the insurance identified in
Section 13 hereof; (iii) deposits to be made in connection with paying the costs of the consultants
of Xxxxxxxxxx County in connection with the establishment of a development district with respect to
the Property or (iv) development costs, on or before such costs are required to be paid by the
Company, then the Managers shall notify the Members of the total amount of additional funds
required (“Capital Call”). The Members shall provide such required funds as working capital to the
Company, in accordance with thaw respective Membership Interests, within thirty (30) days after the
notice of Capital Call has been duly given.
4.3. Member Loans.
If the Managers and all of Members agree, any Member may, but shall not be required to, loan
or advance funds to the Company. If any Member shall loan any money to the Company pursuant to this
Section 4.3 (a “Member Loan”), the amount of any such loan shall not be an increase in such
Member’s share of the distributions or Net Profits and Net Losses of the Company under this
Operating Agreement; but the amount of any such loan shall be an obligation of the Company to such
Member, and shall be repaid with interest at a floating rate equal to the Prime Rate as published
on the day that the funds are advanced, plus 5%, provided that any amounts advanced as Member Loans
to the Company to repay the Deferred Purchase Money Notes shall be at such rate agreed to by the
Members, which may be a fixed rate. Any amounts advanced as a Member Loan shall be identified by
the Member as a Member Loan and shall not constitute a Capital Contribution on the books and
records of the Company.
4.4. Failure of a Member to Timely Contribute the Share of Additional Capital;
Remedies.
(a) If a Member fails to pay when due all or any portion of (i) any Initial Capital
Contribution required by Section 4.1 hereof or (ii) any Additional Capital Contribution which is
the subject of a duly given Capital Call required by Section 4.2 (the “Defaulting Member”), the
other Member (the “Non-Defaulting Member”) may pay the unpaid amount of the Defaulting Member’s
Capital Contribution (the “Unpaid Contribution”). To the extent the Unpaid Contribution is paid by
the Non-Defaulting Member, following the delivery of written notice to the Defaulting Member, and
the failure to make such Capital Contribution within a period of fifteen (15) days following
receipt of such notice, the Membership Interest of the Non-Defaulting Member making such Unpaid
Contribution to the Company shall be increased by an amount determined as if the Non-Defaulting
Member had made an additional Capital Contribution equal to three times the amount of the Unpaid
Contribution, so that the Membership Interest of the Non-Defaulting Member would be determined by
the percentage that is derived from dividing the aggregate Capital Contributions made by the
Non-Defaulting Member (including the deemed additional Capital Contribution) to the aggregate
Capital Contributions made to the Company, and the Defaulting Member’s Membership Interest shall be
decreased to the remaining percentage interest of Membership Interests in the Company. For example,
by way of illustration only, in the case where the aggregate Capital Contributions made to the
Company prior to the Capital Call were $8,500,000, split equally between Member A and Member B; an
Additional Capital Contribution was required of each of the Members of $200,000; Member A failed to
make the Additional Capital Contribution following receipt of the written notice and the cure
period required above; and Member B made such Capital Contribution in addition to
making the $200,000 Capital Contribution required to be made by it, the Membership Interest of
Member B would be determined by dividing the aggregate Capital Contributions made by Member B, (3 x
$200,000) + $200;000 + $4,250,000 = $5,050,000), divided by the aggregate Capital Contributions
made to the Company by both Members, $8,900,000, or 56.74%, and the Membership Interest of Member A
would be decreased to 43.26% (100% — 56.74%).
4.5. Responsibility for Deferred Purchase Money Notes. Each of the Members shall be
responsible for contributing the necessary funds to the Company, and any required guaranties of
payment, with respect to one-half of the amount of the Deferred Purchase Money Notes payable to
Seller and Assignor with respect to the acquisition of the membership interests of Clarksburg;
Skylark, LLC, provided that except as expressly stated in the Deferred Purchase Money Notes, the
obligations of the Members to the Seller and the Assignor shall be nonrecourse to the Members. Any
amounts advanced to the Company by either Member with respect to the repayment of the Deferred
Purchase Money Notes shall be treated as an additional Capital Contribution under Section 4.02
unless otherwise agreed by the Members. Any decision to borrow funds by the Company to repay all or
any portion of the Deferred Purchase Money Notes shall constitute a Major Decision pursuant to
Section 7.1(d) hereunder.
ARTICLE 5. PROFITS AND LOSSES
5.1. Definitions. In addition to those terms defined elsewhere in this Operating
Agreement, and unless the context otherwise requires, for the purposes of this Operating Agreement
the following terms shall have the meanings set forth below.
(a) “Capital Account” means a capital account created and maintained according to Treasury
Regulation Section 1.704-1(b).
(b) “Gain” means the income and gain of the Company for federal income tax purposes arising
from a sale or other disposition of all or any portion of the Property made in connection with the
overall liquidation of the Company.
(c) “Loss” means the loss of the Company for federal income tax purposes arising from a sale
of the Property made in connection with the overall liquidation of the Company.
(d) “Net Losses” means the net loss of the Company for federal income tax purposes for each
taxable year, calculated to include Gain or Loss but without regard to those items that are
specially allocated in accordance with Regulatory Allocations; provided, however, that in
determining net loss (i) any tax-exempt income received by the Company shall be included as an item
of gross income, and (ii) any expenditure of the Company, including all Development Costs,
described (or treated under Treasury Regulation Section 1.704-1(b)(2)(iv)(i) as described) in
Section 705(a)(2)(B) of the Code shall be treated as a deductible expense.
(e) “Net Profits” means the taxable income of the Company for federal income tax purposes for
each taxable year, calculated to include Gain or Loss but without regard to those items which are
specially allocated in accordance with the Regulatory Allocations; provided, however, that in
determining taxable income (i) any tax-exempt income received by the Company shall be included as
an item of gross income, and (ii) any expenditure of the
Company, including all Development Costs, described (or treated under Treasury Regulation
Section 1.704-1(b)(2)(iv)(i) as described) in Section 705(a)(2)(B) of the Code shall be treated as
a deductible expense.
(f) “Regulatory Allocations” means the allocations set forth in Section 5.4 below. Such
allocations are intended to comply with certain requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code.
(g) “Treasury Regulations” means temporary and final regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding provisions of
succeeding regulations).
5.2. Tax Characterization. The Company shall, for federal and state income tax
purposes, be classified as a partnership rather than an association taxable as a corporation. Each
Member, by execution or acceptance of this Operating Agreement, covenants and agrees that it will
file its own federal and state income and other tax returns in a manner that is consistent with the
tax classification of the Company as a partnership and will not take any action which in
inconsistent with such classification.
5.3. Determination of Net Profits and Net Losses. The Net Profits and Net Losses of
the Company shall be determined in accordance with the accounting methods followed for federal
income tax purposes and otherwise in accordance with sound accounting principles and procedures
applied in a consistent manner. An accounting shall be made for each fiscal year by the accountants
employed by the Company as soon as possible after the close of each such fiscal year to determine
the Members’ respective shares of Net Profits or Net Losses of the Company, which shall be credited
or debited, as the case may be, to the Members’ respective Capital Accounts.
5.4. General Allocation of Net Profits and Net Losses. Subject, first, to the
provisions of Section 5.5 below, Net Profits and Net Losses of the Company for any year shall be
allocated among the Members pro rata, in accordance with the Members’ respective Membership
Interests.
5.5. Special Allocations and Limitation.
(a) Unless otherwise agreed to by the Members, any Net Profit or Loss of the Company with
respect to the sale of the Artery Sale Lots shall be allocated to Artery while any Net Profit or
Loss with respect to the sale of the Beazer Sale Lots shall he allocated to Beazer.
(b) The Company shall comply with Treasury Regulation Section 1.704-2 with respect to the
allocation of deductions and the chargeback of minimum gain on nonrecourse debts of the Company,
and with Treasury Regulation Section 1.704-1(b) with respect to the establishment and maintenance
of Capital Accounts for the Members.
(c) No Member shall be allocated any Net Losses or Loss which would cause or increase a
deficit balance in such Member’s Capital Account in excess of any obligation of such Member to
restore deficits (as defined in Treas. Reg. Section 1.704-1(b)(2)(ii)(c), as amended). All Net
Losses in excess of the limitation set forth in the preceding sentence shall be allocated to the
remaining Members in accordance with their respective Membership Interests. If
any Member shall receive with respect to the Company an adjustment, allocation or distribution
in the nature described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)-(6), as amended, which
causes or increases a deficit in such Member’s Capital Account, such Member shall be allocated
items of income and gain in an amount and manner as will eliminate such deficit balance as quickly
as possible. It is intended that this Section 5.5(b) shall constitute a “qualified income offset”
within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3), as amended.
(d) The Regulatory Allocations set forth in Section 5.5(b) above shall be taken into account
in allocating Net Profits, Gain, Net Losses and Loss pursuant to Section 5.4 above, so that, to the
extent possible, the next amount of such allocations of Net Profits, Gains, Net Losses and Loss
shall be equal to the net amount that would have been allocated to each Member if the Regulatory
Allocations had not occurred.
(e) The respective interests of the Members in the Net Profits, Net Losses, Gain, and Loss or
items thereof shall remain as set forth above unless changed by amendment to this Operating
Agreement or by an assignment of a Membership Interest authorized by the terms of this Operating
Agreement. Except as otherwise provided herein, for tax purposes, all items of income, gain, loss,
deduction, or credit shall be allocated to the Members in the same manner as are Net Profits and
Net Losses from operations; provided, however, that with respect to property contributed to the
Company by a Member, such items shall be shared among the Members so as to take into account the
variation between the basis of such property and its fair market value at the time of contribution
in accordance with Section 704(c) of the Code.
(f) If any fees, interest, or other amounts paid to a Member or an Affiliate pursuant to this
Operating Agreement, or any other agreement between the Company and such Member or Affiliate
providing for the payment of such amounts, and deducted by the Company, whether in reliance upon
Section 162, 163, 707(a) or 707(c) of the Code or otherwise, are disallowed as deductions to the
Company on its federal income tax return for the taxable year in or with respect to which such
amounts are paid and are treated instead as Company distributions, then:
(i) there shall be allocated to the Member who received (or whose Affiliate received) such
payments an amount of gross income for the taxable year in or with respect to which such fees,
interest or other amounts were paid equal to the amount of such fees, interest or other amounts
that are so disallowed and treated as Company distributions; and
(ii) the Net Profits or Net Losses, as the case may be, for the taxable year in or with
respect to which such fees, interest, or other amounts were paid shall be (A) increased or
decreased, as the case may be, by the amount of such fees, interest, or other amounts that are
disallowed and treated as Company distributions, and (B) determined without regard to any gross
income of the Company which is specially allocated in accordance with the foregoing Section
5.S(e)(i).
(g) The Company shall allocate Net Profit to the Members in an amount equal to the excess of
any interest accrued on such Member’s Development Capital Contributions, over prior cumulative
allocations to such Member under this Section 5.5(f).
5.6. Allocation on Admission of New Members or Transfers. In the event of the
admission of a New Member or in the event of a valid transfer of all or part of a Member’s
Membership Interest in the Company pursuant to Article 8 hereof, all recurring items of Net Profits
and Net Losses of the Company and all ordinary distributions by the Company shall be allocated to
the transferee in the same proportion that the number of days in the Company fiscal year after the
transfer bears to the total number of days in the Company fiscal year provided, however, that any
extraordinary or nonrecurring items of Net Profits, Net Losses, Gain or Loss shall be specifically
allocated to the transferee if such item was realized or incurred on or after the date of his
admission to the Company.
ARTICLE 6. DISTRIBUTIONS
6.1. Distributions.
(a) Distributions to Members shall be made only from Available Cash or Liquidating Proceeds
(as defined in subsection (b) below). No Member shall have the right to demand a distribution in
kind from the Company.
(b) Distributions of Available Cash shall be made among the Members in such amounts and at
such times as shall be determined by the Managers (but not less frequently than quarterly) in the
following order of priority: first, to reimburse the Members for any Member Loans; second, to the
Members in accordance with their positive Capital Account balances until such Capital Account
balances shall have been reduced to zero (the intent being that distributions of cash shall be made
with respect to any Gain attributable to the Artery Sale lots being paid to Artery and that
distributions of cash made with respect to any Gain attributable to the Beazer Sale lots being paid
to Beazer); and third, to the Members in accordance with their respective Membership Interests.
For purposes hereof, “Available Cash” shall mean the excess of cash received from all
activities of the Company, including the net cash realized by the Company from the sale,
refinancing (as approved in accordance with Section 7.1(d)(i)(a) hereof) or other disposition of
assets after retirement of any Company Financing and the payment of all expenses related to the
transaction, less cash disbursements (including within the phrase “cash disbursements”, without
limitation, debt service payments on Company Financing) and a reasonable allowance for reserves,
contingencies, working capital and anticipated obligations (which allowance for reserves,
contingencies, working capital and anticipated obligations shall not be required after the Property
or the final portion of the Property, has been sold). Notwithstanding the foregoing, “Available
Cash” shall not include the net proceeds from any sale or other disposition of all or any portion
of the Property or other Company assets made in connection with the overall liquidation of the
Company (the “Liquidating Proceeds”). The determination of what constitutes Available Cash as
opposed to Liquidating Proceeds shall be made by the Manager. Liquidating Proceeds shall be
distributed as provided in Section 9.3.
(c) Notwithstanding provision to the contrary contained in this Operating Agreement, no
payment or distribution pursuant to Section 6.1(b) hereof shall be made if after giving effect to
such distribution the Company would not be able to pay its debts as they become
due in the usual course of business or the Company’s total assets would be less than its total
liabilities.
7.1. Management.
(a) Managers. The Company shall be managed by a representative of Artery and a representative
of Beazer (individually. a “Manager”, and collectively, the “Managers”). The initial Manager for
Artery shall consist of X. Xxxxx XxXxxxx (the “Artery Manager”). The initial Manager for Beazer
shall consist of Xxxxx X Xxxxxx (the “Beazer Manager”). At any time, upon prior written notice
delivered to the other Manager specifying the scope and extent of the delegation, each of the
Artery Manager and the Beazer Manager shall have the authority to delegate any specific task or
responsibility each possesses as Manager hereunder to one or more designated agents.
(b) General Powers. The Managers shall have full, exclusive, and complete discretion, power,
and authority, subject in all cases to the other provisions of this Operating Agreement and the
requirements of applicable law, to manage, control, administer, and operate the business and
affairs of the Company for the purposes herein stated, and to make all decisions affecting such
business and affairs.
(c) Duties of Managers. The Managers shall devote such time to the Company and its business
as is appropriate to conduct the business of the Company in an effective manner and to carry out
their responsibilities herein; provided, however, that the Managers shall no be obligated to devote
their full time and attention or that of their officers, directors, and employees, to the business
and affairs of the Company. Without limiting the generality of the foregoing, the Managers shall
have the right, power, and duty to do, accomplish, and complete, in accordance with the Business
Plan and Development Budget and this Operating Agreement, for, on behalf of and at the expense of
the Company, and do hereby covenant to do all of the following:
(i) To conduct all activities and perform all actions deemed necessary to execute, implement,
and effectuate the goals and intent of the Business Plan and Development Budget;
(ii) Employ, coordinate, and supervise the contractors and agents necessary to carry out the
Company’s business;
(iii) Protect and preserve the title and interests of the Company in the Property;
(iv) In cooperating with the Administrative Manager, to keep, or cause to be kept, all books
and records of the Company and deliver any reports required by this Operating Agreement, all in
accordance with the provisions hereof;
(v) Maintain all funds of the Company in accordance with the provisions hereof
(vi) Cause to be paid as they become due all bills and expenses and other expenditures of the
Company, including, but not limited to, taxes and insurance, all within the limits set forth in the
Business Plan and Development Budget;
(vii) Hire legal counsel, accountants and other professionals as may be appropriate to carry
out the business of the Company;
(viii) Take any actions reasonably deemed to be ancillary to carry out any of the Managers’
duties to the Company, and
(ix) Enter into the Development Management Agreement with Artery Development Company, LLC and
delegate certain duties and obligations related to the development and sale of the Property
pursuant to the terms of the Development Management Agreement, the Underlying Purchase Agreement,
as amended, the Assignment Agreement, as amended, and this Operating Agreement.
(d) Major Decisions.
(i) Notwithstanding any provision of this Operating Agreement to the contrary, the following
“Major Decisions” shall be made on behalf of the Company only upon the prior written approval of
both Artery and Bearer, without which mutual approval, the Managers, either individually or
collectively, shall not act;
(a) Financing or refinancing the Company or the Property including, without limitation,
identifying lenders for the Development Work, obtaining lines of credit or lender guaranties for
the Development Work or other uses in connection with the Property, and granting or modifying any
mortgages, pledges, or other encumbrances of Company assets in connection therewith, including, but
not limited to, the refinancing of the Deferred Purchase Money Notes (“Company Financing”);
(b) Except as provided in Section 7.1(c) hereof, selling, exchanging, leasing, conveying, or
otherwise disposing of the Property, or any portion thereof;
(c) Acquiring additional real or personal property other than the Property;
(d) Making any payment or disbursement (or incurring any liability to make same) other than
for real estate taxes and insurance with respect to the Property or costs to develop the Property
the incurrence of which is required by applicable governmental authority;
(e) Seeking or allowing the Company to seek Bankruptcy protection from creditors under any
date or federal law, code, or statute;
(f) Prosecuting; defending, or settling any litigation matters, federal, state or local tax
matters; or similar claims;
(g) Taking any other action described in this Operating Agreement as requiring the approval or
consent of all Members;
(h) Sale of the Property or any portion thereof outside the ordinary course of business of the
Company, including but not limited to the sale of lots of the Property in bulk;
(i) Determining the institution(s) at which accounts for the deposit and investment of funds
of the Company will be opened and maintained, the types of accounts, procedures for depositing and
transferring funds in or between such accounts, and the persons who will have authority with
respect to the accounts and funds therein;
(j) Establishing and making modifications to the Business Plan and Development Budget or to
the Development Management Agreement;
(k) Seeking preliminary plan and site plan approvals for the Property;
(l) Filing a petition with Xxxxxxxxxx County, Maryland for the creation of a special taxing
district with respect to the Property and entering into any agreements related thereto; and
(m) Admitting new Members or substituting Members into the Company.
(e) Unanimous Consent. All decisions made by the Managers shall require the unanimous consent
of all of the Managers; provided that while the Managers will consult with each other with respect
to the selection of home builders for the building lots, only the Artery Manager shall be required
for the Company to enter into Lot Sale Agreements with respect to the Artery Sale Lots and only the
Beazer Manager shall be required for the Company to enter into Lot Sale Agreements with respect to
the Beazer Sale Lots.
(f) Limitation on Authority of Members.
(i) No Member is an agent of the Company solely by virtue of being a Member, and no Member has
authority to act for the Company solely by virtue of being a Member.
(ii) This Section 7.1(f) supersedes any authority granted to the Members pursuant to the Act.
Any Member who takes any action or binds the Company in violation of this Section 7.1 shall be
solely responsible for any loss and expense incurred by the Company as a result of the unauthorized
action and shall indemnify and hold the Company harmless with respect to the loss or expense
(including reasonable attorneys’ fees).
7.2. Personal Service. No Member, including the Managers, shall receive any salary,
fee or draw for services rendered to or on behalf of the Company or otherwise in its capacity as a
Member and/or Manager, provided that, subject to the provisions of Section 11 hereof, each Member
or Manager shall be reimbursed for any expenses incurred by such Member on behalf of
the Company or otherwise in its capacity as a Member or Manager, including such expenses as
provided in Section 7.5(c) hereof. For purposes of this Section 7.2, reference to “Member” shall
include the principals and Affiliates of a Member.
7.3. Duties of Parties.
(a) Except as otherwise expressly provided in Section 7.3(b), nothing in this Operating
Agreement shall be deemed to restrict in any way the rights of any Member, or of any Affiliate of
any Member, to conduct any other business or activity whatsoever, and the Member shall not be
accountable to the Company or to any Member with respect to that business or activity even if the
business or activity competes with the Company’s business. The organization of the Company shall be
without prejudice to their respective rights (or the rights of their respective Affiliates) to
maintain, expand or diversify such other interests and activities and to receive and enjoy profits
or compensation therefrom. Each Member waives any rights the Member might otherwise have to share
or participate is such other interests or activities of any other Member or the Member’s
Affiliates.
(b) Each Member understands and acknowledges that the conduct of the Company’s business may
involve business dealings and undertakings with Members and their Affiliates. In any of those
cases, those dealings and undertakings shall be at arm’s length and on commercially reasonable
terms.
7.4. Indemnification.
(a) The Company shall defend, indemnify and save harmless the tax matters partner (as defined
in Section 7.5 below), the Managers and any member, employee, director, officer, agent and
representative thereof (collectively an Indemnified Person”) for all loss, liability, damage, cost,
or expense (including reasonable attorneys’ fees) incurred by reason of any demands, claims, suits,
actions or proceedings arising out of (a) the Indemnified Person’s relationship to the Company, or
(b) such Indemnified Person’s capacity as a Manager, tax matters partner, or member, employee,
director, officer, agent and representative thereof, except for such loss, liability, damage, cost,
or expense as arises out of the theft, fraud, willful misconduct or gross negligence. Expanses
incurred in defending a civil, or criminal action, suit or proceeding shall be paid by the Company
in advance of the final disposition of such action, suit or proceeding, and not less often than
monthly upon receipt of an undertaking by and on behalf of the Indemnified Person to repay such
amount if it shall be ultimately determined that he is not entitled to be indemnified by the
Company.
(b) The tax matter partner, the Manager and all members, directors and officers thereof
(collectively, an “Indemnifying Person”) shall defend the Company for all loss, liability, damage,
cost, or expense (including reasonable attorneys’ fees) incurred by reason of any demands, claims,
suits, actions or proceedings arising out of the Indemnifying Person’s theft, fraud, willful
misconduct or gross negligence. Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Indemnifying Person in advance of the final dispositions of such
action, suit or proceeding, and not less often than monthly. Company shall repay such amount if it
shall be ultimately determined that it is not entitled to be indemnified hereunder.
7.5. Tax Matters Partner. The Administrative Manager shall serve as the Company’s
“Tax Matters Partner” solely for purposes of Code Section 6231(a)(7).
(a) The Tax Matters Partner shall have and perform all of the duties required under the Code,
including the following duties:
(i) Furnish the name, address, profits interest, and taxpayer identification number of each
Member to the Internal Revenue Service; and
(ii) Within five calendar days after the receipt of any correspondence or communication
relating to the Company or a Member from the Internal Revenue Service, the Tax Matters Partner
shall forward to each Member a photocopy of all such correspondence or communication(s). The Tax
Matters Partner shall, within five calendar days thereafter, advise each Member in writing of the
substance and form of any conversation or communication held with any representative of the
Internal Revenue Service.
(b) The Tax Matters Partner is authorized:
(i) To extend the statute of limitations for assessing or computing any tax liability against
the Company (or the amount or character of any Company tax items);
(ii) To settle any audit with the Internal Revenue Service concerning the adjustment or
readjustment of any partnership item(s) (within the meaning of Section 6231(a)(3) of the Code);
(iii) To file a request for an administrative adjustment with the Internal Revenue Service at
any time or file a petition for judicial review with respect to any such request;
(iv) To initiate or settle any judicial review or action concerning the amount or character of
any partnership tax item(s) (within the meaning of Section 6231(a)(3) of the Code);
(v) To intervene in any action brought by any other Member for judicial review of a final
adjustment; or
(vi) To take any other action not expressly permitted by this Operating Agreement on behalf of
the Members or the Company in connection with any administrative or judicial tax proceeding.
(vii) The Tax Matters Partner shall be reimbursed by the Company for all reasonable third
party out-of-pocket costs and expenses (including legal and amounting fees) incurred by the Tax
Matters Partner in performing its duties as tax matters partner.
7.6. Substitution of Managers. At any time and from time to time, Artery shall have
the right, without prior consent by Beazer, to remove the Artery Manager upon the delivery of
notice (“Substitution Notice”) by Artery to the Artery Manager, evidencing Artery’s election to
substitute the Artery Manager. At any time and from time to time, Beazer shall have the right,
without prior consent by Artery, to remove the Beazer Manager upon the delivery of a similar
Substitution Notice by Beazer to the Beazer Manager, evidencing Beazer’s election to substitute the
Beazer Manager. Artery shall have no right to remove the Beazer Manager and Beazer shall have no
right to remove the Artery Manager without the consent of the other Member. Immediately following
delivery of a Substitution Notice by Artery or Beazer to the Artery Manager or the Beazer Manager,
respectively, Artery or Beazer shall select a substitute Artery Manager or Beazer Manager,
respectively (each a “Substitute Manager”), succeeding the Manager to be replaced (each a “Removed
Manger”); and all rights, responsibilities and restrictions of and applicable to the Managers under
the Operating Agreement shall apply to the Substitute Managers; and all references in the Operating
Agreement to decisions or actions of the Managers requiring the approval of the Managers shall
thereafter be read to require the approval of the Substitute Managers. Nevertheless, the Removed
Managers shall execute and deliver any documentation provided by the Substitute Managers either to
evidence such substitution or to revise any information on the Articles. In the event any Removed
Manager shall refuse to execute and deliver any such documentation the Substitute Manager is hereby
constituted and appointed by the Removed Manager as his or her true and lawful attorney-in-fact for
the purpose of making, executing, signing, acknowledging and filing any such documents, in the
Removed Manager’s name, place and stead, it being understood that the foregoing power-of-attorney
is irrevocable and is coupled with en interest. This Section 7.6 shall operate independently from
Section 3.3 hereof.
7.7. Limitations on Liability. A Member or Manager shall not be liable for any action
taken as a Member or Manager, or any failure to take action as a Member or Manager, except to the
extent that such Member or Manager’s conduct fails to comply with the standards of ordinary care as
set forth in the Act.
ARTICLE 8. TRANSFER OF INTERESTS AND WITHDRAWAL OF MEMBERS; DEFAULT BY MANAGER
8.1. Transfers.
(a) Except as hereinafter provided, no Person may Transfer all or any portion of the Person’s
Membership Interest (which, in the case of the Manager, shall be deemed to have occurred in the
event of any Transfer of an interest in the equity ownership of the Manager), unless the following
conditions (“Conditions of Transfer”) are satisfied:
(i) The Transfer will not require registration of Membership Interests under any federal or
state securities laws; and
(ii) The Transferee delivers to the Company (a) a written instrument whereby the Transferee
agrees to be bound by the terms of this Operating Agreement; (b) a written instrument signed by the
Transferor and the Transferee indicating whether or not it is the intent of such parties that the
Transferee is to become a substitute Member in the Company (such intent being presumed, in the
absence of a joint statement to the contrary, in the case of a Transfer under the circumstances
described in Section 8.1(a) hereof); and (c) the following information: (i) the Transferee’s
taxpayer identification number; and (ii) the Transferee’s initial tag basis in the Transferred
Interest.
(iii) The Transfer has been consented to by all of the Members, except that a Transfer to any
Affiliate of a Member shall not require the consent of the other Member, provided that any
requisite lender consent to such Transfer shall have first been obtained.
(b) If the Conditions of Transfer are satisfied, then a Member may Transfer all or any portion
of that Person’s Membership Interest and, if it is the intent of the parties to the Transfer that
the Transferee shall become a substitute Member in the Company, the Manager-shall take such action
as shall be necessary to effect such admission to the Company of the Transferee as substitute
Member. Otherwise, the Transferee of the Interest shall have no right to: (i) become a Member;
(ii) exercise any Membership rights other than to receive allocations of Net Profit or Net Loss and
distributions of Available Cash or Liquidating Proceeds; or (iii) act as an agent of the Company.
(c) Each Member hereby acknowledges the reasonableness of the prohibition contained in this
Section 8.1 in view of the purposes of the Company and the relationship of the Members. The
Transfer in violation of the prohibition contained in this Section 8.1 shall be deemed invalid,
null and void, a default under this Operating Agreement, and of no force or effect. Any Transferee
to whom Membership Interest are attempted to be Transferred in violation of this Section 8.1 shall
not be entitled to vote on matters coming before the Members, participate in the management of the
Company, act as an agent of the Company, receive allocations of Net Profit and Net Loss and
distributions from the Company or have any other rights in or with respect to the Membership
Interests.
8.2. Voluntary Withdrawal. No Member shall have the right to Voluntarily Withdraw
from the Company. Voluntary Withdrawal of a Member shall not cause the dissolution or
discontinuation of the business of the Company.
8.3. Involuntary Withdrawal. Immediately upon the occurrence of an Involuntary
Withdrawal, the successor of the Withdrawn Member shall thereupon have the right to receive
allocations of Net Profit and Net Loss and distribution from the Company but shall not become a
Member unless admitted in accordance with Section 3.1 hereof. Involuntary Withdrawal of a Member
shall not cause the dissolution or discontinuation of the business of the Company.
ARTICLE 9. DISSOLUTION, CONTINUANCE AND WINDING UP; BUY-OUT
9.1. Events of Dissolution. Subject to Section 9.2 below, the Company shall be
dissolved and its affairs shall be wound up only upon the happening of the first to occur of the
following events of dissolution:
(a) upon the mutual consent of the Members;
(b) within 12 months after the sale or liquidation of the Property including the sale or
tender all of the lots comprising the Property, but not before the release of all performance and
payment bonds and guaranties posted with respect to the development of the Property;
(c) the entry of a decree of judicial dissolution or otherwise as required under the Act; or
(d) the withdrawal of the last remaining Member from the Company.
9.2. Winding Up. Upon dissolution under Section 9.1, the Managers shall appoint a
committee of Persons, who may or may not be Members, to conduct the winding up of the Company and
carry out the tasks and responsibilities required by this Article 9. Also upon dissolution under
Section 9.1, the Company shall conduct no further business, except for taking such action as shall
be necessary for the winding up of the affairs of the Company and the liquidation of its assets and
the distribution thereof to the Members or legal representative or successor in interest to a
former Member’s Membership Interest pursuant to the provisions hereof.
9.3. Distribution Upon Liquidation. Immediately following the Company’s liquidation,
Liquidating Proceeds shall be distributed, first, to the repayment of any loans or indebtedness of
the Company, including the Member Loans, next to the establishment of any reserves which the
liquidators deem reasonably necessary for the contingent, unmatured or unforeseen liabilities of
the Company, next to the Members (and legal representatives and successors in interest to former
Members) in accordance with their respective positive Capital Account balances, as adjusted, and
last to she Members in accordance with their Membership Interests. The claims of each priority
group specified above shall be satisfied in full before satisfying any claims of a lower priority
group. If assets available for disposition are insufficient to dispose of all of the claims in a
priority group, the available assets shall be distributed in proportion to the amounts owed to each
person in the that respective priority group, and no assets shall be distributed to any claimants
in a tower priority group. Nothing in this Section shall be construed to require any Member with a
negative capital account balance to contribute funds to the Company upon dissolution to bring the
balance of such Capital Account to zero.
ARTICLE 10. BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS; ADMINISTRATIVE MANAGER
10.1. Bank Accounts. All funds of the Company shall be deposited in a bank account or
accounts maintained in the Company’s name. The Administrative Manager shall be responsible for
maintaining the operating bank accounts for the Project, provided that each of the Managers shall
be provided access to all bank statements and records.
10.2. Books and Records.
(a) The Administrative Manager shall keep or cause to be kept complete and accurate books and
records of the Company and supporting documentation of the transactions with respect to the conduct
of the Company’s business. The records shall include, but not be limited to, complete and accurate
information regarding the state of the business and financial condition of the Company, a copy of
the Articles and Operating Agreement and all amendments to the Articles and Operating Agreement; a
current list of the names and last known business, residence, or mailing addresses of all Members;
and the Company’s federal, state or local tax returns.
(b) The books and records shall be maintained in accordance with generally accepted accounting
principles and shall be available at the Company’s principal office for
examination by any Member or the Member’s duly authorized representative at any and all
reasonable times during normal business hours.
(c) Each Member shall reimburse the Company for all costs and expenses incurred by the Company
in connection with the Member’s inspection and copying of the Company’s books and records.
10.3. Annual Accounting Period. The annual accounting period and taxable year of the
Company shall be the calendar year, ending December 31.
10.4. Reports.
(a) Within seventy-five (75) days after the end of each taxable year of the Company, the
Administrative Manager shall cause to be sent to each Person who was a Member at any time during
the accounting year then ended annual financial statements, including a balance sheet and statement
of income and loss, prepared by the accountants of the Administrative Manager in accordance with
standards issued by the American Institute of Certified Public accountants, and audited in
accordance with such standards if requested by the Non-Managing Members.
(b) Within seventy-five (75) days after the end of each taxable year of the Company, the
Administrative Manager shall cause to be sent to each Person who was a Member at any time during
the taxable year then ended, that tax information concerning the Company which is necessary for
preparing the Member’s income tax returns for that year.
(c) On a monthly basis, within 15 days following the end of the calendar month to which the
report applies, the Administrative Manager shall prepare and provide, at the Company’s expense,
summaries to all Members which contain at a minimum the following information for the Company: (a)
a monthly statement of income and loss for the Company, (b) a balance sheet of the Company at the
end of the month, (c) cash position at the end of the month, and (d) summary of cash flow for the
prior month, and year-to-year date cash flow of the Company; and any additional reports as may be
set forth in the Development Management Agreement.
10.5. Other Duties of Administrative Manager. The Administrative Manager shall be
responsible for paying all invoices to third party suppliers, vendors and contractors on behalf of
the Company, paying the fees and expenses of Artery Development Company, LLC under the Development
Management Agreement and generally handling the finances of the Company, including administering
draw requests under any Company Financing.
10.6. Administrative Fee. In consideration for performing the duties of
Administrative Manager hereunder, the Administrative Manager shall be entitled to receive an
administrative fee (“Administrative Fee”) from the Company in the following amount; $200 for each
single family and townhouse Lot; $100 for each multifamily dwelling unit; and no fee for any
moderately priced dwelling unit Lot or commercial Lot. The Administrative Fee shall be calculated
based upon the projected number of Lots which the Property is expected to yield at the time of
execution of this Agreement, and will be adjusted upwards or downwards when the actual
number of Lots has been determined, and shall be payable in equal monthly installments
commencing on July 1, 2001 and continuing for a period of six years thereafter.
ARTICLE 11. BUSINESS PLAN AND DEVELOPMENT BUDGET
11.1. Procedures for Establishment. Within 60 days after the execution of this
Operating Agreement, the Members shall agree to a business plan and development and operating
budget for the Company (the “Business Plan and Development Budget”), which shall include a budget
for the Development Work and operations of the Company for the remainder of the current fiscal
year. The Managers shall, pursuant to the terms of the Development Management Agreement, prepare
and submit a proposed budget for the Development Work, which budget shall be apart of the Business
Plan and Development Budget.
11.2. Annual Development Budget. Each fiend year, by 60 days prior to the end of the
Company’s fourth fiscal quarter, Artery shall prepare and submit to Beater its proposed Business
Plan and Development Budget for the following fiscal year, and Beazer shall thereafter submit its
responses on the proposed Business Plan and Development Budget to Artery. within 15 days after
receipt of Artery’s submission. The Business Plan and Development Budget shall for the upcoming
fiscal year shall contain reasonable detail with respect to revenue, contractual adjustments,
income, operating expenses, capital needs. and debt incurrence and payment. All of the Members
shall agree to adopt the Business Plan and Development Budget for the following fiscal year by 15
days prior to the beginning of the following fiscal year, or agree to submit to binding arbitration
pursuant to Section 15.12. hereof, during which time the preceding fiscal year’s Business Plan and
Development Budget shall be increased by the Consumer Price Index (Xxxxxxxxxx, X.X./Xxxxxxxxx
xxxxxxxxxxxx xxxx) for the preceding fiscal year and shall continue in effect.
11.3. Interim Amendments to Business Plan and Development Budget. In the event any of
the Members wishes to propose amendments to the Business Plan and Development Budget currently in
effect for a particular fiscal year, the Member proposing such amendments shall deliver its
proposed amendments to the other Member for approval. The Member receiving the proposed amendment
to the Business Plan and Development Budget shall deliver its responses on the proposed amendment
to the Business Plan and Development Budget to the first Member within 15 days after receipt of
such submission. The proposed amendments to the Business Plan and Development Budget shall be
effective upon 15 days after unanimous approval by the Members of the proposed amendments, unless
otherwise agreed.
ARTICLE 12. DEVELOPMENT MANAGEMENT AGREEMENT
12.1. Development Management Agreement. Following the valid execution of this
Operating Agreement by the Members, the Company shall enter into a development agreement (or shall
cause Clarksburg Skylark, LLC- to enter into a development agreement) which shall specify and
govern the responsibilities. duties, activities, obligations, rights, and powers of Artery
Development Company, LLC in connection with the Development Work (the “Development Management
Agreement”) in the form attached hereto as Exhibit “D”. The Development Management
Agreement and the Business Plan and Development Budget shall specify the scope and extent of the
Development Work. Artery Development Company, LLC
shall devote such time to the Company and its business as is appropriate to conduct the
business of the Company in an effective manner and to carry out its responsibilities as required by
the Development Management Agreement and this Operating Agreement; provided, however, that Artery
Development Company, LLC shall not be obligated to devote its full time and attention or that of
its officers, directors, employees, and Affiliates to the activities required by the Development
Management Agreement.
ARTICLE 13. PROCEDURE FOR SALE OF LOTS
13.1. Division of Property into Building Lots.
(a) As soon as practicable, and in any event prior to the recordation of record plats for any
Phase of the development of the Property, the Members shall agree on a division of the residential
building lots with respect to such Phase into two groups, the “Artery Sale Lots” which shall be
sold to builders solely at the direction of Artery, and the “Beazer Sale Lots” which shall be sold
to builders solely at the direction of Beazer. The Members will split the residential building
lots located on the Property on a 50/50 basis for each Phase, with one Member preparing the
division plan for each Phase and the other Member selecting the first lot group; and alternating
thereafter between the Members with respect to the preparation of the division plan and the
selection of building lots.
(b) The Members agree to divide the lots based upon the following guidelines: (i) all single
family and townhouse lots, including MPDU lots, will be divided on as evenly basis as possible
based upon (a) type of lot, (b) the size of lot, (c) location of lot within the Phase and (d) value
of Lot; (ii) Artery will have the first preference on the purchase of any of the multifamily lots
or commercial land bays, which shall be sold on the basis of a fair market value determination
pursuant to an agreement approved by the Members, and otherwise the Members will agree on the sale
of such lots to a third party developer; and (ii) subject to the provisions of Section 13.2(d),
Artery shall assume the obligations set forth in the Assignment Agreement with respect to the sale
of 300 residential lots to Rocky Gorge Homes, LLC, and will be entitled to receive the deposit
posted by Rocky Gorge Homes, LLC under the Assignment Agreement with respect thereto. The Members
agree that any discrepancies in the value of lots provided to either Member in a given Phase will
be made up, to the extent practicable, in the next succeeding Phase, and that any discrepancies in
value which exist at the end of the final Phase will be settled by a monetary payment.
13.2. General.
(a) All sales of residential building lots will be made pursuant to the terms of the Lot Sales
Agreement. To the extent practicable, the terms of the sale of the lots of the Property shall be
consistent for builders of the Beazer Sale Lots and the Artery Sale Lots, provided that the
purchase price paid by any Affiliate of Beazer for the Beazer Sale Lots may not include the profit
attributable to the development of any of the Beazer Sale Lots, and which may be reflected in the
profit attributable to the sale of the completed home.
(b) The Members shall cooperate with each other in maintaining a consistent high quality of
development and consistent architectural standards within the development,
which will he included in architectural covenants approved by the Members. The parties will
cooperate in the selection of any marketing names for the subdivisions, the placement and design of
entrance monuments and other identifying elements.
(c) Pursuant to the Development Management Agreement, Artery Development Company, LLC will
establish a home owners association for all of the residential building lots, a private utility
company for the construction of the on-site water and sewer connections and will seek to establish
a special taxing district under the provisions of Xxxxxxxxxx County law. The Company shall be
entitled to collect a per house connection fee (or an established connection fee for the commercial
parcel) from each builder at the time of settlement of the lot for the on-site water and sewer
connections in an amount determined by the Members as part of the Business Plan and Development
Budget. Each of the Members shall be entitled to receive the distributions of the private front
foot benefit charges imposed on its respective lots by the private utility company, provided
further, that Artery shall be entitled to purchase the rights to receive such payments with respect
to the Beazer Sale Lots through the payment to Beazer of an upfront payment equivalent to six times
the projected annual private water and sewer charges on such lots. The Members will insure that
all builders purchasing lots from them receive all necessary disclosures concerning the
establishment of the home owners association, the private utility company, and, if and when
created, the special taxing district.
(d) Notwithstanding the provisions of this Section 13, the Members shall retain the right to
reallocate the sale of the lots of the Property if the Members mutually agree that the Members and
the Company will gain a competitive advantage by doing so, and in the event that the obligation of
Rocky Gorge Homes, LLC to purchase lots out of the Artery Sale lots results in an allocation of
lots to Artery that are not optimal for sale to a home builder, the parties agree to cooperate to
work out an alternative arrangement if doing so would not adversely affect the allocation °flats
for construction of homes by an Affiliate of Beazer.
(e) The Members shall cooperate with each other in developing plans for suitable recreational
facilities and other amenities for the Property and will enter into such further agreements as may
be necessary to finance, construct and operate same.
13.3. Option to Purchase Lots from Artery Development Company LLC at Fairland Project.
In consideration for entering into this Agreement with Artery, Artery Development Company LLC
shall provide to Beazer Homes Corp. the right to purchase approximately fifty percent (50%) of the
lots in the Fairland Project located in Xxxxxxxxxx and Prince George’s Counties, Maryland, for
which Artery Development Company LLC and Xxxxxx Homes have foamed a joint venture. The terms of the
purchase right shall be set forth in the Option Agreement attached hereto as Exhibit “H”.
The parties further agree that in the event that Xxxxxx Homes exercises any option that it may have
to purchase up to 50 lots from the Fairland community from those lots which arc the subject of this
option to Beazer Homes Corp., Artery shall provide an option for an equivalent number of lots out
of the Artery Sale Lots to Beazer Homes Corp. on the same terms and conditions with respect to
calculation of purchase price as set forth in the Fairland Option Agreement.
ARTICLE 14. MEETINGS OF MEMBERS AND ACTIONS ON WRITTEN CONSENT
14.1. Meetings. The Members shall meet at least once per calendar month to discuss
the status of the Company, including but not limited to issues related to the operations of the
Company and the Development Work. In addition, Meetings of the Members, for any purpose or
purposes, may be called by the Managers or any Member.
14.2. Action by Members Without a Meeting. Any action required or permitted to be
taken at a meeting of Members may be taken without a meeting if the action is evidenced by
unanimous written consent of the Members, signed by all of the Members and showing the affirmative
vote with respect to such action of all of the Members. Such written consent shall be filed with
the minutes or records of the Company.
14.3. Place of Meetings; Telephone Meetings. The Members may designate any place,
either in or outside the State of Maryland, as the place of meetings for any meeting of the
Members. If no designation is made, the place of meeting shall be the principal office of the
Company in the State of Maryland. A meeting may take place by telephone conference call or any
other form of electronic communication through which the Members may simultaneously hear each
other. Such meeting shall be deemed to be held at the principal office of the Company or at the
place properly named in the notice calling the meeting.
14.4. Notice of Meetings. Written notice stating the place, day and hour of the
meeting and the purpose or purposes for which the meeting is called shall be delivered not less
than two (2) days (or any shorter period that may hereafter be permitted by the Act) nor more than
one (1) months before the date of the meeting, either personally or by mail, by or at the direction
of the person calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered as provided in Section 15.1 hereof. The business
conducted at any meeting need not be limited to the matters referenced in the notice of the
meeting. No notice shall be required for action by written consent
pursuant to Section 14.2 hereof.
14.5. Waiver of Notice. When any notice is required to be given to any Member, a
waiver thereof in writing signed by the Person entitled to such notice, whether before, at or after
the time stated therein, shall be equivalent to the giving of such notice. Attendance by a Member
at a meeting is a waiver of notice of such meeting, except if the Member objects at the beginning
of the meeting to the transaction of business became the meeting is not lawfully called or convened
and does not otherwise participate in the consideration of any matter at the meeting.
ARTICLE 15. MISCELLANEOUS
15.1. Notice. All communications provided for herein shall be made in writing and
transmitted by mail, first class postage prepaid, return receipt requested, or by telecopy the
receipt of which is confirmed by the receiving party (all Members agreeing that they have an
obligation to confirm receipt of a telecopy within 48 hours when requested), to the addresses set
forth in Exhibit “A” or such other address as a Member may, from time to time, designate in
writing. Any address may be changed by notice given to the Company and all Members by the party
whose address or telecopier number for notice is to be changed. Insofar as practicable, any
consent of the Members, required or appropriate under this Operating Agreement, shall be
accomplished by notice without the necessity of meetings of the Members.
15.2. Severability. The invalidity or unenforceability of any provision in this
Operating Agreement shall not affect the other provisions hereof and this Operating Agreement shall
be construed in all respects as if such invalid or unenforceable provision were omitted.
15.3. Interpretation. This Operating Agreement shall be interpreted and construed in
accordance with the laws of the State of Maryland. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or plural as the identity of the
person or persons referred to may require. Paragraph, article and other section captions of this
Operating Agreement have been inserted as a matter of convenience only and shall not control or
affect the meaning or construction of any of the terms or provisions thereof.
15.4. Integration. The parties hereto agree that except as set forth in the Articles,
all understandings and agreements heretofore made between them regarding operating the Company are
merged in this Operating Agreement. There are no promises, agreements, conditions, understandings,
warranties, or representations, oral or written, express or implied, among the parties hereto
concerning operating the Company, other than as set forth in this Operating Agreement and the
Articles. All prior agreements among the parties concerning operating the Company other than the
Articles are superseded by this Operating Agreement.
15.5. Counterparts; Effective Date. This Operating Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of which shall constitute
an agreement, and the signature of any member to a counterpart shall be deemed to be a signature
to, and may be appended to, any other counterpart, this Operating Agreement is dated and shall be
effective among the parties as of the date feat above written.
15.6. Binding Effect. This Operating Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective successors, assigns, heirs, executors,
administrators, and legal representatives.
15.7. No Third Party Beneficiaries. The parties hereto intend that there shall be no
third party beneficiaries of this Operating Agreement and this Operating Agreement shall be
enforceable only by those persons upon whom this Operating Agreement is binding and to whom this
Operating Agreement inures. Specifically, but without limitation, creditors and assignees of
Members shall have no right to enforce any part of this Operating Agreement.
15.8. Operation as Limited Liability Company. The Company is intended to be organized
and operated under the Act.
15.9. Amendments. Amendments otherwise authorized herein, amendments may be made to
this Operating Agreement from time to time with the consent of all Members. All such amendments
shall be in writing and counter-signed by all Members.
15.10. Member Consent and Approval. For all imposes in the Operating Agreement,
whenever there is a reference to a right of a Member or its principals to approve or otherwise
consent to a request, act or decision of the other Member or Manager, the parties agree that such
approval or consent is to be subject to a standard of commercial reasonableness and may not be
unreasonably conditioned, withheld or delayed.
15.11. Waiver. The failure of any Member to seek redress for violation of or to
insist upon the strict performance of any covenant or condition of this Operating Agreement shall
not prevent a subsequent act, which would have originally constituted a violation, from having the
affect of an original violation.
15.12. Arbitration. The Members shall submit all controversies pertaining to the
Company, this Operating Agreement, and/or the relationship between the various parties hereto to
arbitration in accordance with the Commercial Arbitration Rules and practices of the American
Arbitration Association (“AAA”) then in effect, with the arbitration to be held before a panel, in
a location in the Washington D.C. metropolitan area which is mutually agreed upon by the Members.
The parties agree to cooperate in pursuing-such arbitration promptly commencing with the date of
either party’s request therefor. Upon receipt of such notice to pursue arbitration, the Members
shall promptly obtain a list of commercial arbiters made available by the AAA with expertise in
residential and commercial real estate development matters. Within five (5) days of receipt of such
list, each Member shall agree to choose one arbiter, who together shall select a third arbiter from
such list. The hearing before the arbitration panel shall be held as soon as practicable
thereafter, which shall be within a period of thirty (30) days after selection of the arbitration
panel, unless the schedule of the arbiters does not so permit. Unless otherwise agreed by the
parties involved in the arbitration, the expenses and costs associated with the arbitration panel
and hearing facilities shall be paid by the Company and each party shall be responsible for their
own costs and expenses associated with any arbitration proceeding, including attorneys fees. The
decision of the arbitration panel shall be in writing and shall be deemed final, binding and
conclusive upon the parties, and the appropriate judgment, order or other judicial relief (whether
legal or equitable) may be entered in any court of competent jurisdiction to enforce the decision
rendered by the arbitration pond. This agreement to arbitrate shall be specifically enforceable
and shall survive the termination or expiration of this Operating Agreement.
WITNESS: | ARTERY CLARKSBURG, LLC, a Maryland limited liability company |
|||
By: The Artery Group, LLC, Manager | ||||
/s/
|
By: | /s/ X. Xxxxx XxXxxxx | ||
Name: X. Xxxxx XxXxxxx | ||||
Title: Executive Vice President | ||||
BEAZER CLARKSBURG, LLC, a Maryland limited liability company |
||||
By: Beazer Homes Corporation, Member | ||||
/s/
|
By: | /s/ Xxxxx X. Xxxxxx | ||
Name: Xxxxx X. Xxxxxx | ||||
Title: Vice President |
LIST OF EXHIBITS:
Exhibit A — Members and Membership Interests
Exhibit B — Articles of Organization
Exhibit C — Description of the Property
Exhibit D — Development Management Agreement
Exhibit E — [DELETED]
Exhibit F — Seller Deferred Purchase Money Note
Exhibit G — Assignor Deferred Purchase Money Note
Exhibit H — Fairland Option Agreement
EXHIBIT A
ARTERY-BEAZER CLARKSBURG, LLC
MEMBERS AND MEMBERSHIP INTEREST
Members | Membership Interest | |||
Artery Clarksburg, LLC
|
50 | % | ||
a Maryland limited liability company |
||||
7200 Wisconsin Avenue, Suite 1000 |
||||
Bethesda, Maryland 20814 |
||||
Attention: X. Xxxxx XxXxxxx |
||||
Beazer Clarksburg, LLC
|
50 | % | ||
a Maryland limited liability company |
||||
8965 Guilford Road |
||||
Suite 290 |
||||
Columbia, Maryland 21046 |
||||
Attention: Xxxxx X. Xxxxx |
EXHIBIT B
ARTERY-BEAZER CLARKSBURG, LLC
ARTICLES OF INCORPORATION
OF
ARTERY-BEAZER CLARKSBURG, LLC
OF
ARTERY-BEAZER CLARKSBURG, LLC
EXHIBIT C
ARTERY-BEAZER CLARKSBURG, LLC
DESCRIPTION OF THE PROPERTY
EXHIBIT D
ARTERY-BEAZER CLARKSBURG, LLC
DEVELOPMENT MANAGEMENT AGREEMENT
EXHIBIT E
ARTERY-BEAZER CLARKSBURG, LLC
(DELETED)
EXHIBIT F
ARTERY-BEAZER CLARKSBURG, LLC
SELLER DEFERRED PURCHASE MONEY NOTE
EXHIBIT G
ARTERY-BEAZER CLARKSBURG, LLC
ASSIGNOR DEFERRED PURCHASE MONEY NOTE
EXHIBIT H
ARTERY-BEAZER CLARKSBURG, LLC
FAIRLAND OPTION AGREEMENT